BILL ANALYSIS C.S.S.B. 1346 By: West State Affairs 04-26-95 Committee Report (Substituted) BACKGROUND The economics of professional sports teams has been changing rapidly as players' salaries and other costs rise faster than revenues. While ticket price increases were once the answer to offsetting rising costs, this revenue source no longer is seen as a solution as team owners attempt to keep tickets affordable for the average Texas sports fan. The proliferation of new professional sports stadiums and arenas across the United States is testimony to the changing economics of professional sports. Public financing of these facilities has become the key to enabling franchises to remain as economic engines generating jobs and revenues for the communities where the teams reside. If Texas cities were allowed to offer incentives such as rebates, they would be more successful in their attempts to improve their economy through revitalization and tourism revenue. PURPOSE As proposed, C.S.S.B. 1346 allows municipalities to offer incentives such as rebates in order to designate certain areas as sports facility enterprise zones, which would improve their economy through revitalization and tourism revenue. 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 2303, Government Code, by adding Subchapter H, as follows: SUBCHAPTER H. QUALIFIED SPORTS FACILITY PROJECTS Sec. 2303.601. Defines "local government," "qualified sports facility project," "sports authority," "sports facility," and "sports facility enterprise zone." Sec. 2303.602. DESIGNATION OF SPORTS FACILITY ENTERPRISE ZONE. (a) Provides that a sports facility enterprise zone (zone) is an enterprise zone entitled to the benefits of this chapter applicable to enterprise zones. (b) Provides that if a local government designates an area as a reinvestment zone and as a zone in the same ordinance or order, the area is designated as a zone without further hearing or procedural requirement other than as required by Chapter 311, Tax Code. (c) Authorizes the governing body of a zone in which a qualified sports facility project (project) is located to apply to the Texas Department of Commerce (department) for designation as a zone for the purpose of state benefits. Requires the department to designate the zone if the department or the governing body of the local government certifies that the zone was created in accordance with this subchapter and Chapter 311, Tax Code. (d) Provides that designation of a zone does not reduce the number of zones the department may designate. Sec. 2303.603. QUALIFIED SPORTS FACILITY PROJECT. (a) Provides that a person is a qualified business, an enterprise project, and a project if the department, for the purpose of state benefits, or the governing body of a local government, for the purpose of local benefits, certifies that the person is a project that is owned by a sports authority (authority). (b) Provides that a project, for purposes of Subsection (a), meets the employment, income, and other criteria of a qualified business and enterprise project under this subchapter. (c) Provides that a zone in which a project is located, for purposes of Subsection (a), meets the requirements of this chapter. (d) Prohibits the department from considering new permanent or retained jobs created by a project in determining the number of enterprise projects that the department may approve. Sec. 2303.604. REFUND, REBATE, OR PAYMENT OF TAX PROCEEDS TO CERTAIN SPORTS AUTHORITIES. (a) Authorizes the governing body of a municipality or county to establish a program by which it reduces or eliminates any fees or taxes that it imposes on a project in order to promote the public health, safety, or welfare. (b) Authorizes a governmental body, including a municipality, county, or political subdivision, to agree to rebate, refund, or pay certain tax proceeds for a period prescribed by the agreement to an authority that owns or is rehabilitating or remodeling a project. (c) Authorizes a local government to agree to guarantee, from revenue from hotel occupancy taxes or sales and use taxes, the bonds or other obligations of an authority that were issued or incurred to pay the cost of construction, remodeling, or rehabilitation of a project owned by the authority or local government. (d) Requires an agreement to be in writing, containing an expiration date, and requiring the beneficiary to provide documentation to support the claim. (e) Requires a governmental body that makes an agreement to make the rebate, refund, or payment directly to the beneficiary. (f) Defines "eligible tax proceeds" and "incremental increase in tax proceeds." SECTION 2. Amends Chapter 111C, Tax Code, by adding Section 111.110, as follows: Sec. 111.110. REBATE, REFUND, OR PAYMENT OF TAX PROCEEDS TO CERTAIN SPORTS AUTHORITIES. (a) Requires an authority that owns or is assisting a municipality, county, or other political subdivision in rehabilitating or remodeling a project located in a zone to receive from the state a rebate, refund, or payment of 80 percent of the sales and use taxes and 80 percent of the mixed beverage taxes retained by the state and generated, paid, or collected