By Oliveira H.B. No. 2000
75R2041 SMH-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to property tax abatements.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Section 111.301(a), Tax Code, is amended to read
1-5 as follows:
1-6 (a) An eligible person is entitled to a refund of state
1-7 sales and use taxes imposed under Chapter 151 and state franchise
1-8 taxes imposed under Chapter 171 paid in a calendar year for which
1-9 the person paid ad valorem taxes to a school district on property
1-10 that in that year is:
1-11 (1) located in a reinvestment zone established under
1-12 Chapter 312;
1-13 (2) exempt in whole or in part from the payment of ad
1-14 valorem taxes imposed by a municipality or a county under a tax
1-15 abatement agreement entered into with the municipality under
1-16 Section 312.204 or the county under Section 312.402 [Chapter 312];
1-17 and
1-18 (3) not subject to a tax abatement agreement entered
1-19 into by the school district.
1-20 SECTION 2. Section 312.004(a), Tax Code, is amended to read
1-21 as follows:
1-22 (a) The commissioners court of a county that enters into a
1-23 tax abatement agreement for the county may enter into a tax
1-24 abatement agreement applicable to the same property on behalf of a
2-1 taxing unit other than the county if [If] by statute the ad valorem
2-2 tax rate of the other [a] taxing unit [other than a county] is
2-3 approved by the commissioners court [of a county] or the [if a]
2-4 commissioners court is expressly required by statute to levy the ad
2-5 valorem taxes of the other [a] taxing unit. The tax abatement
2-6 agreement entered into on behalf of the other taxing unit is not
2-7 required to contain the same terms as the tax abatement agreement
2-8 entered into on behalf of the county [other than a county, a tax
2-9 abatement agreement executed by the commissioners court for county
2-10 taxes also applies to the taxation by the taxing unit of the
2-11 property subject to the agreement, if that property is otherwise
2-12 taxable by the taxing unit].
2-13 SECTION 3. Section 312.005, Tax Code, is amended to read as
2-14 follows:
2-15 Sec. 312.005. STATE ADMINISTRATION. (a) The comptroller
2-16 [Texas Department of Commerce] shall maintain a central registry of
2-17 reinvestment zones designated under this chapter and of ad valorem
2-18 tax abatement agreements executed under this chapter. Each taxing
2-19 unit that designates a reinvestment zone or executes a tax
2-20 abatement agreement under this chapter shall deliver to the
2-21 [department and to the] comptroller before April 1 of the year
2-22 following the year in which the zone is designated or the agreement
2-23 is executed a report providing the following information:
2-24 (1) for a reinvestment zone, a general description of
2-25 the zone, including its size, the types of property located in it,
2-26 its duration, and the guidelines and criteria established for the
2-27 reinvestment zone under Section 312.002, including subsequent
3-1 amendments and modifications of the guidelines or criteria;
3-2 (2) a copy of each tax abatement agreement to which
3-3 the taxing unit is a party; and
3-4 (3) any other information required by the comptroller
3-5 to administer Subchapter F, Chapter 111.
3-6 (b) The comptroller [department] may provide assistance to a
3-7 taxing unit on request of its governing body or the presiding
3-8 officer of its governing body relating to the administration of
3-9 this chapter, including the designation of reinvestment zones, the
3-10 adoption of tax abatement guidelines, and the execution of tax
3-11 abatement agreements.
3-12 (c) The comptroller by rule shall adopt and furnish to
3-13 taxing units on request:
3-14 (1) methods appropriate for analyzing the costs and
3-15 benefits of a proposed tax abatement agreement;
3-16 (2) performance standards appropriate for inclusion in
3-17 a tax abatement agreement; and
3-18 (3) provisions appropriate for inclusion in a tax
3-19 abatement agreement for recapturing property tax revenue if a
3-20 property owner fails to comply with the terms of the agreement.
3-21 SECTION 4. Subchapter B, Chapter 312, Tax Code, is amended
3-22 by adding Section 312.2035 to read as follows:
3-23 Sec. 312.2035. ANALYSIS OF COSTS AND BENEFITS. (a) A
3-24 municipality must perform an analysis of the costs and benefits of
3-25 a proposed tax abatement agreement before the municipality may
3-26 enter into the agreement under this subchapter.
