75R11473 E                           

         By Oliveira, Serna, Luna, Seaman                      H.B. No. 2001

         Substitute the following for H.B. No. 2001:

         By Oliveira                                       C.S.H.B. No. 2001

                                A BILL TO BE ENTITLED

 1-1                                   AN ACT

 1-2     relating to the enterprise zone program.


 1-4           SECTION 1.  Section 2303.052(d), Government Code, is amended

 1-5     to read as follows:

 1-6           (d)  On or before December 15 [1] of each year the department

 1-7     shall submit to the governor, the legislature, and the Legislative

 1-8     Budget Board a report that:

 1-9                 (1)  evaluates the effectiveness of the enterprise zone

1-10     program;

1-11                 (2)  describes the use of state and local incentives

1-12     under this chapter and their effect on revenue; and

1-13                 (3)  suggests legislation.

1-14           SECTION 2.  Section 2303.0525(a), Government Code, is amended

1-15     to read as follows:

1-16           (a)  On or before December 15 [1] of each even-numbered year,

1-17     the department shall prepare a cost-benefit analysis of the

1-18     enterprise zone program.

1-19           SECTION 3.  Sections 2303.104(b) and (c), Government Code,

1-20     are amended to read as follows:

1-21           (b)  At least three [one] of the incentives summarized under

1-22     Subsection (a)(3) must not apply throughout the governmental entity

1-23     or entities nominating the area as an enterprise zone.  At least

1-24     two of the incentives summarized under Subsection (a)(3) must be

 2-1     financial incentives.

 2-2           (c)  This section does not prohibit a municipality or county

 2-3     from extending additional incentives, including tax incentives, for

 2-4     business enterprises in an enterprise zone by a separate ordinance

 2-5     or order or by a written agreement.

 2-6           SECTION 4.  Section 2303.401, Government Code, is amended to

 2-7     read as follows:

 2-8           Sec. 2303.401. DEFINITIONS [DEFINITION].  In this subchapter:

 2-9                 (1)  "New[, "new] permanent job" means a new employment

2-10     position created by a qualified business as described by Section

2-11     2303.402 that:

2-12                       (A) [(1)]  has provided at least 1,820 hours of

2-13     employment a year to a qualified employee; and

2-14                       (B) [(2)]  is intended to exist during the period

2-15     that the qualified business is designated as an enterprise project

2-16     under Section 2303.406.

2-17                 (2)  "Retained job" means a job that existed with a

2-18     qualified business before designation as an enterprise project

2-19     that:

2-20                       (A)  has provided employment to a qualified

2-21     employee of at least 1,820 hours annually; and

2-22                       (B)  is intended to be an employment position

2-23     retained during the period the business is designated as an

2-24     enterprise project in accordance with Chapter 151, Tax Code.

2-25           SECTION 5.  Section 2303.403, Government Code, is amended to

2-26     read as follows:

2-27           Sec. 2303.403.  PROHIBITION ON QUALIFIED BUSINESS

 3-1     CERTIFICATION.  If the department determines that the governing

 3-2     body of an enterprise zone is not complying with this chapter, the

 3-3     department shall prohibit the certification of a qualified business

 3-4     in the zone until the department determines that the governing body

 3-5     is complying with this chapter.  The department may not designate

 3-6     more than 65 businesses as enterprise projects during the [any]

 3-7     biennium beginning September 1, 1997 or September 1, 1999.  The

 3-8     department in its discretion may withhold up to five project slots

 3-9     from designation.

3-10           SECTION 6.  Sections 2303.406(a) and (b), Government Code,

3-11     are amended to read as follows:

3-12           (a)  The department may designate a business as an enterprise

3-13     project only if the department determines that:

3-14                 (1)  the business is a qualified business under Section

3-15     2303.402 that:

3-16                       (A)  is located in or has made a substantial

3-17     commitment to locate in an enterprise zone described by Section

3-18     2303.404(b); and

3-19                       (B)  has made a commitment to create or retain at

3-20     least:

3-21                             (i)  10 jobs, if the company is locating in

3-22     an enterprise zone in which the community has a population equal to

3-23     or less than 50,000, according to the most recent estimates based

3-24     on the most recent decennial census provided by the State Data

3-25     Center; or

3-26                             (ii)  25 jobs, if the company is locating

3-27     in an enterprise zone in which the community has a population of

 4-1     more than 50,000, according to the most recent estimates based on

 4-2     the most recent decennial census provided by the State Data Center;

 4-3                 (2)  the governing body of the enterprise zone making

 4-4     the application has demonstrated that a high level of cooperation

 4-5     exists among public, private, and neighborhood entities in the

 4-6     zone; and

 4-7                 (3)  the designation will contribute significantly to

 4-8     the achievement of the plans of the governing body making the

 4-9     application for development and revitalization of the zone.

4-10           (b)  The department shall designate qualified businesses as

4-11     enterprise projects on a competitive basis.  The department shall

4-12     establish a minimum scoring threshold that must be met by the

4-13     qualified business applying for a project designation and make its

4-14     designation decisions using a weighted scale in which:

4-15                 (1)  35 [50]  percent of the evaluation depends on the

4-16     economic distress of:

4-17                       (A)  the enterprise zone in which a proposed

4-18     enterprise project is located; and

4-19                       (B)  the area within the enterprise zone where

4-20     the project is located;

4-21                 (2)  20 [25] percent of the evaluation depends on the

4-22     local public effort used for the project to achieve  development

4-23     and revitalization of the enterprise zone; [and]

4-24                 (3)  20 [25] percent of the evaluation depends on the

4-25     [evaluation criteria as determined by the department, which must

4-26     include:]

4-27                       [(A)  the] level of cooperation and support the

 5-1     project applicant commits to the revitalization goals of the zone;

 5-2                 (4)  10 percent of the evaluation depends on amount of

 5-3     capital investment; and

 5-4                 (5)  15 percent of the evaluation depends on

 5-5                       [(B)]  the type and wage level in relation to the

 5-6     prevailing wage for that occupation in the local labor market area

 5-7     of the jobs to be created or retained by the business.

