By Oliveira                                     H.B. No. 2001

      75R4270 LJR-D                           

                                A BILL TO BE ENTITLED

 1-1                                   AN ACT

 1-2     relating to the enterprise zone program.

 1-3           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

 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 2303.109(a), Government Code, is amended

 2-7     to read as follows:

 2-8           (a)  An area may be designated as an enterprise zone for a

 2-9     maximum of five [seven] years.  A designation remains in effect

2-10     until September 1 of the final year of the designation.

2-11           SECTION 5.  Section 2303.401, Government Code, is amended to

2-12     read as follows:

2-13           Sec. 2303.401. DEFINITIONS [DEFINITION].  In this subchapter:

2-14                 (1)  "New[, "new] permanent job" means a new employment

2-15     position created by a qualified business as described by Section

2-16     2303.402 that:

2-17                       (A) [(1)]  has provided at least 1,820 hours of

2-18     employment a year to a qualified employee; and

2-19                       (B) [(2)]  is intended to exist during the period

2-20     that the qualified business is designated as an enterprise project

2-21     under Section 2303.406.

2-22                 (2)  "Retained job" means a job that existed with a

2-23     qualified business before designation as an enterprise project

2-24     that:

2-25                       (A)  has provided employment to a qualified

2-26     employee of at least 1,820 hours annually; and

2-27                       (B)  is intended to be an employment position

 3-1     retained during the period the business is designated as an

 3-2     enterprise project in accordance with Chapter 151, Tax Code.

 3-3           SECTION 6.  Section 2303.403, Government Code, is amended to

 3-4     read as follows:

 3-5           Sec. 2303.403.  PROHIBITION ON QUALIFIED BUSINESS

 3-6     CERTIFICATION.  If the department determines that the governing

 3-7     body of an enterprise zone is not complying with this chapter, the

 3-8     department shall prohibit the certification of a qualified business

 3-9     in the zone until the department determines that the governing body

3-10     is complying with this chapter.  The department may not designate

3-11     more than 65 businesses as enterprise projects during the [any]

3-12     biennium beginning September 1, 1997 or September 1, 1999.  The

3-13     department in its discretion may withhold up to five project slots

3-14     from designation.  For the biennium beginning September 1, 1997, a

3-15     governing body may not have more than two qualified businesses

3-16     designated as regular enterprise projects or more than four

3-17     qualified businesses designated as bonus projects.

3-18           SECTION 7.  Sections 2303.406(a) and (b), Government Code,

3-19     are amended to read as follows:

3-20           (a)  The department may designate a business as an enterprise

3-21     project only if the department determines that:

3-22                 (1)  the business is a qualified business under Section

3-23     2303.402 that:

3-24                       (A)  is located in or has made a substantial

3-25     commitment to locate in an enterprise zone described by Section

3-26     2303.404(b); and

3-27                       (B)  has made a commitment to create at least:

 4-1                             (i)  10 jobs, if the company is locating in

 4-2     an enterprise zone in which the community has a population equal to

 4-3     or less than 50,000, according to the most recent estimates based

 4-4     on the most recent decennial census provided by the State Data

 4-5     Center; or

 4-6                             (ii)  25 jobs, if the company is locating

 4-7     in an enterprise zone in which the community has a population of

 4-8     more than 50,000, according to the most recent estimates based on

 4-9     the most recent decennial census provided by the State Data Center;

4-10                 (2)  the governing body of the enterprise zone making

4-11     the application has demonstrated that a high level of cooperation

4-12     exists among public, private, and neighborhood entities in the

4-13     zone; and

4-14                 (3)  the designation will contribute significantly to

4-15     the achievement of the plans of the governing body making the

4-16     application for development and revitalization of the zone.

4-17           (b)  The department shall designate qualified businesses as

4-18     enterprise projects on a competitive basis.  The department shall

4-19     establish a minimum scoring threshold that must be met by a

4-20     qualified business  applying for a project designation and make its

4-21     designation decisions using a weighted scale in which:

4-22                 (1)  20 [50]  percent of the evaluation depends on the

4-23     economic distress of:

4-24                       (A)  the enterprise zone in which a proposed

4-25     enterprise project is located; and

4-26                       (B)  the area within the enterprise zone where

4-27     the project is located;

 5-1                 (2)  20 [25] percent of the evaluation depends on the

 5-2     local public effort used for the project to achieve  development

 5-3     and revitalization of the enterprise zone; [and]

 5-4                 (3)  40 [25] percent of the evaluation depends on the

 5-5     [evaluation criteria as determined by the department, which must

 5-6     include:]

 5-7                       [(A)  the] level of cooperation and support the

 5-8     project applicant commits to the revitalization goals of the zone;

 5-9     and

5-10                 (4)  20 percent of the evaluation depends on

5-11                       [(B)]  the type and wage level of the jobs to be

5-12     created or retained by the business.

5-13           SECTION 8.  Section 2303.407, Government Code, is amended to

5-14     read as follows:

5-15           Sec. 2303.407.  ALLOCATION OF JOBS ELIGIBLE FOR TAX REFUND.

5-16     When the department designates a business as an enterprise project,

5-17     the department shall allocate to the project the maximum number of

5-18     new permanent jobs or retained jobs eligible to be included in a

5-19     computation of a tax refund for the project.  The number may not

5-20     exceed 500 [625] or a number equal to 110 percent of the number of

5-21     anticipated new permanent jobs or retained jobs specified in the

5-22     application for designation of the business as an enterprise

5-23     project under Section 2303.405, whichever is less.

5-24           SECTION 9.  Sections 151.429(b) and (g), Tax Code, are

5-25     amended to read as follows:

5-26           (b)  Subject to the limitations provided by Subsection (c) of

5-27     this section, an enterprise project qualifies for a refund of taxes

 6-1     under this section of $2,500 [$2,000] for each new permanent job or

 6-2     job that has been retained by the enterprise project for a

 6-3     qualified employee.

 6-4           (g)  The refund provided by this section is conditioned on

 6-5     the enterprise project maintaining at least the same level of

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

 6-7     qualified for a refund for a period of three years from that date.

 6-8     The Texas Department of Commerce shall annually certify to the

 6-9     comptroller [and the Legislative Budget Board] whether that level

6-10     of employment of qualified employees has been maintained.  On the

6-11     Texas Department of Commerce certifying that such a level has not

6-12     been maintained, the comptroller shall assess that portion of the

6-13     refund attributable to any such decrease in employment, including

6-14     penalty and interest from the date of the refund.

6-15           SECTION 10.  Section 171.1015(g), Tax Code, is amended to

6-16     read as follows:

6-17           (g)  Only enterprise projects [qualified businesses] that

6-18     have been certified as eligible for a tax deduction under this

6-19     section by the Texas Department of Commerce to the comptroller may

6-20     apply for [and the Legislative Budget Board are entitled to] the

6-21     tax deduction.

6-22           SECTION 11.  Section 2303.110(d), Government Code, and

6-23     Section 171.501, Tax Code, are repealed.

6-24           SECTION 12.  The change made to Section 2303.109(a),

6-25     Government Code, by this Act does not affect the term of a

6-26     designation of an area as an enterprise zone made before the

6-27     effective date of this Act.

 7-1           SECTION 13.  This Act takes effect September 1, 1997.

 7-2           SECTION 14.  The importance of this legislation and the

 7-3     crowded condition of the calendars in both houses create an

 7-4     emergency and an imperative public necessity that the

 7-5     constitutional rule requiring bills to be read on three several

 7-6     days in each house be suspended, and this rule is hereby suspended.