By Jones of Lubbock, Isett, et al. H.B. No. 713
75R931 DWS-F
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to defense economic readjustment zones; authorizing the
1-3 issuance of bonds.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Subtitle G, Title 10, Government Code, is amended
1-6 by adding Chapter 2310 to read as follows:
1-7 CHAPTER 2310. DEFENSE ECONOMIC READJUSTMENT ZONE
1-8 SUBCHAPTER A. GENERAL PROVISIONS
1-9 Sec. 2310.001. DEFINITIONS. In this chapter:
1-10 (1) "Defense worker" means an employee of:
1-11 (A) the United States Department of Defense,
1-12 including a member of the armed forces and a government civilian
1-13 worker;
1-14 (B) any employee of a government agency, private
1-15 business, or department of defense related function that is
1-16 employed on a defense facility; or
1-17 (C) any employee of a business that provides
1-18 direct services or products to the department of defense and whose
1-19 job is directly dependent on defense expenditures.
1-20 (2) "Defense worker job" means a department of defense
1-21 authorized permanent position or a position held or occupied by one
1-22 or more defense workers for more than 12 months.
1-23 (3) "Department" means the Texas Department of
1-24 Commerce.
2-1 (4) "Nominating body" means the governing body of a
2-2 municipality or county, or a combination of the governing bodies of
2-3 municipalities or counties, that nominates and applies for
2-4 designation of an area as a readjustment zone.
2-5 (5) "Qualified business" means a person certified as a
2-6 qualified business under Section 2310.302.
2-7 (6) "Qualified employee" means a person who:
2-8 (A) works for a qualified business; and
2-9 (B) performs at least 50 percent of the person's
2-10 service for the business in the readjustment zone.
2-11 (7) "Readjustment zone" means an area designated as a
2-12 defense economic readjustment zone under this chapter.
2-13 Sec. 2310.002. JURISDICTION OF MUNICIPALITY. For the
2-14 purposes of this chapter, territory in the extraterritorial
2-15 jurisdiction of a municipality is considered to be in the
2-16 jurisdiction of the municipality.
2-17 (Sections 2310.003-2310.050 reserved for expansion
2-18 SUBCHAPTER B. DEPARTMENT POWERS AND DUTIES RELATING TO ZONES
2-19 Sec. 2310.051. GENERAL POWERS AND DUTIES. (a) The
2-20 department shall administer and monitor the implementation of this
2-21 chapter.
2-22 (b) The department shall establish criteria and procedures
2-23 for designating a qualified area as a readjustment zone and for
2-24 designating a defense readjustment project.
2-25 (c) The department shall adopt rules necessary to carry out
2-26 the purposes of this chapter.
2-27 Sec. 2310.052. EVALUATION; REPORT. (a) The department
3-1 shall conduct a continuing evaluation of the programs of
3-2 readjustment zones.
3-3 (b) On or before December 1 of each year, the department
3-4 shall submit to the governor, the legislature, and the Legislative
3-5 Budget Board a report that:
3-6 (1) evaluates the effectiveness of the readjustment
3-7 zone program;
3-8 (2) describes the use of state and local incentives
3-9 under this chapter and their effect on revenue; and
3-10 (3) suggests legislation, as appropriate.
3-11 Sec. 2310.053. ASSISTANCE. (a) The department shall
3-12 assist:
3-13 (1) a qualified business in obtaining the benefits of
3-14 any state incentive or inducement program provided by law;
3-15 (2) the governing body of a readjustment zone in
3-16 obtaining assistance from another state agency, including job
3-17 training and technical assistance to qualified businesses in a
3-18 zone; and
3-19 (3) the governing body of a readjustment zone in
3-20 encouraging small business development.
3-21 (b) The department shall provide to persons desiring to
3-22 locate and engage in business in a readjustment zone information
3-23 and appropriate assistance relating to the required legal
3-24 authorization, including a state license, permit, certificate,
3-25 approval, registration, or charter, to engage in business in this
3-26 state.
3-27 (c) The department shall publicize existing tax incentives
4-1 and economic development programs in readjustment zones.
4-2 (d) On request the department shall offer to a unit of local
4-3 government having a readjustment zone within its jurisdiction
4-4 technical assistance relating to tax abatement and the development
4-5 of alternative revenue sources.
4-6 Sec. 2310.054. COORDINATION WITH OTHER GOVERNMENTAL
4-7 ENTITIES. (a) In cooperation with the appropriate units of local
4-8 government and other state agencies, the department shall
4-9 coordinate and streamline state business assistance programs and
4-10 permit or license application procedures for businesses in
4-11 readjustment zones.
4-12 (b) The department shall work with the responsible state and
4-13 federal agencies to coordinate readjustment zone programs with
4-14 other programs carried out in a readjustment zone, including
4-15 housing, community and economic development, small business,
4-16 banking, financial assistance, transportation, and employment
4-17 training programs.
4-18 (c) The department shall encourage other state agencies in
4-19 awarding grants, loans, or services to give priority to businesses
4-20 in readjustment zones.
4-21 (Sections 2310.055-2310.100 reserved for expansion
4-22 SUBCHAPTER C. DESIGNATION OF READJUSTMENT ZONE
4-23 Sec. 2310.101. CRITERIA FOR READJUSTMENT ZONE DESIGNATION.
4-24 (a) To be designated as a readjustment zone an area must:
4-25 (1) have a continuous boundary;
4-26 (2) be at least one square mile but not larger than
4-27 the greater of:
5-1 (A) 10 square miles, excluding lakes, waterways,
5-2 and transportation arteries; or
5-3 (B) an area, not to exceed 20 square miles, that
5-4 is equal to five percent of the area, excluding lakes, waterways,
5-5 and transportation arteries, of the municipality, county, or
5-6 combination of municipalities or counties nominating the area as a
5-7 readjustment zone;
5-8 (3) be located in an adversely affected
5-9 defense-dependent community;
5-10 (4) have at least 50 percent of its area located in an
5-11 existing or former United States Department of Defense facility;
5-12 and
5-13 (5) be nominated as a readjustment zone by an
5-14 ordinance or order adopted by the nominating body.
