By: Madla, et al. S.B. No. 226
A BILL TO BE ENTITLED
AN ACT
1-1 relating to defense economic readjustment zones; authorizing the
1-2 issuance of bonds.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Subtitle G, Title 10, Government Code, is amended
1-5 by adding Chapter 2310 to read as follows:
1-6 CHAPTER 2310. DEFENSE ECONOMIC READJUSTMENT ZONE
1-7 SUBCHAPTER A. GENERAL PROVISIONS
1-8 Sec. 2310.001. DEFINITIONS. In this chapter:
1-9 (1) "Defense worker" means:
1-10 (A) an employee of the United States Department
1-11 of Defense, including a member of the armed forces and a government
1-12 civilian worker;
1-13 (B) an employee of a government agency or
1-14 private business, or an entity providing a department of defense
1-15 related function, who is employed on a defense facility;
1-16 (C) an employee of a business that provides
1-17 direct services or products to the department of defense and whose
1-18 job is directly dependent on defense expenditures; or
1-19 (D) an employee or private contractor employed
1-20 by the United States Department of Energy working on a defense or
1-21 department of energy facility in support of a department of defense
1-22 related project.
1-23 (2) "Defense worker job" means a department of defense
2-1 authorized permanent position or a position held or occupied by one
2-2 or more defense workers for more than 12 months.
2-3 (3) "Department" means the Texas Department of
2-4 Commerce.
2-5 (4) "Nominating body" means the governing body of a
2-6 municipality or county, or a combination of the governing bodies of
2-7 municipalities or counties, that nominates and applies for
2-8 designation of an area as a readjustment zone.
2-9 (5) "Qualified business" means a person certified as a
2-10 qualified business under Section 2310.302.
2-11 (6) "Qualified employee" means a person who:
2-12 (A) works for a qualified business; and
2-13 (B) performs at least 50 percent of the person's
2-14 service for the business in the readjustment zone.
2-15 (7) "Readjustment zone" means an area designated as a
2-16 defense economic readjustment zone under this chapter.
2-17 Sec. 2310.002. JURISDICTION OF MUNICIPALITY. For the
2-18 purposes of this chapter, territory in the extraterritorial
2-19 jurisdiction of a municipality is considered to be in the
2-20 jurisdiction of the municipality.
2-21 (Sections 2310.003-2310.050 reserved for expansion
2-22 SUBCHAPTER B. DEPARTMENT POWERS AND DUTIES RELATING TO ZONES
2-23 Sec. 2310.051. GENERAL POWERS AND DUTIES. (a) The
2-24 department shall administer and monitor the implementation of this
2-25 chapter.
3-1 (b) The department shall establish criteria and procedures
3-2 for designating a qualified area as a readjustment zone and for
3-3 designating a defense readjustment project.
3-4 (c) The department shall adopt rules necessary to carry out
3-5 the purposes of this chapter.
3-6 Sec. 2310.052. EVALUATION; REPORT. (a) The department
3-7 shall conduct a continuing evaluation of the programs of
3-8 readjustment zones.
3-9 (b) On or before December 1 of each year, the department
3-10 shall submit to the governor, the legislature, and the Legislative
3-11 Budget Board a report that:
3-12 (1) evaluates the effectiveness of the readjustment
3-13 zone program;
3-14 (2) describes the use of state and local incentives
3-15 under this chapter and their effect on revenue; and
3-16 (3) suggests legislation, as appropriate.
3-17 Sec. 2310.053. ASSISTANCE. (a) The department shall
3-18 assist:
3-19 (1) a qualified business in obtaining the benefits of
3-20 any state incentive or inducement program provided by law;
3-21 (2) the governing body of a readjustment zone in
3-22 obtaining assistance from another state agency, including job
3-23 training and technical assistance to qualified businesses in a
3-24 zone; and
3-25 (3) the governing body of a readjustment zone in
4-1 encouraging small business development.
4-2 (b) The department shall provide to persons desiring to
4-3 locate and engage in business in a readjustment zone information
4-4 and appropriate assistance relating to the required legal
4-5 authorization, including a state license, permit, certificate,
4-6 approval, registration, or charter, to engage in business in this
4-7 state.
4-8 (c) The department shall publicize existing tax incentives
4-9 and economic development programs in readjustment zones.
4-10 (d) On request the department shall offer to a unit of local
4-11 government having a readjustment zone within its jurisdiction
4-12 technical assistance relating to tax abatement and the development
4-13 of alternative revenue sources.
4-14 Sec. 2310.054. COORDINATION WITH OTHER GOVERNMENTAL
4-15 ENTITIES. (a) In cooperation with the appropriate units of local
4-16 government and other state agencies, the department shall
4-17 coordinate and streamline state business assistance programs and
4-18 permit or license application procedures for businesses in
4-19 readjustment zones.
4-20 (b) The department shall work with the responsible state and
4-21 federal agencies to coordinate readjustment zone programs with
4-22 other programs carried out in a readjustment zone, including
4-23 housing, community and economic development, small business,
4-24 banking, financial assistance, transportation, and employment
4-25 training programs.
5-1 (c) The department shall encourage other state agencies in
5-2 awarding grants, loans, or services to give priority to businesses
5-3 in readjustment zones.
5-4 (Sections 2310.055-2310.100 reserved for expansion
5-5 SUBCHAPTER C. DESIGNATION OF READJUSTMENT ZONE
5-6 Sec. 2310.101. CRITERIA FOR READJUSTMENT ZONE DESIGNATION.
5-7 (a) To be designated as a readjustment zone an area must:
5-8 (1) have a continuous boundary;
5-9 (2) be at least one square mile but not larger than 20
5-10 square miles, excluding lakes, waterways, and transportation
5-11 arteries, of the municipality, county, or combination of
5-12 municipalities or counties nominating the area as a readjustment
5-13 zone;
5-14 (3) be located in an adversely affected
5-15 defense-dependent community;
5-16 (4) have at least 50 percent of its area located in an
5-17 existing or former United States Department of Defense facility;
5-18 and
5-19 (5) be nominated as a readjustment zone by an
5-20 ordinance or order adopted by the nominating body.
