85R19067 GRM-D
By: Blanco, Geren, Gutierrez, Sheffield H.B. No. 2998
Substitute the following for H.B. No. 2998:
By: Gutierrez C.S.H.B. No. 2998
A BILL TO BE ENTITLED
AN ACT
relating to defense economic readjustment zones.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 2310.001, Government Code, is amended by
amending Subdivision (7) and adding Subdivision (8) to read as
follows:
(7) "Readjustment zone" means a municipality or county
[an area] designated as a defense economic readjustment zone under
this chapter.
(8) "Veteran" has the meaning assigned by Section
2308.251.
SECTION 2. Section 2310.002, Government Code, is amended to
read as follows:
Sec. 2310.002. JURISDICTION OF MUNICIPALITY. (a) For the
purposes of this chapter, territory in the extraterritorial
jurisdiction of a municipality is considered to be in the
jurisdiction of the municipality.
(b) Notwithstanding Subsection (a), the governing body of a
county may apply to the bank for designation as a defense
readjustment project a project or activity of a qualified business
that is located within the jurisdiction of a municipality located
in the county.
(c) Before a county makes an application as provided by
Subsection (b), the applying county must enter into an interlocal
agreement with the municipality that has jurisdiction of the
territory in which the project or activity described by Subsection
(b) will be located. The interlocal agreement must specify that
either the applying county or the municipality that has
jurisdiction of the territory in which the project or activity
described by Subsection (b) will be located is the governmental
body having administration authority under Section 2310.201 and
that both the applying county and municipality approve the
application. For purposes of this subsection, a county during any
biennium may use the maximum number of designations the county is
permitted under Section 2310.306(e) within the territory described
by this subsection.
SECTION 3. Section 2310.051(b), Government Code, is amended
to read as follows:
(b) The bank shall establish criteria and procedures [for
designating a qualified area as a readjustment zone and] for
designating a defense readjustment project.
SECTION 4. Section 2310.052(b), Government Code, is amended
to read as follows:
(b) The bank must include the following information
regarding the defense readjustment zone program in the report
required by Section 489.107 [On or before December 1 of each year,
the office shall submit to the governor, the legislature, and the
Legislative Budget Board a report that]:
(1) an evaluation of [evaluates] the effectiveness of
the readjustment zone program;
(2) a description of [describes] the use of state and
local incentives under this chapter and their effect on revenue;
and
(3) suggestions for [suggests] legislation for the
program, as appropriate.
SECTION 5. Section 2310.101, Government Code, is amended to
read as follows:
Sec. 2310.101. [CRITERIA FOR] READJUSTMENT ZONE
DESIGNATION. (a) A municipality or county automatically qualifies
for designation [To be designated] as a readjustment zone if the
municipality or county is a defense-dependent community as
described by Section 2310.102 [an area must:
[(1) have a continuous boundary;
[(2) be at least one square mile but not larger than 20
square miles, excluding lakes, waterways, and transportation
arteries, of the municipality, county, or combination of
municipalities or counties nominating the area as a readjustment
zone;
[(3) be located in an adversely affected
defense-dependent community;
[(4) have at least 50 percent of its area located in an
existing or former United States Department of Defense facility;
and
[(5) be nominated as a readjustment zone by an
ordinance or order adopted by the nominating body].
(b) A municipality or county designated as [An area is not
prohibited from being included in] a readjustment zone under this
section is not prohibited from having an area of the municipality or
county [because the area is] also included in an enterprise zone
designated under Chapter 2303.
SECTION 6. Section 2310.102, Government Code, is amended to
read as follows:
Sec. 2310.102. [ADVERSELY AFFECTED] DEFENSE-DEPENDENT
COMMUNITY. A municipality or county is a [an adversely affected]
defense-dependent community if, as applicable, the municipality or
county is adjacent to or encompasses any part of a federally owned
or operated military installation, facility, or mission that is
functioning on June 1, 2003 [the bank determines that:
[(1) the municipality or county requires assistance
because of:
[(A) the proposed or actual establishment,
realignment, or closure of a defense facility;
[(B) the cancellation or termination of a United
States Department of Defense contract or the failure of the
department of defense to proceed with an approved major weapon
system program;
[(C) a publicly announced planned major
reduction in department of defense spending that would directly and
adversely affect the municipality or county; or
[(D) the closure or a significant reduction of
the operations of a defense facility as the result of a merger,
acquisition, or consolidation of a defense contractor operating the
facility; and
[(2) the municipality or county is expected to
experience, during the period between the beginning of the federal
fiscal year during which an event described by Subdivision (1) is
finally approved and the date that the event is to be substantially
completed, a direct loss of:
[(A) 2,500 or more defense worker jobs in any
area of the municipality or county that is located in an urbanized
area of a metropolitan statistical area;
[(B) 1,000 or more defense worker jobs in any
area of the municipality or county that is not located in an
urbanized area of a metropolitan statistical area; or
[(C) one percent of the civilian jobs in the
municipality or county].