5-15 (b) The department may not designate an area as a
5-16 readjustment zone if more than one other readjustment zone is
5-17 located in the county in which the proposed zone is to be located.
5-18 Sec. 2310.102. ADVERSELY AFFECTED DEFENSE-DEPENDENT
5-19 COMMUNITY. A municipality or county is an adversely affected
5-20 defense-dependent community if the department determines that:
5-21 (1) the municipality or county requires assistance
5-22 because of:
5-23 (A) the proposed or actual establishment,
5-24 realignment, or closure of a defense facility;
5-25 (B) the cancellation or termination of a United
5-26 States Department of Defense contract or the failure of the
5-27 department of defense to proceed with an approved major weapon
6-1 system program;
6-2 (C) a publicly announced planned major reduction
6-3 in department of defense spending that would directly and adversely
6-4 affect the municipality or county; or
6-5 (D) the closure or a significant reduction of
6-6 the operations of a defense facility as the result of a merger,
6-7 acquisition, or consolidation of a defense contractor operating the
6-8 facility; and
6-9 (2) the municipality or county is expected to
6-10 experience, during the period between the date an event described
6-11 by Subdivision (1) is finally approved and the date that the event
6-12 is to be substantially completed, a direct loss of:
6-13 (A) 2,500 or more defense worker jobs in any
6-14 area of the municipality or county that is located in a
6-15 metropolitan statistical area;
6-16 (B) 1,000 or more defense worker jobs in any
6-17 area of the municipality or county that is not located in a
6-18 metropolitan statistical area; or
6-19 (C) one percent of the civilian jobs in the
6-20 municipality or county.
6-21 Sec. 2310.103. NOMINATION OF READJUSTMENT ZONE. (a) The
6-22 governing body of a municipality or county that is an adversely
6-23 affected defense-dependent community, individually or in
6-24 combination with other municipalities or counties that are
6-25 adversely affected defense-dependent communities, by ordinance or
6-26 order, as appropriate, may nominate as a readjustment zone an area
6-27 within its jurisdiction that meets the criteria under Section
7-1 2310.101.
7-2 (b) Unless the nominating body holds a public hearing before
7-3 adopting an ordinance or order under this section, the ordinance or
7-4 order is not valid.
7-5 (c) The governing body of a county may not nominate
7-6 territory in a municipality, including extraterritorial
7-7 jurisdiction of a municipality, to be included in a proposed
7-8 readjustment zone unless the governing body of the municipality
7-9 also nominates the territory and together with the county files a
7-10 joint application under Section 2310.105.
7-11 (d) The governing bodies of a combination of municipalities
7-12 or counties may not jointly nominate an area as a readjustment zone
7-13 unless the governing bodies have entered into a binding agreement
7-14 to administer the zone jointly.
7-15 Sec. 2310.104. NOMINATING ORDINANCE OR ORDER. (a) An
7-16 ordinance or order nominating an area as a readjustment zone must:
7-17 (1) describe precisely the area to be included in the
7-18 zone by a legal description or reference to roadways, lakes,
7-19 waterways, or municipal or county boundaries;
7-20 (2) state a finding that the area meets the
7-21 requirements of this chapter;
7-22 (3) summarize briefly the incentives, including tax
7-23 incentives, that, at the election of the nominating body, apply to
7-24 business enterprises in the area; and
7-25 (4) nominate the area as a readjustment zone.
7-26 (b) At least one of the incentives summarized under
7-27 Subsection (a)(3) must not be offered elsewhere within the
8-1 jurisdiction except within an enterprise zone designated under
8-2 Chapter 2303.
8-3 (c) This section does not prohibit a municipality or county
8-4 from extending additional incentives, including tax incentives, for
8-5 business enterprises in a readjustment zone by a separate ordinance
8-6 or order.
8-7 Sec. 2310.105. APPLICATION FOR DESIGNATION. (a) For an
8-8 area to be designated as a readjustment zone, the nominating body,
8-9 after nominating the area as a readjustment zone, must send to the
8-10 department a written application for designation of the area as a
8-11 readjustment zone.
8-12 (b) The application must include:
8-13 (1) a certified copy of the ordinance or order, as
8-14 appropriate, nominating the area as a readjustment zone;
8-15 (2) a map of the area showing existing streets and
8-16 highways;
8-17 (3) an analysis and appropriate supporting documents
8-18 and statistics demonstrating that the area qualifies for
8-19 designation as a readjustment zone;
8-20 (4) a statement that specifies each tax incentive,
8-21 grant, other financial incentive or benefit, or program to be
8-22 provided by the nominating body to business enterprises in the area
8-23 that is not to be provided throughout the governmental entity or
8-24 entities nominating the area as a readjustment zone;
8-25 (5) a statement of the economic development and
8-26 planning objectives for the area;
8-27 (6) an estimate of the economic impact of the
9-1 designation of the area as a readjustment zone on the revenues of
9-2 the governmental entity or entities nominating the area as a
9-3 readjustment zone, considering all the financial incentives and
9-4 benefits and the programs contemplated;
9-5 (7) a transcript or tape recording of all public
9-6 hearings on the proposed zone;
9-7 (8) if the application is a joint application, a
9-8 description and copy of the agreement between the applicants;
9-9 (9) the procedures for negotiating with residents,
9-10 community groups, and other entities affected by the designation of
9-11 the area as a readjustment zone and with qualified businesses in
9-12 the area;
9-13 (10) a description of the administrative authority, if
9-14 one is to be appointed for the readjustment zone under Section
9-15 2310.202; and
9-16 (11) any additional information the department
9-17 requires.
9-18 (c) Information required by Subsection (b) is for evaluation
9-19 purposes only.
9-20 Sec. 2310.106. REVIEW OF APPLICATION. (a) On receipt of an
9-21 application for the designation of a readjustment zone, the
9-22 department shall review the application to determine if the
9-23 nominated area qualifies for designation as a readjustment zone
9-24 under this chapter.
