87R7828 SMH/KJE-D
By: Murphy H.B. No. 1556
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 23.03, Tax Code, is amended to read as
follows:
Sec. 23.03. COMPILATION OF LARGE PROPERTIES AND PROPERTIES
SUBJECT TO EXEMPTION FROM AD VALOREM TAXATION [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 an exemption from ad valorem
taxation [a limitation on appraised value] under Chapter 313.
SECTION 2. Section 151.359(k), Tax Code, is amended to read
as follows:
(k) A data center is not eligible to receive an exemption
under this section if the data center is subject to an agreement
limiting the appraised value of the data center's property under
Subchapter B [or C], Chapter 313, as that subchapter existed before
September 1, 2021, or former Subchapter C, Chapter 313.
SECTION 3. Section 151.3595(j), Tax Code, is amended to
read as follows:
(j) A data center is not eligible to receive an exemption
under this section if the data center is subject to an agreement
limiting the appraised value of the data center's property under
Subchapter B [or C], Chapter 313, as that subchapter existed before
September 1, 2021, or former Subchapter C, Chapter 313.
SECTION 4. Section 171.602(f), Tax Code, is amended to read
as follows:
(f) The comptroller may not issue a credit under this
section before the later of:
(1) September 1, 2018; or
(2) the expiration of an agreement under Chapter 313
as that chapter existed before September 1, 2021, regarding the
clean energy project for which the credit is issued.
SECTION 5. Section 312.0025(a), Tax Code, is amended to
read as follows:
(a) Notwithstanding any other provision of this chapter to
the contrary, the governing body of a school district, in the manner
required for official action and for purposes of Subchapter B [or
C], Chapter 313, may designate an area entirely within the
territory of the school district as a reinvestment zone if the
governing body finds that, as a result of the designation and the
granting of an exemption from ad valorem taxation [a limitation on
appraised value] under Subchapter B [or C], Chapter 313, for
property located in the reinvestment zone, the designation is
reasonably likely to:
(1) contribute to the expansion of primary employment
in the reinvestment zone; or
(2) attract major investment in the reinvestment zone
that would:
(A) be a benefit to property in the reinvestment
zone and to the school district; and
(B) contribute to the economic development of the
region of this state in which the school district is located.
SECTION 6. 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 7. Section 313.004, Tax Code, is amended to read as
follows:
Sec. 313.004. LEGISLATIVE INTENT. It is the intent of the
legislature in enacting this chapter that:
(1) economic development decisions involving school
district taxes should occur at the local level with oversight by the
state and should 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 provided by this chapter;
(B) an applicant for an ad valorem tax 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 tax imposed by
Chapter 171 to receive an ad valorem tax benefit provided by this
chapter;
(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 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; and
(4) in implementing this chapter, the comptroller
should:
(A) strictly interpret the criteria and
selection guidelines provided by this chapter; and
(B) issue certificates for exemptions from ad
valorem taxation [limitations on appraised value] only for those
applications for an ad valorem tax benefit provided by this chapter
that:
(i) create high-paying jobs;
(ii) provide a net benefit to the state over
the long term; and
(iii) advance the economic development
goals of this state.
SECTION 8. Section 313.007, Tax Code, is amended to read as
follows:
Sec. 313.007. EXPIRATION. Subchapter [Subchapters] B
expires [and C expire] December 31, 2032 [2022].
