88R27961 E
By: Hunter, Meyer, Burrows, Shine, Longoria, H.B. No. 5
et al.
Substitute the following for H.B. No. 5:
By: Shine C.S.H.B. No. 5
A BILL TO BE ENTITLED
AN ACT
relating to agreements authorizing a limitation on taxable value on
certain property to provide for the creation of jobs and the
generation of state and local tax revenue; authorizing fees;
authorizing a penalty.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 403, Government Code, is amended by
adding Subchapter T to read as follows:
SUBCHAPTER T. AGREEMENTS TO CREATE JOBS AND GENERATE STATE AND
LOCAL TAX REVENUE
Sec. 403.601. PURPOSES. The purposes of this subchapter
are to:
(1) create new, high-paying permanent jobs and
construction jobs in this state;
(2) encourage financially positive economic
development in this state;
(3) provide a temporary competitive economic
incentive for attracting large-scale manufacturing projects to
this state that, in the absence of this subchapter, would likely
locate in another state or nation;
(4) strengthen the security and resource independence
of this state and nation by encouraging energy and water
infrastructure development, new and expanded electric power
generation, and electric grid reliability projects;
(5) promote the relocation of offshore manufacturing
facilities to this state;
(6) make this state a national and international
leader in new and innovative technologies;
(7) encourage the establishment of advanced
manufacturing industry sectors critical to national defense and
health care;
(8) create new wealth, raise personal income, and
foster long-term expansion of state and local tax bases;
(9) provide growing and sustainable economic
opportunity for the residents of this state; and
(10) incentivize the preceding objectives in a
balanced, transparent, and accountable manner.
Sec. 403.602. DEFINITIONS. In this subchapter:
(1) "Additional job" means a full-time job in
connection with an eligible project that is not a required job for
the same project.
(2) "Agreement" means an agreement entered into under
Section 403.612.
(3) "Applicant" means a person that applies for, or
enters into an agreement providing for, a limitation on the taxable
value of eligible property used as part of an eligible project,
including the person's assignees or successors-in-interest.
(4) "Appraised value," "tax year," and "taxing unit"
have the meanings assigned by Section 1.04, Tax Code.
(5) "Construction completion date" means the date on
which an eligible project is first capable of being used for the
purposes for which it is constructed.
(6) "Construction job" means an otherwise full-time
job that is temporary in nature and is performed before the start of
the incentive period applicable to an eligible project to perform
construction, maintenance, remodeling, or repair work for an
applicant in connection with the project.
(7) "Construction period" means the period prescribed
by an agreement as the construction period of the eligible project
that is the subject of the agreement.
(8) "Eligible project" means a project that:
(A) is a national or state security project or
supply chain infrastructure project;
(B) is a manufacturing project; or
(C) requires an investment in a school district
in this state of more than $1 billion.
(9) "Eligible property" means property, other than
property used for intermittent power generation to supply
electricity to the power grid, that is used as part of an eligible
project that is wholly owned by an applicant or leased by an
applicant under a capitalized lease and consists of:
(A) a new building or expansion of an existing
building, including a permanent, nonremovable component of a
building, that is:
(i) constructed after the date the
agreement pertaining to the project is entered into; and
(ii) located in an area designated as a
reinvestment zone under Chapter 311 or 312, Tax Code, or as an
enterprise zone under Chapter 2303 of this code, at the time the
agreement pertaining to the project is entered into; or
(B) tangible personal property, other than
inventory, first located in the zone described by Paragraph (A)(ii)
after the date the agreement pertaining to the project is entered
into.
(10) "Full-time job" means a permanent full-time job
that requires a total of at least 1,600 hours of work a year in
connection with an eligible project.
(11) "Grid reliability project" means a project:
(A) that generates base load or dispatchable
electricity for the power grid, including from thermal sources, or
that provides stored energy to the power grid from batteries,
regardless of power source;
(B) that increases the output capacity or
reliability of an existing dispatchable electric power generation
facility or that replaces dispatchable electric power generation
assets to extend the useful life of the facility, including
equipment that enables the use of multiple fuels;
(C) that creates or expands the capability to
store fuel used by an electric power generation facility,
regardless of whether the fuel is stored at the facility site;
(D) to produce hydrogen fuel or feed stock;
(E) that is a natural gas terminal or storage
facility; or
(F) that is a gas processing plant, including a
plant used in the processing, treatment, or fractionation of
natural gas.
(12) "Incentive period" for an eligible project means
the period prescribed by the agreement pertaining to the project
during which the eligible property used as part of the project is
subject to a limitation on taxable value.
(13) "Independent contractor" has the meaning
assigned by Section 406.121, Labor Code.
(14) "Investment" means the costs incurred by an
applicant to acquire or construct eligible property composing an
eligible project, other than the cost of land or inventory.
(15) "Manufacturing project" means a project
primarily engaged in activities described by Sectors 31-33 of the
2007 North American Industry Classification System, including
semiconductor fabrication cleanrooms and equipment as defined by
Section 151.318(q), Tax Code.
(16) "Metropolitan statistical area" means an area so
designated by the United States Office of Management and Budget.
(17) "National or state security project or supply
chain infrastructure project" means:
(A) a grid reliability project; or
(B) a seawater or brackish groundwater
desalination project.
(18) "Required job" means a job that an applicant
commits to create or demonstrate in connection with an eligible
project as prescribed by Section 403.604.
(19) "Total jobs" means the sum of required jobs and
additional jobs in connection with an eligible project.
Sec. 403.603. EXPIRATION. This subchapter expires December
31, 2036.
Sec. 403.604. REQUIRED JOBS AND INVESTMENT. (a) This
section does not apply to a national or state security project or
supply chain infrastructure project.
