1-1 By: Brown, Patterson S.B. No. 345
1-2 (In the Senate - Filed January 27, 1995; January 30, 1995,
1-3 read first time and referred to Committee on Finance;
1-4 April 25, 1995, reported adversely, with favorable Committee
1-5 Substitute by the following vote: Yeas 12, Nays 0; April 25, 1995,
1-6 sent to printer.)
1-7 COMMITTEE SUBSTITUTE FOR S.B. No. 345 By: Brown
1-8 A BILL TO BE ENTITLED
1-9 AN ACT
1-10 relating to tax abatement, reinvestment zones, and the refund of
1-11 certain taxes by the comptroller to reimburse certain taxes paid on
1-12 property in a reinvestment zone.
1-13 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-14 SECTION 1. Chapter 111, Tax Code, is amended by adding
1-15 Subchapter F to read as follows:
1-16 SUBCHAPTER F. TAX REFUND FOR ECONOMIC DEVELOPMENT
1-17 Sec. 111.301. REFUND OF STATE TAXES; APPLICATION FOR REFUND.
1-18 (a) An eligible person is entitled to a refund of state sales and
1-19 use taxes imposed under Chapter 151 and state franchise taxes
1-20 imposed under Chapter 171 paid in a calendar year for which the
1-21 person paid ad valorem taxes to a school district on property that
1-22 in that year is:
1-23 (1) located in a reinvestment zone established under
1-24 Chapter 312;
1-25 (2) exempt in whole or in part from the payment of ad
1-26 valorem taxes imposed by a municipality or a county under a tax
1-27 abatement agreement entered into with the municipality or county
1-28 under Chapter 312; and
1-29 (3) not subject to a tax abatement agreement entered
1-30 into by the school district.
1-31 (b) The amount of a refund may not exceed the amount of net
1-32 state sales and use and state franchise taxes paid by the person,
1-33 after any applicable tax credit, in that year. A person is
1-34 entitled to a refund under this section for the lesser of five
1-35 years or the duration of the tax abatement agreement. If the tax
1-36 abatement agreement is cancelled or the person relocates the
1-37 person's business outside the zone, a person may not apply for a
1-38 refund after the date of the cancellation or the date of the
1-39 relocation, as applicable.
1-40 (c) To be eligible for the refund:
1-41 (1) a person must have:
1-42 (A) established a new business in the
1-43 reinvestment zone;
1-44 (B) expanded an existing business located in the
1-45 reinvestment zone; or
1-46 (C) modernized an existing business located in
1-47 the reinvestment zone to retain jobs of employees of the business;
1-48 (2) that business must have had:
1-49 (A) since the date the person entered into the
1-50 tax abatement agreement with the municipality or county, an
1-51 increase in the business's payroll of $3,000,000, specific to
1-52 property located in this state according to records filed by the
1-53 business with the Texas Employment Commission; or
1-54 (B) since an initial comparison year beginning
1-55 on or after January 1, 1996, an increase of at least $10,000,000 in
1-56 the appraised value of the business's property subject to the tax
1-57 abatement agreement with the municipality or county according to
1-58 the appraisal rolls; and
1-59 (3) that person must have furnished the comptroller
1-60 with a copy of the tax abatement agreement entered into by the
1-61 person with the municipality or county.
1-62 (d) Application for the refund is to the comptroller. The
1-63 application must:
1-64 (1) include the state tax refund voucher issued to the
1-65 person under Section 111.303; and
1-66 (2) have attached a tax receipt from the assessor and
1-67 collector of taxes for the school district showing full payment of
1-68 ad valorem taxes to the school district for the tax year for which
2-1 the refund is sought.
2-2 (e) The comptroller shall make a refund under this section
2-3 in an amount equal to 80 percent of the amount shown on the voucher
2-4 issued to the person under Section 111.303. A refund amount
2-5 payable under this subchapter does not earn interest.
2-6 (f) A person applying for a refund must certify to the
2-7 comptroller that the person is in compliance with each term of the
2-8 tax abatement agreement entered into with the municipality or
2-9 county.
2-10 (g) If the relevant tax abatement agreement has not been
2-11 filed with the comptroller and the Texas Department of Commerce,
2-12 the comptroller may not act on the application until the agreement
2-13 is on file.
2-14 (h) If, after a review or audit, the comptroller determines
2-15 that the person applying for the refund is not in compliance with
2-16 each term of the appropriate tax abatement agreement, the
2-17 comptroller may not act on the refund application until the person
2-18 comes into compliance and shall notify the municipality or county
2-19 of the person's noncompliance.
2-20 (i) The comptroller may grant to a person who is not in
2-21 compliance with a tax abatement agreement a temporary waiver if the
2-22 comptroller determines that the person's noncompliance is the
2-23 result of a natural disaster.