SECTION 9. The heading to Subchapter B, Chapter 313, Tax
Code, is amended to read as follows:
SUBCHAPTER B. EXEMPTION FROM AD VALOREM TAXATION [LIMITATION ON
APPRAISED VALUE] OF CERTAIN PROPERTY [USED TO CREATE JOBS]
SECTION 10. Section 313.021, Tax Code, is amended by
amending Subdivisions (1), (2), and (4) and adding Subdivision (6)
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) or[,] (B); or
(D) 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, 2022, and that houses
tangible personal property described by Paragraph (A) or (B)[, (C),
(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:
(a) construct a new building or erect
or affix a new improvement that does not exist before the date the
person submits a complete application for an exemption from ad
valorem taxation [a limitation on appraised value] under this
subchapter; or
(b) renovate, expand, or otherwise
improve an existing building or improvement;
(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 qualifying
jobs];
(B) the [new] building or other [new] improvement
described by Paragraph (A)(ii); and
(C) tangible personal property:
(i) that is not subject to a tax abatement
agreement entered into by a school district under Chapter 312;
(ii) for which a sales and use tax refund is
not claimed under Section 151.3186; and
(iii) except for new equipment described in
Section 151.318(q) or (q-1), that is first placed in service in the
new building, in the newly renovated, expanded, or improved
building, or in or on the new or newly renovated, expanded, or
improved 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 time period" means[:
[(A)] the period that begins on the date that a
person's application for an exemption from ad valorem taxation [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, except as provided
by [Paragraph (B) or (C) of this subdivision or] Section
313.027(h)[;
[(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].
(6) "Wealth per student" has the meaning assigned by
Section 48.273, Education Code.
SECTION 11. Section 313.022, Tax Code, is amended to read as
follows:
Sec. 313.022. [APPLICABILITY;] CATEGORIZATION OF SCHOOL
DISTRICTS. [(a) This subchapter applies to each school district in
this state other than a school district to which Subchapter C
applies.
[(b)] For purposes of determining the required minimum
amount of a qualified investment under Section 313.021(2)(A)(iv)
[313.021(2)(A)(iv)(a), and the minimum amount of a limitation on
appraised value under Section 313.027(b)], school districts [to
which this subchapter applies] are categorized as follows:
(1) Category I consists of school districts having a
wealth per student of not more than the statewide average wealth per
student; and
(2) Category II consists of school districts having a
wealth per student of more than the statewide average wealth per
student. [according to the taxable value of property in the
district for the preceding tax year determined under Subchapter M,
Chapter 403, Government Code, as follows:
[CATEGORY TAXABLE VALUE OF PROPERTY [CATEGORY TAXABLE VALUE OF PROPERTY
[CATEGORY TAXABLE VALUE OF PROPERTY
[I $10 billion or more [I $10 billion or more
[I $10 billion or more
[II $1 billion or more but less than $10 billion [II $1 billion or more but less than $10 billion
[II $1 billion or more but less than $10 billion
[III $500 million or more but less than $1 billion [III $500 million or more but less than $1 billion
[III $500 million or more but less than $1 billion
[IV $100 million or more but less than $500 million [IV $100 million or more but less than $500 million
[IV $100 million or more but less than $500 million
[V less than $100 million] [V less than $100 million]
[V less than $100 million]
SECTION 12. Section 313.023, Tax Code, is amended to read as
follows:
Sec. 313.023. MINIMUM AMOUNTS OF QUALIFIED INVESTMENT. For
each category of school district established by Section 313.022,
the minimum amount of a qualified investment under Section
313.021(2)(A)(iv) [313.021(2)(A)(iv)(a)] is as follows:
CATEGORY MINIMUM QUALIFIED INVESTMENT CATEGORY MINIMUM QUALIFIED INVESTMENT
CATEGORY MINIMUM QUALIFIED INVESTMENT
I $10 [$100] million I $10 [$100] million
I $10 [$100] million
II $50 [$80] million II $50 [$80] million
II $50 [$80] million
[III $60 million [III $60 million
[III $60 million
[IV $40 million [IV $40 million
[IV $40 million
[V $20 million] [V $20 million]
[V $20 million]
SECTION 13. Sections 313.024(a), (b), (b-1), and (c), Tax
Code, are amended to read as follows:
(a) This subchapter applies [and Subchapter C apply] only to
property owned by an entity subject to the tax imposed by Chapter
171.