5-21 (b) An area is not prohibited from being included in a
5-22 readjustment zone because the area is also included in an
5-23 enterprise zone designated under Chapter 2303.
5-24 Sec. 2310.102. ADVERSELY AFFECTED DEFENSE-DEPENDENT
5-25 COMMUNITY. A municipality or county is an adversely affected
6-1 defense-dependent community if the department determines that:
6-2 (1) the municipality or county requires assistance
6-3 because of:
6-4 (A) the proposed or actual establishment,
6-5 realignment, or closure of a defense facility;
6-6 (B) the cancellation or termination of a United
6-7 States Department of Defense contract or the failure of the
6-8 department of defense to proceed with an approved major weapon
6-9 system program;
6-10 (C) a publicly announced planned major reduction
6-11 in department of defense spending that would directly and adversely
6-12 affect the municipality or county; or
6-13 (D) the closure or a significant reduction of
6-14 the operations of a defense facility as the result of a merger,
6-15 acquisition, or consolidation of a defense contractor operating the
6-16 facility; and
6-17 (2) the municipality or county is expected to
6-18 experience, during the period between the beginning of the federal
6-19 fiscal year during which an event described by Subdivision (1) is
6-20 finally approved and the date that the event is to be substantially
6-21 completed, a direct loss of:
6-22 (A) 2,500 or more defense worker jobs in any
6-23 area of the municipality or county that is located in an urbanized
6-24 area of a metropolitan statistical area;
6-25 (B) 1,000 or more defense worker jobs in any
7-1 area of the municipality or county that is not located in an
7-2 urbanized area of a metropolitan statistical area; or
7-3 (C) one percent of the civilian jobs in the
7-4 municipality or county.
7-5 Sec. 2310.103. NOMINATION OF READJUSTMENT ZONE. (a) The
7-6 governing body of a municipality or county that is an adversely
7-7 affected defense-dependent community, individually or in
7-8 combination with other municipalities or counties that are
7-9 adversely affected defense-dependent communities, by ordinance or
7-10 order, as appropriate, may nominate as a readjustment zone an area
7-11 within its jurisdiction that meets the criteria under Section
7-12 2310.101.
7-13 (b) Unless the nominating body holds a public hearing before
7-14 adopting an ordinance or order under this section, the ordinance or
7-15 order is not valid.
7-16 (c) The governing body of a county may not nominate
7-17 territory in a municipality, including extraterritorial
7-18 jurisdiction of a municipality, to be included in a proposed
7-19 readjustment zone unless the governing body of the municipality
7-20 also nominates the territory and together with the county files a
7-21 joint application under Section 2310.105.
7-22 (d) The governing bodies of a combination of municipalities
7-23 or counties may not jointly nominate an area as a readjustment zone
7-24 unless the governing bodies have entered into a binding agreement
7-25 to administer the zone jointly.
8-1 Sec. 2310.104. NOMINATING ORDINANCE OR ORDER. (a) An
8-2 ordinance or order nominating an area as a readjustment zone must:
8-3 (1) describe precisely the area to be included in the
8-4 zone by a legal description or reference to roadways, lakes,
8-5 waterways, or municipal or county boundaries;
8-6 (2) state a finding that the area meets the
8-7 requirements of this chapter;
8-8 (3) summarize briefly the incentives, including tax
8-9 incentives, that, at the election of the nominating body, apply to
8-10 business enterprises in the area; and
8-11 (4) nominate the area as a readjustment zone.
8-12 (b) At least one of the incentives summarized under
8-13 Subsection (a)(3) must not be offered elsewhere within the
8-14 jurisdiction except within an enterprise zone designated under
8-15 Chapter 2303.
8-16 (c) This section does not prohibit a municipality or county
8-17 from extending additional incentives, including tax incentives, for
8-18 business enterprises in a readjustment zone by a separate ordinance
8-19 or order.
8-20 Sec. 2310.105. APPLICATION FOR DESIGNATION. (a) For an
8-21 area to be designated as a readjustment zone, the nominating body,
8-22 after nominating the area as a readjustment zone, must send to the
8-23 department a written application for designation of the area as a
8-24 readjustment zone.
8-25 (b) The application must include:
9-1 (1) a certified copy of the ordinance or order, as
9-2 appropriate, nominating the area as a readjustment zone;
9-3 (2) a map of the area showing existing streets and
9-4 highways;
9-5 (3) an analysis and appropriate supporting documents
9-6 and statistics demonstrating that the area qualifies for
9-7 designation as a readjustment zone;
9-8 (4) a statement that specifies each tax incentive,
9-9 grant, other financial incentive or benefit, or program to be
9-10 provided by the nominating body to business enterprises in the area
9-11 that is not to be provided throughout the governmental entity or
9-12 entities nominating the area as a readjustment zone;
9-13 (5) a statement of the economic development and
9-14 planning objectives for the area;
9-15 (6) an estimate of the economic impact of the
9-16 designation of the area as a readjustment zone on the revenues of
9-17 the governmental entity or entities nominating the area as a
9-18 readjustment zone, considering all the financial incentives and
9-19 benefits and the programs contemplated;
9-20 (7) a transcript or tape recording of all public
9-21 hearings on the proposed zone;
9-22 (8) if the application is a joint application, a
9-23 description and copy of the agreement between the applicants;
9-24 (9) the procedures for negotiating with residents,
9-25 community groups, and other entities affected by the designation of
10-1 the area as a readjustment zone and with qualified businesses in
10-2 the area;
10-3 (10) a description of the administrative authority, if
10-4 one is to be appointed for the readjustment zone under Section
10-5 2310.202; and
10-6 (11) any additional information the department
10-7 requires.
10-8 (c) Information required by Subsection (b) is for evaluation
10-9 purposes only.
10-10 Sec. 2310.106. REVIEW OF APPLICATION. (a) On receipt of an
10-11 application for the designation of a readjustment zone, the
10-12 department shall review the application to determine if the
10-13 nominated area qualifies for designation as a readjustment zone
10-14 under this chapter.