(b) To be eligible to enter into an agreement, an applicant
for a limitation on taxable value of eligible property to be used
for a proposed eligible project must agree to:
(1) if the project is to be located in a school
district with a taxable value of property of $10 billion or more for
the tax year preceding the year in which the applicant submits the
application as determined under Subchapter M:
(A) create at least 50 required jobs by the end of
the first tax year of the incentive period prescribed by the
agreement and demonstrate an average of at least that number of jobs
during each following tax year until the date the agreement
expires; and
(B) make an investment in the project in an
amount of at least $100 million before the incentive period begins;
(2) if the project is to be located in a school
district with a taxable value of property of at least $1 billion but
less than $10 billion for the tax year preceding the year in which
the applicant submits the application as determined under
Subchapter M:
(A) create at least 40 required jobs by the end of
the first tax year of the incentive period prescribed by the
agreement and demonstrate an average of at least that number of jobs
during each following tax year until the date the agreement
expires; and
(B) make an investment in the project in an
amount of at least $80 million before the incentive period begins;
(3) if the project is to be located in a school
district with a taxable value of property of at least $500 million
but less than $1 billion for the tax year preceding the year in
which the applicant submits the application as determined under
Subchapter M:
(A) create at least 25 required jobs by the end of
the first tax year of the incentive period prescribed by the
agreement and demonstrate an average of at least that number of jobs
during each following tax year until the date the agreement
expires; and
(B) make an investment in the project in an
amount of at least $50 million before the incentive period begins;
(4) if the project is to be located in a school
district with a taxable value of property of at least $100 million
but less than $500 million for the tax year preceding the year in
which the applicant submits the application as determined under
Subchapter M:
(A) create at least 10 required jobs by the end of
the first tax year of the incentive period prescribed by the
agreement and demonstrate an average of at least that number of jobs
during each following tax year until the date the agreement
expires; and
(B) make an investment in the project in an
amount of at least $25 million before the incentive period begins;
or
(5) if the project is to be located in a school
district with a taxable value of property of less than $100 million
for the tax year preceding the year in which the applicant submits
the application as determined under Subchapter M or in a school
district that is not located in a metropolitan statistical area:
(A) create at least five required jobs by the end
of the first tax year of the incentive period prescribed by the
agreement and demonstrate an average of at least that number of jobs
during each following tax year until the date the agreement
expires; and
(B) make an investment in the project in an
amount of at least $10 million before the incentive period begins.
(c) For purposes of Subsection (b), each required job
created in connection with an eligible project:
(1) must be a new full-time job in this state:
(A) maintained in the usual course and scope of
the applicant's business, which may be performed by an individual
who is a trainee under the Texans Work program established under
Chapter 308, Labor Code; or
(B) performed by an independent contractor and
the independent contractor's employees at the site of the project;
and
(2) may not be transferred by the applicant from an
existing facility or location in this state or otherwise created to
replace an existing job, unless the applicant fills the vacancy
caused by the transfer.
(d) For purposes of Subsection (b), an applicant may count
as a required job one construction job credit. An applicant is
entitled to one construction job credit in connection with an
eligible project for every 10 construction jobs created in
connection with the project before the date the incentive period
for the project begins. An applicant may elect to determine the
number of construction jobs for purposes of this subsection as the
quotient of:
(1) the total amount paid by the applicant for labor in
connection with construction of the project before the incentive
period for the project begins, as evidenced by:
(A) separated charges for labor services on
contractor invoices; or
(B) other documentation from contractors of the
cost of labor performed under lump-sum contracts; and
(2) the average annual wage for all jobs in the county
in which the project is primarily located during the most recent
four quarters for which data is available, as computed by the Texas
Workforce Commission.
(e) For purposes of calculating the applicable number of
required jobs under Subsection (b) in connection with an eligible
project, an applicant may aggregate the number of hours worked by
one or more individuals who work fewer than 1,600 hours a year in
connection with the project if the number of hours worked by each of
those individuals combined meets or exceeds 1,600 hours of work a
year.
(f) For purposes of Subsection (b), an applicant may
demonstrate that the applicant has met the applicable minimum
investment requirement by any reasonable means. The applicant is
considered to have met the applicable minimum investment
requirement if the most recent appraisal roll for the county in
which the eligible property is located indicates that the appraised
value of the property composing the project as of January 1 of the
first year of the incentive period is equal to or greater than the
minimum investment requirement applicable to the project.
Sec. 403.605. TAXABLE VALUE OF ELIGIBLE PROPERTY. (a)
Except as provided by Subsection (b), the taxable value for school
district maintenance and operations ad valorem tax purposes of
eligible property subject to an agreement for each tax year of the
incentive period prescribed by the agreement is equal to:
(1) $100 million, if the project subject to the
agreement is located in a school district with a taxable value of
property of $10 billion or more for the tax year preceding the year
in which the applicant submitted the application to which the
agreement pertains as determined under Subchapter M;
(2) $75 million, if the project subject to the
agreement is located in a school district with a taxable value of
property of at least $1 billion but less than $10 billion for the
tax year preceding the year in which the applicant submitted the
application to which the agreement pertains as determined under
Subchapter M;
(3) $50 million, if the project subject to the
agreement is located in a school district with a taxable value of
property of at least $500 million but less than $1 billion for the
tax year preceding the year in which the applicant submitted the
application to which the agreement pertains as determined under
Subchapter M;
(4) $25 million, if the project subject to the
agreement is located in a school district with a taxable value of
property of at least $100 million but less than $500 million for the
tax year preceding the year in which the applicant submitted the
application to which the agreement pertains as determined under
Subchapter M; or
(5) $5 million, if the project subject to the
agreement is located in a school district with a taxable value of
property of less than $100 million for the tax year preceding the
year in which the applicant submitted the application to which the
agreement pertains as determined under Subchapter M.
(b) The taxable value of eligible property for school
district maintenance and operations ad valorem tax purposes for a
tax year during the incentive period is the appraised value of the
property for that tax year if that value is less than the value of
the property as determined under Subsection (a).