(b) To be eligible for an exemption from ad valorem taxation
[a limitation on appraised value] under this subchapter, the entity
must use the property for:
(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;
(4) [(6) electric power generation using integrated
gasification combined cycle technology;
[(7) nuclear electric power generation;
[(8) a computer center primarily used in connection
with one or more activities described by Subdivisions (1) through
(7) conducted by the entity; or
[(9)] a Texas priority project; or
(5) a battery energy storage facility within the scope
of Subchapter E, Chapter 35, Utilities Code.
(b-1) Notwithstanding any other provision of this
subchapter, an owner of a parcel of land that is located wholly or
partly in a reinvestment zone, a new building constructed on the
parcel of land, a new improvement erected or affixed on the parcel
of land, or tangible personal property placed in service in the
building or improvement or on the parcel of land may not receive an
exemption from ad valorem taxation [a limitation on appraised
value] under this subchapter for the parcel of land, building,
improvement, or tangible personal property under an agreement under
this subchapter that is entered into on or after September 1, 2021
[2017], if, on or after that date, a wind-powered energy device is
installed or constructed on the same parcel of land at a location
that is within 25 nautical miles of the boundaries of a military
aviation facility located in this state. The prohibition provided
by this subsection applies regardless of whether the wind-powered
energy device is installed or constructed at a location that is in
the reinvestment zone.
(c) For purposes of determining an applicant's eligibility
for an exemption from ad valorem taxation [a limitation] under this
subchapter:
(1) the land on which a building or component of a
building described by Section 313.021(1)(C) or (D) [313.021(1)(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.
SECTION 14. Section 313.025, Tax Code, is amended by
amending Subsections (a), (a-1), (b), (d), (d-1), (f), (h), and (i)
and adding Subsection (a-2) 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 comptroller [governing
body of the school district in which the property is located] for an
exemption from ad valorem taxation of the person's qualified
property by the school district in which the property is located as
provided by Section 313.027 [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 Subsection (a-1) [the comptroller], and [it
must] be accompanied by an[:
[(1) the] application fee of $50,000 [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) any information required by the comptroller for
the purposes of Section 313.026].
(a-1) The application form may require the applicant to
provide only the following information:
(1) the name and taxpayer identification number of the
applicant and each parent, subsidiary, or affiliate of the
applicant;
(2) contact information for the applicant;
(3) the name of the school district in which the
qualified property is located;
(4) a description of the project, including the
category of the applicable North American Industry Classification
System that describes the activities in which the applicant will
engage in connection with the project;
(5) the location of the project; and
(6) for each ad valorem tax year covered by the
proposed agreement between the applicant and the school district,
an estimate of:
(A) the amount of the qualified investment to be
spent or allocated for the project;
(B) the number of construction jobs to be created
at the project site and the total amount of wages that will be paid
to the persons holding those jobs;
(C) the number of operations jobs to be held by
employees of the applicant that will be created at the project site
and the total amount of wages that will be paid to the persons
holding those jobs; and
(D) the number of operations jobs to be held by
independent contractors that will be created at the project site
and the total amount of wages that will be paid to the persons
holding those jobs.
(a-2) Within seven days of the receipt of each document, the
comptroller [school district] shall submit to the governing body of
the school district in which the property is located [comptroller]
a copy of the application and the proposed agreement between the
applicant and the school district. If the applicant submits an
economic analysis of the proposed project to the comptroller
[school district], the comptroller [district] shall submit a copy
of the analysis to the school district [comptroller]. In addition,
the comptroller [school district] shall submit to the school
district [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.
(b) The governing body of a school district is not required
to consider an application for an exemption from ad valorem
taxation [a limitation on appraised value]. If the governing body
of the school district elects to consider an application, the
governing body shall [deliver a copy of the application to the
comptroller and] request that the comptroller conduct an economic
impact evaluation of the investment proposed by the application.
