By: Sibley S.B. No. 746
A BILL TO BE ENTITLED
AN ACT
1-1 relating to property tax increment financing and property tax
1-2 abatements.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Section 11.43, Tax Code, is amended by adding
1-5 Subsection (j) to read as follows:
1-6 (j) An application for an exemption under Section 11.28 must
1-7 include:
1-8 (1) a copy of the certification of the governing body
1-9 of the taxing unit issued for the tax year under Section
1-10 312.211(d); and
1-11 (2) any notice under Section 312.205(a)(8) that the
1-12 agreement has been modified under that subsection.
1-13 SECTION 2. Subsection (c), Section 11.45, Tax Code, is
1-14 amended to read as follows:
1-15 (c) The chief appraiser shall determine the validity of each
1-16 application for exemption filed with him before he submits the
1-17 appraisal records for review and determination of protests as
1-18 provided by Chapter 41 [of this code]. The chief appraiser shall
1-19 rely on a certification issued under Section 312.211(d) for the
1-20 accuracy of the facts stated in the certification.
1-21 SECTION 3. Subsection (a), Section 111.301, Tax Code, is
1-22 amended to read as follows:
1-23 (a) An eligible person is entitled to a refund of state
2-1 sales and use taxes imposed under Chapter 151 and state franchise
2-2 taxes imposed under Chapter 171 paid in a calendar year for which
2-3 the person paid ad valorem taxes to a school district on property
2-4 that in that year is:
2-5 (1) located in a reinvestment zone established under
2-6 Chapter 312;
2-7 (2) exempt in whole or in part from the payment of ad
2-8 valorem taxes imposed by a municipality or a county under a tax
2-9 abatement agreement entered into with the municipality under
2-10 Section 312.204 or the county under Section 312.402 [Chapter 312];
2-11 and
2-12 (3) not subject to a tax abatement agreement entered
2-13 into by the school district.
2-14 SECTION 4. Subsection (b), Section 311.016, Tax Code, is
2-15 amended to read as follows:
2-16 (b) A copy of a report made under this section shall be sent
2-17 to the comptroller. The comptroller may require a municipality to
2-18 provide a summary of the report, together with any additional
2-19 information the comptroller determines necessary, on a form
2-20 prescribed by the comptroller [attorney general].
2-21 SECTION 5. Subsection (a), Section 312.004, Tax Code, is
2-22 amended to read as follows:
2-23 (a) The commissioners court of a county that enters into a
2-24 tax abatement agreement for a county may enter into a tax abatement
2-25 agreement applicable to the same property on behalf of a taxing
3-1 unit other than the county if [If] by statute the ad valorem tax
3-2 rate of the other [a] taxing unit [other than a county] is approved
3-3 by the commissioners court [of a county] or the [if a]
3-4 commissioners court is expressly required by statute to levy the ad
3-5 valorem taxes of the other [a] taxing unit. The tax abatement
3-6 agreement entered into on behalf of the other taxing unit is not
3-7 required to contain the same terms as the tax abatement agreement
3-8 entered into on behalf of the county [other than a county, a tax
3-9 abatement agreement executed by the commissioners court for county
3-10 taxes also applies to the taxation by the taxing unit of the
3-11 property subject to the agreement, if that property is otherwise
3-12 taxable by the taxing unit].
3-13 SECTION 6. Section 312.005, Tax Code, is amended to read as
3-14 follows:
3-15 Sec. 312.005. STATE ADMINISTRATION. (a) The comptroller
3-16 [Texas Department of Commerce] shall maintain a central registry of
3-17 reinvestment zones designated under this chapter and of ad valorem
3-18 tax abatement agreements executed under this chapter.
