JWB H.B. 1030 75(R)BILL ANALYSIS WAYS & MEANS H.B. 1030 By: Maxey 5-1-97 Committee Report (Unamended) BACKGROUND Chapter 312, Tax Code (Property Redevelopment and Tax Abatement Act), provides that a governmental entity granting a tax abatement may cancel or modify the abatement agreement, but there is currently no statutory penalty for failure to comply with the terms of the agreement. By allowing a governmental entity to recapture lost property tax revenue from a non-complying business, there will be an effective tool to ensure compliance with promises made to the governmental entity and an attempt to guarantee tax revenue is not lost. PURPOSE The bill allows a governmental entity to cancel a tax abatement agreement if a property owner fails to comply with each applicable term of the agreement. It also allows the governmental entity to take all appropriate measures to recapture lost tax revenue, and provides a mechanism to cancel the agreement and recapture revenue if the agreement is not fulfilled completely within five years. 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.Amends Sec. 312.205(a), Tax Code (Specific Terms of Tax Abatement Agreement), requiring that a tax abatement agreement made under Sec. 312.204, Tax Code (Municipal Tax Abatement Agreement), must include provisions: (1) allowing a municipality to recapture lost property tax revenue if the property owner does not comply with each applicable term of the agreement; (2) allowing modification of the agreement by the municipality and the property owner; and (3) allowing for cancellation of the agreement by the municipality if the property owner doesn't comply with each applicable term of the agreement. SECTION 2.Amends Chapter 312, Tax Code (Property Redevelopment and Tax Abatement Act), by adding Section 312.211. ACTION BY TAXING UNIT ON NONCOMPLIANCE. Requires the cancellation of a property tax abatement agreement and recapture of lost revenue if the property owner does not comply with each applicable term of the abatement agreement by the fifth anniversary of the date the agreement was entered into. Cancellation does not negate the duty to pay property taxes owed as a result of the agreement. SECTION 3.Amends Sec. 312.402(e), Tax Code (County Tax Abatement Agreement), to extend requirements enacted by Sections 1 and 2 of the bill to counties or other taxing units. SECTION 4. Provides that this Act applies only to tax abatement agreements entered into after effective date of Act. SECTION 5.Effective date: September 1, 1997 SECTION 6. Emergency clause.