The comptroller shall conduct or contract with a third person to
conduct the economic impact evaluation, which shall be completed
and provided to the governing body of the school district, along
with the comptroller's certificate or written explanation under
Subsection (d), as soon as practicable but not later than the 90th
day after the date the comptroller receives the request from the
school district [application]. The governing body shall provide to
the comptroller or to a third person contracted by the comptroller
to conduct the economic impact evaluation any requested
information. A methodology to allow comparisons of economic impact
for different schedules of the addition of qualified investment or
qualified property may be developed as part of the economic impact
evaluation. The governing body shall provide a copy of the economic
impact evaluation to the applicant on request. [The comptroller
may charge the applicant a fee sufficient to cover the costs of
providing the economic impact evaluation.] The governing body of a
school district shall approve or disapprove an application not
later than the 150th day after the date the application is filed,
unless the economic impact evaluation has not been received or an
extension is agreed to by the governing body and the applicant.
(d) Not later than the 90th day after the date the
comptroller receives the request from the school district [copy of
the application], the comptroller shall issue a certificate for an
exemption from ad valorem taxation [a limitation on appraised
value] of the property and provide the certificate to the governing
body of the school district or provide the governing body a written
explanation of the comptroller's decision not to issue a
certificate.
(d-1) The governing body of a school district may not
approve an application unless the comptroller submits to the
governing body a certificate for an exemption from ad valorem
taxation [a limitation on appraised value] of the property.
(f) The governing body may approve an application only if
the governing body finds that the information in the application is
true and correct, finds that the applicant is eligible for the
exemption from ad valorem taxation [limitation on the appraised
value] of the person's qualified property, and determines that
granting the application is in the best interest of the school
district and this state.
(h) After receiving a request from the school district [copy
of the application], the comptroller shall determine whether the
property meets the requirements of Section 313.024 for eligibility
for an exemption from ad valorem taxation [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 an exemption from ad valorem taxation [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 certificate for an
exemption from ad valorem taxation [a limitation on appraised
value] of the property or a written explanation of the decision not
to issue a certificate, and the governing body of the school
district may not grant the application.
SECTION 15. Sections 313.026(a), (b), (c), and (d), Tax
Code, are amended to read as follows:
(a) The economic impact evaluation of the application must
include any information the comptroller determines is necessary or
helpful to:
(1) the governing body of the school district in
determining whether to approve the application under Section
313.025; or
(2) the comptroller in determining whether to issue a
certificate for an exemption from ad valorem taxation [a limitation
on appraised value] of the property under Section 313.025.
(b) Except as provided by Subsections (c) and (d), the
comptroller's determination whether to issue a certificate for an
exemption from ad valorem taxation [a limitation on appraised
value] under this chapter for property described in the application
shall be based on the economic impact evaluation described by
Subsection (a) and on any other information available to the
comptroller, including information provided by the governing body
of the school district.
(c) The comptroller may not issue a certificate for an
exemption from ad valorem taxation [a limitation on appraised
value] under this chapter for property described in an application
unless the comptroller determines that:
(1) the project proposed by the applicant is
reasonably likely to generate, before the 25th anniversary of the
beginning of the exemption [limitation] period, tax revenue,
including state tax revenue, school district maintenance and
operations ad valorem tax revenue attributable to the project, and
any other tax revenue attributable to the effect of the project on
the economy of the state, in an amount sufficient to offset the
school district maintenance and operations ad valorem tax revenue
lost as a result of the agreement; [and]
(2) the exemption [limitation on appraised value] is a
determining factor in the applicant's decision to invest capital
and construct the project in this state; and
(3) the exemption will not financially harm the school
district in which the property is located.
(d) The comptroller shall state in writing the basis for the
determinations made under Subsections (c)(1), [and] (2), and (3).
SECTION 16. Section 313.0265, Tax Code, is amended to read
as follows:
Sec. 313.0265. DISCLOSURE OF EXEMPTION [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 exemption from ad valorem taxation [appraised
value limitation] expires.
(b) The comptroller shall designate the following as
substantive:
(1) each application requesting an exemption from ad
valorem taxation [a limitation on appraised value]; and
(2) the economic impact evaluation made in connection
with the application.
(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 exempt
property from ad valorem taxation under this chapter [limit
appraised value] is maintained.