9-25 (b) The department shall allow an applicant to correct any
9-26 omission or clerical error in the application and to return the
9-27 application to the department on or before the 15th day after the
10-1 date on which the department receives the application.
10-2 Sec. 2310.107. DESIGNATION AGREEMENT. (a) If the
10-3 department determines that a nominated area for which a designation
10-4 application has been received satisfies the criteria under Section
10-5 2310.101, the department shall negotiate with the nominating body
10-6 for a designation agreement.
10-7 (b) A designation agreement must:
10-8 (1) designate the nominated area as a readjustment
10-9 zone; and
10-10 (2) designate the administrative authority, if one is
10-11 to be appointed for the zone under Section 2310.202, and describe
10-12 its functions and duties, which should include decision-making
10-13 authority and the authority to negotiate with affected entities.
10-14 (c) The department shall complete the negotiations and sign
10-15 the agreement not later than the 60th day after the date on which
10-16 the application is received unless the department extends that
10-17 period to the 90th day after the date on which the application was
10-18 received.
10-19 (d) If an agreement is not completed within the 60-day
10-20 period provided by Subsection (c), the department shall provide to
10-21 the nominating body the specific areas of concern and a final
10-22 proposal for the agreement.
10-23 (e) If the agreement is not executed before the 91st day
10-24 after the date on which the application was received, the
10-25 application is considered to be denied.
10-26 Sec. 2310.108. DENIAL OF APPLICATION; NOTICE. (a) The
10-27 department may deny an application for the designation of a
11-1 readjustment zone only if the department determines that the
11-2 nominated area does not satisfy the criteria under Section
11-3 2310.101.
11-4 (b) The department shall inform the nominating body of the
11-5 specific reasons for denial of an application, including denial
11-6 under Section 2310.107(e).
11-7 Sec. 2310.109. PERIOD OF DESIGNATION. An area may be
11-8 designated as a readjustment zone for a maximum of seven years. A
11-9 designation remains in effect until September 1 of the final year
11-10 of the designation.
11-11 Sec. 2310.110. AMENDING BOUNDARIES. (a) The nominating
11-12 body may amend the boundary of a readjustment zone by ordinance or
11-13 order, as appropriate, adopted after a public hearing on the issue.
11-14 (b) The amended boundary:
11-15 (1) must be continuous;
11-16 (2) may not exceed the original size requirement of
11-17 Section 2310.101; and
11-18 (3) may not exclude any area originally included
11-19 within the boundary of the zone as designated.
11-20 (c) The readjustment zone with the amended boundary must
11-21 continue to meet the location requirements of Section 2310.101(4).
11-22 (d) A nominating body may not make more than one boundary
11-23 amendment annually for a readjustment zone.
11-24 (e) For each amendment of a readjustment zone boundary, the
11-25 nominating body shall pay the department a reasonable fee, in an
11-26 amount specified by the department, not to exceed $500. The
11-27 department may use fees collected under this subsection to
12-1 administer this chapter and for other purposes to advance this
12-2 chapter.
12-3 Sec. 2310.111. REMOVAL OF DESIGNATION. (a) The department
12-4 may remove the designation of an area as a readjustment zone if:
12-5 (1) the area no longer meets the criteria for
12-6 designation under this chapter or by department rule adopted under
12-7 this chapter; or
12-8 (2) the department determines that the governing body
12-9 of the readjustment zone has not complied with commitments made in
12-10 the ordinance or order nominating the area as a readjustment zone.
12-11 (b) The removal of a designation does not affect the
12-12 validity of a tax incentive or regulatory relief granted or accrued
12-13 before the removal.
12-14 (Sections 2310.112-2310.200 reserved for expansion
12-15 SUBCHAPTER D. ADMINISTRATION OF READJUSTMENT ZONES
12-16 Sec. 2310.201. ADMINISTRATION BY GOVERNING BODY. The
12-17 governing body of a readjustment zone is the governing body of the
12-18 municipality or county, or the governing bodies of the combination
12-19 of municipalities or counties, that applied to have the area
12-20 designated as a readjustment zone.
12-21 Sec. 2310.202. ADMINISTRATION BY ADMINISTRATIVE AUTHORITY.
12-22 (a) The governing body of a readjustment zone may delegate its
12-23 administrative duties to an administrative authority appointed by
12-24 the governing body.
12-25 (b) An administrative authority must:
12-26 (1) be composed of 3, 5, 7, 9, 11, or 15 members;
12-27 (2) be a viable and responsive body generally
13-1 representative of all public or private entities that have a stake
13-2 in the development of the zone; and
13-3 (3) if the readjustment zone includes private
13-4 residences, include:
13-5 (A) an elected official representing
13-6 readjustment zone residents and businesses; or
13-7 (B) at least two readjustment zone residents.
13-8 Sec. 2310.203. LIAISON. The governing body of a
13-9 readjustment zone shall designate a liaison to communicate and
13-10 negotiate with:
13-11 (1) the department;
13-12 (2) the administrative authority, if one exists;
13-13 (3) a defense readjustment project; and
13-14 (4) other entities in or affected by the readjustment
13-15 zone.
13-16 Sec. 2310.204. ANNUAL REPORT. (a) Not later than October 1
13-17 of each year, the governing body of a readjustment zone shall
13-18 submit to the department a report in the form required by the
13-19 department.
13-20 (b) The report must be approved by the readjustment zone's
13-21 administrative authority, if one exists.
13-22 (c) The report must include for the year preceding the date
13-23 of the report:
13-24 (1) a list of local incentives for community
13-25 development available in the zone;
13-26 (2) the use of local incentives for which the
13-27 governing body provided in the ordinance or order nominating the
14-1 readjustment zone and the effect of those incentives on revenue;
14-2 (3) the number of businesses assisted, located, and
14-3 retained in the zone since its designation due to the existence of
14-4 the readjustment zone;
14-5 (4) a summary of all industrial revenue bonds issued
14-6 to finance projects located in the zone; and
14-7 (5) a description of all efforts made to attain
14-8 revitalization goals for the zone.
