By: Brown, Patterson S.B. No. 345
A BILL TO BE ENTITLED
AN ACT
1-1 relating to tax abatement, reinvestment zones, and the refund of
1-2 certain taxes by the comptroller to reimburse certain taxes paid on
1-3 property in a reinvestment zone.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Chapter 111, Tax Code, is amended by adding
1-6 Subchapter F to read as follows:
1-7 SUBCHAPTER F. TAX REFUND FOR ECONOMIC DEVELOPMENT
1-8 Sec. 111.301. REFUND OF STATE TAXES; APPLICATION FOR REFUND.
1-9 (a) An eligible person is entitled to a refund of state sales and
1-10 use taxes imposed under Chapter 151 and state franchise taxes
1-11 imposed under Chapter 171 paid in a calendar year for which the
1-12 person paid ad valorem taxes to a school district on property that
1-13 in that year is:
1-14 (1) located in a reinvestment zone established under
1-15 Chapter 312;
1-16 (2) exempt in whole or in part from the payment of ad
1-17 valorem taxes imposed by a municipality or a county under a tax
1-18 abatement agreement entered into with the municipality or county
1-19 under Chapter 312; and
1-20 (3) not subject to a tax abatement agreement entered
1-21 into by the school district.
1-22 (b) No refund may be made under this section if the person
1-23 makes a payment in lieu of taxes, or any other payment, including a
1-24 gift, grant, donation, or provision of in-kind service, that is not
2-1 payment of a tax or fee, to a municipality or county during the
2-2 period of a tax abatement agreement between the person and the
2-3 municipality or county.
2-4 (c) The amount of a refund may not exceed the amount of net
2-5 state sales and use and state franchise taxes paid by the person,
2-6 after any applicable tax credit, in that year. A person is
2-7 entitled to a refund under this section for the lesser of five
2-8 years or the duration of the tax abatement agreement. If the tax
2-9 abatement agreement is cancelled or the person relocates the
2-10 person's business outside the zone, a person may not apply for a
2-11 refund after the date of the cancellation or the date of the
2-12 relocation, as applicable.
2-13 (d) To be eligible for the refund:
2-14 (1) a person must have:
2-15 (A) established a new business in the
2-16 reinvestment zone;
2-17 (B) expanded an existing business located in the
2-18 reinvestment zone; or
2-19 (C) modernized an existing business located in
2-20 the reinvestment zone to retain jobs of employees of the business;
2-21 (2) that business must have had:
2-22 (A) since the date the person entered into the
2-23 tax abatement agreement with the municipality or county, an
2-24 increase in the business's payroll of $3,000,000, specific to
2-25 property located in this state according to records filed by the
2-26 business with the Texas Employment Commission; or
2-27 (B) since an initial comparison year beginning
3-1 on or after January 1, 1996, an increase of at least $10,000,000 in
3-2 the appraised value of the business's property subject to the tax
3-3 abatement agreement with the municipality or county according to
3-4 the appraisal rolls; and
3-5 (3) that person must have furnished the comptroller
3-6 with a copy of the tax abatement agreement entered into by the
3-7 person with the municipality or county.
3-8 (e) Application for the refund is to the comptroller. The
3-9 application must:
3-10 (1) be made on the form prescribed by the comptroller;
3-11 (2) have attached a tax receipt from the assessor and
3-12 collector of taxes for the school district showing full payment of
3-13 school district ad valorem taxes on the property for the tax year
3-14 for which the refund is sought; and
3-15 (3) include sufficient information for the comptroller
3-16 to determine the portion of the ad valorem taxes paid to a school
3-17 district by the person for the applicable tax year on the property
3-18 that the person would not have been required to pay if the school
3-19 district had entered into a tax abatement agreement concerning the
3-20 property that included the same terms, including terms governing
3-21 the portion of the property that is to be exempt from taxation
3-22 under the agreement, as the applicable municipal or county tax
3-23 abatement agreement.
3-24 (f) A refund amount payable under this subchapter does not
3-25 earn interest.
3-26 (g) A person applying for a refund must certify to the
3-27 comptroller that the person is in compliance with each term of the
4-1 tax abatement agreement entered into with the municipality or
4-2 county.
4-3 (h) If the relevant tax abatement agreement has not been
4-4 filed with the comptroller and the Texas Department of Commerce,
4-5 the comptroller may not act on the application until the agreement
4-6 is on file.
4-7 (i) If, after a review or audit, the comptroller determines
4-8 that the person applying for the refund is not in compliance with
4-9 each term of the appropriate tax abatement agreement, the
4-10 comptroller may not act on the refund application until the person
4-11 comes into compliance and shall notify the municipality or county
4-12 of the person's noncompliance.
4-13 (j) The comptroller may grant to a person who is not in
4-14 compliance with a tax abatement agreement a temporary waiver if the
4-15 comptroller determines that the person's noncompliance is the
4-16 result of a natural disaster.
4-17 (k) The comptroller may conduct any audit that the
4-18 comptroller determines necessary for the enforcement or
4-19 administration of this subchapter.