SECTION 17. The heading to Section 313.027, Tax Code, is
amended to read as follows:
Sec. 313.027. EXEMPTION OF PROPERTY FROM AD VALOREM
TAXATION [LIMITATION ON APPRAISED VALUE]; AGREEMENT.
SECTION 18. Sections 313.027(a), (a-1), (d), (e), (f), (i),
and (j), Tax Code, are amended to read as follows:
(a) If the person's application is approved by the governing
body of the school district, the portion of 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 that arises from the project is exempt from
[may not exceed the lesser of]:
(1) the district's tier one maintenance and operations
tax rate described by Section 45.0032(a), Education Code [market
value of the property]; and [or]
(2) the portion of the district's enrichment tax rate
described by Section 45.0032(b)(2), Education Code [subject to
Subsection (b), the amount agreed to by the governing body of the
school district].
(a-1) The agreement must:
(1) specify the period for which [provide that] the
exemption from ad valorem taxation [limitation] under Subsection
(a) applies, which may not exceed [for a period of] 10 years; and
(2) specify the beginning date of the exemption
[limitation], which must be January 1 of the first tax year that
begins after:
(A) the application date;
(B) the qualifying time period; or
(C) the following applicable date:
(i) in the case of a project involving the
construction of a new building or the erection or affixing of a new
improvement, the date commercial operations begin at the site of
the project; or
(ii) in the case of a project involving the
renovation, expansion, or other improvement of an existing building
or improvement, the date the renovation, expansion, or other
improvement is completed.
(d) The governing body of the school district and the
property owner shall enter into a written agreement for the
implementation of the exemption from ad valorem taxation
[limitation on appraised value] under this subchapter of [on] the
owner's qualified property.
(e) The agreement must describe with specificity the
qualified investment that the person will make on or in connection
with the person's qualified property that is subject to the
exemption from ad valorem taxation [limitation on appraised value]
under this subchapter. Other property of the person that is not
specifically described in the agreement is not subject to the
exemption [limitation] unless the governing body of the school
district, by official action, provides that the other property is
subject to the exemption [limitation].
(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 five years after
the date the exemption from ad valorem taxation [limitation on
appraised value] of the owner's property expires;
(4) 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) 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;
(6) must specify the ad valorem tax years covered by
the agreement; and
(7) must be in a form approved by the comptroller.
(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 or any other entity on behalf of a
school district [in an amount that exceeds an amount equal to the
greater of $100 per student per year in average daily attendance, as
defined by Section 48.005, Education Code, or $50,000 per year, or
for a period that exceeds the period beginning with the period
described by Section 313.021(4) and ending December 31 of the third
tax year after the date the person's eligibility for a limitation
under this chapter expires]. This subsection [limit] does not:
(1) apply to payments provided under [amounts
described by] Subsection (f)(2); or
(2) prohibit a person from voluntarily providing
supplemental payments to the school district or another entity on
behalf of the district [(f)(1) or (2)].
(j) An agreement under this chapter must disclose any
consideration promised in conjunction with the application and the
exemption from ad valorem taxation and stipulate that all
obligations of the parties to the agreement are stated in the
agreement. Any separate agreement between the parties that imposes
any additional obligation on either party is void [limitation].
SECTION 19. Section 313.0275(b), Tax Code, is amended to
read as follows:
(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 multiplying the amount of
the exemption from ad valorem taxation under this subchapter
[subtracting from the market value] of the property for that tax
year by the sum of the school district's tier one maintenance and
operations tax rate described by Section 45.0032(a), Education
Code, and the portion of the district's enrichment tax rate
described by Section 45.0032(b)(2) of that code [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.