10-15 (b) The department shall allow an applicant to correct any
10-16 omission or clerical error in the application and to return the
10-17 application to the department on or before the 15th day after the
10-18 date on which the department receives the application.
10-19 Sec. 2310.107. DESIGNATION AGREEMENT. (a) If the
10-20 department determines that a nominated area for which a designation
10-21 application has been received satisfies the criteria under Section
10-22 2310.101, the department shall negotiate with the nominating body
10-23 for a designation agreement.
10-24 (b) A designation agreement must:
10-25 (1) designate the nominated area as a readjustment
11-1 zone; and
11-2 (2) designate the administrative authority, if one is
11-3 to be appointed for the zone under Section 2310.202, and describe
11-4 its functions and duties, which should include decision-making
11-5 authority and the authority to negotiate with affected entities.
11-6 (c) The department shall complete the negotiations and sign
11-7 the agreement not later than the 60th day after the date on which
11-8 the application is received unless the department extends that
11-9 period to the 90th day after the date on which the application was
11-10 received.
11-11 (d) If an agreement is not completed within the 60-day
11-12 period provided by Subsection (c), the department shall provide to
11-13 the nominating body the specific areas of concern and a final
11-14 proposal for the agreement.
11-15 (e) If the agreement is not executed before the 91st day
11-16 after the date on which the application was received, the
11-17 application is considered to be denied.
11-18 Sec. 2310.108. DENIAL OF APPLICATION; NOTICE. (a) The
11-19 department may deny an application for the designation of a
11-20 readjustment zone only if the department determines that the
11-21 nominated area does not satisfy the criteria under Section
11-22 2310.101.
11-23 (b) The department shall inform the nominating body of the
11-24 specific reasons for denial of an application, including denial
11-25 under Section 2310.107(e).
12-1 Sec. 2310.109. PERIOD OF DESIGNATION. An area may be
12-2 designated as a readjustment zone for a maximum of seven years. A
12-3 designation remains in effect until September 1 of the final year
12-4 of the designation.
12-5 Sec. 2310.110. AMENDING BOUNDARIES. (a) The nominating
12-6 body may amend the boundary of a readjustment zone by ordinance or
12-7 order, as appropriate, adopted after a public hearing on the issue.
12-8 (b) The amended boundary:
12-9 (1) must be continuous;
12-10 (2) may not exceed the original size requirement of
12-11 Section 2310.101; and
12-12 (3) may not exclude any area originally included
12-13 within the boundary of the zone as designated.
12-14 (c) The readjustment zone with the amended boundary must
12-15 continue to meet the location requirements of Section
12-16 2310.101(a)(4).
12-17 (d) A nominating body may not make more than one boundary
12-18 amendment annually for a readjustment zone.
12-19 (e) For each amendment of a readjustment zone boundary, the
12-20 nominating body shall pay the department a reasonable fee, in an
12-21 amount specified by the department, not to exceed $500. The
12-22 department may use fees collected under this subsection to
12-23 administer this chapter and for other purposes to advance this
12-24 chapter.
12-25 Sec. 2310.111. REMOVAL OF DESIGNATION. (a) The department
13-1 may remove the designation of an area as a readjustment zone if:
13-2 (1) the area no longer meets the criteria for
13-3 designation under this chapter or by department rule adopted under
13-4 this chapter; or
13-5 (2) the department determines that the governing body
13-6 of the readjustment zone has not complied with commitments made in
13-7 the ordinance or order nominating the area as a readjustment zone.
13-8 (b) The removal of a designation does not affect the
13-9 validity of a tax incentive or regulatory relief granted or accrued
13-10 before the removal.
13-11 (Sections 2310.112-2310.200 reserved for expansion
13-12 SUBCHAPTER D. ADMINISTRATION OF READJUSTMENT ZONES
13-13 Sec. 2310.201. ADMINISTRATION BY GOVERNING BODY. The
13-14 governing body of a readjustment zone is the governing body of the
13-15 municipality or county, or the governing bodies of the combination
13-16 of municipalities or counties, that applied to have the area
13-17 designated as a readjustment zone.
13-18 Sec. 2310.202. ADMINISTRATION BY ADMINISTRATIVE AUTHORITY.
13-19 (a) The governing body of a readjustment zone may delegate its
13-20 administrative duties to an administrative authority appointed by
13-21 the governing body.
13-22 (b) An administrative authority must:
13-23 (1) be composed of 3, 5, 7, 9, 11, or 15 members;
13-24 (2) be a viable and responsive body generally
13-25 representative of all public or private entities that have a stake
14-1 in the development of the zone; and
14-2 (3) if the readjustment zone includes private
14-3 residences, include:
14-4 (A) an elected official representing
14-5 readjustment zone residents and businesses; or
14-6 (B) at least two readjustment zone residents.
14-7 Sec. 2310.203. LIAISON. The governing body of a
14-8 readjustment zone shall designate a liaison to communicate and
14-9 negotiate with:
14-10 (1) the department;
14-11 (2) the administrative authority, if one exists;
14-12 (3) a defense readjustment project; and
14-13 (4) other entities in or affected by the readjustment
14-14 zone.
14-15 Sec. 2310.204. ANNUAL REPORT. (a) Not later than October 1
14-16 of each year, the governing body of a readjustment zone shall
14-17 submit to the department a report in the form required by the
14-18 department.
14-19 (b) The report must be approved by the readjustment zone's
14-20 administrative authority, if one exists.
14-21 (c) The report must include for the year preceding the date
14-22 of the report:
14-23 (1) a list of local incentives for community
14-24 development available in the zone;
14-25 (2) the use of local incentives for which the
15-1 governing body provided in the ordinance or order nominating the
15-2 readjustment zone and the effect of those incentives on revenue;
15-3 (3) the number of businesses assisted, located, and
15-4 retained in the zone since its designation due to the existence of
15-5 the readjustment zone;
15-6 (4) a summary of all industrial revenue bonds issued
15-7 to finance projects located in the zone; and
15-8 (5) a description of all efforts made to attain
15-9 revitalization goals for the zone.