(c) The taxable value of eligible property for school
district maintenance and operations ad valorem tax purposes is zero
for each tax year beginning with the tax year following the year in
which the agreement pertaining to the property is entered into and
ending December 31 of the tax year that includes the construction
completion date for the applicable eligible project.
(d) The chief appraiser for the appraisal district in which
eligible property is located shall determine the market value and
appraised value of the property and include the market value,
appraised value, and taxable value of the property as determined
under this section in the appraisal records for the appraisal
district.
(e) The chief appraiser for the appraisal district in which
eligible property subject to an agreement is located may not use an
estimated value included in the application to which the agreement
pertains to determine the market value of the property.
Sec. 403.606. APPLICATION. (a) A person who proposes to
construct an eligible project in a school district may apply to the
governing body of the district to limit the taxable value for
maintenance and operations ad valorem tax purposes of the district
of the eligible property used as part of the proposed project.
(b) A person submitting an application under Subsection (a)
must use the form prescribed by the comptroller. The form must
contain the following information:
(1) the applicant's name, address, and Texas taxpayer
identification number and the contact information for the
applicant's authorized representative;
(2) the applicant's form of business and, if
applicable, the name, address, and Texas taxpayer identification
number of the applicant's parent entity;
(3) the applicable school district's name and address
and the contact information for the district's authorized
representative;
(4) the legal description of the property on which the
project is proposed to be located and, if applicable, the address of
the proposed project;
(5) the applicable number of required jobs prescribed
by Section 403.604 for the proposed project;
(6) a list of each taxing unit in which the project is
proposed to be located;
(7) a brief description of the proposed project,
including the classification of the project as designated by the
North American Industry Classification System;
(8) a brief description of the eligible property to be
used as part of the proposed project;
(9) a projected timeline for construction and
completion of the proposed project, including the projected dates
on which construction will begin, construction will be completed,
and commercial operations will start;
(10) the proposed incentive period;
(11) the name and location of the existing or proposed
reinvestment zone or enterprise zone in which the proposed project
will be located;
(12) a brief summary of the projected economic
benefits of the proposed project; and
(13) the applicant's signature and certification of
the accuracy of the information included in the application.
(c) The form prescribed by Subsection (b) must allow the
applicant to segregate confidential information described by
Section 403.622(a) from other information in the application.
(d) An applicant must include with an application the
following:
(1) an application fee payable to the school district
in an amount determined by the district not to exceed $60,000 for an
initial application, inclusive of the costs of processing the
application, retaining professional services, preparing the school
finance impact report required by Section 403.608, and, if
applicable, creating a reinvestment zone or enterprise zone;
(2) a map showing the site of the proposed project; and
(3) the economic benefit statement prepared under
Section 403.607 in connection with the proposed project.
(e) A school district that receives an application under
this section shall forward the application to the comptroller not
later than the seventh day after the date the district receives the
application.
(f) The comptroller may request that an applicant provide
any additional information the comptroller reasonably determines
is necessary to complete the comptroller's evaluation of the
application. The comptroller may require an applicant to submit
the additional information by a certain date and may extend that
deadline on a showing of good cause. The comptroller is not
required to take any further action on an application until it is
complete.
(g) The comptroller shall notify an applicant and the
pertinent school district when the applicant's application is
administratively complete.
Sec. 403.607. ECONOMIC BENEFIT STATEMENT. (a) An
applicant shall submit an economic benefit statement with the
applicant's application.
(b) An economic benefit statement must include the
following information for each year of the period that begins on the
date the applicant projects construction of the proposed project
that is the subject of the application will begin and ends on the
25th anniversary of the date the incentive period ends:
(1) an estimate of the number of total jobs that will
be created by the project;
(2) an estimate of the total amount of capital
investment that will be created by the project;
(3) an estimate of the increase in appraised value of
property that will be attributable to the project;
(4) an estimate of the amount of ad valorem taxes that
will be imposed by each taxing unit other than the school district
on the property used as part of the project;
(5) an estimate of the amount of state taxes that will
be paid in connection with the project; and
(6) an estimate of the associated economic benefits
that may reasonably be attributed to the project, including:
(A) the impact on the gross revenues and
employment levels of local businesses that provide goods or
services in connection with the project or to the applicant's
employees;
(B) the amount of state and local taxes that will
be generated as a result of the indirect economic impact of the
project, including all ad valorem taxes not otherwise estimated in
Subdivision (4) that will be imposed on property placed into
service as a result of the project;
(C) the development of complementary businesses
or industries that locate in this state as a direct consequence of
the project;
(D) the total impact of the project on the gross
domestic product of this state;
(E) the total impact of the project on personal
income in this state; and
(F) the total impact of the project on state and
local taxes.
(c) An applicant may use standard economic estimation
techniques, including economic multipliers, to create an economic
benefit statement.
(d) The comptroller shall establish criteria for the
methodology to be used by an applicant to create an economic benefit
statement.
(e) The comptroller may require an applicant to supplement
or modify an economic benefit statement to ensure the accuracy of
the estimates required to be included in the statement under
Subsection (b).
Sec. 403.608. SCHOOL FINANCE IMPACT REPORT. (a) A school
district that receives an application under this subchapter shall
promptly prepare a school finance impact report for the proposed
project that is the subject of the application.
(b) A school finance impact report must detail the projected
tax and revenue consequences for the school district of the
proposed project for each year of the 25-year period beginning on
the date the application is received by the district.
(c) A school finance impact report must include an estimate
of the amount of ad valorem taxes imposed by the school district
during the period described by Subsection (b) on the property used
as part of the proposed project, together with all related property
owned by the applicant or leased by the applicant under a
capitalized lease and placed in service as a direct result of the
project:
(1) for maintenance and operations purposes; and
(2) for interest and sinking fund purposes.