3-19 (b) Each taxing unit that designates a reinvestment zone or
3-20 executes a tax abatement agreement under this chapter shall deliver
3-21 to the [department and to the] comptroller before April 1 of the
3-22 year following the year in which the zone is designated or the
3-23 agreement is executed a report providing the following information:
3-24 (1) for a reinvestment zone, [a general description of
3-25 the zone, including its size, the types of property located in it,
4-1 its duration, and] the guidelines and criteria established for the
4-2 [reinvestment] zone under Section 312.002, including subsequent
4-3 amendments and modifications of the guidelines or criteria; and
4-4 (2) for a tax abatement agreement:
4-5 (A) a copy of the [each tax abatement]
4-6 agreement;
4-7 (B) the name of each party to the agreement;
4-8 (C) a statement of whether the agreement applies
4-9 to real property, tangible personal property, or both;
4-10 (D) the portion of the value of the property
4-11 that is exempt from taxation in each year covered by the agreement;
4-12 (E) the appraised value of the property before
4-13 the agreement takes effect;
4-14 (F) an estimate of any loss in ad valorem tax
4-15 revenue from the property during the term of the agreement;
4-16 (G) a statement of whether the business
4-17 conducted on the property is new or existing;
4-18 (H) the standard industrial classification, if
4-19 applicable, of the business conducted on the property;
4-20 (I) an estimate of the number of any jobs to be
4-21 created or retained by the business conducted on the property
4-22 during the term of the agreement;
4-23 (J) an estimate of the payroll of any jobs
4-24 described by Paragraph (I);
4-25 (K) an estimate of the timing of creation of any
5-1 jobs described by Paragraph (I);
5-2 (L) an estimate of the amount of any capital to
5-3 be invested by the property owner in the property during the term
5-4 of the agreement;
5-5 (M) an estimate of the timing of any capital
5-6 investments described by Paragraph (L);
5-7 (N) a copy of the analysis of costs and benefits
5-8 required by Section 312.2035; and
5-9 (O) any other information required by the
5-10 comptroller.
5-11 (c) A taxing unit that executes a tax abatement agreement
5-12 but does not comply with Subsection (b)(2) may not enter into
5-13 another tax abatement agreement until the taxing unit complies with
5-14 that subsection [to which the taxing unit is a party; and]
5-15 [(3) any other information required by the comptroller
5-16 to administer Subchapter F, Chapter 111].
5-17 (d) [(b)] The comptroller and the Texas Department of
5-18 Commerce [department] may provide assistance to a taxing unit on
5-19 request of its governing body or the presiding officer of its
5-20 governing body relating to the administration of this chapter,
5-21 including the designation of reinvestment zones, the adoption of
5-22 tax abatement guidelines, and the execution of tax abatement
5-23 agreements.
5-24 (e) On or before November 1 of each even-numbered year, the
5-25 comptroller shall:
6-1 (1) prepare a comprehensive report on the use of tax
6-2 abatements in encouraging economic development in this state; and
6-3 (2) deliver a copy of the report to:
6-4 (A) the governor, lieutenant governor, and
6-5 speaker of the house of representatives; and
6-6 (B) a taxing unit on request.
6-7 SECTION 7. Subchapter A, Chapter 312, Tax Code, is amended
6-8 by adding Section 312.007 to read as follows:
6-9 Sec. 312.007. PROPERTY TAX ABATEMENT ADVISORY COMMITTEE.
6-10 (a) The Property Tax Abatement Advisory Committee is created.
6-11 (b) The committee is composed of five members who are
6-12 designated by the executive director of the Texas Department of
6-13 Commerce and reflect the diverse population of the state. Two
6-14 members must be municipal or county officials, and the three other
6-15 members must have economic development experience.
6-16 (c) The committee shall elect a presiding officer from among
6-17 its members.
6-18 (d) The committee shall meet at least twice a year and may
6-19 meet at other times at the call of the presiding officer. The
6-20 committee is subject to Chapter 551, Government Code.
6-21 (e) The committee may adopt rules for the committee's
6-22 internal procedures.
6-23 (f) Members of the committee are not entitled to
6-24 compensation for service on the committee.
6-25 (g) The department shall provide staff support for the
7-1 committee.