 5-8           SECTION 7.  Section 2303.407, Government Code, is amended to

 5-9     read as follows:

5-10           Sec. 2303.407.  ALLOCATION OF JOBS ELIGIBLE FOR TAX REFUND.

5-11     When the department designates a business as an enterprise project,

5-12     the department shall allocate to the project the maximum number of

5-13     new permanent jobs or retained jobs eligible to be included in a

5-14     computation of a tax refund for the project.  The number may not

5-15     exceed 500 [625] or a number equal to 110 percent of the number of

5-16     anticipated new permanent jobs or retained jobs specified in the

5-17     application for designation of the business as an enterprise

5-18     project under Section 2303.405, whichever is less.

5-19           SECTION 8.  Section 2303.511(b), Government Code, is amended

5-20     to read as follows:

5-21           (b)  A reduction in utility rates under Subsection (a)(9)(B)

5-22     is subject to the agreement of the affected utility and the

5-23     approval of the appropriate regulatory authority under Sections 16

5-24     and 17, Public Utility Regulatory Act (Article 1446c, Vernon's

5-25     Texas Civil Statutes).  The rates may [not] be reduced up to but

5-26     not more than five percent below the lowest rate allowable for that

5-27     customer class [offered to any customer located in the enterprise

 6-1     zone, including economic development rates and standby rates].  A

 6-2     qualified enterprise project or the governing body of the

 6-3     enterprise zone may petition the appropriate utility and the

 6-4     appropriate regulatory authority to receive a reduced rate under

 6-5     this section, and the regulatory authority may order that rates be

 6-6     reduced.  In making its determination under this section, the

 6-7     regulatory authority shall consider revitalization goals for the

 6-8     enterprise zone.  In setting the rates of the utility the

 6-9     appropriate regulatory authority shall allow the utility to recover

6-10     the amount of the reduction.

6-11           SECTION 9.  Sections 151.429(a), (b), and (g), Tax Code, are

6-12     amended to read as follows:

6-13           (a)  An enterprise project is eligible for a refund in the

6-14     amount provided by this section of the taxes imposed by this

6-15     chapter on purchases of:

6-16                 (1)  equipment or machinery sold to, repaired for, or

6-17     rented by  an enterprise project for use in an enterprise zone;

6-18                 (2)  building materials sold to an enterprise project

6-19     for use in remodeling, rehabilitating, or constructing a structure

6-20     in an enterprise zone;

6-21                 (3)  labor for remodeling, rehabilitating, or

6-22     constructing a structure by an enterprise project in an enterprise

6-23     zone; and

6-24                 (4)  electricity and natural gas purchased and consumed

6-25     in the normal course of business in the enterprise zone.

6-26           (b)  Subject to the limitations provided by Subsection (c) of

6-27     this section, an enterprise project qualifies for a refund of taxes

 7-1     under this section of $2,500 [$2,000] for each new permanent job or

 7-2     job that has been retained by the enterprise project for a

 7-3     qualified employee.

 7-4           (g)  The refund provided by this section is conditioned on

 7-5     the enterprise project maintaining at least the same level of

 7-6     employment of qualified employees as existed at the time it

 7-7     qualified for a refund for a period of three years from that date.

 7-8     The Texas Department of Commerce shall annually certify to the

 7-9     comptroller [and the Legislative Budget Board] whether that level

7-10     of employment of qualified employees has been maintained.  On the

7-11     Texas Department of Commerce certifying that such a level has not

7-12     been maintained, the comptroller shall assess that portion of the

7-13     refund attributable to any such decrease in employment, including

7-14     penalty and interest from the date of the refund.

7-15           SECTION 10.  Section 171.1015(g), Tax Code, is amended to

7-16     read as follows:

7-17           (g)  Only enterprise projects [qualified businesses] that

7-18     have been certified as eligible for a tax deduction under this

7-19     section by the Texas Department of Commerce to the comptroller may

7-20     apply for [and the Legislative Budget Board are entitled to] the

7-21     tax deduction.

7-22           SECTION 11.  Section 2303.110(d), Government Code, is

7-23     repealed.

7-24           SECTION 12.  (a)  An enterprise project designated under

7-25     Chapter 2303, Government Code, after August 31, 1997, may not

7-26     receive a tax refund under Section 151.429, Tax Code, as amended by

7-27     this Act, or a tax reduction under Section 171.1015, Tax Code,

 8-1     before September 1, 1999.

 8-2           (b)  An enterprise project designated under Chapter 2303,

 8-3     Government Code, after August 31, 1999, may not receive a tax

 8-4     refund under Section 151.429, Tax Code, as amended by this Act, or

 8-5     a tax reduction under Section 171.1015, Tax Code, before September

 8-6     1, 2001.

 8-7           (c)  Not more than $8 million per biennium in state sales and

 8-8     use taxes may be refunded to enterprise projects designated during

 8-9     a biennium beginning September 1, 1997, September 1, 1999, or

8-10     September 1, 2001.

8-11           SECTION 13.  This Act takes effect September 1, 1997.

8-12           SECTION 14.  The importance of this legislation and the

8-13     crowded condition of the calendars in both houses create an

8-14     emergency and an imperative public necessity that the

8-15     constitutional rule requiring bills to be read on three several

8-16     days in each house be suspended, and this rule is hereby suspended.