BILL ANALYSIS
H.B. 2065
By: Oliveira (Lucio)
Economic Development
05-25-95
Senate Committee Report (Unamended)
BACKGROUND
The 70th Legislature adopted the Texas Enterprise Zone Act which
allows the Department of Commerce (department) to designate
economically distressed areas, nominated by cities or counties, as
state enterprise zones. The department, along with the Comptroller
of Public Accounts, administers state incentives offered to
businesses locating or expanding in enterprise zones. Currently,
there are 156 enterprise zones designated throughout the state.
State incentives are reauthorized by the legislature each regular
session. The 73rd Legislature passed legislation to codify the
Texas Enterprise Zone Act, Article 5190.7, into Chapter 2303, Texas
Government Code. Legislation was also adopted which reauthorized
the department to offer state incentives to businesses in
enterprise zones and expanded the purposes of enterprise zones.
PURPOSE
As proposed, H.B. 2065 provides for incentives to businesses
locating or expanding in enterprise zones; and establishes
guidelines for program access and requirements.
RULEMAKING AUTHORITY
It is the committee's opinion that this bill does not grant any
additional rulemaking authority to a state officer, institution, or
agency.
SECTION BY SECTION ANALYSIS
SECTION 1. Amends Chapter 2303B, Government Code, by adding and
amending Section 2303.0525, as follows:
Sec. 2303.0525. COST-BENEFIT ANALYSIS. (a) Requires the
Department of Commerce (department), on or before December 1
of each even-numbered year, to prepare a cost-benefit analysis
of the enterprise zone program.
(b) Requires the department to submit the analysis to the
state auditor for review and comment on the methodology and
conclusions of the analysis.
(c) Requires the state auditor, before the regular session
of the legislature convenes, to submit the analysis and the
state auditor's comments on the analysis to the governor,
the lieutenant governor, and the speaker of the house of
representatives.
(b) Repealer: Section 25, Chapter 986, Acts of the 73rd
Legislature, Regular Session, 1993 (relating to the
requirement of the department to prepare an annual cost-benefit analysis of the enterprize zone program and submit
it to the state auditor for review).
SECTION 2. Amends Section 2303.102, Government Code, as follows:
Sec. 2303.102. AREA OF PERVASIVE POVERTY, UNEMPLOYMENT, AND
ECONOMIC DISTRESS. (a) Provides that an area is an area of
pervasive poverty, unemployment, and economic distress for the
purposes of Section 2303.101 if:
(1) the average rate of unemployment in the area during
the most recent 12-month period for which data are
available was at least one and one-half times the state,
rather than local or national, average for that period; or
(2) the area had a population loss of at least 12, rather
than nine, percent during the most recent six-year period
or at least four, rather than three, percent during the
most recent three-year period; and, among other
qualifications, the area has had a substantial increase in
the number of individuals younger than 18 years of age
arrested due to criminal activity.
(b) Sets forth provisions under which labor force and
population data are considered current.
SECTION 3. Amends Section 2303.109(b), Government Code, to add the
areas designated as a federal empowerment zone and a federal
enterprise community to the areas that may be designated as an
enterprise zone without further qualification for longer than seven
years but not longer than the period permitted by federal law.
SECTION 4. Amends Section 2303.205(c), Government Code, to add to
the list of provisions the report must include, the number of
businesses assisted and retained in the zone since its designation
due to the existence of the enterprise zone; a summary of, rather
than a copy of the report required for, all industrial revenue
bonds issued to finance projects located in the zone; and a
description of all efforts made to attain revitalization goals for
the zone. Deletes existing Subdivision (2). Makes nonsubstantive
changes.
SECTION 5. Amends Chapter 2303C, Government Code, by adding Section
2303.112, as follows:
Sec. 2303.112. EXCEPTION TO LIMIT ON DESIGNATION. Provides
that designation as an enterprise zone under this chapter of
an area designated as a federal enterprise zone, federal
empowerment zone, or federal enterprise community located in
a municipality or county does not reduce the number of
enterprise zones that the municipality or county may have
designated under this chapter.