SECTION 7. Section 2310.109, Government Code, is amended to
read as follows:
Sec. 2310.109. PERIOD OF DESIGNATION. A [An area may be
designated as a] readjustment zone [for a maximum of seven years.
A] designation remains in effect indefinitely so long as the
municipality or county, as applicable, continues to qualify for
designation as a readjustment zone under this chapter [until
September 1 of the final year of the designation].
SECTION 8. Section 2310.111(a), Government Code, is amended
to read as follows:
(a) The bank may remove the designation of an area
designated as a readjustment zone before September 1, 2017, if:
(1) the area no longer meets the criteria for
designation under this chapter, as this chapter existed on January
1, 2017, or by rule of the office adopted under this chapter before
September 1, 2017; or
(2) the bank determines that the governing body of the
readjustment zone has not complied with commitments made in the
ordinance or order nominating the area as a readjustment zone
before September 1, 2017.
SECTION 9. Section 2310.201, Government Code, is amended to
read as follows:
Sec. 2310.201. ADMINISTRATION BY GOVERNING BODY. (a) The
governing body of a readjustment zone is the governing body of the
municipality or county[, or the governing bodies of the combination
of municipalities or counties, that applied to have the area]
designated as a readjustment zone.
(b) The governing body with administration authority over a
defense readjustment project for which a designation is sought
under Section 2310.002(c) is determined under the terms of an
interlocal agreement required by that subsection.
SECTION 10. Section 2310.204(c), Government Code, is
amended to read as follows:
(c) The report must include for the year preceding the date
of the report:
(1) a list of local incentives for community
development available in the zone;
(2) the use of local incentives [for which the
governing body provided in the ordinance or order nominating the
readjustment zone] and the effect of those incentives on revenue;
(3) the number of businesses assisted, located, and
retained in the zone since its designation due to the existence of
the readjustment zone;
(4) a summary of all industrial revenue bonds issued
to finance projects located in the zone; and
(5) a description of all efforts made to attain
revitalization goals for the zone.
SECTION 11. Section 2310.301, Government Code, is amended
to read as follows:
Sec. 2310.301. DEFINITIONS [DEFINITION]. In this
subchapter:
(1) "New [, "new] permanent job" means a new
employment position created by a qualified business as described by
Section 2310.302 that:
(A) [(1)] has provided at least 1,820 hours of
employment a year to a qualified employee; and
(B) [(2)] is intended to exist during the period
that the qualified business is designated as a defense readjustment
project under Section 2310.306.
(2) "Retained job" means a job that:
(A) existed with a qualified business on the 91st
day before the date the business's project or activity is
designated as a defense readjustment project;
(B) has provided and will continue to provide
employment to a qualified employee of at least 1,820 hours
annually; and
(C) will be or has been an employment position
for the longer of:
(i) the duration of the project's
designation period; or
(ii) three years after the expiration date
of the claim period for receipt of a state benefit authorized by
this chapter.
SECTION 12. Section 2310.302(a), Government Code, is
amended to read as follows:
(a) A person is a qualified business if the bank, for the
purpose of state benefits under this chapter, or the governing body
of a readjustment zone, for the purpose of local benefits,
certifies that:
(1) the person is engaged in or has provided
substantial commitment to initiate the active conduct of a trade or
business in the readjustment zone; and
(2) at least 25 percent of the person's new employees
in the readjustment zone are:
(A) residents of the governing jurisdiction;
(B) economically disadvantaged individuals, as
defined by Section 2303.402(c); [or]
(C) dislocated defense workers; or
(D) veterans.
SECTION 13. Section 2310.303, Government Code, is amended
to read as follows:
Sec. 2310.303. PROHIBITION ON QUALIFIED BUSINESS
CERTIFICATION. If the bank determines that the governing body of a
readjustment zone is not complying with this chapter, the bank
shall prohibit the certification of a qualified business in the
zone until the bank determines that the governing body is complying
with this chapter. [The bank may not designate more than two defense
readjustment projects in a single readjustment zone.]
