1-1     By:  Oliveira, et al. (Senate Sponsor - Sibley)       H.B. No. 2001

 1-2           (In the Senate - Received from the House May 6, 1997;

 1-3     May 7, 1997, read first time and referred to Committee on Economic

 1-4     Development; May 18, 1997, reported adversely, with favorable

 1-5     Committee Substitute by the following vote:  Yeas 10, Nays 0;

 1-6     May 18, 1997, sent to printer.)

 1-7     COMMITTEE SUBSTITUTE FOR H.B. No. 2001                  By:  Sibley

 1-8                            A BILL TO BE ENTITLED

 1-9                                   AN ACT

1-10     relating to the enterprise zone program.


1-12           SECTION 1.  Section 2303.052(d), Government Code, is amended

1-13     to read as follows:

1-14           (d)  On or before December 15 [1] of each year the department

1-15     shall submit to the governor, the legislature, and the Legislative

1-16     Budget Board a report that:

1-17                 (1)  evaluates the effectiveness of the enterprise zone

1-18     program;

1-19                 (2)  describes the use of state and local incentives

1-20     under this chapter and their effect on revenue; and

1-21                 (3)  suggests legislation.

1-22           SECTION 2.  Section 2303.0525(a), Government Code, is amended

1-23     to read as follows:

1-24           (a)  On or before December 15 [1] of each even-numbered year,

1-25     the department shall prepare a cost-benefit analysis of the

1-26     enterprise zone program.

1-27           SECTION 3.  Sections 2303.104(b) and (c), Government Code,

1-28     are amended to read as follows:

1-29           (b)  At least three [one] of the incentives summarized under

1-30     Subsection (a)(3) must not apply throughout the governmental entity

1-31     or entities nominating the area as an enterprise zone.  At least

1-32     two of the incentives summarized under Subsection (a)(3) must be

1-33     financial incentives.

1-34           (c)  This section does not prohibit a municipality or county

1-35     from extending additional incentives, including tax incentives, for

1-36     business enterprises in an enterprise zone by a separate ordinance

1-37     or order or by a written agreement.

1-38           SECTION 4.  Section 2303.401, Government Code, is amended to

1-39     read as follows:

1-40           Sec. 2303.401.  DEFINITIONS [DEFINITION].  In this

1-41     subchapter:

1-42                 (1)  "New[, "new] permanent job" means a new employment

1-43     position created by a qualified business as described by Section

1-44     2303.402 that:

1-45                       (A) [(1)]  has provided at least 1,820 hours of

1-46     employment a year to a qualified employee; and

1-47                       (B) [(2)]  is intended to exist during the period

1-48     that the qualified business is designated as an enterprise project

1-49     under Section 2303.406.

1-50                 (2)  "Retained job" means a job that existed with a

1-51     qualified business before designation as an enterprise project

1-52     that:

1-53                       (A)  has provided employment to a qualified

1-54     employee of at least 1,820 hours annually; and

1-55                       (B)  is intended to be an employment position

1-56     retained during the period the business is designated as an

1-57     enterprise project in accordance with Chapter 151, Tax Code.

1-58           SECTION 5.  Section 2303.403, Government Code, is amended to

1-59     read as follows:

1-60           Sec. 2303.403.  Prohibition on Qualified Business

1-61     Certification.  If the department determines that the governing

1-62     body of an enterprise zone is not complying with this chapter, the

1-63     department shall prohibit the certification of a qualified business

1-64     in the zone until the department determines that the governing body

 2-1     is complying with this chapter.  The department may not designate

 2-2     more than 65 businesses as enterprise projects during the [any]

 2-3     biennium beginning September 1, 1997 or September 1, 1999.  The

 2-4     department in its discretion may withhold up to five project slots

 2-5     from designation.

 2-6           SECTION 6.  Sections 2303.406(a) and (b), Government Code,

 2-7     are amended to read as follows:

 2-8           (a)  The department may designate a business as an enterprise

 2-9     project only if the department determines that:

2-10                 (1)  the business is a qualified business under Section

2-11     2303.402 that:

2-12                       (A)  is located in or has made a substantial

2-13     commitment to locate in an enterprise zone described by Section

2-14     2303.404(b); and

2-15                       (B)  has made a commitment to create or retain at

2-16     least:

2-17                             (i)  10 jobs, if the company is locating in

2-18     an enterprise zone in which the community has a population equal to

2-19     or less than 50,000, according to the most recent estimates based

2-20     on the most recent decennial census provided by the State Data

2-21     Center; or

2-22                             (ii)  25 jobs, if the company is locating

2-23     in an enterprise zone in which the community has a population of

2-24     more than 50,000, according to the most recent estimates based on

2-25     the most recent decennial census provided by the State Data Center;

2-26                 (2)  the governing body of the enterprise zone making

2-27     the application has demonstrated that a high level of cooperation

2-28     exists among public, private, and neighborhood entities in the

2-29     zone; and

2-30                 (3)  the designation will contribute significantly to

2-31     the achievement of the plans of the governing body making the

2-32     application for development and revitalization of the zone.

2-33           (b)  The department shall designate qualified businesses as

2-34     enterprise projects on a competitive basis.  The department shall

2-35     establish a minimum scoring threshold that must be met by the

2-36     qualified business applying for a project designation and make its

2-37     designation decisions using a weighted scale in which:

2-38                 (1)  40  [50] percent of the evaluation depends on the

2-39     economic distress of:

2-40                       (A))  the enterprise zone in which a proposed

2-41     enterprise project is located; and

2-42                       (B)  the area within the enterprise zone where

2-43     the project is located;).

