83R5762 CLG/SMH-D
By: Hilderbran H.B. No. 3591
A BILL TO BE ENTITLED
AN ACT
relating to state funding to support economic development;
providing for the imposition of a fee.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subtitle F, Title 4, Government Code, is amended
by adding Chapter 483 to read as follows:
CHAPTER 483. TEXAS ECONOMIC DEVELOPMENT FUND
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 483.001. DEFINITIONS. In this chapter:
(1) "Office" means the Texas Economic Development and
Tourism Office within the office of the governor.
(2) "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, 2014, 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, 2014, 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, 2014, 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, 2014, 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, 2014, 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, 2014, and that houses tangible personal property described by
Paragraph (A), (B), (C), (D), or (E).
(3) "Qualified property" means:
(A) land:
(i) that is located in an area designated as
a reinvestment zone under Chapter 311 or 312, Tax Code, 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 applies for a rebate
payment under this chapter;
(iii) that is not subject to a tax abatement
agreement entered into by a school district under Chapter 312, Tax
Code; 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 $50 million; 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, Tax
Code; and
(ii) except for new equipment described in
Section 151.318(q) or (q-1), Tax Code, 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.
(4) "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 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.
(5) "Qualifying time period" means:
(A) the period that begins on the date that a
person's application for a rebate payment is approved by the office
and ends on December 31 of the second tax year that begins after
that date, except as provided by Paragraph (B) or (C) of this
subdivision;
(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 office approves the
property owner's application for a rebate under this chapter,
unless a shorter time period is agreed to by the office 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 office approves the property owner's application for a
rebate under this chapter, unless a shorter time period is agreed to
by the office and the property owner.
(6) "County average weekly wage for manufacturing
jobs" means:
(A) the average weekly wage in a county for
manufacturing jobs during the most recent four quarterly periods
for which data is available at the time a person submits an
application for a rebate payment under this chapter, as computed by
the Texas Workforce Commission; or
(B) the average weekly wage for manufacturing
jobs in the region designated for the regional planning commission,
council of governments, or similar regional planning agency created
under Chapter 391, Local Government Code, in which the county is
located during the most recent four quarterly periods for which
data is available at the time a person submits an application for a
rebate payment under this chapter, as computed by the Texas
Workforce Commission.
Sec. 483.002. PURPOSES. The purposes of this chapter are
to:
(1) encourage large-scale capital investments in this
state, especially in school districts that have an ad valorem tax
base that is less than the statewide average ad valorem tax base of
school districts in this state;
(2) create new, high-paying jobs in this state;
(3) attract to this state new, large-scale businesses
that are exploring opportunities to locate in other states or other
countries;
(4) enable this state to compete with other states by
authorizing economic development incentives that meet or exceed
incentives being offered to prospective employers by other states
and to provide this state with an effective means to attract
large-scale investment;
(5) strengthen and improve the overall performance of
the economy of this state;
(6) expand and enlarge the ad valorem property tax
base of this state; and
(7) enhance this state's economic development efforts
by providing this state with an effective economic development
option.
Sec. 483.003. EXPIRATION OF PROGRAM AND CHAPTER. (a) The
rebate program established under this chapter terminates December
31, 2020.
(b) This chapter expires January 1, 2021.
SUBCHAPTER B. TEXAS ECONOMIC DEVELOPMENT FUND
Sec. 483.051. TEXAS ECONOMIC DEVELOPMENT FUND. (a) The
Texas Economic Development Fund is a dedicated account in the
general revenue fund.
(b) The following amounts shall be deposited in the fund:
(1) any amounts appropriated by the legislature for
the fund for the purposes of this chapter;
(2) any rebate payments that are returned as provided
by Subchapter D;
(3) interest earned on the investment of money in the
fund; and
(4) gifts, grants, and other donations received for
the fund.
(c) Except as provided by Subsection (d), money in the fund
may be used only for the purposes of this chapter.