4-20 Sec. 111.302. ISSUANCE OF TAX REFUND; AMOUNT OF REFUND.
4-21 (a) The comptroller shall issue a tax refund to a person for a tax
4-22 year in which the person applying has paid the ad valorem taxes
4-23 imposed by a school district on property of the person described by
4-24 Section 111.301(a).
4-25 (b) If the person qualifies for the refund, the refund shall
4-26 be issued before the 120th day after the date the application is
4-27 filed with the comptroller.
5-1 (c) The amount of a tax refund is equal to 80 percent of the
5-2 portion of the ad valorem taxes paid to a school district by the
5-3 person for the applicable tax year on the property that the person
5-4 would not have been required to pay if the school district had
5-5 entered into a tax abatement agreement covering the property that
5-6 included the same terms, including terms governing the portion of
5-7 the property that is to be exempt from taxation under the
5-8 agreement, as the applicable municipal or county tax abatement
5-9 agreement.
5-10 Sec. 111.303. RULES AND FORMS. (a) The comptroller by rule
5-11 shall adopt rules and forms for the administration of this
5-12 subchapter. The rules must include a schedule of the state taxes
5-13 to which this subchapter applies.
5-14 (b) The comptroller shall provide without charge one copy of
5-15 the rules and forms to each person applying for a refund under this
5-16 subchapter.
5-17 Sec. 111.304. EVALUATION; ANNUAL REPORT. Not later than
5-18 December 1, 1999, and December 1 of each subsequent year, the
5-19 comptroller shall submit an annual report to the legislature. The
5-20 report:
5-21 (1) must document the applications for refunds filed
5-22 with the comptroller under this subchapter;
5-23 (2) must document the refunds paid by the comptroller
5-24 under this chapter;
5-25 (3) must contain relevant information obtained from
5-26 the Texas Department of Commerce, including information to
5-27 demonstrate the relationship between tax refunds under this
6-1 subchapter and the economy; and
6-2 (4) may include any other relevant information that
6-3 the comptroller determines is applicable to this subchapter or to
6-4 Chapter 312.
6-5 SECTION 2. Subsection (a), Section 312.005, Tax Code, is
6-6 amended to read as follows:
6-7 (a) The Texas Department of Commerce shall maintain a
6-8 central registry of reinvestment zones designated under this
6-9 chapter and of ad valorem tax abatement agreements executed under
6-10 this chapter. Each taxing unit that designates a reinvestment zone
6-11 or executes a tax abatement agreement under this chapter shall
6-12 deliver to the department and to the comptroller before April 1 of
6-13 the year following the year in which the zone is designated or the
6-14 agreement is executed a report providing the following information:
6-15 (1) for a reinvestment zone, a general description of
6-16 the zone, including its size, the types of property located in it,
6-17 <and> its duration, and the guidelines and criteria established for
6-18 the reinvestment zone under Section 312.002, including subsequent
6-19 amendments and modifications of the guidelines or criteria; <and>
6-20 (2) <for> a copy of each tax abatement agreement to
6-21 which the taxing unit is a party; and
6-22 (3) any other information required by the comptroller
6-23 to administer Subchapter F, Chapter 111<, the parties to the
6-24 agreement, a general description of the property and the
6-25 improvements or repairs to be made under the agreement, the portion
6-26 of the property to be exempted, and duration of the agreement>.
6-27 SECTION 3. Section 312.202, Tax Code, is amended to read as
7-1 follows:
7-2 Sec. 312.202. Criteria for Reinvestment Zone. <(a)> To be
7-3 designated as a reinvestment zone under this subchapter, an area
7-4 must<:>
7-5 <(1) substantially arrest or impair the sound growth
7-6 of the municipality creating the zone, retard the provision of
7-7 housing accommodations, or constitute an economic or social
7-8 liability and be a menace to the public health, safety, morals, or
7-9 welfare in its present condition and use because of the presence
7-10 of:>
7-11 <(A) a substantial number of substandard, slum,
7-12 deteriorated, or deteriorating structures;>
7-13 <(B) the predominance of defective or inadequate
7-14 sidewalks or streets;>
7-15 <(C) faulty size, adequacy, accessibility, or
7-16 usefulness of lots;>
7-17 <(D) unsanitary or unsafe conditions;>
7-18 <(E) the deterioration of site or other
7-19 improvements;>
7-20 <(F) tax or special assessment delinquency
7-21 exceeding the fair value of the land;>
7-22 <(G) defective or unusual conditions of title;>
7-23 <(H) conditions that endanger life or property
7-24 by fire or other cause; or>
7-25 <(I) any combination of these factors;>
7-26 <(2) be predominantly open and, because of obsolete
7-27 platting, deterioration of structures or site improvements, or
8-1 other factors, substantially impair or arrest the sound growth of
8-2 the municipality;>
8-3 <(3) be in a federally assisted new community located
8-4 in a home-rule municipality or in an area immediately adjacent to a
8-5 federally assisted new community located in a home-rule
8-6 municipality;>
8-7 <(4) be located entirely in an area that meets the
8-8 requirements for federal assistance under Section 119 of the
8-9 Housing and Community Development Act of 1974 (42 U.S.C. Section
8-10 5318);>
8-11 <(5) encompass signs, billboards, or other outdoor
8-12 advertising structures designated by the governing body of the
8-13 municipality for relocation, reconstruction, or removal for the
8-14 purpose of enhancing the physical environment of the municipality,
8-15 which the legislature declares to be a public purpose; or>
8-16 <(6)> be in the judgment of the governing body
8-17 reasonably likely as a result of the designation to contribute to
8-18 the <retention or expansion of primary employment or to attract
8-19 major investment in the zone that would be a benefit to the
8-20 property and that would contribute to the> economic development of
8-21 the municipality.