SECTION 14. Section 2310.305(b), Government Code, is
amended to read as follows:
(b) An application must:
(1) describe the procedures and efforts of the
governmental entity or entities [that applied to have the area
designated as a readjustment zone] to facilitate and encourage
participation by and negotiation among affected entities in the
zone in which the qualified business is located;
(2) contain an economic analysis of the plans of the
qualified business for expansion, revitalization, or other
activity in the readjustment zone, including:
(A) the number of anticipated new permanent jobs
the business will create during the designation period presented in
the form of a tabular listing of:
(i) the classification titles of those
jobs; and
(ii) the number of jobs and salary range for
each classification title;
(B) the anticipated number of permanent jobs the
business will retain during the designation period presented in the
form of a tabular listing of:
(i) the classification titles of those
jobs; and
(ii) the number of jobs and salary range for
each classification title;
(C) the amount of investment to be made in the
zone; [and]
(D) other information the bank requires;
(E) the number of employment positions in
existence at the qualified business site on the 91st day before the
application deadline; and
(F) if the application is for a double or triple
jumbo defense adjustment project, as defined by Section 2310.307,
an indication of which level of designation is being sought; and
(3) describe the local effort made by the governmental
entity or entities [that applied to have the area designated as a
readjustment zone], the administrative authority, if one exists,
the qualified business, and other affected entities to develop and
revitalize the zone.
SECTION 15. Section 2310.306, Government Code, is amended
by adding Subsection (e) to read as follows:
(e) The maximum number of defense readjustment projects
that the bank may designate for each readjustment zone during any
biennium is:
(1) six, if the readjustment zone is a municipality or
county with a population of less than 250,000; or
(2) nine, if the readjustment zone is a municipality
or county with a population of 250,000 or more.
SECTION 16. Section 2310.307, Government Code, is amended
to read as follows:
Sec. 2310.307. ALLOCATION OF JOBS ELIGIBLE FOR TAX REFUND.
(a) The [When the bank designates a business as a defense
readjustment project, the] bank shall allocate to a defense
readjustment [the] project the maximum number of new permanent jobs
or retained jobs eligible based on the amount of capital investment
made in the project, the project's designation level, and the
refund per job with a maximum refund to be included in a computation
of a tax refund for the project.
(b) A capital investment in a project of:
(1) $40,000 to $399,999 will result in a refund of up
to $2,500 per job with a maximum refund of $25,000 for the creation
or retention of 10 jobs;
(2) $400,000 to $999,999 will result in a refund of up
to $2,500 per job with a maximum refund of $62,500 for the creation
or retention of 25 jobs;
(3) $1,000,000 to $4,999,999 will result in a refund
of up to $2,500 per job with a maximum refund of $312,500 for the
creation or retention of 125 jobs;
(4) $5,000,000 or more will result in a refund of up to
$2,500 per job with a maximum refund of $1,250,000 for the creation
or retention of 500 jobs, except as provided by Subdivision (5) or
(6);
(5) $150,000,000 to $249,999,999 will result in a
refund of up to $5,000 per new permanent job with a maximum refund
of $2,500,000 for the creation of 500 new permanent jobs if the bank
designates the project as a double jumbo defense readjustment
project; or
(6) $250,000,000 or more will result in a refund of up
to $7,500 per new permanent job with a maximum refund of $3,750,000
for the creation of at least 500 new permanent jobs if the bank
designates the project as a triple jumbo defense readjustment
project.
(c) A defense readjustment project for which a commitment
for a capital investment in the range amount and the creation of the
number of new permanent jobs specified by Subsection (b)(5) is made
is considered a double jumbo defense readjustment project if the
project is so designated by the bank.
(d) A defense readjustment project for which a commitment
for a capital investment in the range amount and the creation of the
number of new permanent jobs specified by Subsection (b)(6) is made
is considered a triple jumbo defense readjustment project if the
project is so designated by the bank. [The number may not exceed
500 or a number equal to 110 percent of the number of anticipated
new permanent jobs or retained jobs specified in the application
for designation of the business as a defense readjustment project
under Section 2310.305, whichever is less.]
SECTION 17. Subchapter E, Chapter 2310, Government Code, is
amended by adding Section 2310.3071 to read as follows:
Sec. 2310.3071. MAXIMUM TAX REFUND. (a) In this section,
"double jumbo defense readjustment project" and "triple jumbo
defense readjustment project" have the meanings assigned by Section
2310.307.
(b) A defense readjustment project is eligible for a maximum
refund of $250,000 in each state fiscal year.
(c) A double jumbo defense readjustment project is eligible
for a maximum refund of $500,000 in each state fiscal year.
(d) A triple jumbo defense readjustment project is eligible
for a maximum refund of $750,000 in each state fiscal year.
