87R24087 SMH-D
By: Murphy, Burrows, Moody, Shine H.B. No. 1556
Substitute the following for H.B. No. 1556:
By: Shine C.S.H.B. No. 1556
A BILL TO BE ENTITLED
AN ACT
relating to the Texas Economic Development Act; requiring the
imposition of an authorized fee and changing the amounts of certain
fees.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 313.007, Tax Code, is amended to read as
follows:
Sec. 313.007. EXPIRATION. Subchapters B and C expire
December 31, 2032 [2022].
SECTION 2. Sections 313.021(1) and (2), Tax Code, are
amended to read as follows:
(1) "Qualified investment" means:
(A) tangible personal property that is first
placed in service in this state during the applicable qualifying
time period that begins on or after January 1, 2002, without regard
to whether the property is affixed to or incorporated into real
property, and that is described as Section 1245 property by Section
1245(a), Internal Revenue Code of 1986;
(B) tangible personal property that is first
placed in service in this state during the applicable qualifying
time period that begins on or after January 1, 2002, without regard
to whether the property is affixed to or incorporated into real
property, and that is used in connection with the manufacturing,
processing, or fabrication in a cleanroom environment of a
semiconductor product, without regard to whether the property is
actually located in the cleanroom environment, including:
(i) integrated systems, fixtures, and
piping;
(ii) all property necessary or adapted to
reduce contamination or to control airflow, temperature, humidity,
chemical purity, or other environmental conditions or
manufacturing tolerances; and
(iii) production equipment and machinery,
moveable cleanroom partitions, and cleanroom lighting;
(C) tangible personal property that is first
placed in service in this state during the applicable qualifying
time period that begins on or after January 1, 2002, without regard
to whether the property is affixed to or incorporated into real
property, and that is used in connection with the operation of a
nuclear electric power generation facility, including:
(i) property, including pressure vessels,
pumps, turbines, generators, and condensers, used to produce
nuclear electric power; and
(ii) property and systems necessary to
control radioactive contamination;
(D) tangible personal property that is first
placed in service in this state during the applicable qualifying
time period that begins on or after January 1, 2002, without regard
to whether the property is affixed to or incorporated into real
property, and that is used in connection with operating an
integrated gasification combined cycle electric generation
facility, including:
(i) property used to produce electric power
by means of a combined combustion turbine and steam turbine
application using synthetic gas or another product produced by the
gasification of coal or another carbon-based feedstock; or
(ii) property used in handling materials to
be used as feedstock for gasification or used in the gasification
process to produce synthetic gas or another carbon-based feedstock
for use in the production of electric power in the manner described
by Subparagraph (i);
(E) tangible personal property that is first
placed in service in this state during the applicable qualifying
time period that begins on or after January 1, 2010, without regard
to whether the property is affixed to or incorporated into real
property, and that is used in connection with operating an advanced
clean energy project, as defined by Section 382.003, Health and
Safety Code; [or]
(F) a building or a permanent, nonremovable
component of a building that is built or constructed during the
applicable qualifying time period that begins on or after January
1, 2002, and that houses tangible personal property described by
Paragraph (A), (B), (C), (D), or (E); or
(G) a building or a permanent, nonremovable
component of a building that, as part of a discrete project that
increases the value of the building or component, is renovated,
expanded, modernized, or otherwise improved during the applicable
qualifying time period that begins on or after January 1, 2023, and
that houses tangible personal property described by Paragraph (A),
(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 a limitation on appraised
value under this subchapter; or
(b) renovate, expand, modernize, 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, modernized, or
improved building, or in or on the new or newly renovated, expanded,
modernized, 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.