SECTION 20. Subchapter B, Chapter 313, Tax Code, is amended
by adding Section 313.0277 to read as follows:
Sec. 313.0277. PAYMENT TO STATE BASED ON DIFFERENCE BETWEEN
AD VALOREM TAX BENEFIT RECEIVED AND WAGES AND OTHER COMPENSATION
PAID. (a) A person with whom a school district enters into an
agreement under this subchapter is liable to this state for an
amount equal to the difference between:
(1) the product of:
(A) 10 percent of the amount of the exemption
from ad valorem taxation under this subchapter of the property
subject to the agreement for the current tax year; and
(B) the sum of the school district's tier one
maintenance and operations tax rate described by Section
45.0032(a), Education Code, and the portion of the district's
enrichment tax rate described by Section 45.0032(b)(2) of that code
for the current tax year; and
(2) the sum of:
(A) the total amount of wages paid during the
current tax year to employees of the person holding jobs created at
the site of the project covered by the agreement; and
(B) 50 percent of the total amount of nonemployee
compensation paid during the current tax year to independent
contractors for construction or other work performed at the site of
the project covered by the agreement as reported on Internal
Revenue Service Form 1099-MISC or any subsequent form with a
different number or designation that substantially provides the
same information.
(b) An amount imposed under Subsection (a) becomes
delinquent if not paid on or before February 1 of the following tax
year. Section 33.01 applies to the delinquent amount in the manner
that section applies to delinquent taxes.
(c) The comptroller shall deposit an amount collected under
this section, including any interest and penalty applicable to the
amount, to the credit of the foundation school fund. Money
deposited under this subsection may be used only to supplement the
funds allocated to school districts under Section 48.106, Education
Code.
SECTION 21. Section 313.028, Tax Code, is amended to read as
follows:
Sec. 313.028. CERTAIN BUSINESS INFORMATION CONFIDENTIAL.
Information provided to a school district or the comptroller in
connection with an application for an exemption from ad valorem
taxation [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 22. Section 313.030, Tax Code, is amended to read as
follows:
Sec. 313.030. PROPERTY NOT ELIGIBLE FOR TAX ABATEMENT.
Property subject to an exemption from ad valorem taxation [a
limitation on appraised value] in a tax year under this subchapter
is not eligible for tax abatement by a school district under Chapter
312 in that tax year.
SECTION 23. Section 313.031, Tax Code, is amended to read as
follows:
Sec. 313.031. RULES AND FORMS[; FEES]. [(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 an exemption from ad valorem taxation [a
limitation on appraised value] under this subchapter.
[(b) The governing body of a school district by official
action shall establish reasonable nonrefundable application fees
to be paid by property owners who apply to the district for a
limitation on the appraised value of the person's property under
this subchapter. The amount of an application fee must be
reasonable and may not exceed the estimated cost to the district of
processing and acting on an application, including any cost to the
school district associated with the economic impact evaluation
required by Section 313.025.]
SECTION 24. Sections 313.032(a), (c), and (d), Tax Code,
are amended 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 information described by
Subdivision (2) [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 total amount of investment in this
state;
[(D) 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 on the state and
local governments]; and
(2) an assessment of the progress of each agreement
made under this chapter that states for each agreement:
(A) the number of [qualifying] jobs each
recipient of an exemption from ad valorem taxation created at the
project site by the following categories:
(i) construction jobs;
(ii) operations jobs held by employees of
the recipient; and
(iii) operations jobs held by independent
contractors [a limitation on appraised value committed to create];
(B) the total amount of wages paid by [number of
qualifying jobs] each recipient to persons holding jobs described
by Paragraph (A), by category listed in that paragraph [created];
(C) [the total amount of wages and the median
wage of the new qualifying jobs each recipient created;
[(D)] the amount of the qualified investment each
recipient committed to spend or allocate for each project;
(D) [(E)] the amount of the qualified investment
each recipient spent or allocated for each project;
(E) the total market value of all of the property
related to the project covered by the agreement as determined by the
applicable chief appraiser, regardless of whether the property is
qualified property;
(F) the market value of the portion of the
qualified property of each recipient as determined by the
applicable chief appraiser that is currently eligible for an
exemption from ad valorem taxation[, including property that is no
longer eligible for a limitation on appraised value] under the
agreement;
(G) [the limitation on appraised value for the
qualified property of each recipient;
[(H)] the dollar amount of the taxes that would
have been imposed on the [qualified] property related to the
project, regardless of whether the property is qualified property,
if the qualified property had not received an exemption from ad
valorem taxation [a limitation on appraised value]; [and]
(H) [(I)] the dollar amount of the taxes imposed
on the [qualified] property related to the project, regardless of
whether the property is qualified property; and
(I) the difference between the amount described
by Paragraph (G) and the amount described by Paragraph (H).