14-9 (Sections 2310.205-2310.300 reserved for expansion
14-10 SUBCHAPTER E. QUALIFIED BUSINESSES AND DEFENSE
14-11 READJUSTMENT PROJECTS
14-12 Sec. 2310.301. DEFINITION. In this subchapter, "new
14-13 permanent job" means a new employment position created by a
14-14 qualified business as described by Section 2310.302 that:
14-15 (1) has provided at least 1,820 hours of employment a
14-16 year to a qualified employee; and
14-17 (2) is intended to exist during the period that the
14-18 qualified business is designated as a defense readjustment project
14-19 under Section 2310.306.
14-20 Sec. 2310.302. QUALIFIED BUSINESS. (a) A person is a
14-21 qualified business if the department, for the purpose of state
14-22 benefits under this chapter, or the governing body of a
14-23 readjustment zone, for the purpose of local benefits, certifies
14-24 that:
14-25 (1) the person is engaged in or has provided
14-26 substantial commitment to initiate the active conduct of a trade or
14-27 business in the readjustment zone; and
15-1 (2) at least 25 percent of the person's new employees
15-2 in the readjustment zone are:
15-3 (A) residents of readjustment zones of the
15-4 governing jurisdiction;
15-5 (B) economically disadvantaged individuals; or
15-6 (C) dislocated defense workers.
15-7 (b) The governing body of a readjustment zone may certify a
15-8 franchise or subsidiary of a new or existing business as a
15-9 qualified business if the franchise or subsidiary:
15-10 (1) is located entirely in the readjustment zone; and
15-11 (2) maintains separate books and records of the
15-12 business activity conducted in the zone.
15-13 Sec. 2310.303. PROHIBITION ON QUALIFIED BUSINESS
15-14 CERTIFICATION. If the department determines that the governing
15-15 body of a readjustment zone is not complying with this chapter, the
15-16 department shall prohibit the certification of a qualified business
15-17 in the zone until the department determines that the governing body
15-18 is complying with this chapter. The department may not designate
15-19 more than two businesses in a single readjustment zone as defense
15-20 readjustment projects.
15-21 Sec. 2310.304. REQUEST FOR APPLICATION FOR DEFENSE
15-22 READJUSTMENT PROJECT DESIGNATION. A qualified business in a
15-23 readjustment zone may request that the governing body of the
15-24 readjustment zone apply to the department for designation of the
15-25 business as a defense readjustment project. The request must also
15-26 be made to the readjustment zone's administrative authority, if one
15-27 exists.
16-1 Sec. 2310.305. APPLICATION FOR DEFENSE READJUSTMENT PROJECT
16-2 DESIGNATION. (a) If the governing body of a readjustment zone or
16-3 the governing body and administrative authority of a readjustment
16-4 zone, as appropriate, approve a request made under Section
16-5 2310.304, the governing body may apply to the department for the
16-6 designation of the qualified business as a defense readjustment
16-7 project.
16-8 (b) An application must:
16-9 (1) describe the procedures and efforts of the
16-10 governmental entity or entities that applied to have the area
16-11 designated as a readjustment zone to facilitate and encourage
16-12 participation by and negotiation among affected entities in the
16-13 zone in which the qualified business is located;
16-14 (2) contain an economic analysis of the plans of the
16-15 qualified business for expansion, revitalization, or other activity
16-16 in the readjustment zone, including:
16-17 (A) the number of anticipated new permanent jobs
16-18 the business will create;
16-19 (B) the anticipated number of permanent jobs the
16-20 business will retain;
16-21 (C) the amount of investment to be made in the
16-22 zone; and
16-23 (D) other information the department requires;
16-24 and
16-25 (3) describe the local effort made by the governmental
16-26 entity or entities that applied to have the area designated as a
16-27 readjustment zone, the administrative authority, if one exists, the
17-1 qualified business, and other affected entities to develop and
17-2 revitalize the zone.
17-3 (c) For the purposes of this section, local effort to
17-4 develop and revitalize a readjustment zone is:
17-5 (1) the willingness of public entities in the zone to
17-6 provide services, incentives, and regulatory relief authorized by
17-7 this chapter and to negotiate with the qualified business for which
17-8 application is made and with other local groups or businesses to
17-9 achieve the public purposes of this chapter; and
17-10 (2) the effort of the qualified business and other
17-11 affected entities to cooperate in achieving those public purposes.
17-12 (d) Factors to be considered in evaluating the local effort
17-13 of a public entity include:
17-14 (1) tax abatement, deferral, refunds, or other tax
17-15 incentives;
17-16 (2) regulatory relief, including:
17-17 (A) zoning changes or variances;
17-18 (B) exemptions from unnecessary building code
17-19 requirements, impact fees, or inspection fees; and
17-20 (C) streamlined permitting;
17-21 (3) enhanced municipal services, including:
17-22 (A) improved police and fire protection;
17-23 (B) institution of community crime prevention
17-24 programs; and
17-25 (C) special public transportation routes or
17-26 reduced fares;
17-27 (4) improvements in community facilities, including:
18-1 (A) capital improvements in water and sewer
18-2 facilities;
18-3 (B) road repair; and
18-4 (C) creation or improvement of parks;
18-5 (5) improvements to housing, including:
18-6 (A) low-interest loans for housing
18-7 rehabilitation, improvement, or new construction; and
18-8 (B) transfer of abandoned housing to individuals
18-9 or community groups;
18-10 (6) business and industrial development services,
18-11 including:
18-12 (A) low-interest loans for business;
18-13 (B) use of surplus school buildings or other
18-14 underutilized publicly owned facilities as small business
18-15 incubators;
18-16 (C) provision of publicly owned land for
18-17 development purposes, including residential, commercial, or
18-18 industrial development;
18-19 (D) creation of special one-stop permitting and
18-20 problem resolution centers or ombudsmen; and
18-21 (E) promotion and marketing services; and
18-22 (7) job training and employment services, including:
18-23 (A) retraining programs;
18-24 (B) literacy and employment skills programs;
18-25 (C) vocational education; and
18-26 (D) customized job training.