Sec. 403.609. COMPTROLLER DETERMINATION REGARDING
APPLICATION. (a) The comptroller shall determine whether to
recommend that a school district approve an application submitted
to the district under this subchapter.
(b) The comptroller shall notify an applicant and a school
district of the comptroller's determination under Subsection (a)
regarding an application submitted to the district by the applicant
not later than the 60th day after the date the comptroller
determines the application is complete.
(c) The comptroller shall recommend that a school district
approve an application submitted to the district if the comptroller
finds that:
(1) the proposed project that is the subject of the
application is an eligible project;
(2) the proposed project is reasonably likely to
generate, before the 25th anniversary of the last day of the
incentive period, state or local tax revenue, including ad valorem
tax revenue attributable to the effect of the project on the economy
of this 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
(3) the agreement is a determining factor in the
applicant's decision to make the investment and locate the project
in this state.
(d) Subsection (c)(3) does not apply to an application if
the proposed project that is the subject of the application is a
grid reliability project.
Sec. 403.610. HEARING. (a) An applicant is entitled to a
hearing if the comptroller determines not to recommend that the
applicable school district approve an application submitted by the
applicant to the district.
(b) A hearing under this section is a contested case hearing
and shall be conducted by the State Office of Administrative
Hearings in the manner provided by Section 2003.101.
(c) To receive a hearing under this section, an applicant
must file a notice of appeal with the comptroller not later than the
30th day after the date the comptroller notifies the applicant of
the comptroller's determination under Section 403.609. The
comptroller's determination becomes final if the applicant does not
file the notice of appeal as provided by this subsection.
(d) An 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.
Sec. 403.611. SCHOOL DISTRICT ACTION ON APPLICATION. (a)
The governing body of a school district shall approve or disapprove
an application submitted to the district under this subchapter that
the comptroller recommends be approved by the district. The
governing body may approve an application only if the comptroller
recommends the application be approved. The governing body shall
approve or disapprove the application not later than the 35th day
after the date the comptroller notifies the district of the
comptroller's determination under Section 403.609. The governing
body may extend the deadline prescribed by this subsection on
written request of the applicant.
(b) The governing body of a school district that disapproves
an application may propose amendments to the application and
reconsider the amended application not later than the 60th day
after the date the governing body disapproves the application. The
governing body may extend the deadline prescribed by this
subsection on written request of the applicant. The school
district may impose a fee of $15,000 for an amendment to an
application.
(c) If the governing body of the school district and the
applicant agree on an amendment to the application under Subsection
(b), the amended application must be submitted to the comptroller
for a redetermination regarding the application. The comptroller
shall notify the applicant and school district of the comptroller's
redetermination regarding the application not later than the 30th
day after the date the comptroller receives the amended
application.
(d) The presiding officer of the governing body of a school
district shall notify the applicant and the comptroller of the
governing body's approval or disapproval of an application not
later than the seventh day after the date the governing body
approves or disapproves the application.
(e) Except for a payment authorized by this subchapter, an
employee or representative of a school district, a member of the
governing body of the district, or any other person may not
intentionally or knowingly solicit, accept, agree to accept, or
require any payment of money or transfer of property or other thing
of value, directly or indirectly, to the district, an employee or
representative of the district, a member of the governing body of
the district, or any other person in recognition of, anticipation
of, or consideration for approval of an application under this
section.
(f) Except for a payment authorized by this subchapter, an
applicant, an employee or representative of the applicant, or any
other person may not intentionally or knowingly offer, confer,
agree to confer, or make a payment of money or transfer of property
or other thing of value, directly or indirectly, to the school
district, an employee or representative of the district, a member
of the governing body of the district, or any other person in
recognition of, anticipation of, or consideration for approval of
an application under this section.
Sec. 403.612. AGREEMENT. (a) The governing body of a
school district that approves an application under Section 403.611
shall enter into an agreement with the applicant that submitted the
application.
(b) An agreement entered into under this section between an
applicant and a school district for an eligible project shall:
(1) specify the project to which the agreement
applies;
(2) specify the term of the agreement, which must:
(A) begin on the date the agreement is entered
into; and
(B) end on December 31 of the third tax year
following the end of the incentive period;
(3) specify the incentive period for the project;
(4) specify the manner for determining the taxable
value for school district maintenance and operations ad valorem tax
purposes during the incentive period under Section 403.605 for the
eligible property subject to the agreement;
(5) specify the applicable jobs and investment
requirements prescribed by Section 403.604 and require the
applicant to comply with those requirements;
(6) if the applicant is subject to the jobs
requirement prescribed by Section 403.604, require that the average
annual wage paid to all persons employed by the applicant in
connection with the project used to calculate total jobs, other
than a required job derived from a construction job credit, exceed
the average annual wage for all jobs in the county during the most
recent four quarters for which data is available, as computed by the
Texas Workforce Commission, with the applicant's average annual
wage being equal to the quotient of:
(A) the applicant's total wages paid, other than
wages paid for construction jobs, as reported under Section
403.617(c)(4); and
(B) the applicant's number of total jobs, other
than a required job derived from a construction job credit, as
reported under Section 403.617(c)(3);
(7) require the applicant to pay a penalty prescribed
by Section 403.615 if the applicant fails to comply with an
applicable jobs or wage requirement;
(8) authorize the district to terminate the agreement
if the applicant fails to meet a material requirement of the
agreement as provided by Subsection (e); and
(9) incorporate each relevant provision of this
subchapter.
(c) An agreement entered into under this section between an
applicant and a school district pertaining to an eligible project
may:
(1) require the applicant to:
(A) either:
(i) share a percentage of the applicant's
tax revenue savings with the district, as computed under Section
403.614; or
(ii) pay the district an amount specified
in the agreement, which may not be less than $75,000 for each tax
year during the incentive period; and
(B) if the agreement requires the applicant to
share a percentage of the applicant's tax revenue savings under
Paragraph (A)(i), specify the tax savings percentages required to
compute the applicable tax sharing amount under Section 403.614;
(2) require the applicant to make an indemnity payment
to the district as provided by Subsection (f);
(3) authorize the applicant to terminate the agreement
as an alternative to making an indemnity payment to the district as
provided by Subsection (f); and
(4) authorize the district to terminate the agreement
as provided by Subsection (h).