(d) The fund may be temporarily used by the comptroller for
cash management purposes.
(e) The administration of the fund is considered to be a
trusteed program within the office.
SUBCHAPTER C. ELIGIBLE PROPERTY
Sec. 483.101. ELIGIBLE PROPERTY. (a) In this section:
(1) "Computer center" means an establishment
primarily engaged in providing electronic data processing and
information storage.
(2) "Integrated gasification combined cycle
technology" means technology used to produce electricity in a
combined combustion turbine and steam turbine application using
synthetic gas or another product produced from the gasification of
coal or another carbon-based feedstock, including related
activities such as materials-handling and gasification of coal or
another carbon-based feedstock.
(3) "Manufacturing" means an establishment primarily
engaged in activities described in sectors 31-33 of the 2007 North
American Industry Classification System.
(4) "Nuclear electric power generation" means
activities described in category 221113 of the 2002 North American
Industry Classification System.
(5) "Renewable energy electric generation" means an
establishment primarily engaged in activities described in
category 221119 of the 1997 North American Industry Classification
System.
(6) "Research and development" means an establishment
primarily engaged in activities described in category 541710 of the
2002 North American Industry Classification System.
(b) This chapter applies only to property owned by an entity
to which Chapter 171, Tax Code, applies.
(c) To be eligible for a rebate payment under this chapter,
the entity must use the property 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 computer center primarily used in connection
with one or more activities described by Subdivisions (1) through
(7) conducted by the entity.
(d) For purposes of determining an applicant's eligibility
for a rebate payment under this chapter:
(1) the land on which a building or component of a
building described by Section 483.001(2)(E) is located is not
considered a qualified investment;
(2) property that is leased under a capitalized lease
may be considered a qualified investment;
(3) property that is leased under an operating lease
may not be considered a qualified investment; and
(4) property that is owned by a person other than the
applicant and that is pooled or proposed to be pooled with property
owned by the applicant may not be included in determining the amount
of the applicant's qualifying investment.
(e) To be eligible for a rebate payment under this chapter,
at least 80 percent of all the new jobs created by the property
owner must be qualifying jobs as defined by Section 483.001.
SUBCHAPTER D. REBATE PAYMENT PROGRAM
Sec. 483.151. REBATE PAYMENT PROGRAM. The office shall
establish and administer a program to make rebate payments from
money appropriated from the Texas Economic Development Fund under
Section 483.051 to a person who:
(1) owns qualified property that meets the eligibility
requirements of this chapter;
(2) makes the minimum amount of qualified investment
on or in connection with the person's qualified property during the
qualifying time period; and
(3) creates the required number of qualifying jobs
during each year of the agreement.
Sec. 483.152. APPLICATION FOR REBATE PAYMENTS. (a) The
owner or lessee of, or the holder of another possessory interest in,
any qualified property described by Section 483.001(3)(A), (B), or
(C) may apply to the office to receive rebate payments under this
chapter.
(b) An application must be made on the form prescribed by
the office and include the information required by the office, and
it must be accompanied by:
(1) an application fee established by the office;
(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
483.001(3); and
(3) information necessary to allow the comptroller to
make the determination required by Section 483.153.
(c) Not later than the 10th day after the date the office
receives an application under this section, the office shall submit
a copy of the application and the proposed agreement between the
applicant and the governor to the comptroller.
Sec. 483.153. DETERMINATION BY COMPTROLLER. (a) Not later
than the 91st day after the date the comptroller receives the copy
of the application and the proposed agreement, the comptroller
shall:
(1) determine whether the fiscal benefit to the state
of the proposed qualified investment exceeds the comptroller's
estimate of rebate payments to be made under the proposed agreement
by more than five percent; and
(2) certify that determination to the office.
(b) In making the determination under this section, the
comptroller shall use accepted revenue estimating techniques,
including dynamic modeling.