3-27 (b) The analysis may include the costs and benefits to any
4-1 other taxing unit proposing to enter into a tax abatement agreement
4-2 applicable to the same property.
4-3 (c) A taxing unit may not enter into a tax abatement
4-4 agreement for which the analysis shows that the costs exceed the
4-5 benefits.
4-6 SECTION 5. Section 312.204, Tax Code, is amended by amending
4-7 Subsections (a) and (e) and adding Subsections (g) and (h) to read
4-8 as follows:
4-9 (a) The governing body of a municipality eligible to enter
4-10 into tax abatement agreements under Section 312.002 may agree in
4-11 writing with the owner of taxable real property that is located in
4-12 a reinvestment zone, but that is not in an improvement project
4-13 financed by tax increment bonds, to exempt from taxation a portion
4-14 of the value of the real property or of tangible personal property
4-15 located on the real property, or both, for a period not to exceed
4-16 five [10] years, subject to the rights of holders of outstanding
4-17 bonds of the municipality, on the condition that the owner of the
4-18 property make specific improvements or repairs to the property. An
4-19 agreement may provide for the exemption of the real property in
4-20 each year covered by the agreement only to the extent its value for
4-21 that year exceeds its value for the year in which the agreement is
4-22 executed. An agreement may provide for the exemption of tangible
4-23 personal property located on the real property in each year covered
4-24 by the agreement other than tangible personal property that was
4-25 located on the real property at any time before the period covered
4-26 by the agreement with the municipality, and other than inventory or
4-27 supplies. In a municipality that has a comprehensive zoning
5-1 ordinance, an improvement, repair, development, or redevelopment
5-2 taking place under an agreement under this section must conform to
5-3 the comprehensive zoning ordinance.
5-4 (e) The governing body of a municipality eligible to enter
5-5 into tax abatement agreements under Section 312.002 may agree in
5-6 writing with the owner or lessee of real property that is located
5-7 in a reinvestment zone to exempt from taxation for a period not to
5-8 exceed five [10] years a portion of the value of the real property
5-9 or of personal property, or both, located within the zone and owned
5-10 or leased by a certificated air carrier, on the condition that the
5-11 certificated air carrier make specific real property improvements
5-12 or lease for a term of five [10] years or more real property
5-13 improvements located within the reinvestment zone. An agreement
5-14 may provide for the exemption of the real property in each year
5-15 covered by the agreement to the extent its value for that year
5-16 exceeds its value for the year in which the agreement is executed.
5-17 An agreement may provide for the exemption of the personal property
5-18 owned or leased by a certificated air carrier located within the
5-19 reinvestment zone in each year covered by the agreement other than
5-20 specific personal property that was located within the reinvestment
5-21 zone at any time before the period covered by the agreement with
5-22 the municipality.
5-23 (g) An agreement may provide for the exemption of not more
5-24 than:
5-25 (1) 50 percent of the portion of the value of the
5-26 property that is subject to abatement under Subsection (a) or (e)
5-27 if less than 25 percent of the property owner's new employees in
6-1 the reinvestment zone are economically disadvantaged individuals;
6-2 or
6-3 (2) 65 percent of the portion of the value of the
6-4 property that is subject to abatement under Subsection (a) or (e)
6-5 if 25 percent or more of the property owner's new employees in the
6-6 reinvestment zone are economically disadvantaged individuals.
6-7 (h) For purposes of Subsection (g) "economically
6-8 disadvantaged individuals" has the meaning assigned that term by
6-9 Section 2303.402, Government Code.
6-10 SECTION 6. Section 312.205, Tax Code, is amended to read as
6-11 follows:
6-12 Sec. 312.205. SPECIFIC TERMS OF TAX ABATEMENT AGREEMENT.