15-10 (Sections 2310.205-2310.300 reserved for expansion
15-11 SUBCHAPTER E. QUALIFIED BUSINESSES AND DEFENSE
15-12 READJUSTMENT PROJECTS
15-13 Sec. 2310.301. DEFINITION. In this subchapter, "new
15-14 permanent job" means a new employment position created by a
15-15 qualified business as described by Section 2310.302 that:
15-16 (1) has provided at least 1,820 hours of employment a
15-17 year to a qualified employee; and
15-18 (2) is intended to exist during the period that the
15-19 qualified business is designated as a defense readjustment project
15-20 under Section 2310.306.
15-21 Sec. 2310.302. QUALIFIED BUSINESS. (a) A person is a
15-22 qualified business if the department, for the purpose of state
15-23 benefits under this chapter, or the governing body of a
15-24 readjustment zone, for the purpose of local benefits, certifies
15-25 that:
16-1 (1) the person is engaged in or has provided
16-2 substantial commitment to initiate the active conduct of a trade or
16-3 business in the readjustment zone; and
16-4 (2) at least 25 percent of the person's new employees
16-5 in the readjustment zone are:
16-6 (A) residents of the governing jurisdiction;
16-7 (B) economically disadvantaged individuals, as
16-8 defined by Section 2303.402(c); or
16-9 (C) dislocated defense workers.
16-10 (b) The governing body of a readjustment zone may certify a
16-11 franchise or subsidiary of a new or existing business as a
16-12 qualified business if the franchise or subsidiary:
16-13 (1) is located entirely in the readjustment zone; and
16-14 (2) maintains separate books and records of the
16-15 business activity conducted in the zone.
16-16 Sec. 2310.303. PROHIBITION ON QUALIFIED BUSINESS
16-17 CERTIFICATION. If the department determines that the governing
16-18 body of a readjustment zone is not complying with this chapter, the
16-19 department shall prohibit the certification of a qualified business
16-20 in the zone until the department determines that the governing body
16-21 is complying with this chapter. The department may not designate
16-22 more than two businesses in a single readjustment zone as defense
16-23 readjustment projects.
16-24 Sec. 2310.304. REQUEST FOR APPLICATION FOR DEFENSE
16-25 READJUSTMENT PROJECT DESIGNATION. A qualified business in a
17-1 readjustment zone may request that the governing body of the
17-2 readjustment zone apply to the department for designation of the
17-3 business as a defense readjustment project. The request must also
17-4 be made to the readjustment zone's administrative authority, if one
17-5 exists.
17-6 Sec. 2310.305. APPLICATION FOR DEFENSE READJUSTMENT PROJECT
17-7 DESIGNATION. (a) If the governing body of a readjustment zone or
17-8 the governing body and administrative authority of a readjustment
17-9 zone, as appropriate, approve a request made under Section
17-10 2310.304, the governing body may apply to the department for the
17-11 designation of the qualified business as a defense readjustment
17-12 project.
17-13 (b) An application must:
17-14 (1) describe the procedures and efforts of the
17-15 governmental entity or entities that applied to have the area
17-16 designated as a readjustment zone to facilitate and encourage
17-17 participation by and negotiation among affected entities in the
17-18 zone in which the qualified business is located;
17-19 (2) contain an economic analysis of the plans of the
17-20 qualified business for expansion, revitalization, or other activity
17-21 in the readjustment zone, including:
17-22 (A) the number of anticipated new permanent jobs
17-23 the business will create;
17-24 (B) the anticipated number of permanent jobs the
17-25 business will retain;
18-1 (C) the amount of investment to be made in the
18-2 zone; and
18-3 (D) other information the department requires;
18-4 and
18-5 (3) describe the local effort made by the governmental
18-6 entity or entities that applied to have the area designated as a
18-7 readjustment zone, the administrative authority, if one exists, the
18-8 qualified business, and other affected entities to develop and
18-9 revitalize the zone.
18-10 (c) For the purposes of this section, local effort to
18-11 develop and revitalize a readjustment zone is:
18-12 (1) the willingness of public entities in the zone to
18-13 provide services, incentives, and regulatory relief authorized by
18-14 this chapter and to negotiate with the qualified business for which
18-15 application is made and with other local groups or businesses to
18-16 achieve the public purposes of this chapter; and
18-17 (2) the effort of the qualified business and other
18-18 affected entities to cooperate in achieving those public purposes.
18-19 (d) Factors to be considered in evaluating the local effort
18-20 of a public entity include:
18-21 (1) tax abatement, deferral, refunds, or other tax
18-22 incentives;
18-23 (2) regulatory relief, including:
18-24 (A) zoning changes or variances;
18-25 (B) exemptions from unnecessary building code
19-1 requirements, impact fees, or inspection fees; and
19-2 (C) streamlined permitting;
19-3 (3) enhanced municipal services, including:
19-4 (A) improved police and fire protection;
19-5 (B) institution of community crime prevention
19-6 programs; and
19-7 (C) special public transportation routes or
19-8 reduced fares;
19-9 (4) improvements in community facilities, including:
19-10 (A) capital improvements in water and sewer
19-11 facilities;
19-12 (B) road repair; and
19-13 (C) creation or improvement of parks;
19-14 (5) improvements to housing, including:
19-15 (A) low-interest loans for housing
19-16 rehabilitation, improvement, or new construction; and
19-17 (B) transfer of abandoned housing to individuals
19-18 or community groups;
19-19 (6) business and industrial development services,
19-20 including:
19-21 (A) low-interest loans for business;
19-22 (B) use of surplus school buildings or other
19-23 underutilized publicly owned facilities as small business
19-24 incubators;
19-25 (C) provision of publicly owned land for
20-1 development purposes, including residential, commercial, or
20-2 industrial development;
20-3 (D) creation of special one-stop permitting and
20-4 problem resolution centers or ombudsmen; and
20-5 (E) promotion and marketing services; and
20-6 (7) job training and employment services, including:
20-7 (A) retraining programs;
20-8 (B) literacy and employment skills programs;
20-9 (C) vocational education; and
20-10 (D) customized job training.