7-2 (h) Not later than September 1, 1998, the committee shall
7-3 deliver to the governor, lieutenant governor, speaker of the house
7-4 of representatives, executive director of the department, and
7-5 comptroller a report containing model:
7-6 (1) guidelines and criteria for tax abatement;
7-7 (2) tax abatement proposal forms for submission by
7-8 property owners to taxing units;
7-9 (3) tax abatement agreements, including:
7-10 (A) performance standards; and
7-11 (B) provisions for recapturing property tax
7-12 revenue under Section 312.205(a)(7) and for the payment of
7-13 penalties and interest under Section 312.205(b)(4); and
7-14 (4) analyses of costs and benefits under Section
7-15 312.2035.
7-16 (i) In preparing the report required by Subsection (h), the
7-17 committee shall consider the diverse characteristics and economic
7-18 development goals of communities throughout the state.
7-19 (j) The department shall furnish to a taxing unit on request
7-20 a copy of the report.
7-21 (k) This section expires and the committee is abolished
7-22 September 1, 1998.
7-23 SECTION 8. Subchapter B, Chapter 312, Tax Code, is amended
7-24 by adding Sections 312.2035 and 312.2045 to read as follows:
7-25 Sec. 312.2035. ANALYSIS OF COSTS AND BENEFITS. (a) A
8-1 municipality must perform an analysis of the costs and benefits of
8-2 a proposed tax abatement agreement before the municipality may
8-3 enter into the agreement under this subchapter.
8-4 (b) The costs examined must include:
8-5 (1) an estimate of any loss in ad valorem tax revenue
8-6 from the property covered by the agreement during the term of the
8-7 agreement;
8-8 (2) the impact of the agreement on the municipality's
8-9 ability to provide services; and
8-10 (3) any other cost the municipality determines to be
8-11 significant.
8-12 (c) The benefits examined must include:
8-13 (1) an estimate of the number of any jobs to be
8-14 created or retained by the property owner in the reinvestment zone
8-15 during the term of the agreement;
8-16 (2) an estimate of the payroll of any jobs described
8-17 by Subdivision (1);
8-18 (3) an estimate of the timing of creation of any jobs
8-19 described by Subdivision (1);
8-20 (4) an estimate of the amount of any capital
8-21 investments to be made by the property owner in the reinvestment
8-22 zone during the term of the agreement;
8-23 (5) an estimate of the timing of any capital
8-24 investments described by Subdivision (4);
8-25 (6) an estimate of any increase in local sales tax
9-1 revenue to be generated by the property owner in the reinvestment
9-2 zone during the term of the agreement; and
9-3 (7) any other benefit the municipality determines to
9-4 be significant.
9-5 (d) A municipality may not enter into a tax abatement
9-6 agreement for which the analysis shows that the costs exceed the
9-7 benefits.
9-8 Sec. 312.2045. NOTICE OF TAX ABATEMENT AGREEMENT. (a) A
9-9 municipality that enters into a tax abatement agreement shall
9-10 either, at the option of the municipality:
9-11 (1) publish notice of the agreement not later than the
9-12 seventh day after the date the agreement is entered into in a
9-13 newspaper that is published daily in each county in which the
9-14 municipality is located; or
9-15 (2) post notice of the agreement not later than the
9-16 seventh day after the date the agreement is entered into at each
9-17 place where the governing body of a municipality is required by
9-18 Chapter 551, Government Code, to post notice of its meetings.
9-19 (b) The notice must include:
9-20 (1) the name of each party to the tax abatement
9-21 agreement;
9-22 (2) the portion of the value of the property that is
9-23 exempt from taxation in each year covered by the agreement; and
9-24 (3) a summary of the analysis of costs and benefits
9-25 required by Section 312.2035.
10-1 SECTION 9. Section 312.205, Tax Code, is amended to read as
10-2 follows:
10-3 Sec. 312.205. SPECIFIC TERMS OF TAX ABATEMENT AGREEMENT.