18-27 (e) Factors to be considered in evaluating the local effort
19-1 of a private entity include:
19-2 (1) the willingness to negotiate or cooperate in the
19-3 redevelopment of vacated defense facilities and the creation of
19-4 high-skilled, high wage jobs;
19-5 (2) commitments to hire dislocated defense workers and
19-6 economically disadvantaged workers;
19-7 (3) commitments to hire minority workers and to
19-8 contract with minority-owned businesses;
19-9 (4) provision of technical and vocational job training
19-10 for residents of the nominating body's jurisdiction or economically
19-11 disadvantaged employees;
19-12 (5) provision of child care for employees;
19-13 (6) commitments to implement and contribute to a
19-14 tutoring or mentoring program for area students;
19-15 (7) prevention or reduction of juvenile crime; and
19-16 (8) the willingness to make contributions to the
19-17 well-being of the community, such as job training, or the donation
19-18 of land for parks or other public purposes.
19-19 Sec. 2310.306. DEFENSE READJUSTMENT PROJECT DESIGNATION.
19-20 (a) The department may designate a qualified business as a defense
19-21 readjustment project only if the department determines that:
19-22 (1) the business is a qualified business under Section
19-23 2310.302 that is located in or has made a substantial commitment to
19-24 locate in a defense readjustment zone;
19-25 (2) the governing body of the readjustment zone making
19-26 the application has demonstrated that a high level of cooperation
19-27 exists among public, private, and neighborhood entities in the
20-1 zone; and
20-2 (3) the designation will contribute significantly to
20-3 the achievement of the plans of the governing body making the
20-4 application for development and revitalization of the zone.
20-5 (b) The department shall designate qualified businesses as
20-6 defense readjustment projects on a competitive basis. The
20-7 department shall make its designation decisions using a weighted
20-8 scale in which:
20-9 (1) 50 percent of the evaluation is based on the
20-10 effect of the loss of defense expenditures and employment on the
20-11 community;
20-12 (2) 25 percent of the evaluation depends on the local
20-13 effort to achieve development and revitalization of the
20-14 readjustment zone; and
20-15 (3) 25 percent of the evaluation depends on the
20-16 evaluation criteria as determined by the department, which must
20-17 include:
20-18 (A) the level of cooperation and support the
20-19 project applicant commits to the revitalization goals of the zone;
20-20 and
20-21 (B) the type and wage level of the jobs to be
20-22 created or retained by the business.
20-23 (c) The department may remove a defense readjustment project
20-24 designation if it determines that the business is not complying
20-25 with a requirement for its designation.
20-26 Sec. 2310.307. ALLOCATION OF JOBS ELIGIBLE FOR TAX REFUND.
20-27 When the department designates a business as a defense readjustment
21-1 project, the department shall allocate to the project the maximum
21-2 number of new permanent jobs or retained jobs eligible to be
21-3 included in a computation of a tax refund for the project. The
21-4 number may not exceed 500 or a number equal to 110 percent of the
21-5 number of anticipated new permanent jobs or retained jobs specified
21-6 in the application for designation of the business as a defense
21-7 readjustment project under Section 2310.305, whichever is less.
21-8 Sec. 2310.308. DURATION OF CERTAIN DESIGNATIONS. The
21-9 department's designation of a qualified business as a defense
21-10 readjustment project is effective until the fifth anniversary of
21-11 the date on which the designation is made regardless of whether the
21-12 readjustment zone in which the project is located expires before
21-13 the fifth anniversary of the project.
21-14 (Sections 2310.309-2310.400 reserved for expansion
21-15 SUBCHAPTER F. READJUSTMENT ZONE BENEFITS
21-16 Sec. 2310.401. EXEMPTIONS FROM STATE REGULATION; SUSPENSION
21-17 OF LOCAL REGULATION. (a) A state agency may exempt from its
21-18 regulation a qualified business, qualified employee, or qualified
21-19 property in a readjustment zone if the exemption is consistent
21-20 with:
21-21 (1) the purposes of this chapter; and
21-22 (2) the protection and promotion of the general health
21-23 and welfare.
21-24 (b) A local government may suspend local regulation,
21-25 including an ordinance, rule, or standard, relating to zoning,
21-26 licensing, or building codes in a readjustment zone.
21-27 (c) An exemption from or suspension of regulation under this
22-1 section must be adopted in the same manner that the regulation was
22-2 adopted.
22-3 (d) The authorization provided by Subsection (a) or (b) does
22-4 not apply to regulation:
22-5 (1) that relates to:
22-6 (A) civil rights;
22-7 (B) equal employment;
22-8 (C) equal opportunity;
22-9 (D) fair housing rights; or
22-10 (E) preservation of historical sites or
22-11 historical artifacts;
22-12 (2) the relaxation of which is likely to harm the
22-13 public safety or public health, including environmental health; or
22-14 (3) that is specifically imposed by law.
22-15 (e) For the purposes of this section, property is classified
22-16 as qualified property if the property is:
22-17 (1) tangible personal property located in the
22-18 readjustment zone that was acquired from the federal government by
22-19 lease or deed or:
22-20 (A) acquired by a taxpayer not earlier than the
22-21 90th day before the date on which the area was designated as a
22-22 readjustment zone; and
22-23 (B) used predominantly by the taxpayer in the
22-24 active conduct of a trade or business;
22-25 (2) real property located in the readjustment zone
22-26 that was acquired from the federal government by lease or deed or:
22-27 (A) acquired by a taxpayer not earlier than the
23-1 90th day before the date on which the area was designated as a
23-2 readjustment zone and was used predominantly by the taxpayer in the
23-3 active conduct of a trade or business; or
23-4 (B) the principal residence of the taxpayer on
23-5 the date of the sale or exchange; or
23-6 (3) an interest in an entity that was certified as a
23-7 qualified business under Section 2310.302 for the entity's most
23-8 recent tax year ending before the date of the sale or exchange.