20-11 (e) Factors to be considered in evaluating the local effort
20-12 of a private entity include:
20-13 (1) the willingness to negotiate or cooperate in the
20-14 redevelopment of vacated defense facilities and the creation of
20-15 high-skilled, high wage jobs;
20-16 (2) commitments to hire dislocated defense workers and
20-17 economically disadvantaged workers;
20-18 (3) commitments to hire minority workers and to
20-19 contract with minority-owned businesses;
20-20 (4) provision of technical and vocational job training
20-21 for residents of the nominating body's jurisdiction or economically
20-22 disadvantaged employees;
20-23 (5) provision of child care for employees;
20-24 (6) commitments to implement and contribute to a
20-25 tutoring or mentoring program for area students;
21-1 (7) prevention or reduction of juvenile crime; and
21-2 (8) the willingness to make contributions to the
21-3 well-being of the community, such as job training, or the donation
21-4 of land for parks or other public purposes.
21-5 Sec. 2310.306. DEFENSE READJUSTMENT PROJECT DESIGNATION.
21-6 (a) The department may designate a qualified business as a defense
21-7 readjustment project only if the department determines that:
21-8 (1) the business is a qualified business under Section
21-9 2310.302 that is located in or has made a substantial commitment to
21-10 locate in a defense readjustment zone;
21-11 (2) the governing body of the readjustment zone making
21-12 the application has demonstrated that a high level of cooperation
21-13 exists among public, private, and neighborhood entities in the
21-14 zone; and
21-15 (3) the designation will contribute significantly to
21-16 the achievement of the plans of the governing body making the
21-17 application for development and revitalization of the zone.
21-18 (b) The department shall designate qualified businesses as
21-19 defense readjustment projects on a competitive basis. The
21-20 department shall make its designation decisions using a weighted
21-21 scale in which:
21-22 (1) 50 percent of the evaluation is based on the
21-23 effect of the loss of defense expenditures and employment on the
21-24 community;
21-25 (2) 25 percent of the evaluation depends on the local
22-1 effort to achieve development and revitalization of the
22-2 readjustment zone; and
22-3 (3) 25 percent of the evaluation depends on the
22-4 evaluation criteria as determined by the department, which must
22-5 include:
22-6 (A) the level of cooperation and support the
22-7 project applicant commits to the revitalization goals of the zone;
22-8 and
22-9 (B) the type and wage level of the jobs to be
22-10 created or retained by the business.
22-11 (c) The department may remove a defense readjustment project
22-12 designation if it determines that the business is not complying
22-13 with a requirement for its designation.
22-14 Sec. 2310.307. ALLOCATION OF JOBS ELIGIBLE FOR TAX REFUND.
22-15 When the department designates a business as a defense readjustment
22-16 project, the department shall allocate to the project the maximum
22-17 number of new permanent jobs or retained jobs eligible to be
22-18 included in a computation of a tax refund for the project. The
22-19 number may not exceed 500 or a number equal to 110 percent of the
22-20 number of anticipated new permanent jobs or retained jobs specified
22-21 in the application for designation of the business as a defense
22-22 readjustment project under Section 2310.305, whichever is less.
22-23 Sec. 2310.308. DURATION OF CERTAIN DESIGNATIONS. The
22-24 department's designation of a qualified business as a defense
22-25 readjustment project is effective until the fifth anniversary of
23-1 the date on which the designation is made regardless of whether the
23-2 readjustment zone in which the project is located expires before
23-3 the fifth anniversary of the project.
23-4 (Sections 2310.309-2310.400 reserved for expansion
23-5 SUBCHAPTER F. READJUSTMENT ZONE BENEFITS
23-6 Sec. 2310.401. EXEMPTIONS FROM STATE REGULATION; SUSPENSION
23-7 OF LOCAL REGULATION. (a) A state agency may exempt from its
23-8 regulation a qualified business, qualified employee, or qualified
23-9 property in a readjustment zone if the exemption is consistent
23-10 with:
23-11 (1) the purposes of this chapter; and
23-12 (2) the protection and promotion of the general health
23-13 and welfare.
23-14 (b) A local government may suspend local regulation,
23-15 including an ordinance, rule, or standard, relating to zoning,
23-16 licensing, or building codes in a readjustment zone.
23-17 (c) An exemption from or suspension of regulation under this
23-18 section must be adopted in the same manner that the regulation was
23-19 adopted.
23-20 (d) The authorization provided by Subsection (a) or (b) does
23-21 not apply to regulation:
23-22 (1) that relates to:
23-23 (A) civil rights;
23-24 (B) equal employment;
23-25 (C) equal opportunity;
24-1 (D) fair housing rights; or
24-2 (E) preservation of historical sites or
24-3 historical artifacts;
24-4 (2) the relaxation of which is likely to harm the
24-5 public safety or public health, including environmental health; or
24-6 (3) that is specifically imposed by law.
24-7 (e) For the purposes of this section, property is classified
24-8 as qualified property if the property is:
24-9 (1) tangible personal property located in the
24-10 readjustment zone that was acquired from the federal government by
24-11 lease or deed or:
24-12 (A) acquired by a taxpayer not earlier than the
24-13 90th day before the date on which the area was designated as a
24-14 readjustment zone; and
24-15 (B) used predominantly by the taxpayer in the
24-16 active conduct of a trade or business;
24-17 (2) real property located in the readjustment zone
24-18 that was acquired from the federal government by lease or deed or:
24-19 (A) acquired by a taxpayer not earlier than the
24-20 90th day before the date on which the area was designated as a
24-21 readjustment zone and was used predominantly by the taxpayer in the
24-22 active conduct of a trade or business; or
24-23 (B) the principal residence of the taxpayer on
24-24 the date of the sale or exchange; or
24-25 (3) an interest in an entity that was certified as a
25-1 qualified business under Section 2310.302 for the entity's most
25-2 recent tax year ending before the date of the sale or exchange.