SECTION 3. Section 313.024(c), Tax Code, is amended to read
as follows:
(c) For purposes of determining an applicant's eligibility
for a limitation under this subchapter:
(1) the land on which a building or component of a
building described by Section 313.021(1)(F) or (G) [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; and
(5) a building or component of a building that is
renovated, expanded, modernized, or otherwise improved as
described by Section 313.021(1)(G) is not considered a qualified
investment unless:
(A) the building or component would qualify as a
qualified investment if the building or component were to be built
or constructed during the applicable qualifying time period; and
(B) the agreement between the property owner and
the school district describes with specificity as required by
Section 313.027(e) the manner in which the building or component
will be renovated, expanded, modernized, or otherwise improved.
SECTION 4. Section 313.025, Tax Code, is amended by
amending Subsections (a), (a-1), and (b) 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 governing body of the
school district in which the property is located for a limitation on
the appraised value for school district maintenance and operations
ad valorem tax purposes of the person's qualified property. An
application must be made on the form prescribed by the comptroller
and [include the information required by the comptroller, and it
must] be accompanied by a [:
[(1) the application] fee in the amount of $60,000
payable to [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;
(6) for each ad valorem tax year covered by the
proposed agreement between the applicant and the school district:
(A) an estimate of the amount of the qualified
investment to be spent or allocated for the project;
(B) the number of qualifying jobs the applicant
commits to create and the total amount of wages that will be paid to
the persons holding those jobs;
(C) an estimate of the appraised value of the
project if the project were not subject to the proposed agreement;
(D) an estimate of the amount of ad valorem taxes
for maintenance and operations and for debt that would be imposed by
the school district on the project if the project were not subject
to the proposed agreement;
(E) an estimate of the appraised value of the
project for school district maintenance and operations ad valorem
tax purposes as determined in accordance with the proposed
agreement; and
(F) an estimate of the amount of ad valorem taxes
for maintenance and operations that will be imposed by the school
district on the project as determined in accordance with the
proposed agreement; and
(7) any information that the comptroller:
(A) requires for the purposes of Section 313.026;
or
(B) otherwise determines to be necessary to
determine the applicant's eligibility for a limitation on appraised
value.
(a-2) Within seven days of the receipt of each document, the
school district shall submit to the 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 school district, the district shall
submit a copy of the analysis to the comptroller. In addition, the
school district shall submit to the comptroller any subsequent
revision of or amendment to any of those documents within seven days
of its receipt. The comptroller shall publish each document
received from the school district under this subsection on the
comptroller's Internet website. If the school district maintains a
generally accessible Internet website, the district shall provide
on its website a link to the location of those documents posted on
the comptroller's website in compliance with this subsection. This
subsection does not require the comptroller to post information
that is confidential under Section 313.028.
(b) The governing body of a school district is not required
to consider an application for a limitation on appraised value. If
the governing body of the school district elects not to consider the
application, the governing body shall refund $10,000 of the payment
described by Subsection (a) to the applicant. If the governing body
of the school district elects to consider an application, the
governing body shall deliver a copy of the application and $10,000
of the payment described by Subsection (a) 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 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.
SECTION 5. Sections 313.027(a-1), (f), and (i), Tax Code,
are amended to read as follows:
(a-1) The agreement must:
(1) provide that the limitation under Subsection (a)
applies for a period of 10 years; and
(2) specify the beginning date of the 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, modernization, or other improvement of an
existing building or improvement, the date the renovation,
expansion, modernization, or other improvement is completed.
(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) must require the property owner to provide a
stabilization payment to the school district in each tax year
during the period for which the limitation under Subsection (a)
applies in an amount equal to a portion, not to exceed 38 percent,
as specified by the agreement of the amount computed by subtracting
from the market value of the person's qualified property as
described in the agreement for that tax year the value of the
property as limited by the agreement and multiplying the difference
by the maintenance and operations tax rate of the school district
for that tax year [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 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 pursuant to an application filed on or after January 1,
2023, under which the person agrees to provide supplemental
payments to a school district or any other entity on behalf of a
school district. A stabilization payment as described by
Subsection (f)(2) is not considered to be a supplemental payment
for purposes of an agreement entered into by a person and a school
district pursuant to an application filed before January 1, 2023,
under which the person agrees to provide supplemental payments to
the school district or another entity on behalf of the 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 limit does not apply to amounts described by
Subsection (f)(1) or (2)].