SECTION 6. Amends Chapter 2303F, Government Code, as follows:
SUBCHAPTER F. QUALIFIED BUSINESS AND ENTERPRISE PROJECTS
Sec. 2303.401. DEFINITIONS. Defines "new permanent job."
Sec. 2303.402. QUALIFIED BUSINESS. Redesignates existing
Section 2303.401. Changes the defining provisions of a person
who is economically disadvantaged to include an individual who
is entering the workplace after being confined in a facility
operated by, rather than a unit of, the institutional division
of the Texas Department of Criminal Justice or under contract
with the Texas Department of Criminal Justice, rather than
confined in a correctional facility authorized by Chapter 495;
or has been released by the Texas Youth Commission and is on
parole, if state law provides for such a person to be on
parole. Makes nonsubstantive changes.
Sec. 2303.403. Redesignates existing Section 2303.402.
PROHIBITION ON QUALIFIED BUSINESS CERTIFICATION. Prohibits the
department from designating more than 65 businesses as
enterprise projects during any biennium.
Sec. 2303.404. REQUEST FOR APPLICATION FOR ENTERPRISE PROJECT
DESIGNATION. (a) Authorizes a qualified business in an
enterprise zone described by Subsection (b) to request that
the governing body of the enterprise zone apply to the
department for designation of the business as an enterprise
project. Requires the request to also be made to the
enterprise zone's administrative authority, if one exists.
(b) Authorizes a request to be made under this section only
to the governing body of an enterprise zone that has an
unemployment rate that is at least one and one-half times
the state average; or a certain population loss.
Sec. 2303.405. APPLICATION FOR ENTERPRISE PROJECT DESIGNATION.
(a) Authorizes a governing body, if the governing body of an
enterprise zone or the governing body and administrative
authority of an enterprise zone approve a request made under
Section 2303.404, to apply to the department for the
designation of the qualified business as an enterprise
project.
(b) Sets forth requirements for an application.
(c) Provides that local effort to develop and revitalize an
enterprise zone is the willingness of public entities in the
zone to provide services, incentives, and regulatory relief
authorized by this chapter and to negotiate with the
qualified business for which application is made and with
neighborhood enterprise associations and other local groups
or businesses to achieve the public purposes of this
chapter; and the effort of the qualified business and other
affected entities to cooperate in achieving those public
purposes.
(d) Sets forth factors to be considered in evaluating the
local effort of a public entity.
(e) Sets forth factors to be considered in evaluating the
local effort of a private entity.
Sec. 2303.406. ENTERPRISE PROJECT DESIGNATION. (a) Authorizes
the department to designate a business as an enterprise
project only if the department makes certain determinations.
(b) Requires the department to designate qualified
businesses as enterprise projects on a competitive basis.
Sets forth the weighted scale by which the department shall
make its designation decisions.
(c) Provides that the designation of an enterprise project
is effective until the fifth anniversary of the date on
which the designation is made.
(d) Authorizes the department to remove an enterprise
project designation if it determines that the business is
not complying with a requirements for its designation.
Sec. 2303.408. New heading: DURATION OF CERTAIN DESIGNATIONS.
Redesignates existing Section 2303.403. Provides that the
department's designation of a qualified business as an
enterprise project is effective until the fifth anniversary of
the date on which the designation is made regardless of
whether the enterprise zone in which the project is located
expires before the fifth anniversary of the project. Deletes
the provision that after August 31, 1993, the department may
not designate a business as an enterprise project. Deletes
existing Subsection (b). Makes a conforming change.
SECTION 7. Amends Section 2303.505(a), Government Code, to add to
the provisions on which the governing body of a municipality
through a program may refund its local sales and use taxes paid by
a qualified business: labor for remodeling, rehabilitating, or
constructing a structure in an enterprise zone; and electricity and
natural gas purchased and consumed in the normal course of business
in the enterprise zone.