25-3 Sec. 2310.402. REVIEW OF STATE AGENCY RULES; REPORT. (a) A
25-4 state agency by rule may provide, when applicable, encouragements
25-5 and incentives to increase:
25-6 (1) the renovation, improvement, or new construction
25-7 of housing in readjustment zones; and
25-8 (2) the economic viability and profitability of
25-9 business and commerce in readjustment zones.
25-10 (b) The department shall disseminate the reports to the
25-11 governing bodies of readjustment zones and others as necessary to
25-12 advance the purposes of this chapter.
25-13 (c) To contribute to the implementation of this chapter, an
25-14 agency may waive, modify, provide exemptions to, or otherwise
25-15 minimize the adverse effects of the rules it administers on the
25-16 renovation, improvement, or new construction of housing in
25-17 readjustment zones or on the economic viability and profitability
25-18 of business and commerce in readjustment zones.
25-19 Sec. 2310.403. STATE PREFERENCES. (a) A state agency shall
25-20 give preference to the governing body of a readjustment zone or a
25-21 qualified business or qualified employee located in a readjustment
25-22 zone over other eligible applicants for grants, loans, or credit
25-23 enhancements that are administered by the state agency if:
25-24 (1) at least 50 percent of the grant, loan, or credit
25-25 enhancement will be spent for the direct benefit of the
26-1 readjustment zone; and
26-2 (2) the purpose of the grant, loan, or credit
26-3 enhancement is to:
26-4 (A) promote economic development in the
26-5 community; or
26-6 (B) construct, improve, extend, repair, or
26-7 maintain public facilities in the community.
26-8 (b) The comptroller may and is encouraged to deposit state
26-9 money in financial institutions located or doing business in
26-10 readjustment zones.
26-11 (c) A state agency may and is encouraged to contract with
26-12 businesses located in readjustment zones.
26-13 (d) The department or another state agency may give
26-14 preference to readjustment zones in granting economic development
26-15 money or other benefits.
26-16 Sec. 2310.404. STATE TAX REFUNDS AND DEDUCTION; REPORT.
26-17 (a) A defense readjustment project is eligible for:
26-18 (1) a refund of state taxes under Section 151.4291,
26-19 Tax Code;
26-20 (2) a deduction from taxable capital under Section
26-21 171.1016, Tax Code; and
26-22 (3) the exclusion of receipts from service performed
26-23 in a readjustment zone in the determination of gross receipts from
26-24 business done in this state under Sections 171.103 and 171.1032,
26-25 Tax Code.
27-1 (b) Not later than the 60th day after the last day of each
27-2 fiscal year, the comptroller shall report to the department the
27-3 statewide total of the tax refunds made under this section during
27-4 that fiscal year.
27-5 Sec. 2310.405. LOCAL SALES AND USE TAX REFUNDS. (a) To
27-6 encourage the development of areas designated as readjustment
27-7 zones, the governing body of a municipality through a program may
27-8 refund its local sales and use taxes paid by a qualified business
27-9 on:
27-10 (1) the purchase, lease, or rental of equipment or
27-11 machinery for use in a readjustment zone;
27-12 (2) the purchase of material for use in remodeling,
27-13 rehabilitating, or constructing a structure in a readjustment zone;
27-14 (3) labor for remodeling, rehabilitating, or
27-15 constructing a structure in a readjustment zone; and
27-16 (4) electricity and natural gas purchased and consumed
27-17 in the normal course of business in the readjustment zone.
27-18 (b) To promote the public health, safety, or welfare, the
27-19 governing body of a municipality or county through a program may
27-20 refund its local sales and use taxes paid by a qualified business
27-21 or qualified employee.
27-22 (c) The governing body of a municipality or county that is
27-23 the governing body of a readjustment zone may provide for the
27-24 partial or total refund of its local sales and use taxes paid by a
27-25 person making a taxable purchase, lease, or rental for development
28-1 or revitalization in the zone.
28-2 (d) A person eligible for a refund of local sales and use
28-3 taxes under this section shall pay the entire amount of state and
28-4 local sales and use taxes at the time the taxes would be due if an
28-5 agreement for the refund did not exist.
28-6 (e) An agreement to refund local sales and use taxes under
28-7 this section must:
28-8 (1) be written;
28-9 (2) contain an expiration date; and
28-10 (3) require that the person eligible for the refund
28-11 provide to the municipality or county making the refund the
28-12 documentation necessary to support a refund claim.
28-13 (f) The municipality or county shall make the refund
28-14 directly to the person eligible for the refund in the manner
28-15 provided by the agreement.
28-16 Sec. 2310.406. REDUCTION OR ELIMINATION OF LOCAL FEES OR
28-17 TAXES. (a) To promote the public health, safety, or welfare, the
28-18 governing body of a municipality or county through a program may
28-19 reduce or eliminate fees or taxes that it imposes on a qualified
28-20 business or qualified employee.
28-21 (b) This section does not apply to sales and use taxes or
28-22 property taxes.
28-23 Sec. 2310.407. TAX INCREMENT FINANCING AND ABATEMENT.
28-24 Designation of an area as a readjustment zone is also designation
28-25 of the area as a reinvestment zone for:
29-1 (1) tax increment financing under Chapter 311, Tax
29-2 Code; and
29-3 (2) tax abatement under Chapter 312, Tax Code.
29-4 Sec. 2310.408. DEVELOPMENT BONDS. To finance a project in a
29-5 readjustment zone, bonds may be issued under:
29-6 (1) the Act for Development of Employment, Industrial
29-7 and Health Resources of 1971 (Article 5190.1, Vernon's Texas Civil
29-8 Statutes); or
29-9 (2) the Development Corporation Act of 1979 (Article
29-10 5190.6, Vernon's Texas Civil Statutes).