SECTION 6. Section 313.0276(e), Tax Code, is amended to
read as follows:
(e) Notwithstanding Subsections (c) and (d), a penalty
imposed under this section may not exceed an amount equal to the
difference between the amount of the ad valorem tax benefit
received by the person under the agreement in the preceding year and
the amount of any stabilization [supplemental] payments as
described by Section 313.027(f)(2) made to the school district in
that year.
SECTION 7. The heading to Section 313.031, Tax Code, is
amended to read as follows:
Sec. 313.031. RULES AND FORMS[; FEES].
SECTION 8. Section 313.031, Tax Code, is amended by adding
Subsection (a-1) to read as follows:
(a-1) The comptroller shall adopt a single annual reporting
form to be used by a recipient or former recipient of a limitation
on appraised value under this chapter for the purpose of submitting
information necessary for the comptroller to complete the reports
required by this chapter. A recipient or former recipient shall
submit the form to the applicable school district at the same time
the recipient or former recipient submits the form to the
comptroller. This subsection does not apply to the form described
by Section 313.033.
SECTION 9. Section 313.032(a), Tax Code, is 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 following with regard to the
agreements entered into under this chapter, considered in the
aggregate, from the year in which each agreement was entered into to
the most recent year for which actual data is available:
(A) the total number of qualifying 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 qualified investment in
this state;
(C) [(D)] the total taxable value for purposes of
school district ad valorem taxes for maintenance and operations and
for debt of property on the tax rolls in this state, including
property for which the limitation period has expired, and the total
amount of school district ad valorem taxes for maintenance and
operations and for debt imposed on that property;
(D) [(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 the total amount of school district maintenance
and operations ad valorem taxes that would have been imposed on that
value if that value were on the tax rolls; and
(E) the total amount of stabilization payments as
described by Section 313.027(f)(2) made to school districts
[(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 from the year
in which the agreement was entered into to the most recent year for
which actual data has been certified:
(A) the number of qualifying jobs each recipient
of a limitation on appraised value committed to create;
(B) the number of qualifying jobs each recipient
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;
(E) the amount of the qualified investment each
recipient spent or allocated for each project;
(F) the market value of the qualified property of
each recipient as determined by the applicable chief appraiser,
including property that is no longer eligible for a limitation on
appraised value under the agreement;
(G) the limitation on appraised value for the
qualified property of each recipient;
(H) the dollar amount of the school district ad
valorem taxes for maintenance and operations and for debt that
would have been imposed on the qualified property if the property
had not received a limitation on appraised value; [and]
(I) the dollar amount of the school district ad
valorem taxes for maintenance and operations and for debt imposed
on the qualified property; and
(J) the amount of stabilization payments as
described by Section 313.027(f)(2) each recipient made to the
applicable school district.
SECTION 10. Section 48.256(d), Education Code, is 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 a limitation on appraised value under Subchapter
B or 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. The comptroller shall provide information to the
agency necessary for this subsection. A revenue protection payment
described by Section 313.027(f)(1), Tax Code, as that subdivision
existed before January 1, 2023, 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.
SECTION 11. The following provisions of the Tax Code are
repealed:
(1) Section 313.031(b); and
(2) Section 313.032(b-1).
SECTION 12. (a) The changes in law made by this Act apply
only to an agreement entered into under Chapter 313, Tax Code,
pursuant to an application filed under that chapter on or after the
effective date of this Act. An agreement entered into under that
chapter pursuant to an application 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.
(b) The change in law made by this Act to Section 48.256(d),
Education Code, applies beginning with the 2023-2024 school year.
SECTION 13. This Act takes effect January 1, 2023.