by the qualified sports facility or events at the project and 80 percent of the incremental increase in state sales and use taxes and mixed beverage taxes retained by the state. (b) Requires the authority to receive the rebate, refund, or payment for the term of the bonds or other obligations issued or incurred by the authority to construct, remodel, or rehabilitate the project. Prohibits the authority from receiving a rebate, refund, or payment before September 1, 1998, regardless of the date on which the bonds or other obligations are issued or incurred. (c) Provides that an authority is not entitled to a rebate, refund, or payment unless each local government that agrees to rebate, refund, or pay to the authority eligible tax proceeds and incremental increase in tax proceeds in accordance with Section 2303.604, Government Code, during the period in which the authority receives funds. (d) Defines "incremental increase," "local government," "qualified sports facility project," "sports authority," and "sports facility enterprise zone." SECTION 3. Amends Section 311.002, Tax Code, by adding Subdivisions (5) and (6), to define "qualified sports facility project," "sports authority," "sports facility enterprise zone," "eligible tax proceeds," and "incremental increase in tax proceeds." SECTION 4. Amends Section 311.005(a), Tax Code, to require an area, among other qualifications, to be an area that a local government determines should be designated as a zone under Chapter 2303G, Government Code, to be designated as a reinvestment zone. SECTION 5. Amends Section 311.015, Tax Code, by adding Subsection (m), to require tax increment bonds or notes issued to finance a project to mature by the 30th anniversary after the date of issuance. Authorizes a local government to pledge eligible tax proceeds and incremental tax proceeds to pay bonds or notes issued to pay the costs of a project under terms the local government considers appropriate. SECTION 6. Amends Chapter 311, Tax Code, by adding Section 311.0032, as follows: Sec. 311.0032. SPORTS FACILITY ENTERPRISE ZONE. (a) Authorizes a local government to designate an area as a zone in the ordinance or order designating that area as a reinvestment zone. (b) Prohibits a local government from designating an area as a zone unless the zone contains or will contain a project; and the local government agrees to rebate, refund, or pay to the authority that owns, proposes to own, or is assisting a county, municipality, or other political subdivision in rehabilitating or remodelling the project eligible tax proceeds and incremental increase in tax proceeds. (c) Requires the local government to agree to provide the rebate, refunding, or payment for the period during which the authority receives funding. SECTION 7. Amends Section 4A, Article 1528l, V.T.C.S. (Texas Transportation Corporation Act), by amending Subsections (a)-(c), (e), and (f), and adding Subsection (j), as follows: (a) Authorizes a local government corporation to be created to aid, act on behalf of one or more local governments to accomplish any governmental purpose, including a project or activity permitted by its articles of incorporation. Provides that the State Highway and Public Transportation Commission (commission) approval is not required for the articles of incorporation, articles of dissolution, or bylaws of a local government corporation. Provides that a member of the board of directors of a corporation is required to be a resident of a local government creating the corporation. (b) Requires a local government corporation to have all the powers, including those of a corporation approved for creation by the commission to accomplish any purpose for which the corporation was created as prescribed by its articles of incorporation; and an industrial development corporation created under Section 4B, Article 5190.6, V.T.C.S. (Development Corporation Act of 1979), and may perform certain acts. (c) Makes a conforming change. (e) Requires the commission, state agencies, local governments, road districts, road utility districts, and other political subdivisions to have the power to implement an authorized project or activity of the local government corporation, if it is also an authorized purpose of the contracting commission, state agency, road district, road utility district, or other political subdivision, among other powers. Provides that a local government has authority to implement an authorized project or activity of the corporation. (f) Requires the corporation, its property, and any transaction in which the property is acquired, to have the same tax exemption as a corporation created pursuant to Chapter 394, Local Government Code, or Section 4B, Article 51.90.6, V.T.C.S., including exemption from paying a sales and use tax. (j) Authorizes a municipality to create a local government corporation that is an authority. Requires the articles of incorporation of an authority to provide that an authority have a seven-member board with two members appointed by the lieutenant governor and two appointed by the comptroller. Sets forth the terms of the directors. Requires an authority to make an