10-4 (a) An agreement made under Section 312.204 must:
10-5 (1) list the kind, number, and location of all
10-6 proposed improvements of the property to which the agreement
10-7 applies;
10-8 (2) provide access to and authorize inspection of the
10-9 property by municipal employees to ensure that the improvements or
10-10 repairs are made according to the specifications and conditions of
10-11 the agreement;
10-12 (3) limit the uses of the property consistent with the
10-13 general purpose of encouraging development or redevelopment of the
10-14 zone during the period that property tax exemptions are in effect;
10-15 (4) contain each term agreed to by the property owner,
10-16 including:
10-17 (A) an estimate of the number of any jobs to be
10-18 created or retained by the property owner in the reinvestment zone
10-19 during the term of the agreement;
10-20 (B) an estimate of the timing of creation of any
10-21 jobs described by Paragraph (A);
10-22 (C) an estimate of the payroll of any jobs
10-23 described by Paragraph (A);
10-24 (D) an estimate of the amount of any capital
10-25 investments to be made by the property owner in the reinvestment
11-1 zone during the term of the agreement; and
11-2 (E) an estimate of the timing of any capital
11-3 investments described by Paragraph (D);
11-4 (5) require the property owner to certify before
11-5 February 1 of each year to the governing body of each taxing unit
11-6 whether the owner is in compliance with each applicable term of the
11-7 agreement and, if not, state the reason for the noncompliance;
11-8 (6) state any circumstances under which the property
11-9 owner may be excused by the governing body of the municipality for
11-10 failing to comply with the agreement;
11-11 (7) provide for recapture by the governing body of the
11-12 municipality of all or part of the [recapturing] property tax
11-13 revenue lost as a result of the agreement if the owner of the
11-14 property fails to make the improvements or repairs as provided by
11-15 the agreement or fails to comply with any performance standard
11-16 contained in the agreement; and
11-17 (8) [(5) contain each term agreed to by the owner of
11-18 the property;]
11-19 [(6) require the owner of the property to certify
11-20 annually to the governing body of each taxing unit that the owner
11-21 is in compliance with each applicable term of the agreement; and]
11-22 [(7)] provide for cancellation or modification of the
11-23 agreement by [that] the governing body of the municipality [may
11-24 cancel or modify the agreement] if the property owner fails to
11-25 comply with the agreement and for written notice of the
12-1 cancellation or modification.
12-2 (b) An agreement made under Section 312.204 may include[, at
12-3 the option of the governing body of the municipality,] provisions
12-4 for:
12-5 (1) the use to be made by the property owner of local
12-6 suppliers during the term of the agreement;
12-7 (2) health benefits and child care during the term of
12-8 the agreement for employees of the property owner who work at the
12-9 property covered by the agreement;
12-10 (3) the percentage of any jobs to be created under
12-11 Subsection (a)(4)(A) to be given to economically disadvantaged
12-12 individuals as defined by Section 2303.402, Government Code;
12-13 (4) payment of a penalty in a specified amount and
12-14 interest at a specified rate if the municipality is entitled to
12-15 recapture lost property tax revenue under Subsection (a)(7);
12-16 (5) improvements or repairs by the municipality to
12-17 streets, sidewalks, and utility services or facilities associated
12-18 with the property, except that the agreement may not provide for
12-19 lower charges or rates than are made for other services or
12-20 properties of a similar character;
12-21 (6) [(2) an economic feasibility study, including a
12-22 detailed list of estimated improvement costs, a description of the
12-23 methods of financing all estimated costs, and the time when related
12-24 costs or monetary obligations are to be incurred;]
12-25 [(3)] a map showing existing uses and conditions of
13-1 real property in the reinvestment zone;
13-2 (7) [(4)] a map showing proposed improvements and uses
13-3 in the reinvestment zone; and
13-4 (8) [(5)] proposed changes of zoning ordinances, the
13-5 master plan, the map, building codes, and city ordinances.
