Enrolled Bill Summary

            Senate Bill 226 adds a new chapter to the Government Code to provide for the creation of defense economic readjustment zones in communities that are adversely affected by federal defense reductions, base closures, contract terminations, or similar actions. A zone is nominated by a city or county or by a combination of one or more cities and counties. It is designated by the Texas Department of Commerce pursuant to specified qualification criteria and is governed by the local government or governments that applied for the designation. Zone designations last up to seven years but can be revoked. The department is limited to six designations before September 1, 2001. Within each zone, on a competitive basis, the department may designate a maximum of two qualified businesses as defense readjustment projects based on job loss, job creation, job retention, and other factors. A project designation lasts up to five years.

            The new chapter, plus amendments to the Tax Code, authorizes various types of governmental incentives including suspension of local or state regulations, refunds of local or state sales and use taxes, reductions in corporate franchise tax liability, property tax abatements, tax increment financing, reductions in utility rates, reductions in city or county fees, bargain purchase of surplus buildings or vacant land from a city or county, preferences for state loans or grants, and preferences for block grants, industrial revenue bonds, and job training funds. A statement of legislative intent, however, provides that no property is to be removed from property taxation by a taxing unit.

            The act establishes reporting requirements for the department, the comptroller of public accounts, and the governing officials of the readjustment zone.