23-9 Sec. 2310.402. REVIEW OF STATE AGENCY RULES; REPORT. (a) A
23-10 state agency by rule may provide, when applicable, encouragements
23-11 and incentives to increase:
23-12 (1) the renovation, improvement, or new construction
23-13 of housing in readjustment zones; and
23-14 (2) the economic viability and profitability of
23-15 business and commerce in readjustment zones.
23-16 (b) The department shall disseminate the reports to the
23-17 governing bodies of readjustment zones and others as necessary to
23-18 advance the purposes of this chapter.
23-19 (c) To contribute to the implementation of this chapter, an
23-20 agency may waive, modify, provide exemptions to, or otherwise
23-21 minimize the adverse effects of the rules it administers on the
23-22 renovation, improvement, or new construction of housing in
23-23 readjustment zones or on the economic viability and profitability
23-24 of business and commerce in readjustment zones.
23-25 Sec. 2310.403. STATE PREFERENCES. (a) A state agency shall
23-26 give preference to the governing body of a readjustment zone or a
23-27 qualified business or qualified employee located in a readjustment
24-1 zone over other eligible applicants for grants, loans, or credit
24-2 enhancements that are administered by the state agency if:
24-3 (1) at least 50 percent of the grant, loan, or credit
24-4 enhancement will be spent for the direct benefit of the
24-5 readjustment zone; and
24-6 (2) the purpose of the grant, loan, or credit
24-7 enhancement is to:
24-8 (A) promote economic development in the
24-9 community; or
24-10 (B) construct, improve, extend, repair, or
24-11 maintain public facilities in the community.
24-12 (b) The comptroller may and is encouraged to deposit state
24-13 money in financial institutions located or doing business in
24-14 readjustment zones.
24-15 (c) A state agency may and is encouraged to contract with
24-16 businesses located in readjustment zones.
24-17 (d) The department may give preference to readjustment zones
24-18 in granting economic development money or other benefits.
24-19 Sec. 2310.404. STATE TAX REFUNDS AND DEDUCTION; REPORT. (a)
24-20 A defense readjustment project is eligible for:
24-21 (1) a refund of state taxes under Section 151.4291,
24-22 Tax Code; and
24-23 (2) a deduction from taxable capital under Section
24-24 171.1016, Tax Code.
24-25 (b) Not later than the 60th day after the last day of each
24-26 fiscal year, the comptroller shall report to the department the
24-27 statewide total of the tax refunds made under this section during
25-1 that fiscal year.
25-2 Sec. 2310.405. LOCAL SALES AND USE TAX REFUNDS. (a) To
25-3 encourage the development of areas designated as readjustment
25-4 zones, the governing body of a municipality through a program may
25-5 refund its local sales and use taxes paid by a qualified business
25-6 on:
25-7 (1) the purchase, lease, or rental of equipment or
25-8 machinery for use in a readjustment zone;
25-9 (2) the purchase of material for use in remodeling,
25-10 rehabilitating, or constructing a structure in a readjustment zone;
25-11 (3) labor for remodeling, rehabilitating, or
25-12 constructing a structure in a readjustment zone; and
25-13 (4) electricity and natural gas purchased and consumed
25-14 in the normal course of business in the readjustment zone.
25-15 (b) To promote the public health, safety, or welfare, the
25-16 governing body of a municipality or county through a program may
25-17 refund its local sales and use taxes paid by a qualified business
25-18 or qualified employee.
25-19 (c) The governing body of a municipality or county that is
25-20 the governing body of a readjustment zone may provide for the
25-21 partial or total refund of its local sales and use taxes paid by a
25-22 person making a taxable purchase, lease, or rental for development
25-23 or revitalization in the zone.
25-24 (d) A person eligible for a refund of local sales and use
25-25 taxes under this section shall pay the entire amount of state and
25-26 local sales and use taxes at the time the taxes would be due if an
25-27 agreement for the refund did not exist.
26-1 (e) An agreement to refund local sales and use taxes under
26-2 this section must:
26-3 (1) be written;
26-4 (2) contain an expiration date; and
26-5 (3) require that the person eligible for the refund
26-6 provide to the municipality or county making the refund the
26-7 documentation necessary to support a refund claim.
26-8 (f) The municipality or county shall make the refund
26-9 directly to the person eligible for the refund in the manner
26-10 provided by the agreement.
26-11 Sec. 2310.406. REDUCTION OR ELIMINATION OF LOCAL FEES OR
26-12 TAXES. (a) To promote the public health, safety, or welfare, the
26-13 governing body of a municipality or county through a program may
26-14 reduce or eliminate fees or taxes that it imposes on a qualified
26-15 business or qualified employee.
26-16 (b) This section does not apply to sales and use taxes or
26-17 property taxes.
26-18 Sec. 2310.407. TAX INCREMENT FINANCING AND ABATEMENT.
26-19 Designation of an area as a readjustment zone is also designation
26-20 of the area as a reinvestment zone for:
26-21 (1) tax increment financing under Chapter 311, Tax
26-22 Code; and
26-23 (2) tax abatement under Chapter 312, Tax Code.
26-24 Sec. 2310.408. DEVELOPMENT BONDS. To finance a project in a
26-25 readjustment zone, bonds may be issued under:
26-26 (1) the Act for Development of Employment, Industrial
26-27 and Health Resources of 1971 (Article 5190.1, Vernon's Texas Civil
27-1 Statutes); or
27-2 (2) the Development Corporation Act of 1979 (Article
27-3 5190.6, Vernon's Texas Civil Statutes).