13-6 SECTION 10. Subsection (a), Section 312.206, Tax Code, is
13-7 amended to read as follows:
13-8 (a) If property taxes on property located in the taxing
13-9 jurisdiction of a municipality are abated under an agreement made
13-10 under Section 312.204, the governing body of each other taxing unit
13-11 eligible to enter into tax abatement agreements under Section
13-12 312.002 in which the property is located may execute a written tax
13-13 abatement agreement with the owner of the property not later than
13-14 the 90th day after the date the municipal agreement is executed.
13-15 The agreement is not required to [must] contain terms identical to
13-16 those contained in the agreement with the municipality [providing
13-17 for the portion of the property that is to be exempt from taxation
13-18 under the agreement, the duration of the agreement, and the
13-19 provisions included in the agreement under Section 312.205, even if
13-20 the value of the property at the time the agreement is executed is
13-21 not the same as its value when the municipal agreement was executed
13-22 and even if improvements or repairs have been made to the property
13-23 since the municipal agreement was executed]. If the governing body
13-24 of the taxing unit by official action at any time before the
13-25 execution of the municipal agreement expresses an intent to [enter
14-1 into an agreement with the owner of property under this subsection
14-2 or to] be bound by the terms of the municipal agreement if the
14-3 municipality enters into an agreement under Section 312.204 with
14-4 the owner relating to the property, the terms of the municipal
14-5 agreement regarding the share of the property to be exempt in each
14-6 year of the municipal agreement apply to the taxation of the
14-7 property by the taxing unit. Sections 312.2035, 312.2045, and
14-8 312.205 apply to a taxing unit that enters into a tax abatement
14-9 agreement under this section [If the taxing unit that expressed its
14-10 intent to enter into an agreement or to be bound by the municipal
14-11 agreement is a county, those terms of the municipal agreement also
14-12 apply to the taxation of the property by a taxing unit in the
14-13 county to which a county tax abatement agreement would apply under
14-14 Section 312.004].
14-15 SECTION 11. Subchapter B, Chapter 312, Tax Code, is amended
14-16 by adding Sections 312.211 and 312.212 to read as follows:
14-17 Sec. 312.211. CERTIFICATION OF COMPLIANCE. (a) The
14-18 governing body of a taxing unit that is a party to a tax abatement
14-19 agreement shall, before March 1 of each year, determine in the
14-20 manner provided by law for official action of the governing body
14-21 whether each property owner receiving a tax abatement under the
14-22 agreement is in compliance with each term of the agreement and, if
14-23 not, whether the noncompliance is excused.
14-24 (b) The governing body shall consider any certification
14-25 furnished by the property owner under Section 312.205(a)(5). The
15-1 governing body may require the property owner to present additional
15-2 evidence the governing body considers necessary to make the
15-3 determination. The burden of proof is on the property owner to
15-4 show that the property owner is in compliance with each term of the
15-5 agreement.
15-6 (c) Each property owner who is a party to the tax abatement
15-7 agreement is entitled to a hearing and to present evidence before
15-8 the governing body of the taxing unit in person or by a
15-9 representative on the issue of compliance with the terms of the
15-10 agreement.
15-11 (d) The governing body shall certify in writing to the
15-12 property owner whether the owner is in compliance with each term of
15-13 the tax abatement agreement and, if not, whether the noncompliance
15-14 is excused.
15-15 Sec. 312.212. ACTION BY TAXING UNIT ON NONCOMPLIANCE.
15-16 (a) Except as provided by Subsection (b), if a property owner
15-17 fails to comply with a tax abatement agreement, the governing body
15-18 of the taxing unit shall:
15-19 (1) recapture all or part of the property tax revenue
15-20 lost as a result of the agreement as provided by Section
15-21 312.205(a)(7); and
15-22 (2) cancel or modify the agreement and give written
15-23 notice of the cancellation or modification as provided by Section
15-24 312.205(a)(8).
15-25 (b) The governing body of the taxing unit may excuse the
16-1 property owner's failure to comply with the agreement under a
16-2 circumstance stated in the tax abatement agreement as provided by
16-3 Section 312.205(a)(6).