(d) An agreement entered into under this section between an
applicant and a school district pertaining to an eligible project
may not require the applicant to make a payment to the district
other than a payment prescribed by this subchapter.
(e) This subsection applies to a term described by
Subsection (b)(8). The agreement must provide that the school
district:
(1) is authorized to terminate the agreement if the
applicant fails to meet a material requirement of the agreement,
other than a requirement described by Section 403.614;
(2) may not terminate the agreement until the district
provides written notice to the applicant of the proposed
termination;
(3) must provide the applicant the opportunity to cure
and dispute the alleged failure, including through judicial action;
and
(4) is entitled to recover all lost ad valorem tax
revenue from the project and interest on that amount calculated as
provided by Section 111.060, Tax Code.
(f) This subsection applies only if an agreement includes a
term described by Subsection (c)(2). The agreement must require
the applicant to make an indemnity payment to the school district
for a tax year during the incentive period in which the district's
revenue is substantially reduced as a result of the enactment of
legislation, an amendment to the constitution, or a final judicial
determination directly affecting the tax incentives authorized by
this subchapter, as determined by the Texas Education Agency as
provided by Subsection (g). The amount of the indemnity payment is
equal to the difference between the amount of revenue the district
would have received in that tax year had the legislation not been
enacted, the constitution not been amended, or the final judicial
determination not been made and the amount of revenue actually
received by the district in that tax year. The agreement must
provide that, as an alternative to making the indemnity payment,
the applicant may elect to terminate the agreement by notifying the
district in writing of the termination. An agreement terminated
under this subsection is void, and all remaining obligations and
benefits under the agreement and this subchapter terminate on the
date the agreement is terminated. The agreement may not require the
applicant to pay back any benefit the applicant received under the
agreement before the date the agreement is terminated under this
subsection.
(g) For purposes of Subsection (f), the Texas Education
Agency shall determine whether a law enacted by the legislature, an
amendment to the constitution, or a final judicial determination
results in a substantial change that affects the Foundation School
Program, not including facilities funding, and directly affects an
agreement entered into under this subchapter. If the agency makes a
determination under this subsection related to an agreement, the
agency shall establish the method the applicable school district
must use to calculate the indemnity payment and certify the
calculation made by the district.
(h) This subsection applies only if an agreement includes a
term described by Subsection (c)(4). The agreement may authorize
the school district to terminate the agreement under the
circumstances described by Subsection (f) if the district
determines that the indemnity payment made by the applicant would
not fully reimburse the district as required by that subsection.
The district must notify the applicant in writing of the
termination. An agreement terminated under this subsection is
void, and all remaining obligations and benefits under the
agreement and this subchapter terminate on the date the agreement
is terminated. The agreement may not require the applicant to pay
back any benefit the applicant received under the agreement before
the date the agreement is terminated under this subsection.
(i) An applicant and a school district may modify the terms
of an agreement that do not materially modify the jobs or investment
requirements prescribed by the agreement. The district may impose
a fee of $15,000 for an amendment to an agreement.
(j) The school district shall append the economic benefit
statement applicable to the project that is the subject of the
agreement to the agreement.
(k) The school district shall submit each agreement entered
into by the district to the comptroller not later than the seventh
day after the date the agreement is entered into.
Sec. 403.613. INCENTIVE PERIOD. (a) An incentive period
pertaining to an eligible project is the period specified in the
agreement for the project, which must be a period of 10 consecutive
tax years.
(b) An incentive period may not begin:
(1) earlier than January 1 of the first tax year
following the construction completion date; or
(2) later than January 1 of the first tax year
following the 10th anniversary of the date the agreement is entered
into.
(c) Subject to Subsection (b), the beginning date of an
incentive period specified in an agreement pertaining to an
eligible project is deferred if the applicant does not satisfy the
minimum investment requirement applicable to the project on or
before the date the incentive period is specified to begin under the
agreement. The incentive period is deferred until January 1 of the
year following the year in which the applicant satisfies the
investment requirement pertaining to the project. The deferral of
an incentive period under this subsection does not affect the date
on which the incentive period ends as prescribed by the agreement.
(d) Subject to Subsection (b), an applicant may propose to
modify the beginning and ending dates of the incentive period as
provided by this subsection. The applicant shall provide notice of
the proposed modification to the comptroller and the school
district not later than the 90th day before the first day of the
incentive period specified in Section 403.612(b)(3) or as proposed
to be modified, whichever is earlier. The applicant shall revise
the most recent economic benefit statement as necessary to reflect
the proposed change to the incentive period. The applicant must
include the revised economic benefit statement with the notice
provided to the comptroller and the district under this subsection.
The comptroller shall make the finding required by Section
403.609(c)(2) regarding the project as proposed to be modified or
determine that the finding cannot be made. The comptroller shall
notify the applicant and the district of the comptroller's finding
or determination not later than the 60th day after the date the
comptroller receives notice from the applicant of the proposed
modification. The applicant may appeal the comptroller's
determination in the manner provided by Section 403.610. The
incentive period for the project may not be modified if the
comptroller determines that the finding required by Section
403.609(c)(2) regarding the project as proposed to be modified
cannot be made or, if the determination is appealed, the applicant
is not successful on appeal before the beginning of the original or
modified incentive period, whichever is earlier.