27-4 Sec. 2310.409. OTHER LOCAL INCENTIVES. (a) The governing
27-5 body of a municipality or county that is the governing body of a
27-6 readjustment zone may:
27-7 (1) defer compliance in the zone with the subdivision
27-8 and development ordinances or rules, other than those relating to
27-9 streets and roads or sewer or water services, of the municipality
27-10 or county, as appropriate;
27-11 (2) give priority to the zone for the receipt of:
27-12 (A) community development block grant money;
27-13 (B) industrial revenue bonds; or
27-14 (C) funds received for job training;
27-15 (3) adopt and implement a plan for police protection
27-16 in the zone;
27-17 (4) amend the zoning ordinances of the municipality or
27-18 county, as appropriate, to promote economic development in the
27-19 zone;
27-20 (5) establish permitting preferences for businesses in
27-21 the zone;
27-22 (6) establish simplified, accelerated, or other
27-23 special permit procedures for businesses in the zone;
27-24 (7) waive development fees for projects in the zone;
27-25 (8) create a local readjustment zone fund for funding
27-26 bonds or other programs or activities to develop or revitalize the
27-27 zone;
28-1 (9) for qualified businesses in the zone, reduce rates
28-2 charged by:
28-3 (A) a utility owned by the municipality or
28-4 county, as appropriate; or
28-5 (B) a cooperative corporation or utility owned
28-6 by private investors, subject to the requirements of Subsection
28-7 (b);
28-8 (10) in issuing housing finance bonds, give priority
28-9 to persons or projects in the zone;
28-10 (11) in providing services, give priority to local
28-11 economic development, educational, job training, or transportation
28-12 programs that benefit the zone; or
28-13 (12) sell real property owned by the municipality or
28-14 county, as appropriate, and located in the readjustment zone in
28-15 accordance with Section 2310.410.
28-16 (b) A reduction in utility rates under Subsection (a)(9)(B)
28-17 is subject to the agreement of the affected utility and the
28-18 approval of the appropriate regulatory authority under the Public
28-19 Utility Regulatory Act of 1995 (Article 1446c-0, Vernon's Texas
28-20 Civil Statutes). The rates may be reduced up to but not more than
28-21 five percent below the lowest rate allowable for that customer
28-22 class. In making its determination under this section, the
28-23 regulatory authority shall consider revitalization goals for the
28-24 readjustment zone. In setting the rates of the utility the
28-25 appropriate regulatory authority shall allow the utility to recover
28-26 the amount of the reduction.
28-27 Sec. 2310.410. DISPOSITION OF PUBLIC PROPERTY IN
29-1 READJUSTMENT ZONE. (a) After an area is designated as a
29-2 readjustment zone, the state, a municipality, or a county that owns
29-3 a surplus building or vacant land in the zone may dispose of the
29-4 building or land by:
29-5 (1) selling the building or land at a public auction;
29-6 or
29-7 (2) establishing an urban homestead program described
29-8 by Subsection (c).
29-9 (b) A municipality or county may sell a surplus building or
29-10 vacant land in the readjustment zone at less than fair market value
29-11 if the governing body of the municipality or county by ordinance or
29-12 order, as appropriate, adopts criteria that specify the conditions
29-13 and circumstances under which the sale may occur and the public
29-14 purpose to be achieved by the sale. The building or land may be
29-15 sold to a buyer who is not the highest bidder if the criteria and
29-16 public purpose specified in the ordinance or order are satisfied.
29-17 A copy of the ordinance or order must be filed with the department
29-18 not later than the day on which the sale occurs.
29-19 (c) An urban homestead program must provide that:
29-20 (1) the state, municipality, or county is to sell to
29-21 an individual a residence or part of a residence that it owns for
29-22 an amount not to exceed $100;
29-23 (2) as a condition of the sale, the individual must
29-24 agree to live in the residence for at least seven years and to
29-25 renovate or remodel the residence to meet the level of maintenance
29-26 stated in an agreement between the individual and the governmental
29-27 entity; and
30-1 (3) after the individual satisfies the seven-year
30-2 residency and property improvement requirements of the agreement,
30-3 the governmental entity shall assign the residence to the
30-4 individual.
30-5 Sec. 2310.411. WAIVER OF PERFORMANCE BOND. A subcontractor
30-6 is not required to execute a performance bond under Chapter 2253
30-7 if:
30-8 (1) the construction, alteration, repair, or other
30-9 public work to be performed under the contract is entirely in a
30-10 readjustment zone; and
30-11 (2) the amount of the contract does not exceed
30-12 $200,000.
30-13 Sec. 2310.412. LIABILITY OF CONTRACTOR OR ARCHITECT. A
30-14 contractor or architect who constructs or rehabilitates a building
30-15 in a readjustment zone is liable for any structural defect in the
30-16 building only for the period ending on the 10th anniversary of the
30-17 date on which beneficial occupancy of the building begins after the
30-18 construction or rehabilitation, notwithstanding a statute of
30-19 limitations to the contrary.
30-20 SECTION 2. Subchapter I, Chapter 151, Tax Code, is amended
30-21 by adding Section 151.4291 to read as follows:
30-22 Sec. 151.4291. TAX REFUNDS FOR DEFENSE READJUSTMENT
30-23 PROJECTS. (a) A defense readjustment project is eligible for a
30-24 refund in the amount provided by this section of the taxes imposed
30-25 by this chapter on purchases of:
30-26 (1) equipment or machinery sold to a defense
30-27 readjustment project for use in a readjustment zone;
31-1 (2) building materials sold to a defense readjustment
31-2 project for use in remodeling, rehabilitating, or constructing a
31-3 structure in a readjustment zone;
31-4 (3) labor for remodeling, rehabilitating, or
31-5 constructing a structure by a defense readjustment project in a
31-6 readjustment zone; and
31-7 (4) electricity and natural gas purchased and consumed
31-8 in the normal course of business in the readjustment zone.
31-9 (b) Subject to the limitations provided by Subsection (c) of
31-10 this section, a defense readjustment project qualifies for a refund
31-11 of taxes under this section of $2,500 for each new permanent job or
31-12 job that has been retained by the defense readjustment project for
31-13 a qualified employee.