2-44                 (2)  15 [25] percent of the evaluation depends on the

2-45     local public effort used for the project to achieve development and

2-46     revitalization of the enterprise zone; [and]

2-47                 (3)  20 [25] percent of the evaluation depends on the

2-48     [evaluation criteria as determined by the department, which must

2-49     include:]

2-50                       [(A)  the] level of cooperation and support the

2-51     project applicant commits to the revitalization goals of the zone;

2-52                 (4)  10 percent of the evaluation depends on amount of

2-53     capital investment; and

2-54                 (5)  15 percent of the evaluation depends on

2-55                       [(B)]  the type and wage level in relation to the

2-56     prevailing wage for that occupation in the local labor market area

2-57     of the jobs to be created or retained by the business.

2-58           SECTION 7.  Section 2303.5055 (e), Government Code is amended

2-59     to read as follows:

2-60           (e)  In this section, "eligible taxable proceeds" means

2-61     taxable proceeds generated, paid, or collected by a qualified hotel

2-62     project or a business at a qualified hotel project, including hotel

2-63     occupancy taxes, ad valorem taxes, sales and use taxes, and mixed

2-64     beverage taxes payable to a county or municipality under Section

2-65     183.051.

2-66     SECTION 8.  Section 2303.511(b), Government Code, is amended to

2-67     read as follows:

2-68           (b)  A reduction in utility rates under Subsection (a)(9)(B)

2-69     is subject to the agreement of the affected utility and the

 3-1     approval of the appropriate regulatory authority under Sections 16

 3-2     and 17, Public Utility Regulatory Act (Article 1446c, Vernon's

 3-3     Texas Civil Statutes).  The rates may [not] be reduced up to but

 3-4     not more than five percent below the lowest rate allowable for that

 3-5     customer class [offered to any customer located in the enterprise

 3-6     zone, including economic development rates and standby rates].  A

 3-7     qualified enterprise project or the governing body of the

 3-8     enterprise zone may petition the appropriate utility and the

 3-9     appropriate regulatory authority to receive a reduced rate under

3-10     this section, and the regulatory authority may order that rates be

3-11     reduced.  In making its determination under this section, the

3-12     regulatory authority shall consider revitalization goals for the

3-13     enterprise zone.  In setting the rates of the utility the

3-14     appropriate regulatory authority shall allow the utility to recover

3-15     the amount of the reduction.

3-16           SECTION 9.  Sections 151.429(a) and (g), Tax Code, are

3-17     amended to read as follows:

3-18           (a)  An enterprise project is eligible for a refund in the

3-19     amount provided by this section of the taxes imposed by this

3-20     chapter on purchases of:

3-21                 (1)  equipment or machinery sold to, repaired for, or

3-22     rented by an enterprise project for use in an enterprise zone;

3-23                 (2)  building materials sold to an enterprise project

3-24     for use in remodeling, rehabilitating, or constructing a structure

3-25     in an enterprise zone;

3-26                 (3)  labor for remodeling, rehabilitating, or

3-27     constructing a structure by an enterprise project in an enterprise

3-28     zone; and

3-29                 (4)  electricity and natural gas purchased and consumed

3-30     in the normal course of business in the enterprise zone, including

3-31     electricity and natural gas used in leased or rented facilities

3-32     where the utility account is in the name of the landlord who meters

3-33     and directly passes through the itemized charges, including sales

3-34     tax, for the electricity and natural gas used by the project to the

3-35     owner of the enterprise project.

3-36           (g)  The refund provided by this section is conditioned on

3-37     the enterprise project maintaining at least the same level of

3-38     employment of qualified employees as existed at the time it

3-39     qualified for a refund for a period of three years from that date.

3-40     The Texas Department of Commerce shall annually certify to the

3-41     comptroller [and the Legislative Budget Board] whether that level

3-42     of employment of qualified employees has been maintained.  On the

3-43     Texas Department of Commerce certifying that such a level has not

3-44     been maintained, the comptroller shall assess that portion of the

3-45     refund attributable to any such decrease in employment, including

3-46     penalty and interest from the date of the refund.

3-47           SECTION 10.  Section 171.1015(g), Tax Code, is amended to

3-48     read as follows:

3-49           (g)  Only enterprise projects [qualified businesses] that

3-50     have been certified as eligible for a tax deduction under this

3-51     section by the Texas Department of Commerce to the comptroller may

3-52     apply for [and the Legislative Budget Board are entitled to] the

3-53     tax deduction.

3-54           SECTION 11.  Section 2303.0525 (b), Section 2303.0525 (c),

3-55     Section 2303.110(d), Government Code, and Section 171.501, Tax

3-56     Code, are repealed.

3-57           SECTION 12.  (a)  An enterprise project designated under

3-58     Chapter 2303, Government Code, after August 31, 1997, may not

3-59     receive a tax refund under Section 151.429, Tax Code, as amended by

3-60     this Act, or a tax reduction under Section 171.1015, Tax Code,

3-61     before September 1, 1999.

3-62           (b)  An enterprise project designated under Chapter 2303,

3-63     Government Code, after August 31, 1999, may not receive a tax

3-64     refund under Section 151.429, Tax Code, as amended by this Act, or

3-65     a tax reduction under Section 171.1015, Tax Code, before

3-66     September 1, 2001.

3-67     (c)  Not more than $8 million in state sales and use taxes may be

3-68     refunded to enterprise projects during any biennium.

3-69     (d)  The changes made by Section 7 of this Act do not impact a

 4-1     qualified hotel project designated by the Texas Department of

 4-2     Commerce before the effective date of this Act.

 4-3           SECTION 13.  This Act takes effect September 1, 1997.

 4-4           SECTION 14.  The importance of this legislation and the

 4-5     crowded condition of the calendars in both houses create an

 4-6     emergency and an imperative public necessity that the

 4-7     constitutional rule requiring bills to be read on three several

 4-8     days in each house be suspended, and this rule is hereby suspended.

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