6-13 (a) An agreement made under Section 312.204 must:
6-14 (1) list the kind, number, and location of all
6-15 proposed improvements of the property;
6-16 (2) provide access to and authorize inspection of the
6-17 property by municipal employees to ensure that the improvements or
6-18 repairs are made according to the specifications and conditions of
6-19 the agreement;
6-20 (3) limit the uses of the property consistent with the
6-21 general purpose of encouraging development or redevelopment of the
6-22 zone during the period that property tax exemptions are in effect;
6-23 (4) provide for recapture by the municipality of the
6-24 [recapturing] property tax revenue lost as a result of the
6-25 agreement if the owner of the property fails to make the
6-26 improvements or repairs as provided by the agreement or fails to
6-27 comply with any performance standard contained in the agreement;
7-1 (5) contain each term agreed to by the owner of the
7-2 property;
7-3 (6) require the owner of the property to certify
7-4 annually to the governing body of each taxing unit that the owner
7-5 is in compliance with each applicable term of the agreement; and
7-6 (7) provide for cancellation or modification of the
7-7 agreement by [that] the governing body of the municipality [may
7-8 cancel or modify the agreement] if the property owner fails to
7-9 comply with the agreement.
7-10 (b) An agreement made under Section 312.204 may include, at
7-11 the option of the governing body of the municipality, provisions
7-12 for:
7-13 (1) improvements or repairs by the municipality to
7-14 streets, sidewalks, and utility services or facilities associated
7-15 with the property, except that the agreement may not provide for
7-16 lower charges or rates than are made for other services or
7-17 properties of a similar character;
7-18 (2) an economic feasibility study, including a
7-19 detailed list of estimated improvement costs, a description of the
7-20 methods of financing all estimated costs, and the time when related
7-21 costs or monetary obligations are to be incurred;
7-22 (3) a map showing existing uses and conditions of real
7-23 property in the reinvestment zone;
7-24 (4) a map showing proposed improvements and uses in
7-25 the reinvestment zone; [and]
7-26 (5) performance standards regarding:
7-27 (A) the number, timing of creation, and payroll
8-1 of any jobs to be created by the property owner in the reinvestment
8-2 zone during the term of the agreement; and
8-3 (B) the amount and timing of any capital
8-4 investments to be made by the property owner in the reinvestment
8-5 zone during the term of the agreement; and
8-6 (6) proposed changes of zoning ordinances, the master
8-7 plan, the map, building codes, and city ordinances.
8-8 SECTION 7. Section 312.206(a), Tax Code, is amended to read
8-9 as follows:
8-10 (a) If property taxes on property located in the taxing
8-11 jurisdiction of a municipality are abated under an agreement made
8-12 under Section 312.204, the governing body of each other taxing unit
8-13 eligible to enter into tax abatement agreements under Section
8-14 312.002 in which the property is located may execute a written tax
8-15 abatement agreement with the owner of the property not later than
8-16 the 90th day after the date the municipal agreement is executed.
8-17 The agreement is not required to [must] contain terms identical to
8-18 those contained in the agreement with the municipality [providing
8-19 for the portion of the property that is to be exempt from taxation
8-20 under the agreement, the duration of the agreement, and the
8-21 provisions included in the agreement under Section 312.205, even if
8-22 the value of the property at the time the agreement is executed is
8-23 not the same as its value when the municipal agreement was executed
8-24 and even if improvements or repairs have been made to the property
8-25 since the municipal agreement was executed]. If the analysis
8-26 performed by the municipality under Section 312.2035 does not
8-27 include the costs and benefits to the taxing unit, the taxing unit
9-1 must perform an analysis under that section as if the taxing unit
9-2 were a municipality before the taxing unit may enter into the
9-3 agreement. Section 312.205 applies to an agreement made by a
9-4 taxing unit under this section in the same manner as it applies to
9-5 an agreement made by a municipality under Section 312.204. If the
9-6 governing body of the taxing unit by official action at any time
9-7 before the execution of the municipal agreement expresses an intent
9-8 to [enter into an agreement with the owner of property under this
9-9 subsection or to] be bound by the terms of the municipal agreement
9-10 if the municipality enters into an agreement under Section 312.204
9-11 with the owner relating to the property, the terms of the municipal
9-12 agreement regarding the share of the property to be exempt in each
9-13 year of the municipal agreement apply to the taxation of the
9-14 property by the taxing unit. [If the taxing unit that expressed
9-15 its intent to enter into an agreement or to be bound by the
9-16 municipal agreement is a county, those terms of the municipal
9-17 agreement also apply to the taxation of the property by a taxing
9-18 unit in the county to which a county tax abatement agreement would
9-19 apply under Section 312.004.]