16-4 SECTION 12. Subsections (a), (c), and (e), Section 312.402,
16-5 Tax Code, are amended to read as follows:
16-6 (a) The commissioners court may execute a tax abatement
16-7 agreement with the owner of taxable real property located in a
16-8 reinvestment zone designated under this subchapter. [The
16-9 execution, duration, and other terms of an agreement made under
16-10 this section are governed by the provisions of] Sections
16-11 312.2035-312.205 apply [312.204 and 312.205 applicable] to [a
16-12 municipality. Section 312.2041 applies to] an agreement made by a
16-13 county under this section in the same manner as those sections
16-14 apply [it applies] to an agreement made by a municipality [under
16-15 Section 312.204].
16-16 (c) If [on or after September 1, 1989,] property subject to
16-17 an agreement with a county under this section is annexed by a
16-18 municipality during the existence of the agreement, the terms of
16-19 the county agreement regarding the share of the property to be
16-20 exempt in each year of the agreement apply to the taxation of the
16-21 property by the municipality if before the annexation the governing
16-22 body of the municipality by official action expresses an intent to
16-23 [enter into an agreement with the owner of the property to abate
16-24 taxes on the property if it is annexed or to] be bound by the terms
16-25 of the county agreement after annexation[, even if that official
17-1 action of the governing body of the municipality expressing that
17-2 intent occurs before September 1, 1989].
17-3 (e) An agreement made under this section by a county or
17-4 other taxing unit is subject to certification and may be canceled,
17-5 modified, or terminated in the same manner and subject to the same
17-6 limitations as provided by Sections [Section] 312.208, 312.211, and
17-7 312.212 for an agreement made under Subchapter B.
17-8 SECTION 13. (a) The comptroller and the Texas Department of
17-9 Commerce shall coordinate the transfer of the administration of the
17-10 central registry of reinvestment zones and of ad valorem tax
17-11 abatement agreements consistent with this Act. The transfer of
17-12 administration from the Texas Department of Commerce to the
17-13 comptroller shall occur as soon as practicable on or after the
17-14 effective date of this Act.
17-15 (b) The transfer required by Subsection (a) of this section
17-16 includes files and related materials used by the Texas Department
17-17 of Commerce.
17-18 SECTION 14. As soon as practicable on or after the effective
17-19 date of this Act, the attorney general shall transfer to the
17-20 comptroller the copies of the reports by governing bodies of
17-21 municipalities on the status of reinvestment zones consistent with
17-22 this Act.
17-23 SECTION 15. The executive director of the Texas Department
17-24 of Commerce shall designate the members of the Property Tax
17-25 Abatement Advisory Committee as soon as practicable on or after the
18-1 effective date of this Act.
18-2 SECTION 16. (a) Except as provided by Subsection (b) of
18-3 this section, this Act applies only to a tax abatement agreement
18-4 entered into on or after the effective date of this Act. A tax
18-5 abatement agreement entered into before the effective date of this
18-6 Act is governed by the law as it existed immediately before the
18-7 effective date of this Act, and that law is continued in effect for
18-8 that purpose.
18-9 (b) Subsection (c), Section 11.45, and Subsection (e),
18-10 Section 312.402, Tax Code, as amended by this Act, and Subsection
18-11 (j), Section 11.43, and Sections 312.211 and 312.212, Tax Code, as
18-12 added by this Act, apply to a tax abatement agreement entered into
18-13 before, on, or after the effective date of this Act.
18-14 (c) This Act applies only to ad valorem taxes imposed on or
18-15 after January 1, 1998.
18-16 SECTION 17. This Act takes effect September 1, 1997.
18-17 SECTION 18. The importance of this legislation and the
18-18 crowded condition of the calendars in both houses create an
18-19 emergency and an imperative public necessity that the
18-20 constitutional rule requiring bills to be read on three several
18-21 days in each house be suspended, and this rule is hereby suspended.