Sec. 403.614. COMPUTATION OF TAX SHARING AMOUNT. (a) An
applicant's tax revenue savings for eligible property that is
subject to an agreement between the applicant and a school district
is:
(1) for a tax year during the period prescribed by
Section 403.605(c), an amount equal to the product of:
(A) the amount computed by dividing the appraised
value of the property for that tax year by 100; and
(B) the maintenance and operations ad valorem tax
rate adopted by the district for that tax year; and
(2) for a tax year during the incentive period
prescribed by the agreement, an amount equal to the product of:
(A) the amount computed by:
(i) subtracting the taxable value of the
property as determined under Section 403.612(b)(4) from the
appraised value of the property for that tax year; and
(ii) dividing the amount computed under
Paragraph (A) by 100; and
(B) the maintenance and operations ad valorem tax
rate adopted by the district for that tax year.
(b) An applicant's tax sharing amount for a tax year during
the period described by Subsection (a)(1) is equal to 20 percent of
the applicant's tax revenue savings as computed under that
subdivision for that tax year.
(c) An applicant's tax sharing amount for a tax year during
the period described by Subsection (a)(2) in which the applicant's
tax revenue savings as computed under that subdivision is:
(1) $3 million or less is the amount equal to the
product of the amount computed under Subsection (a)(2) and the
applicable tax savings percentage specified in the agreement
between the applicant and the school district, which may not exceed
30 percent;
(2) more than $3 million but less than $7 million is
the amount equal to the sum of the following amounts:
(A) the product of:
(i) $3 million; and
(ii) the applicable tax savings percentage
specified in the agreement, which may not exceed 30 percent; and
(B) the product of:
(i) the difference between the amount
computed under Subsection (a)(2) and $3 million; and
(ii) the applicable tax savings percentage
specified in the agreement, which may not exceed 20 percent; and
(3) $7 million or more is the amount equal to the sum
of the following amounts:
(A) the product of:
(i) $3 million; and
(ii) the applicable tax savings percentage
specified in the agreement, which may not exceed 30 percent;
(B) the product of:
(i) $4 million; and
(ii) the applicable tax savings percentage
specified in the agreement, which may not exceed 20 percent; and
(C) the product of:
(i) the difference between the amount
computed under Subsection (a)(2) and $7 million; and
(ii) the applicable tax savings percentage
specified in the agreement, which may not exceed 10 percent.
Sec. 403.615. FAILURE TO COMPLY WITH JOBS OR WAGE
REQUIREMENT. (a) An applicant is liable to the state for a penalty
in the amount computed under this subsection if the applicant fails
to maintain at least the number of required jobs prescribed by the
agreement to which the applicant is a party during the periods
covered by two consecutive reports submitted by the applicant under
Section 403.617. The amount of the penalty is equal to the product
of:
(1) the difference between:
(A) the number of required jobs prescribed by the
agreement; and
(B) the number of required jobs actually created
as stated in the most recent report submitted by the applicant under
Section 403.617; and
(2) the average annual wage prescribed by the
agreement during the most recent four quarters for which data is
available, as computed by the Texas Workforce Commission.
(b) An applicant is liable to the state for a penalty in the
amount computed under this subsection if the applicant fails to
meet the average annual wage requirement prescribed by the
agreement to which the applicant is a party, if any, during the
periods covered by two consecutive reports submitted by the
applicant under Section 403.617. The amount of the penalty is equal
to the difference between:
(1) the product of:
(A) the actual average annual wage paid to all
persons employed by the applicant in connection with the project
that is the subject of the agreement as computed under Section
403.612(b)(6); and
(B) the number of required jobs prescribed by the
agreement; and
(2) the product of:
(A) the average annual wage prescribed by the
agreement; and
(B) the number of required jobs prescribed by the
agreement.
(c) Notwithstanding Subsections (a) and (b), the amount of a
penalty imposed on an applicant under this section may not exceed
the amount of the ad valorem tax benefit received by the applicant
under the agreement that is the subject of the penalty.
(d) An applicant on request of the comptroller shall provide
to the comptroller a schedule of required jobs created as of the
date of the request under an agreement to which the applicant is a
party.
(e) A determination by the comptroller that an applicant has
failed to meet the jobs or wage requirement prescribed by an
agreement to which the applicant is a party is a deficiency
determination under Section 111.008, Tax Code. A penalty imposed
under this section is an amount the comptroller is required to
collect, receive, administer, or enforce, and is subject to the
payment and redetermination requirements of Sections 111.0081 and
111.009, Tax Code. A redetermination under Section 111.009, Tax
Code, of a determination under this section is a contested case as
defined by Section 2001.003 of this code.
(f) An applicant may challenge under Subchapters A and B,
Chapter 112, Tax Code, a determination under this section that
imposes a penalty on the applicant if the applicant contends that
the amount of the penalty is unlawful or that the comptroller may
not legally demand or collect the amount.
(g) The comptroller shall deposit the amount collected
under this section, including any interest applicable to the
amount, to the credit of the foundation school fund.
Sec. 403.616. AUDIT OF AGREEMENTS BY STATE AUDITOR. (a)
Each year the state auditor shall select and review at least three
major agreements to determine whether:
(1) each agreement accomplishes the purposes of this
subchapter as expressed in Section 403.601; and
(2) the terms of each agreement were executed in
compliance with the terms of this subchapter.
(b) As part of the review, the state auditor shall make
recommendations relating to increasing the efficiency and
effectiveness of the administration of this subchapter.
Sec. 403.617. BIENNIAL COMPLIANCE REPORT BY APPLICANT. (a)
An applicant that is a party to an agreement shall submit a report
to the comptroller as required by this section using the form
adopted by the comptroller.
(b) An applicant must submit a report required by this
section to the comptroller not later than June 1 of each
even-numbered year during the term of the agreement that is the
subject of the report.