(c) For purposes of this section, the fiscal benefit to the
state is the sum of the comptroller's estimate of:
(1) the additional state tax revenue that is directly
attributable to the proposed qualified investment that will be
generated during the term of the proposed agreement; and
(2) the amount of school district taxes for
maintenance and operations that will be imposed on the increase in
appraised value of the qualified property during the term of the
proposed agreement that is attributable to the making of the
proposed qualified investment.
Sec. 483.154. APPROVAL OF APPLICATION. The office shall
approve an application for a rebate payment if:
(1) the office determines that the real and personal
property identified in the application as qualified property meets
the applicable criteria established by Section 483.001(3);
(2) the comptroller certifies to the office under
Section 483.153 that the fiscal benefit to the state of the proposed
qualified investment exceeds the comptroller's estimate of rebate
payments to be made under the proposed agreement by more than five
percent; and
(3) the office determines that granting approval of
the application is in the best interest of this state.
Sec. 483.155. REBATE PAYMENT AGREEMENT. (a) If the office
approves the application, the governor shall enter into a written
agreement with the applicant that:
(1) describes with specificity the investment that the
person will make on or in connection with the person's qualified
property during the qualifying time period and the number of
qualifying jobs that will be created during each year of the
agreement;
(2) specifies the ad valorem tax years covered by the
agreement;
(3) states that the office will annually monitor the
person's compliance with the terms of the agreement, including the
minimum investment requirements to be made by the person; and
(4) states that if the office finds that the person has
not met the minimum investment or job creation requirements for the
reporting year:
(A) the person may not receive a rebate for that
year; or
(B) if the rebate has been paid for that year, the
person shall repay the rebate and any related interest to the state
at the agreed rate and on the agreed terms.
(b) The term of a rebate payment agreement may not exceed 10
years.
Sec. 483.156. PAYMENT OF REBATE. (a) The office shall pay a
rebate under the program for an ad valorem tax year to a person who
is eligible for the payment on the first anniversary of the date the
person pays the taxes imposed by the applicable school district on
the qualified property.
(b) The amount of the rebate is equal to the amount of school
district taxes for maintenance and operations imposed in that ad
valorem tax year on the increase in appraised value of the qualified
property that is attributable to the making of the proposed
qualified investment.
Sec. 483.157. MONITORING BY COMPTROLLER. (a) The
comptroller shall monitor the fiscal benefit to the state of a
qualified investment made by a rebate recipient each year under
this chapter.
(b) If the comptroller determines that for any year the
fiscal benefit to the state is less than the amount required to
qualify for receipt of a rebate under this chapter, the comptroller
shall certify that fact to the office and the recipient may not
receive a rebate for that year. If the office has paid a rebate to
the recipient before receiving the comptroller's certification
under this subsection, the recipient must return the rebate payment
for that year to the office.
Sec. 483.158. REPORT ON COMPLIANCE WITH AGREEMENTS. (a)
Before the beginning of each regular session of the legislature,
the office shall submit to the lieutenant governor, the speaker of
the house of representatives, and each other member of the
legislature a report assessing the progress of each agreement made
under this chapter. The report must be based on data certified to
the office by each recipient of a rebate payment under this chapter
and state for each agreement:
(1) the number of qualifying jobs each recipient of a
rebate payment committed to create;
(2) the number of qualifying jobs each recipient
created;
(3) the median wage of the new jobs each recipient
created;
(4) the amount of the qualified investment each
recipient committed to spend or allocate for each project;
(5) the amount of the qualified investment each
recipient spent or allocated for each project;
(6) the amount of the rebate payment received per year
by each recipient;
(7) the number of new jobs created by each recipient in
each sector of the North American Industry Classification System;
and
(8) of the number of new jobs each recipient created,
the number of jobs created that provide health benefits for
employees.
(b) The report may not include information that is
confidential by law.
(c) The office may require a recipient to submit, on a form
the comptroller provides, information required to complete the
report.
Sec. 483.159. RULES AND FORMS. The office shall adopt rules
and forms necessary for the implementation and administration of
this chapter.