2-24 (j) The comptroller may conduct any audit that the
2-25 comptroller determines necessary for the enforcement or
2-26 administration of this subchapter.
2-27 Sec. 111.302. APPLICATION FOR TAX REFUND VOUCHER. (a) A
2-28 person may apply to the comptroller for a state tax refund voucher.
2-29 (b) The application must:
2-30 (1) be made on the form prescribed by the comptroller;
2-31 (2) include sufficient information for the comptroller
2-32 to determine the amount of school taxes paid on the property for a
2-33 tax year; and
2-34 (3) contain the amount of the voucher under Section
2-35 111.303(c).
2-36 Sec. 111.303. ISSUANCE OF TAX REFUND VOUCHER; AMOUNT OF
2-37 VOUCHER. (a) The comptroller shall issue a tax refund voucher to
2-38 a person for a tax year in which the person applying has paid the
2-39 ad valorem taxes imposed by a school district on property of the
2-40 person described by Section 111.301(a).
2-41 (b) If the person qualifies for the voucher, the voucher
2-42 shall be issued before the 90th day after the date the application
2-43 is filed with the comptroller.
2-44 (c) The amount of a tax refund voucher is equal to the
2-45 portion of the ad valorem taxes paid to a school district by the
2-46 person for the applicable tax year on the property that the person
2-47 would not have been required to pay if the school district had
2-48 entered into a tax abatement agreement covering the property that
2-49 included the same terms, including terms governing the portion of
2-50 the property that is to be exempt from taxation under the
2-51 agreement, as the applicable municipal or county tax abatement
2-52 agreement.
2-53 Sec. 111.304. RULES AND FORMS. (a) The comptroller by rule
2-54 shall adopt rules and forms for the administration of this
2-55 subchapter. The rules must include a schedule of the state taxes
2-56 to which this subchapter applies.
2-57 (b) The comptroller shall provide without charge one copy of
2-58 the rules and forms to each person applying for a refund under this
2-59 subchapter.
2-60 Sec. 111.305. EVALUATION; ANNUAL REPORT. Not later than
2-61 December 1, 1999, and December 1 of each subsequent year, the
2-62 comptroller shall submit an annual report to the legislature. The
2-63 report:
2-64 (1) must document the applications for refunds filed
2-65 with the comptroller under this subchapter;
2-66 (2) must document the refunds paid by the comptroller
2-67 under this chapter;
2-68 (3) must contain relevant information obtained from
2-69 the Texas Department of Commerce, including information to
2-70 demonstrate the relationship between tax refunds under this
3-1 subchapter and the economy; and
3-2 (4) may include any other relevant information that
3-3 the comptroller determines is applicable to this subchapter or to
3-4 Chapter 312.
3-5 SECTION 2. Subsection (a), Section 312.005, Tax Code, is
3-6 amended to read as follows:
3-7 (a) The Texas Department of Commerce shall maintain a
3-8 central registry of reinvestment zones designated under this
3-9 chapter and of ad valorem tax abatement agreements executed under
3-10 this chapter. Each taxing unit that designates a reinvestment zone
3-11 or executes a tax abatement agreement under this chapter shall
3-12 deliver to the department and to the comptroller before April 1 of
3-13 the year following the year in which the zone is designated or the
3-14 agreement is executed a report providing the following information:
3-15 (1) for a reinvestment zone, a general description of
3-16 the zone, including its size, the types of property located in it,
3-17 <and> its duration, and the guidelines and criteria established for
3-18 the reinvestment zone under Section 312.002, including subsequent
3-19 amendments and modifications of the guidelines or criteria; <and>
3-20 (2) <for> a copy of each tax abatement agreement to
3-21 which the taxing unit is a party; and
3-22 (3) any other information required by the comptroller
3-23 to administer Subchapter F, Chapter 111<, the parties to the
3-24 agreement, a general description of the property and the
3-25 improvements or repairs to be made under the agreement, the portion
3-26 of the property to be exempted, and duration of the agreement>.