SECTION 18. Section 2310.405(a), Government Code, is
amended to read as follows:
(a) To encourage economic [the] development in the
municipality [of areas designated as readjustment zones], the
governing body of a municipality designated as a readjustment zone
under this chapter, through a program, may refund its local sales
and use taxes paid by a qualified business on all taxable items
purchased for use at the qualified business site related to the
project or activity[:
[(1) the purchase, lease, or rental of equipment or
machinery for use in a readjustment zone;
[(2) the purchase of material for use in remodeling,
rehabilitating, or constructing a structure in a readjustment zone;
[(3) labor for remodeling, rehabilitating, or
constructing a structure in a readjustment zone; and
[(4) electricity and natural gas purchased and
consumed in the normal course of business in the readjustment
zone].
SECTION 19. Section 2310.409, Government Code, is amended
to read as follows:
Sec. 2310.409. OTHER LOCAL INCENTIVES. (a) The governing
body of a municipality or county that is the governing body of a
readjustment zone may:
(1) defer compliance in the zone with the subdivision
and development ordinances or rules, other than those relating to
streets and roads or sewer or water services, of the municipality or
county, as appropriate;
(2) [give priority to the zone for the receipt of:
[(A) community development block grant money;
[(B) industrial revenue bonds; or
[(C) funds received for job training;
[(3) adopt and implement a plan for police protection
in the zone;
[(4)] amend the zoning ordinances of the municipality
or county, as appropriate, to promote economic development in the
zone;
(3) [(5)] establish permitting preferences for
businesses in the zone;
(4) [(6)] establish simplified, accelerated, or other
special permit procedures for businesses in the zone;
(5) [(7)] waive development fees for projects in the
zone;
(6) [(8)] create a local readjustment zone fund for
funding bonds or other programs or activities to develop or
revitalize the zone;
(7) [(9)] for qualified businesses in the zone, reduce
rates charged by:
(A) a utility owned by the municipality or
county, as appropriate; or
(B) a cooperative corporation or utility owned by
private investors, subject to the requirements of Subsection (b);
(8) [(10)] in issuing housing finance bonds, give
priority to persons or projects in the zone;
(9) [(11)] in providing services, give priority to
local economic development, educational, job training, or
transportation programs that benefit the zone; or
(10) [(12)] sell real property owned by the
municipality or county, as appropriate, and located in the
readjustment zone in accordance with Section 2310.410.
(b) A reduction in utility rates under Subsection (a)(7)(B)
[(a)(9)(B)] is subject to the agreement of the affected utility and
the approval of the appropriate regulatory authority under Title 2,
Utilities Code. The rates may be reduced up to but not more than
five percent below the lowest rate allowable for that customer
class. In making its determination under this section, the
regulatory authority shall consider revitalization goals for the
readjustment zone. In setting the rates of the utility the
appropriate regulatory authority shall allow the utility to recover
the amount of the reduction.
SECTION 20. Section 151.4291, Tax Code, is amended by
amending Subsections (a), (b), (c), and (e) and adding Subsection
(i) to read as follows:
(a) A defense readjustment project is eligible for a refund
in the amount provided by this section of the taxes imposed by this
chapter on purchases of all taxable items purchased for use at the
qualified business site related to the project or activity[:
[(1) equipment or machinery sold to a defense
readjustment project for use in a readjustment zone;
[(2) building materials sold to a defense readjustment
project for use in remodeling, rehabilitating, or constructing a
structure in a readjustment zone;
[(3) labor for remodeling, rehabilitating, or
constructing a structure by a defense readjustment project in a
readjustment zone; and
[(4) electricity and natural gas purchased and
consumed in the normal course of business in the readjustment
zone].
(b) Subject to the limitations provided by Subsection (c)
[of this section], a defense readjustment project qualifies for a
refund of taxes under this section based on the amount of capital
investment made at the qualified business site, the project's
designation level, and the refund per job with a maximum refund to
be included in a computation of a tax refund for the project. A
capital investment at the qualified business site of:
(1) $40,000 to $399,999 will result in a refund of up
to $2,500 per job with a maximum refund of $25,000 for the creation
or retention of 10 jobs;
(2) $400,000 to $999,999 will result in a refund of up
to $2,500 per job with a maximum refund of $62,500 for the creation
or retention of 25 jobs;
(3) $1,000,000 to $4,999,999 will result in a refund
of up to $2,500 per job with a maximum refund of $312,500 for the
creation or retention of 125 jobs;
(4) $5,000,000 or more will result in a refund of up to
$2,500 per job with a maximum refund of $1,250,000 for the creation
or retention of 500 jobs, except as provided by Subdivision (5) or
(6);
(5) $150,000,000 to $249,999,999 will result in a
refund of up to $5,000 per new permanent job with a maximum refund
of $2,500,000 for the creation of 500 new permanent jobs if the
Texas Economic Development Bank designates the project as a double
jumbo defense readjustment project; or
(6) $250,000,000 or more will result in a refund of up
to $7,500 per new permanent job with a maximum refund of $3,750,000
for the creation of at least 500 new permanent jobs if the Texas
Economic Development Bank designates the project as a triple jumbo
defense readjustment project [of $2,500 for each new permanent job
or job that has been retained by the defense readjustment project
for a qualified employee].