29-11 Sec. 2310.409. OTHER LOCAL INCENTIVES. (a) The governing
29-12 body of a municipality or county that is the governing body of a
29-13 readjustment zone may:
29-14 (1) defer compliance in the zone with the subdivision
29-15 and development ordinances or rules, other than those relating to
29-16 streets and roads or sewer or water services, of the municipality
29-17 or county, as appropriate;
29-18 (2) give priority to the zone for the receipt of:
29-19 (A) community development block grant money;
29-20 (B) industrial revenue bonds; or
29-21 (C) funds received for job training;
29-22 (3) adopt and implement a plan for police protection
29-23 in the zone;
29-24 (4) amend the zoning ordinances of the municipality or
29-25 county, as appropriate, to promote economic development in the
30-1 zone;
30-2 (5) establish permitting preferences for businesses in
30-3 the zone;
30-4 (6) establish simplified, accelerated, or other
30-5 special permit procedures for businesses in the zone;
30-6 (7) waive development fees for projects in the zone;
30-7 (8) create a local readjustment zone fund for funding
30-8 bonds or other programs or activities to develop or revitalize the
30-9 zone;
30-10 (9) for qualified businesses in the zone, reduce rates
30-11 charged by:
30-12 (A) a utility owned by the municipality or
30-13 county, as appropriate; or
30-14 (B) a cooperative corporation or utility owned
30-15 by private investors, subject to the requirements of Subsection
30-16 (b);
30-17 (10) in issuing housing finance bonds, give priority
30-18 to persons or projects in the zone;
30-19 (11) in providing services, give priority to local
30-20 economic development, educational, job training, or transportation
30-21 programs that benefit the zone; or
30-22 (12) sell real property owned by the municipality or
30-23 county, as appropriate, and located in the readjustment zone in
30-24 accordance with Section 2310.410.
30-25 (b) A reduction in utility rates under Subsection (a)(9)(B)
31-1 is subject to the agreement of the affected utility and the
31-2 approval of the appropriate regulatory authority under the Public
31-3 Utility Regulatory Act of 1995 (Article 1446c-0, Vernon's Texas
31-4 Civil Statutes). The rates may be reduced up to but not more than
31-5 five percent below the lowest rate allowable for that customer
31-6 class. In making its determination under this section, the
31-7 regulatory authority shall consider revitalization goals for the
31-8 readjustment zone. In setting the rates of the utility the
31-9 appropriate regulatory authority shall allow the utility to recover
31-10 the amount of the reduction.
31-11 Sec. 2310.410. DISPOSITION OF PUBLIC PROPERTY IN
31-12 READJUSTMENT ZONE. (a) After an area is designated as a
31-13 readjustment zone, the state, a municipality, or a county that owns
31-14 a surplus building or vacant land in the zone may dispose of the
31-15 building or land by:
31-16 (1) selling the building or land at a public auction;
31-17 or
31-18 (2) establishing an urban homestead program described
31-19 by Subsection (c).
31-20 (b) A municipality or county may sell a surplus building or
31-21 vacant land in the readjustment zone at less than fair market value
31-22 if the governing body of the municipality or county by ordinance or
31-23 order, as appropriate, adopts criteria that specify the conditions
31-24 and circumstances under which the sale may occur and the public
31-25 purpose to be achieved by the sale. The building or land may be
32-1 sold to a buyer who is not the highest bidder if the criteria and
32-2 public purpose specified in the ordinance or order are satisfied.
32-3 A copy of the ordinance or order must be filed with the department
32-4 not later than the day on which the sale occurs.
32-5 (c) An urban homestead program must provide that:
32-6 (1) the state, municipality, or county is to sell to
32-7 an individual a residence or part of a residence that it owns for
32-8 an amount not to exceed $100;
32-9 (2) as a condition of the sale, the individual must
32-10 agree by covenant in the deed conveying the residence to live in
32-11 the residence for at least seven years and to renovate or remodel
32-12 the residence to meet the level of maintenance stated in an
32-13 agreement between the individual and the governmental entity; and
32-14 (3) after the individual satisfies the seven-year
32-15 residency and property improvement requirements of the agreement,
32-16 the governmental entity shall assign the residence to the
32-17 individual.
32-18 Sec. 2310.411. WAIVER OF PERFORMANCE BOND. A subcontractor
32-19 is not required to execute a performance bond under Chapter 2253
32-20 if:
32-21 (1) the construction, alteration, repair, or other
32-22 public work to be performed under the contract is entirely in a
32-23 readjustment zone; and
32-24 (2) the amount of the contract does not exceed
32-25 $200,000.
33-1 Sec. 2310.412. LIABILITY OF CONTRACTOR OR ARCHITECT. A
33-2 contractor or architect who constructs or rehabilitates a building
33-3 in a readjustment zone is liable for any structural defect in the
33-4 building only for the period ending on the 10th anniversary of the
33-5 date on which beneficial occupancy of the building begins after the
33-6 construction or rehabilitation, notwithstanding a statute of
33-7 limitations to the contrary.
33-8 SECTION 2. Subchapter I, Chapter 151, Tax Code, is amended
33-9 by adding Section 151.4291 to read as follows:
33-10 Sec. 151.4291. TAX REFUNDS FOR DEFENSE READJUSTMENT
33-11 PROJECTS. (a) A defense readjustment project is eligible for a
33-12 refund in the amount provided by this section of the taxes imposed
33-13 by this chapter on purchases of:
33-14 (1) equipment or machinery sold to a defense
33-15 readjustment project for use in a readjustment zone;
33-16 (2) building materials sold to a defense readjustment
33-17 project for use in remodeling, rehabilitating, or constructing a
33-18 structure in a readjustment zone;
33-19 (3) labor for remodeling, rehabilitating, or
33-20 constructing a structure by a defense readjustment project in a
33-21 readjustment zone; and
33-22 (4) electricity and natural gas purchased and consumed
33-23 in the normal course of business in the readjustment zone.
33-24 (b) Subject to the limitations provided by Subsection (c) of
33-25 this section, a defense readjustment project qualifies for a refund
34-1 of taxes under this section of $2,500 for each new permanent job or
34-2 job that has been retained by the defense readjustment project for
34-3 a qualified employee.
