BILL ANALYSIS C.S.H.B. 2860 By: Grusendorf April 21, 1995 Committee Report (Substituted) BACKGROUND Chapter 312, Tax Code, the Property Redevelopment and Tax Abatement Act, allows municipalities, counties, and other taxing entities to enter into tax abatement agreements with property owners. Communities grant tax abatements to help stimulate economic growth in certain areas. Tax abatements may help to attract financial investment which, in turn, can expand primary employment opportunities. Currently, the Property Redevelopment and Tax Abatement Act will expire September 1, 1995 PURPOSE The bill establishes an option to certain school districts to grant tax abatements. The bill also repeals the expiration provision of Chapter 312, Tax Code, and reenacts the language in the Chapter without the sunset provision. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Chapter 312, Tax Code, is amended by adding Subchapter D, TAX ABATEMENT IN SCHOOL DISTRICT REINVESTMENT ZONE. 312.501 DESIGNATION OF REINVESTMENT ZONE. (a) A board of trustees may designate an area as a reinvestment zone under the following criteria: (1) It must comply with guidelines in Section 312.002 (Eligibility of Taxing Unit to Participate in Tax Abatement); (2) The district's wealth per student does not exceed the equalized wealth level; (3) The area is primarily undeveloped land contiguous to an airport of a city with a population of more than 400,000; and (4) The area is a municipal utility district. (b) Requires the board to conduct a public hearing and find that the designation as a reinvestment zone would contribute to primary employment in the zone and to the economic development of the district. (c) Requires the board to give notice of the hearing as per Section 312.201 (Designation of Reinvestment Zone). (d) Limits the designation to 10 years and then renewal periods not longer than 5 years. (e) Areas designated as reinvestment zones by either a city or county remain eligible for this designation. (f) Establishes definitions for "wealth per student" and "equalized wealth level" to be the same as Section 36.001 (Definitions), Education Code. 312.502 SCHOOL DISTRICT TAX ABATEMENT AGREEMENT. (a) A board of trustees may abate the school's portion of ad valorem taxes on property of an individual who donates real property to the school district for the purpose of constructing a school. The tax abatement does not take place until the donation is made. (b) Sections 312.204 (Municipal Tax Abatement Agreement), 312.2041 (Notice of Tax Abatement Agreement to Other Taxing Units), 312.205 (Specific Terms of Tax Abatement Agreement), and 312.208 (Modification or Termination of Agreement), apply to a tax abatement agreement under this section as if it were executed under Subchapter B (Tax Abatement in Municipal Reinvestment Zone). (c) An abatement agreement made by another taxing unit under this Chapter does not affect the authority of a school district to make a tax abatement agreement under this section. (d) An abatement agreement made by a school district under this Section does not affect the authority of another taxing unit to make a tax abatement agreement under this Chapter. (e) Tax abatements may not apply to property owned by a trustee of the school district. SECTION 2. Repeals Section 312.006 (Expiration Date), Tax Code. SECTION 3. Emergency Clause. COMPARISON OF ORIGINAL TO SUBSTITUTE C.S.H.B. 2860 clarifies drafting errors in the original bill. SUMMARY OF COMMITTEE ACTION Public notice was posted in accordance with the rules, and a public hearing was held on April 4, 1995. Representative Grusendorf explained the bill. Without objection, H.B. 2625 was left pending before the committee. On April 18, 1995, the committee met in a public hearing, and H.B. 2860 was laid out on pending business. The committee considered a complete substitute by Representative Craddick. Without objection, the committee adopted C.S.H.B. 2860. By a record vote of 7 ayes, 0 nays, 1 present not voting and 3 absent, the committee voted to report H.B. 2860 to the House as substituted with the recommendation that it be sent to the Local & Consent Calendar, and that it do pass. Testimony received in favor of the bill (4/4/95): William Geo. Gurasich, representing himself and the MC Joint Venture