(c) The total amount of tax refund that a defense
readjustment project may apply for in a state fiscal year may not
exceed $250,000, at not more than $2,500 per job. The total amount
of tax refund that a double jumbo defense readjustment project may
apply for in a state fiscal year may not exceed $500,000, at not
more than $5,000 per new permanent job. The total amount of tax
refund that a triple jumbo defense readjustment project may apply
for in a state fiscal year may not exceed $750,000, at not more than
$7,500 per new permanent job. If a defense readjustment project,
double jumbo defense readjustment project, or triple jumbo defense
readjustment project qualifies in a state fiscal year for a refund
of taxes in an amount in excess of the applicable limitation
provided by this subsection, it may apply for a refund of those
taxes in a subsequent year, subject to the applicable limitation
for each year. The total amount that may be refunded to:
(1) a defense readjustment project under this section
may not exceed the amount determined by multiplying $250,000 by the
number of state fiscal years during which the defense readjustment
project created or retained one or more jobs for qualified
employees;
(2) a double jumbo defense readjustment project under
this section may not exceed the amount determined by multiplying
$500,000 by the number of state fiscal years during which the double
jumbo defense readjustment project created one or more new
permanent jobs for qualified employees; or
(3) a triple jumbo defense readjustment project under
this section may not exceed the amount determined by multiplying
$750,000 by the number of state fiscal years during which the triple
jumbo defense readjustment project created one or more new
permanent jobs for qualified employees. [If a defense readjustment
project qualifies in a state fiscal year for a refund of taxes in an
amount in excess of the limitation provided by this subsection, it
may apply for a refund of those taxes in a subsequent year, subject
to the $250,000 limitation for each year. However, a defense
readjustment project may not apply for a refund under this section
after the end of the state fiscal year immediately following the
state fiscal year in which the defense readjustment project's
designation as a defense readjustment project expires or is
removed. The total amount that may be refunded to a defense
readjustment project under this section may not exceed the amount
determined by multiplying $250,000 by the number of state fiscal
years during which the defense readjustment project created one or
more jobs for qualified employees.]
(e) In this section:
(1) "Defense readjustment project" means a person
designated by the Texas Economic Development Bank as a defense
readjustment project under Chapter 2310, Government Code.
(2) "Readjustment zone" and "qualified employee" have
the meanings assigned to those terms by Section 2310.001,
Government Code.
(3) "New permanent job" means a new employment
position created by a qualified business as described by Section
2310.302, Government Code, that:
(A) has provided at least 1,820 hours of
employment a year to a qualified employee; and
(B) is intended to exist during the period that
the qualified business is designated as a defense readjustment
project under Chapter 2310, Government Code.
(4) "Retained job" has the meaning assigned by Section
2310.301, Government Code.
(5) "Double jumbo defense readjustment project" and
"triple jumbo defense readjustment project" have the meanings
assigned by Section 2310.307, Government Code.
(i) As provided by Subsection (c), a double jumbo defense
readjustment project is eligible for a maximum refund of $500,000
and a triple jumbo defense readjustment project is eligible for a
maximum refund of $750,000 in each state fiscal year.
SECTION 21. Sections 2310.001(4), 2310.053(d), 2310.103,
2310.104, 2310.105, 2310.106, 2310.107, 2310.108, 2310.110, and
2310.407, Government Code, are repealed.
SECTION 22. The changes in law made by this Act to Chapter
2310, Government Code, apply only to an application for a
designation of a project or activity under the defense economic
readjustment zone program under Chapter 2310, Government Code, as
amended by this Act, that is filed on or after the effective date of
this Act. An application for designation of a project or activity
under the defense economic readjustment zone program that is filed
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 23. The changes in law made by this Act to Section
151.4291, Tax Code, apply only to an application for a tax refund
made on or after the effective date of this Act. An application for
a tax refund made before the effective date of this Act is governed
by the law in effect on the date the application was made, and the
former law is continued in effect for that purpose.
SECTION 24. This Act takes effect September 1, 2017.