(c) A report required by this section must include the
following documents and information applicable to the agreement
that is the subject of the report:
(1) a certification by the applicant that is a party to
the agreement that the applicant has met the jobs and investment
requirements prescribed by the agreement, which must include:
(A) a sworn affidavit stating:
(i) the number of required jobs prescribed
by the agreement;
(ii) the number of total jobs created under
the agreement as of December 31 of the preceding two years,
including the number of total jobs for each category of required
jobs; and
(iii) the name and contact information of
each person who employs a person described by Subparagraph (ii),
other than the applicant or the applicant's affiliates;
(B) if applicable, payroll records maintained
for purposes of 40 T.A.C. Chapter 815; and
(C) if applicable, evidence of the number of
construction jobs created and construction job credits counted by
the applicant as a required job;
(2) the number assigned to the application by the
comptroller for the agreement, name of the applicant, name of the
school district, and name of and contact information for the
applicant's representative;
(3) the number of total jobs, not including
construction job credits counted by the applicant as a required
job, created by the project in each of the preceding two years;
(4) the total wages paid for total jobs, not including
wages paid for construction jobs, in each of the preceding two
years;
(5) the number of construction jobs created as
determined under Section 403.604(d);
(6) the total amount of the applicant's investment,
including any additional amount invested by the applicant after the
incentive period begins;
(7) the appraised value of all property composing the
project for each previous tax year of the agreement;
(8) the taxable value of all property composing the
project for each previous tax year of the agreement;
(9) the amount of school district maintenance and
operations ad valorem taxes imposed on the property composing the
project and paid by the applicant for each previous tax year of the
agreement;
(10) the amount of school district interest and
sinking fund ad valorem taxes imposed on the property composing the
project and paid by the applicant for each previous tax year of the
agreement;
(11) the amount of school district ad valorem taxes
that would have been imposed on the property composing the project
and paid by the applicant in the absence of the agreement for each
previous tax year of the agreement;
(12) the amount of payments made by the applicant to
the school district as prescribed by the agreement for each
previous tax year of the agreement, listed by type of payment; and
(13) the amount of ad valorem taxes imposed on the
property composing the project by each taxing unit other than the
school district and paid by the applicant for each previous tax year
of the agreement, stated by taxing unit.
(d) This subsection applies only to a report required to be
submitted under this section by an applicant for the period that
includes the first year of the incentive period as prescribed by the
agreement that is the subject of the report or as deferred. In
addition to the documents and information described by Subsection
(c), the applicant must include with the certification required by
Subsection (c)(1):
(1) a list of the property tax account numbers
assigned to the property composing the project;
(2) the current total appraised value of the property
composing the project; and
(3) if applicable, a statement that the incentive
period was deferred because the applicant did not meet the minimum
investment requirement prescribed by the agreement before the date
specified in the agreement.
Sec. 403.618. SCHOOL DISTRICT REPORT. (a) A school
district that is a party to an agreement must submit a report to the
comptroller as prescribed by this section.
(b) A school district must submit the report not later than
June 1 of each even-numbered year:
(1) beginning in the first even-numbered year
following the year in which the governing body of the district
approves the application for the project that is the subject of the
agreement; and
(2) ending in the last even-numbered year before the
third anniversary of the expiration of the incentive period
prescribed by the agreement.
(c) The report must include:
(1) the total amount received from the applicant under
the agreement for each previous year;
(2) the total amount of any other direct or indirect
benefit received from the applicant for each previous year,
including an in-kind contribution; and
(3) the purposes for which the payments and benefits
were used by the school district.
Sec. 403.619. BIENNIAL REPORT TO LEGISLATURE. (a) 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
subchapter. The comptroller must submit the report not later than
December 1 of each even-numbered year.
(b) The report must include:
(1) an assessment of the following with regard to the
agreements entered into under this subchapter, considered in the
aggregate:
(A) the total number of jobs created in this
state;
(B) the total effect on personal income 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 resulting from the agreements, including
property subject to an agreement that has expired;
(E) the total value of property subject to
agreements that have not expired; and
(F) the total fiscal effect resulting from the
agreements on this state and on local governments in this state; and
(2) an assessment of each agreement entered into under
this subchapter that states for each agreement:
(A) the number of required jobs prescribed by the
agreement;
(B) the number of jobs actually created under the
agreement, including:
(i) each job described by Section
403.604(c)(1)(A);
(ii) each job described by Section
403.604(c)(1)(B);
(iii) each construction job credit
described by Section 403.604(d) counted by an applicant as a
required job; and
(iv) any additional jobs created or
maintained in connection with the project that is the subject of the
agreement, if reported by the applicant;
(C) the number of total jobs created under the
agreement, if the term of the agreement has expired;
(D) the amount of the investment specified by the
agreement;
(E) the amount of the actual investment made for
the applicable project before the expiration of the agreement;
(F) the difference between the amount of ad
valorem taxes that would have been imposed on the property
composing the applicable project in the absence of the agreement
and the amount of ad valorem taxes actually imposed on that property
during the term of the agreement;
(G) the total amount of state and local tax
revenue attributable to the applicable project during the term of
the agreement;
(H) the total amount received by the school
district from the applicant under the agreement for each previous
year;
(I) the total amount of any other direct or
indirect benefit received by the district from the applicant for
each previous year, including an in-kind contribution; and
(J) the purposes for which the payments and
benefits described by Paragraphs (H) and (I) were used by the
district.
(c) The comptroller may not include in the report
information that is confidential under law.
(d) The comptroller may use standard economic estimation
techniques, including economic multipliers, to prepare the portion
of the report described by Subsection (b)(1).
(e) The comptroller may require an applicant to submit
information required to complete the report on a form prescribed by
the comptroller.
Sec. 403.620. CONFLICT OF INTEREST. A person may not,
directly or indirectly, represent, advise, or provide a service to
both an applicant and a school district in connection with the same
application submitted or agreement entered into under this
subchapter.
Sec. 403.621. TREATMENT OF PAYMENTS TO SCHOOL DISTRICTS. A
payment by an applicant to a school district under this subchapter
other than a payment of ad valorem taxes imposed by the district may
not be treated as tax revenue collected by the district for any
purpose under Chapter 48 or 49, Education Code.