SECTION 8. Amends Section 2303.511(b), Government Code, to prohibit
the rates from being reduced more than five percent below the
lowest rate offered to any customer located in the enterprise zone,
including economic development rates and standby rates. Authorizes
a qualified enterprise project or the governing body of the
enterprise zone to petition a regulatory authority to receive a
reduced rate under this section, and the regulatory authority may
order that rates be reduced. Requires the regulatory authority, in
making its determination under this section, to consider
revitalization goals for the enterprise zone.
SECTION 9. Amends Section 2303.514, Government Code, to provides
that a subcontractor, rather than a prime contractor, is not
required to execute a performance bond under Chapter 2253 if
certain conditions apply.
SECTION 10. Amends Section 481.155, Government Code, by adding
Subsection (h), to require the executive director, in awarding a
grant under this section, to give priority to a project that is
located in an enterprise zone as defined by Section 2303.003.
SECTION 11. Amends Section 151.429(a), Tax Code, to make
conforming changes.
SECTION 12. Amends Section 312.203, Tax Code, to provide that
the designation of a reinvestment zone for residential or
commercial-industrial tax abatement expires five year after the
date of the designation and may be renewed for periods not to
exceed five years, except that a reinvestment zone that is a state
enterprise zone is designated for the same period ass a state
enterprise zone as provided by Chapter 2303, Government Code.
SECTION 13. Amends Section 312.204, Tax Code, by adding
Subsection (f), to provide that the agreements made with owners of
property in an enterprise zone that is also designated as a
reinvestment zone are not required to contain identical terms for
the portion of the value of property that is to be exempt and the
duration of the agreement.
SECTION 14. Amends Section 312.206, Tax Code, to authorize the
governing body of each taxing jurisdiction, if property taxes on
property located in an enterprise zone are abated under this
chapter, to execute a written agreement with the owner of the
property no later than 90 days after the date the municipal or
county agreement is executed, whichever is later. Authorizes the
agreement to contain terms that are identical to those contained in
the agreement with the municipality, county, or both, whichever
applies, and the only terms of the agreement that may vary are the
portion of the property that is to be exempt from taxation under
the agreement and the duration of the agreement.
SECTION 15. Amends Section 2(10), Article 5190.6, V.T.C.S.
(Development Corporation Act), to redefine "project" to include
economically depressed federally designated empowerment zones and
enterprise communities designated under Section 1391, Internal
Revenue Code of 1986.
SECTION 16. Amends Section 21, Article 5190, V.T.C.S., to
provide that every unit is hereby authorized to utilize a
corporation to issue bonds on its behalf to finance the cost of
projects, including projects in federally designated empowerment
zones and enterprise communities or enterprise zones designated
under the Texas Enterprise Zone Act, to promote and develop new and
expanded business, rather than industrial and manufacturing,
enterprises to promote and encourage employment and the public
welfare.
SECTION 17. (a) Prohibits an enterprise project designated under
Chapter 2303, Government Code, after August 31, 1995, from
receiving a tax refund under Section 151.429, Tax Code, as amended
by this Act, or a tax reduction under Section 171.1015, Tax Code,
before September 1, 1997.
(b) Authorizes not more than $8 million in state sales and use
taxes to be refunded to enterprise projects designated during
the biennium beginning September 1, 1995.
SECTION 18. Requires Sections 5, 6, 7, 8, 9, and 10, Chapter
231, Acts of the 73rd Legislature, Regular Session, 1993, to
continue in existence and be applicable to a qualified hotel
project. Requires a qualified hotel project to continue to be
eligible to receive tax refunds under Section 151.429(h), Tax Code.
Authorizes a qualified hotel project to continue to be designated
as a qualified business and an enterprise project. Prohibits
refunds to a qualified hotel project from affecting the refunds
that may be made under the provisions of Section 17 of this Act or
affect the number of enterprise projects that the department may
approve.
SECTION 19. Effective date: September 1, 1995.
SECTION 20. Emergency clause.