31-14 (c) The total amount of tax refund that a defense
31-15 readjustment project may apply for in a state fiscal year may not
31-16 exceed $250,000. If a defense readjustment project qualifies in a
31-17 state fiscal year for a refund of taxes in an amount in excess of
31-18 the limitation provided by this subsection, it may apply for a
31-19 refund of those taxes in a subsequent year, subject to the $250,000
31-20 limitation for each year. However, a defense readjustment project
31-21 may not apply for a refund under this section after the end of the
31-22 state fiscal year immediately following the state fiscal year in
31-23 which the defense readjustment project's designation as a defense
31-24 readjustment project expires or is removed. The total amount that
31-25 may be refunded to a defense readjustment project under this
31-26 section may not exceed the amount determined by multiplying
31-27 $250,000 by the number of state fiscal years during which the
32-1 defense readjustment project created one or more jobs for qualified
32-2 employees.
32-3 (d) To receive a refund under this section, a defense
32-4 readjustment project must apply to the comptroller for the refund.
32-5 The Texas Department of Commerce shall provide the comptroller with
32-6 the assistance that the comptroller requires in administering this
32-7 section.
32-8 (e) In this section:
32-9 (1) "Defense readjustment project" means a person
32-10 designated by the Texas Department of Commerce as a defense
32-11 readjustment project under Chapter 2310, Government Code.
32-12 (2) "Readjustment zone" and "qualified employee" have
32-13 the meanings assigned to those terms by Section 2310.001,
32-14 Government Code.
32-15 (3) "New permanent job" means a new employment
32-16 position created by a qualified business as described by Section
32-17 2310.302, Government Code, that:
32-18 (A) has provided at least 1,820 hours of
32-19 employment a year to a qualified employee; and
32-20 (B) is intended to exist during the period that
32-21 the qualified business is designated as a defense readjustment
32-22 project under Chapter 2310, Government Code.
32-23 (f) For the purposes of Subsection (a), items bought by a
32-24 project after the date it is designated as a project, or within 90
32-25 days before the date of designation, may be considered eligible for
32-26 a refund.
32-27 (g) The refund provided by this section is conditioned on
33-1 the defense readjustment project maintaining at least the same
33-2 level of employment of qualified employees as existed at the time
33-3 it qualified for a refund for a period of three years from that
33-4 date. The Texas Department of Commerce shall annually certify to
33-5 the comptroller and the Legislative Budget Board whether that level
33-6 of employment of qualified employees has been maintained. On the
33-7 Texas Department of Commerce certifying that such a level has not
33-8 been maintained, the comptroller shall assess that portion of the
33-9 refund attributable to any such decrease in employment, including
33-10 penalty and interest from the date of the refund.
33-11 SECTION 3. Subchapter C, Chapter 171, Tax Code, is amended
33-12 by adding Section 171.1016 to read as follows:
33-13 Sec. 171.1016. REDUCTION OF TAXABLE CAPITAL FOR INVESTMENT
33-14 IN A READJUSTMENT ZONE. (a) A corporation that has been
33-15 designated as a defense readjustment project as provided by Chapter
33-16 2310, Government Code, may deduct either:
33-17 (1) from its apportioned taxable capital, 50 percent
33-18 of its capital investment in the readjustment zone in which the
33-19 defense readjustment project is located; or
33-20 (2) from its apportioned taxable earned surplus, five
33-21 percent of its capital investment in the readjustment zone in which
33-22 the defense readjustment project is located. The deduction may be
33-23 taken on each franchise tax report that is based on a corporation's
33-24 fiscal year during all or part of which the corporation is a
33-25 defense readjustment project.
33-26 (b) The deduction authorized by this section is limited to
33-27 the depreciated value of capital equipment or other investment that
34-1 qualifies for depreciation for federal income tax purposes and that
34-2 is placed in service in the zone after designation as a defense
34-3 readjustment project. The depreciated value must be computed by a
34-4 method which is otherwise acceptable for that corporation's
34-5 franchise tax report and must be computed for each report on which
34-6 it is taken by the same method of depreciation.
34-7 (c) To qualify for the deduction authorized by this section,
34-8 an investment must be used in the normal course of business in the
34-9 defense readjustment zone and must not be removed from the defense
34-10 readjustment zone, except for repair or maintenance. Qualifying
34-11 use and presence in the zone must occur during the accounting year
34-12 on which the report is based.
34-13 (d) The deduction authorized by this section may not be used
34-14 to reduce apportioned taxable capital or apportioned taxable earned
34-15 surplus below a zero value, and no carryover of unused deductions
34-16 to a later privileged period is allowed.
34-17 (e) A corporation may elect to make the deduction authorized
34-18 by this section either from apportioned taxable capital or
34-19 apportioned taxable earned surplus for each separate regular annual
34-20 period. An election for an initial period applies to the second
34-21 tax period and to the first regular annual period.
34-22 (f) In this section:
34-23 (1) "Defense readjustment project" means a person
34-24 designated by the Texas Department of Commerce as a defense
34-25 readjustment project under Chapter 2310, Government Code.
34-26 (2) "Readjustment zone" has the meaning assigned to
34-27 that term by Section 2310.001, Government Code.
35-1 (g) Only qualified businesses that have been certified as
35-2 eligible for a tax deduction under this section by the Texas
35-3 Department of Commerce to the comptroller and the Legislative
35-4 Budget Board are entitled to the tax deduction.
35-5 SECTION 4. Before September 1, 2001, the Texas Department of
35-6 Commerce may not designate more than six defense economic
35-7 readjustment zones under Chapter 2310, Government Code, as added by
35-8 this Act.
35-9 SECTION 5. The importance of this legislation and the
35-10 crowded condition of the calendars in both houses create an
35-11 emergency and an imperative public necessity that the
35-12 constitutional rule requiring bills to be read on three several
35-13 days in each house be suspended, and this rule is hereby suspended,
35-14 and that this Act take effect and be in force from and after its
35-15 passage, and it is so enacted.
35-16 COMMITTEE AMENDMENT NO. 1
35-17 Amend HB 713 as follows:
35-18 On page 29, line 24, after "agree" add the following: ", in
35-19 the deed or contract for deed executed at the time of sale,".
35-20 Isett