Sec. 403.622. CONFIDENTIALITY OF CERTAIN BUSINESS
INFORMATION. (a) Information provided to a school district or the
comptroller by an applicant under this subchapter that is a trade
secret, as defined by Section 134A.002, Civil Practice and Remedies
Code, is confidential and not subject to disclosure under Chapter
552.
(b) Payroll records reported under Section 403.617(c)(1)(A)
or (B) by an applicant to the comptroller are confidential and not
subject to disclosure under Chapter 552.
Sec. 403.623. INTERNET POSTING OF INFORMATION. (a)
Subject to Section 403.622, the comptroller shall post on the
comptroller's Internet website the following information received
by the comptroller:
(1) each application submitted under this subchapter;
(2) each map and economic benefit statement required
to be submitted with an application under this subchapter;
(3) each amendment to an application made under this
subchapter;
(4) each agreement entered into under this subchapter;
and
(5) each biennial compliance report submitted as
required under this subchapter.
(b) Except as provided by Subsection (c), the comptroller
shall post the information described by Subsection (a) as soon as
practicable after the date the comptroller receives the
information.
(c) The comptroller shall post the information described by
Subsections (a)(1), (2), and (3) not later then the 10th business
day after the date the comptroller receives the information.
(d) The comptroller shall continue to post the information
required by this section until the date the agreement to which the
information relates expires.
Sec. 403.624. RULES AND FORMS. (a) The comptroller shall
adopt rules necessary to implement and administer this subchapter,
including rules for:
(1) determining whether an applicant meets the jobs
and investment requirements prescribed by Section 403.604; and
(2) authorizing an applicant or school district to
submit any form or information required by this subchapter
electronically.
(b) The comptroller shall adopt forms necessary to
implement and administer this subchapter, including the forms to be
used by:
(1) an applicant under Section 403.606;
(2) an applicant under Section 403.617; and
(3) a school district under Section 403.618.
(c) The comptroller shall provide without charge one copy of
the rules and forms adopted under this section to any person who
states that the person intends to submit an application to a school
district under this subchapter to limit the taxable value of
eligible property used as part of an eligible project.
SECTION 2. Section 48.2551(a), Education Code, is amended
to read as follows:
(a) In this section:
(1) "DPV" is the taxable value of property in the
school district, as determined by the agency by rule, using locally
determined property values adjusted in accordance with Section
403.302(d), Government Code;
(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 a
limitation on appraised value under former Subchapter B or C,
Chapter 313, Tax Code, or a limitation on taxable value under
Subchapter T, Chapter 403, Government 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 3. Section 48.256, Education Code, is amended by
amending Subsections (d) and (e) and adding Subsection (d-1) 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 taxable [appraised] value under
Subchapter T, Chapter 403, Government [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 T, Chapter
403, Government [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.
(d-1) Subsection (d) applies to an agreement for the
implementation of a limitation on appraised value under former
Subchapter B or C, Chapter 313, Tax Code, that was in effect on
January 1, 2023, in the same manner as that subsection applies to an
agreement described by that subsection. If the agreement for the
limitation on appraised value requires a [A] revenue protection
payment to the school district, the 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-1) [(d)] does not apply to property that
was the subject of an application under former Subchapter B or C,
Chapter 313, Tax Code, made after May 1, 2009, that the comptroller
recommended should be disapproved.
SECTION 4. Section 2303.507, Government Code, is amended to
read as follows:
Sec. 2303.507. TAX INCREMENT FINANCING AND
ABATEMENT; LIMITATIONS ON APPRAISED AND TAXABLE
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) limitations on appraised value under former
Subchapter B or C, Chapter 313, Tax Code; and
(4) limitations on taxable value under Subchapter T,
Chapter 403, of this code.
SECTION 5. Section 23.03, Tax Code, is amended to read as
follows:
Sec. 23.03. COMPILATION OF LARGE PROPERTIES AND PROPERTIES
SUBJECT TO LIMITATION ON APPRAISED OR TAXABLE VALUE. Each year the
chief appraiser shall compile and send to the Texas [Department of]
Economic Development and Tourism Office a list of properties in the
appraisal district that in that tax year:
(1) have a market value of $100 million or more; [or]
(2) are subject to a limitation on appraised value
under former Subchapter B or C, Chapter 313; or
(3) are subject to a limitation on taxable value under
Subchapter T, Chapter 403, Government Code.
SECTION 6. Section 26.012(6), Tax Code, is amended to read
as follows:
(6) "Current total value" means the total taxable
value of property listed on the appraisal roll for the current year,
including all appraisal roll supplements and corrections as of the
date of the calculation, less the taxable value of property
exempted for the current tax year for the first time under Section
11.31 or 11.315, except that:
(A) the current total value for a school district
excludes:
(i) the total value of homesteads that
qualify for a tax limitation as provided by Section 11.26; [and]
(ii) new property value of property that is
subject to an agreement entered into under former Subchapter B or C,
Chapter 313; and
(iii) new property value of property that
is subject to an agreement entered into under Subchapter T, Chapter
403, Government Code; and
(B) the current total value for a county,
municipality, or junior college district excludes the total value
of homesteads that qualify for a tax limitation provided by Section
11.261.
SECTION 7. 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 former
Subchapter B or C, Chapter 313, regarding the clean energy project
for which the credit is issued; or
(2) the expiration of an agreement under Subchapter T,
Chapter 403, Government Code, regarding the clean energy project
for which the credit is issued.
SECTION 8. 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 former Subchapter
B or C, Chapter 313, of this code or Subchapter T, Chapter 403,
Government Code, 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 a limitation on appraised value under former Subchapter
B or C, Chapter 313, of this code or the granting of a limitation on
taxable value under Subchapter T, Chapter 403, Government Code, 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 9. This Act takes effect September 1, 2023.