SECTION 2. The heading to Section 42.2515, Education Code,
is amended to read as follows:
Sec. 42.2515. ADDITIONAL STATE AID FOR AD VALOREM TAX
CREDITS UNDER FORMER TEXAS ECONOMIC DEVELOPMENT ACT.
SECTION 3. 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 4. 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 5. Sections 403.302(d) and (m), Government Code,
are 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 former 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) 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;
(6) the total dollar amount of any exemptions granted
under Section 11.251 or 11.253, Tax Code;
(7) 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;
(8) 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;
(9) 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 repeal [expiration] of
that chapter [the subchapter];
(10) 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;
(11) the appraised value of property the collection of
delinquent taxes on which is deferred under Section 33.06, Tax
Code;
(12) the portion of the appraised value of property
the collection of delinquent taxes on which is deferred under
Section 33.065, Tax Code; and
(13) 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.
(m) Subsection (d)(9) does not apply to property that was
the subject of an application under former Subchapter B or C,
Chapter 313, Tax Code, made after May 1, 2009, that the comptroller
recommended should be disapproved.
SECTION 6. Section 2303.507, Government Code, is amended to
read as follows:
Sec. 2303.507. TAX INCREMENT FINANCING AND ABATEMENT[;
LIMITATIONS ON APPRAISED VALUE]. Designation of an area as an
enterprise zone is also designation of the area as a reinvestment
zone for:
(1) tax increment financing under Chapter 311, Tax
Code; and
(2) tax abatement under Chapter 312, Tax Code[; and
[(3) limitations on appraised value under Chapter 313,
Tax Code].
SECTION 7. Section 23.03, Tax Code, is amended to read as
follows:
Sec. 23.03. COMPILATION OF LARGE PROPERTIES AND PROPERTIES
SUBJECT TO LIMITATION ON APPRAISED VALUE. Each year the chief
appraiser shall compile and send to the Texas [Department of]
Economic Development and Tourism Office a list of properties in the
appraisal district that in that tax year:
(1) have a market value of $100 million or more; or
(2) are subject to a limitation on appraised value
under former Chapter 313.
SECTION 8. Section 26.012(6), Tax Code, is amended to read
as follows:
(6) "Current total value" means the total taxable
value of property listed on the appraisal roll for the current year,
including all appraisal roll supplements and corrections as of the
date of the calculation, less the taxable value of property
exempted for the current tax year for the first time under Section
11.31, except that:
(A) the current total value for a school district
excludes:
(i) the total value of homesteads that
qualify for a tax limitation as provided by Section 11.26; and
(ii) new property value of property that is
subject to an agreement entered into under former Chapter 313; and
(B) the current total value for a county,
municipality, or junior college district excludes the total value
of homesteads that qualify for a tax limitation provided by Section
11.261.
SECTION 9. Section 312.403(a), Tax Code, is amended to read
as follows:
(a) In this section, "nuclear electric power generation"
means activities described in category 221113 of the 2002 North
American Industry Classification System [has the meaning assigned
by Section 313.024(e)].
SECTION 10. Chapter 320, Tax Code, is amended by adding
Section 320.002 to read as follows:
Sec. 320.002. SAVING PROVISIONS AFTER REPEAL OF CHAPTER
313. (a) A limitation on appraised value approved under Subchapter
B or C, Chapter 313, before the repeal of that subchapter continues
in effect according to that subchapter as that subchapter existed
immediately before its repeal, and that law is continued in effect
for purposes of the limitation on appraised value.
(b) The repeal of Subchapter D, Chapter 313, does not affect
a property owner's entitlement to a tax credit granted under that
subchapter if the property owner qualified for the tax credit
before the repeal of that subchapter.
SECTION 11. The following provisions of the Tax Code are
repealed:
(1) Section 312.0025; and
(2) Chapter 313.
SECTION 12. This Act takes effect January 1, 2014.