9-20 SECTION 8. Subchapter B, Chapter 312, Tax Code, is amended
9-21 by adding Section 312.211 to read as follows:
9-22 Sec. 312.211. ACTION BY TAXING UNIT ON NONCOMPLIANCE. If a
9-23 property owner fails to comply with a tax abatement agreement, the
9-24 governing body of the taxing unit shall:
9-25 (1) take all appropriate measures to recapture any
9-26 property tax revenue lost as a result of the agreement; and
9-27 (2) cancel or modify the agreement.
10-1 SECTION 9. Sections 312.402(a), (c), and (e), Tax Code, are
10-2 amended to read as follows:
10-3 (a) The commissioners court may execute a tax abatement
10-4 agreement with the owner of taxable real property located in a
10-5 reinvestment zone designated under this subchapter. [The
10-6 execution, duration, and other terms of an agreement made under
10-7 this section are governed by the provisions of] Sections
10-8 312.2035-312.205 apply [312.204 and 312.205 applicable] to [a
10-9 municipality. Section 312.2041 applies to] an agreement made by a
10-10 county under this section in the same manner as those sections
10-11 apply [it applies] to an agreement made by a municipality [under
10-12 Section 312.204].
10-13 (c) If [on or after September 1, 1989,] property subject to
10-14 an agreement with a county under this section is annexed by a
10-15 municipality during the existence of the agreement, the terms of
10-16 the county agreement regarding the share of the property to be
10-17 exempt in each year of the agreement apply to the taxation of the
10-18 property by the municipality if before the annexation the governing
10-19 body of the municipality by official action expresses an intent to
10-20 [enter into an agreement with the owner of the property to abate
10-21 taxes on the property if it is annexed or to] be bound by the terms
10-22 of the county agreement after annexation[, even if that official
10-23 action of the governing body of the municipality expressing that
10-24 intent occurs before September 1, 1989].
10-25 (e) An agreement made under this section by a county or
10-26 other taxing unit may be canceled, modified, or terminated in the
10-27 same manner and subject to the same limitations as provided by
11-1 Sections [Section] 312.208 and 312.211 for an agreement made under
11-2 Subchapter B.
11-3 SECTION 10. (a) The comptroller and the Texas Department of
11-4 Commerce shall coordinate the transfer of the administration of the
11-5 central registry of reinvestment zones and of ad valorem tax
11-6 abatement agreements consistent with this Act. The transfer of
11-7 administration from the Texas Department of Commerce to the
11-8 comptroller shall occur as soon as possible on or after the
11-9 effective date of this Act.
11-10 (b) The transfer required by Subsection (a) of this section
11-11 includes the transfer of all employees of the Texas Department of
11-12 Commerce assigned to administer the registry, all files and related
11-13 materials of the department comprising the registry, and all money
11-14 appropriated to the department for the administration of the
11-15 registry.
11-16 SECTION 11. (a) Except as provided by Subsection (b) of
11-17 this section, this Act applies only to a tax abatement agreement
11-18 entered into on or after the effective date of this Act. A tax
11-19 abatement agreement entered into before the effective date of this
11-20 Act is governed by the law as it existed immediately before the
11-21 effective date of this Act, and that law is continued in effect for
11-22 that purpose.
11-23 (b) Section 312.211, Tax Code, as added by this Act, and
11-24 Section 312.402(e), Tax Code, as amended by this Act, apply to a
11-25 tax abatement agreement entered into before, on, or after the
11-26 effective date of this Act.
11-27 (c) This Act applies only to ad valorem taxes imposed on or
12-1 after January 1, 1998.
12-2 SECTION 12. This Act takes effect September 1, 1997.
12-3 SECTION 13. The importance of this legislation and the
12-4 crowded condition of the calendars in both houses create an
12-5 emergency and an imperative public necessity that the
12-6 constitutional rule requiring bills to be read on three several
12-7 days in each house be suspended, and this rule is hereby suspended.