34-4 (c) The total amount of tax refund that a defense
34-5 readjustment project may apply for in a state fiscal year may not
34-6 exceed $250,000. If a defense readjustment project qualifies in a
34-7 state fiscal year for a refund of taxes in an amount in excess of
34-8 the limitation provided by this subsection, it may apply for a
34-9 refund of those taxes in a subsequent year, subject to the $250,000
34-10 limitation for each year. However, a defense readjustment project
34-11 may not apply for a refund under this section after the end of the
34-12 state fiscal year immediately following the state fiscal year in
34-13 which the defense readjustment project's designation as a defense
34-14 readjustment project expires or is removed. The total amount that
34-15 may be refunded to a defense readjustment project under this
34-16 section may not exceed the amount determined by multiplying
34-17 $250,000 by the number of state fiscal years during which the
34-18 defense readjustment project created one or more jobs for qualified
34-19 employees.
34-20 (d) To receive a refund under this section, a defense
34-21 readjustment project must apply to the comptroller for the refund.
34-22 The Texas Department of Commerce shall provide the comptroller with
34-23 the assistance that the comptroller requires in administering this
34-24 section.
34-25 (e) In this section:
35-1 (1) "Defense readjustment project" means a person
35-2 designated by the Texas Department of Commerce as a defense
35-3 readjustment project under Chapter 2310, Government Code.
35-4 (2) "Readjustment zone" and "qualified employee" have
35-5 the meanings assigned to those terms by Section 2310.001,
35-6 Government Code.
35-7 (3) "New permanent job" means a new employment
35-8 position created by a qualified business as described by Section
35-9 2310.302, Government Code, that:
35-10 (A) has provided at least 1,820 hours of
35-11 employment a year to a qualified employee; and
35-12 (B) is intended to exist during the period that
35-13 the qualified business is designated as a defense readjustment
35-14 project under Chapter 2310, Government Code.
35-15 (f) For the purposes of Subsection (a), items bought by a
35-16 project after the date it is designated as a project, or within 90
35-17 days before the date of designation, may be considered eligible for
35-18 a refund.
35-19 (g) The refund provided by this section is conditioned on
35-20 the defense readjustment project maintaining at least the same
35-21 level of employment of qualified employees as existed at the time
35-22 it qualified for a refund for a period of three years from that
35-23 date. The Texas Department of Commerce shall annually certify to
35-24 the comptroller and the Legislative Budget Board whether that level
35-25 of employment of qualified employees has been maintained. On the
36-1 Texas Department of Commerce certifying that such a level has not
36-2 been maintained, the comptroller shall assess that portion of the
36-3 refund attributable to any such decrease in employment, including
36-4 penalty and interest from the date of the refund.
36-5 (h) Notwithstanding Section 171.103 or 171.1032, a receipt
36-6 from a service performed by a defense readjustment project in a
36-7 readjustment zone is not a receipt from business done in this
36-8 state.
36-9 SECTION 3. Subchapter C, Chapter 171, Tax Code, is amended
36-10 by adding Section 171.1016 to read as follows:
36-11 Sec. 171.1016. REDUCTION OF TAXABLE CAPITAL FOR INVESTMENT
36-12 IN A READJUSTMENT ZONE. (a) A corporation that has been
36-13 designated as a defense readjustment project as provided by Chapter
36-14 2310, Government Code, may deduct either:
36-15 (1) from its apportioned taxable capital, 50 percent
36-16 of its capital investment in the readjustment zone in which the
36-17 defense readjustment project is located; or
36-18 (2) from its apportioned taxable earned surplus, five
36-19 percent of its capital investment in the readjustment zone in which
36-20 the defense readjustment project is located. The deduction may be
36-21 taken on each franchise tax report that is based on a corporation's
36-22 fiscal year during all or part of which the corporation is a
36-23 defense readjustment project.
36-24 (b) The deduction authorized by this section is limited to
36-25 the depreciated value of capital equipment or other investment that
37-1 qualifies for depreciation for federal income tax purposes and that
37-2 is placed in service in the zone after designation as a defense
37-3 readjustment project. The depreciated value must be computed by a
37-4 method which is otherwise acceptable for that corporation's
37-5 franchise tax report and must be computed for each report on which
37-6 it is taken by the same method of depreciation.
37-7 (c) To qualify for the deduction authorized by this section,
37-8 an investment must be used in the normal course of business in the
37-9 defense readjustment zone and must not be removed from the defense
37-10 readjustment zone, except for repair or maintenance. Qualifying
37-11 use and presence in the zone must occur during the accounting year
37-12 on which the report is based.
37-13 (d) The deduction authorized by this section may not be used
37-14 to reduce apportioned taxable capital or apportioned taxable earned
37-15 surplus below a zero value, and no carryover of unused deductions
37-16 to a later privileged period is allowed.
37-17 (e) A corporation may elect to make the deduction authorized
37-18 by this section either from apportioned taxable capital or
37-19 apportioned taxable earned surplus for each separate regular annual
37-20 period. An election for an initial period applies to the second
37-21 tax period and to the first regular annual period.
37-22 (f) In this section:
37-23 (1) "Defense readjustment project" means a person
37-24 designated by the Texas Department of Commerce as a defense
37-25 readjustment project under Chapter 2310, Government Code.
38-1 (2) "Readjustment zone" has the meaning assigned to
38-2 that term by Section 2310.001, Government Code.
38-3 (g) Only qualified businesses that have been certified as
38-4 eligible for a tax deduction under this section by the Texas
38-5 Department of Commerce to the comptroller and the Legislative
38-6 Budget Board are entitled to the tax deduction.
38-7 SECTION 4. The legislature intends that the implementation
38-8 of this Act not result in the removal of any property from the ad
38-9 valorem taxation of any taxing entity in which the property is
38-10 located.
38-11 SECTION 5. Before September 1, 2001, the Texas Department of
38-12 Commerce may not designate more than six defense economic
38-13 readjustment zones under Chapter 2310, Government Code, as added by
38-14 this Act.
38-15 SECTION 6. The importance of this legislation and the
38-16 crowded condition of the calendars in both houses create an
38-17 emergency and an imperative public necessity that the
38-18 constitutional rule requiring bills to be read on three several
38-19 days in each house be suspended, and this rule is hereby suspended,
38-20 and that this Act take effect and be in force from and after its
38-21 passage, and it is so enacted.