effort to provide that at least 30 percent of the construction, procurement, and service contracts for the project and any business operating in the facility are with minority- or women-owned enterprises. SECTION 8. Amends Chapter 302, Tax Code, by adding Subchapter C, as follows: SUBCHAPTER C. SPORTS FACILITY ENTERPRISE ZONE EXCISE TAX Sec. 302.201. DEFINITIONS. Defines "admissions tax," "event parking tax," and "qualified sports facility project," "sports authority," "sports facility," and "sports facility enterprise zone." Sec. 302.202. EVENT PARKING TAX. (a) Authorizes a municipality, by ordinance, to impose a tax on each motor vehicle (vehicle) parking in a parking facility located inside or within a reasonable distance adjacent to the zone. Prohibits the municipality from imposing a tax in certain areas or for certain events. (b) Authorizes the municipality to impose the tax during a period beginning not more than two hours before and ending not more than two hours after the time an event in a project is scheduled to begin. Prohibits the municipality from imposing the tax during any other time. (c) Authorizes the municipality, by ordinance, to provide that the tax is imposed at a flat amount on each parked vehicle or as a percentage of the amount charged for event parking by the owner of the parking facility. Prohibits the amount of tax from exceeding $2.50 per vehicle. Authorizes the municipality, by ordinance, to repeal or increase or decrease the rate of tax. (d) Authorizes the municipality, by ordinance, to require the owner of a parking facility to collect the tax for the benefit of the municipality. Requires the owner required to collect the tax to add the tax to the parking charge. Provides that the tax is a part of the parking charge, debt owed to the parking facility owner by the person parking, and recoverable at law in the same manner as the parking charge. Provides that the tax is not an occupation tax imposed on the owner of the parking facility. Sec. 302.203. ADMISSION TAX. (a) Authorizes a municipality, by ordinance, to impose a tax on each person admitted to an event at a project. Prohibits the municipality from imposing the tax for admission to an event at a facility that is not a project. (b) Authorizes the municipality, by ordinance, to provide that the tax is imposed at a flat amount on each person admitted or as a percentage of the amount charged for admission. Prohibits the amount of tax from exceeding two dollars per person, regardless of the method of imposition. Authorizes the municipality, by ordinance, to repeal, increase, or decrease the tax. (c) Authorizes the municipality, by ordinance, to require the owner of a project to collect the tax for the municipality. Requires an owner required to collect the tax to add the tax to the admission price. Provides that the tax is part of the admission price, a debt owed to the project owner by the person admitted, and recoverable at law in the same manner as the admission charge. Provides that the tax is not an occupation tax imposed on the owner of the project. Sec. 302.204. EFFECTIVE DATE AND ENDING DATE OF TAX. (a)Provides that a tax takes imposed under this subchapter takes effect on the date prescribed by the ordinance imposing the tax. (b) Authorizes a municipality to impose a tax only if the municipality or the authority issues bonds under Section 302.208. Authorizes the municipality to impose the tax only while the municipality's or authority's bonds issued to pay the costs of constructing, remodeling, or rehabilitating a project are outstanding and unpaid. Sec. 302.205. COLLECTION OF TAX. (a) Requires a person required to collect a tax to report and send the taxes to the municipality as provided by the municipality imposing the tax. (b) Authorizes the municipality, by ordinance, to prescribe penalties for failure to keep records required by the municipality, to report when required, or to pay the tax when due. Authorizing the municipality's attorney to bring suit against a person who fails to collect the tax and to pay it over to the municipality as required. (c) Authorizes the municipality, by ordinance, to permit a person who is required to collect a tax to retain a percentage of the collected amount to be reported as reimbursement for the costs of collection. Authorizes the municipality to provide that the person may retain the amount only if the person complies with the municipality's requirements. Sec. 302.206. USE OF TAX REVENUE. Authorizes revenue from a tax to be used only to acquire sites for and acquire, improve, rehabilitate, remodel, enlarge, equip, or repair a project. Sec. 302.207. PLEDGE FOR BONDS. Requires the municipality to pledge the revenue derived from a tax for the payment of any bonds issued for certain purposes by the municipality or the authority. SECTION 9. Provides that an enactment of the 74th Legislature that imposes a restriction or limitation on a rebate, refund, or payment of state or local taxes to an enterprise zone or qualified project does not apply to a zone or project created under this Act. SECTION 10. Effective date: September 1, 1995. SECTION 11. Emergency clause.