3-27 SECTION 3. Section 312.202, Tax Code, is amended to read as
3-28 follows:
3-29 Sec. 312.202. Criteria for Reinvestment Zone. <(a)> To be
3-30 designated as a reinvestment zone under this subchapter, an area
3-31 must<:>
3-32 <(1) substantially arrest or impair the sound growth
3-33 of the municipality creating the zone, retard the provision of
3-34 housing accommodations, or constitute an economic or social
3-35 liability and be a menace to the public health, safety, morals, or
3-36 welfare in its present condition and use because of the presence
3-37 of:>
3-38 <(A) a substantial number of substandard, slum,
3-39 deteriorated, or deteriorating structures;>
3-40 <(B) the predominance of defective or inadequate
3-41 sidewalks or streets;>
3-42 <(C) faulty size, adequacy, accessibility, or
3-43 usefulness of lots;>
3-44 <(D) unsanitary or unsafe conditions;>
3-45 <(E) the deterioration of site or other
3-46 improvements;>
3-47 <(F) tax or special assessment delinquency
3-48 exceeding the fair value of the land;>
3-49 <(G) defective or unusual conditions of title;>
3-50 <(H) conditions that endanger life or property
3-51 by fire or other cause; or>
3-52 <(I) any combination of these factors;>
3-53 <(2) be predominantly open and, because of obsolete
3-54 platting, deterioration of structures or site improvements, or
3-55 other factors, substantially impair or arrest the sound growth of
3-56 the municipality;>
3-57 <(3) be in a federally assisted new community located
3-58 in a home-rule municipality or in an area immediately adjacent to a
3-59 federally assisted new community located in a home-rule
3-60 municipality;>
3-61 <(4) be located entirely in an area that meets the
3-62 requirements for federal assistance under Section 119 of the
3-63 Housing and Community Development Act of 1974 (42 U.S.C. Section
3-64 5318);>
3-65 <(5) encompass signs, billboards, or other outdoor
3-66 advertising structures designated by the governing body of the
3-67 municipality for relocation, reconstruction, or removal for the
3-68 purpose of enhancing the physical environment of the municipality,
3-69 which the legislature declares to be a public purpose; or>
3-70 <(6)> be in the judgment of the governing body
4-1 reasonably likely as a result of the designation to contribute to
4-2 the <retention or expansion of primary employment or to attract
4-3 major investment in the zone that would be a benefit to the
4-4 property and that would contribute to the> economic development of
4-5 the municipality.
4-6 <(b) For purposes of this section, a federally assisted new
4-7 community is a federally assisted area:>
4-8 <(1) that has received or will receive assistance in
4-9 the form of loan guarantees under Title X of the National Housing
4-10 Act (12 U.S.C. Section 1749aa et seq.); and>
4-11 <(2) a portion of which has received grants under
4-12 Section 107 of the Housing and Community Development Act of 1974
4-13 (42 U.S.C. Section 5307) made pursuant to the authority created by
4-14 that section for grants in behalf of new communities assisted under
4-15 Title VII of the Housing and Urban Development Act of 1970 or Title
4-16 IV of the Housing and Urban Development Act of 1968 or in behalf of
4-17 new community projects assisted under Title X of the National
4-18 Housing Act (12 U.S.C. Section 1749aa et seq.).>
4-19 SECTION 4. Subsection (a), Section 312.205, Tax Code, is
4-20 amended to read as follows:
4-21 (a) An agreement made under Section 312.204 must:
4-22 (1) list the kind, number, and location of all
4-23 proposed improvements of the property;
4-24 (2) provide access to and authorize inspection of the
4-25 property by municipal employees to ensure that the improvements or
4-26 repairs are made according to the specifications and conditions of
4-27 the agreement;
4-28 (3) limit the uses of the property consistent with the
4-29 general purpose of encouraging development or redevelopment of the
4-30 zone during the period that property tax exemptions are in effect;
4-31 <and>
4-32 (4) provide for recapturing property tax revenue lost
4-33 as a result of the agreement if the owner of the property fails to
4-34 make the improvements or repairs as provided by the agreement;
4-35 (5) contain each term agreed to by the owner of the
4-36 property;
4-37 (6) require the owner of property to certify annually
4-38 to the governing body of each taxing unit that the owner is in
4-39 compliance with each applicable term of the agreement; and
4-40 (7) provide that the governing body of the
4-41 municipality may cancel or modify the agreement if the property
4-42 owner fails to comply with the agreement.
4-43 SECTION 5. Section 312.006, Tax Code, is amended to read as
4-44 follows:
4-45 Sec. 312.006. EXPIRATION DATE. If not continued in effect,
4-46 this chapter expires September 1, 2003 <1995>.
4-47 SECTION 6. (a) Except as provided by Subsection (b) of this
4-48 section, this Act takes effect September 1, 1995. The change in
4-49 law made by Section 1 of this Act applies only to a tax that is
4-50 paid on or after September 1, 1995.
4-51 (b) Section 5 of this Act takes effect August 31, 1995.
4-52 SECTION 7. The importance of this legislation and the
4-53 crowded condition of the calendars in both houses create an
4-54 emergency and an imperative public necessity that the
4-55 constitutional rule requiring bills to be read on three several
4-56 days in each house be suspended, and this rule is hereby suspended.
4-57 * * * * *