(c) The portion of the report described by Subsection (a)(2)
must be based on data certified to the comptroller by each recipient
or former recipient of an exemption from ad valorem taxation [a
limitation on appraised value] under this chapter. The comptroller
shall verify a random sample of the data submitted under this
section using information from the Texas Workforce Commission, the
chief appraiser of the applicable appraisal district, or other
sources the comptroller considers reliable. The random sample used
to verify data under this section must constitute not less than 33
percent of the data used by the comptroller to prepare the report.
Information provided under this section that contains personal
identifying information of an individual is confidential and not
subject to disclosure under Chapter 552, Government Code, or
Chapter 111, Tax Code.
(d) The comptroller may require a recipient or former
recipient of an exemption from ad valorem taxation [a limitation on
appraised value] under this chapter to submit, on a form the
comptroller provides, information required to complete the report.
SECTION 25. Section 313.033, Tax Code, is amended to read as
follows:
Sec. 313.033. ANNUAL REPORT BY RECIPIENT OF EXEMPTION [ON
COMPLIANCE WITH JOB-CREATION REQUIREMENTS]. Each recipient of an
exemption from ad valorem taxation [a limitation on appraised
value] under this chapter shall submit to the comptroller an annual
report on a form provided by the comptroller that provides the
following information with regard to each agreement entered into by
the recipient under this chapter:
(1) the number of jobs the recipient created at the
project site by the following categories:
(A) construction jobs;
(B) operations jobs held by employees of the
recipient; and
(C) operations jobs held by independent
contractors;
(2) the total amount of wages paid by the recipient to
persons holding jobs described by Subdivision (1), by category
listed in that subdivision;
(3) the amount of the qualified investment the
recipient committed to spend or allocate for the project;
(4) the amount of the qualified investment the
recipient spent or allocated for the project;
(5) the total market value of all of the property
related to the project covered by the agreement as determined by the
applicable chief appraiser, regardless of whether the property is
qualified property;
(6) the market value of the portion of the qualified
property of the recipient as determined by the applicable chief
appraiser that is currently eligible for an exemption from ad
valorem taxation under the agreement;
(7) the dollar amount of the taxes that would have been
imposed on the property related to the project, regardless of
whether the property is qualified property, if the qualified
property had not received an exemption from ad valorem taxation;
(8) the dollar amount of the taxes imposed on the
property related to the project, regardless of whether the property
is qualified property; and
(9) the difference between the amount described by
Subdivision (7) and the amount described by Subdivision (8)
[sufficient to document the number of qualifying jobs created].
SECTION 26. Section 313.171, Tax Code, is amended by
amending Subsection (a) and adding Subsection (a-1) to read as
follows:
(a) An exemption from ad valorem taxation [A limitation on
appraised value] approved under Subchapter B [or C] before the
expiration of that subchapter continues in effect according to that
subchapter as that subchapter existed immediately before its
expiration, and that law is continued in effect for purposes of the
exemption [limitation on appraised value].
(a-1) A limitation on appraised value approved under
Subchapter C 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.
SECTION 27. Section 48.202(b), Education Code, is amended
to read as follows:
(b) In computing the district enrichment tax rate of a
school district, the total amount of maintenance and operations
taxes collected by the school district does not include the amount
of:
(1) the district's local fund assignment under Section
48.256; [or]
(2) taxes paid into a tax increment fund under Chapter
311, Tax Code; or
(3) taxes attributable to the application of the
portion of the district's enrichment tax rate described by Section
45.0032(b)(1) of this code to the portion of the appraised value of
property that is otherwise exempt from ad valorem taxation under
Subchapter B, Chapter 313, Tax Code.
