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.
1-11 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
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.
4-9 * * * * *