8-22 <(b) For purposes of this section, a federally assisted new
8-23 community is a federally assisted area:>
8-24 <(1) that has received or will receive assistance in
8-25 the form of loan guarantees under Title X of the National Housing
8-26 Act (12 U.S.C. Section 1749aa et seq.); and>
8-27 <(2) a portion of which has received grants under
9-1 Section 107 of the Housing and Community Development Act of 1974
9-2 (42 U.S.C. Section 5307) made pursuant to the authority created by
9-3 that section for grants in behalf of new communities assisted under
9-4 Title VII of the Housing and Urban Development Act of 1970 or Title
9-5 IV of the Housing and Urban Development Act of 1968 or in behalf of
9-6 new community projects assisted under Title X of the National
9-7 Housing Act (12 U.S.C. Section 1749aa et seq.).>
9-8 SECTION 4. Subsection (a), Section 312.205, Tax Code, is
9-9 amended to read as follows:
9-10 (a) An agreement made under Section 312.204 must:
9-11 (1) list the kind, number, and location of all
9-12 proposed improvements of the property;
9-13 (2) provide access to and authorize inspection of the
9-14 property by municipal employees to ensure that the improvements or
9-15 repairs are made according to the specifications and conditions of
9-16 the agreement;
9-17 (3) limit the uses of the property consistent with the
9-18 general purpose of encouraging development or redevelopment of the
9-19 zone during the period that property tax exemptions are in effect;
9-20 <and>
9-21 (4) provide for recapturing property tax revenue lost
9-22 as a result of the agreement if the owner of the property fails to
9-23 make the improvements or repairs as provided by the agreement;
9-24 (5) contain each term agreed to by the owner of the
9-25 property;
9-26 (6) require the owner of property to certify annually
9-27 to the governing body of each taxing unit that the owner is in
10-1 compliance with each applicable term of the agreement; and
10-2 (7) provide that the governing body of the
10-3 municipality may cancel or modify the agreement if the property
10-4 owner fails to comply with the agreement.
10-5 SECTION 5. Section 312.006, Tax Code, is amended to read as
10-6 follows:
10-7 Sec. 312.006. EXPIRATION DATE. If not continued in effect,
10-8 this chapter expires September 1, 2001 <1995>.
10-9 SECTION 6. (a) Except as provided by Subsection (b) of this
10-10 section, this Act takes effect September 1, 1995. The change in
10-11 law made by Section 1 of this Act applies only to a tax that is
10-12 paid on or after September 1, 1995.
10-13 (b) Section 5 of this Act takes effect August 31, 1995.
10-14 SECTION 7. The importance of this legislation and the
10-15 crowded condition of the calendars in both houses create an
10-16 emergency and an imperative public necessity that the
10-17 constitutional rule requiring bills to be read on three several
10-18 days in each house be suspended, and this rule is hereby suspended.
10-19 COMMITTEE AMENDMENT NO. 1
10-20 Amend S.B. No. 345 as follows:
10-21 (1) In SECTION 1 of the bill, in Subsection (d)(2)(B),
10-22 Section 111.301, Tax Code (senate engrossment, page 3, line 4),
10-23 strike "$10,000,000" and substitute "$5,000,000".
10-24 Finnell
10-25 COMMITTEE AMENDMENT NO. 2
10-26 Amend S.B. No. 345 by striking Section 3 of the bill (senate
10-27 engrossment, page 7, line 11, through page 9, line 22) and
11-1 renumbering subsequent sections accordingly.
11-2 74R12568 SMH-D Finnell
11-3 COMMITTEE AMENDMENT NO. 3
11-4 Amend S.B. No. 345 as follows:
11-5 In SECTION 1 of the bill, amend Subchapter F, Section
11-6 111.301, by striking the existing Subsection (b) and substituting
11-7 the following in lieu thereof:
11-8 (b) No refund may be made under this section if the person
11-9 makes a payment in lieu of taxes, or any other payment, including a
11-10 gift, grant, donation, or provision of in-kind service, to a
11-11 municipality or county with which the person has executed a tax
11-12 abatement agreement, if the payment was made during the period of
11-13 the agreement. This subsection does not apply to a payment that is
11-14 a tax, fee, or charge for services provided by the municipality or
11-15 county, or to payments pursuant to a contract with an industrial
11-16 district under Chapter 42, Local Government Code, or to a payment
11-17 that in any year of the agreement does not in the aggregate exceed
11-18 $5,000 in value.
11-19 Finnell