SECTION 28. Section 48.2551(a), Education Code, is amended
to read as follows:
(a) In this section:
(1) "DPV" has the meaning assigned by Section 48.256;
(2) "E" is the expiration of the exclusion of
appraised property value for the preceding tax year that is
recognized as taxable property value for the current tax year,
which is the sum of the following:
(A) property value that is no longer subject to
an exemption from ad valorem taxation [a limitation on appraised
value] under Chapter 313, Tax Code; and
(B) property value under Section 311.013(n), Tax
Code, that is no longer excluded from the calculation of "DPV" from
the preceding year because of refinancing or renewal after
September 1, 2019;
(3) "MCR" is the district's maximum compressed rate,
which is the tax rate for the current tax year per $100 of valuation
of taxable property at which the district must levy a maintenance
and operations tax to receive the full amount of the tier one
allotment to which the district is entitled under this chapter;
(4) "PYDPV" is the district's value of "DPV" for the
preceding tax year; and
(5) "PYMCR" is the district's value of "MCR" for the
preceding tax year.
SECTION 29. Sections 48.256(d) and (e), Education Code, are
amended to read as follows:
(d) This subsection applies to a school district in which
the board of trustees entered into a written agreement with a
property owner under Section 313.027, Tax Code, for the
implementation of an exemption from ad valorem taxation [a
limitation on appraised value] under Subchapter B [or C], Chapter
313, Tax Code, a limitation on appraised value under Subchapter B,
Chapter 313, Tax Code, as that subchapter existed before September
1, 2021, or a limitation on appraised value under former Subchapter
C, Chapter 313, Tax Code. For purposes of determining "DPV" under
Subsection (a) for a school district to which this subsection
applies, the commissioner shall exclude a portion of the market
value of property not otherwise fully taxable by the district under
Subchapter B [or C], Chapter 313, Tax Code, before the expiration of
the subchapter or former Subchapter C, Chapter 313, Tax Code,
before the repeal of that subchapter. The comptroller shall
provide information to the agency necessary for this subsection.
[A revenue protection payment required as part of an agreement for a
limitation on appraised value shall be based on the district's
taxable value of property for the preceding tax year.]
(e) Subsection (d) does not apply to property that was the
subject of an application under Subchapter B or former Subchapter
C, Chapter 313, Tax Code, made after May 1, 2009, that the
comptroller recommended should be disapproved.
SECTION 30. Section 2303.507, Government Code, is amended
to read as follows:
Sec. 2303.507. TAX INCREMENT FINANCING AND ABATEMENT;
EXEMPTIONS FROM AD VALOREM TAXATION [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;
(2) tax abatement under Chapter 312, Tax Code; and
(3) exemptions from ad valorem taxation [limitations
on appraised value] under Chapter 313, Tax Code.
SECTION 31. The following provisions of the Tax Code are
repealed:
(1) Section 313.006;
(2) Section 313.009;
(3) Sections 313.021(3) and (5);
(4) Sections 313.024(d) and (d-2);
(5) Sections 313.024(e)(3), (4), and (6);
(6) Section 313.025(f-1);
(7) Sections 313.027(b), (c), and (g);
(8) Section 313.0276;
(9) Section 313.032(b-1); and
(10) Subchapter C, Chapter 313.
SECTION 32. 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 33. This Act takes effect September 1, 2021.
[CATEGORY TAXABLE VALUE OF PROPERTY
[I $10 billion or more
[II $1 billion or more but less than $10 billion
[III $500 million or more but less than $1 billion
[IV $100 million or more but less than $500 million
[V less than $100 million]
CATEGORY MINIMUM QUALIFIED INVESTMENT
I $10 [$100] million
II $50 [$80] million
[III $60 million
[IV $40 million
[V $20 million]