By Sibley S.B. No. 746
75R5501 SMH-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to property tax increment financing and property tax
1-3 abatements.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 11.43, Tax Code, is amended by adding
1-6 Subsection (j) to read as follows:
1-7 (j) An application for an exemption under Section 11.28 must
1-8 include:
1-9 (1) a copy of the certification of the governing body
1-10 of the taxing unit issued for the tax year under Section
1-11 312.211(d); and
1-12 (2) any notice under Section 312.205(a)(8) that the
1-13 agreement has been modified under that subsection.
1-14 SECTION 2. Section 11.45(c), Tax Code, is amended to read
1-15 as follows:
1-16 (c) The chief appraiser shall determine the validity of each
1-17 application for exemption filed with him before he submits the
1-18 appraisal records for review and determination of protests as
1-19 provided by Chapter 41 [of this code]. The chief appraiser shall
1-20 rely on a certification issued under Section 312.211(d) for the
1-21 accuracy of the facts stated in the certification.
1-22 SECTION 3. Section 111.301(a), Tax Code, is amended to read
1-23 as follows:
1-24 (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. Section 311.016(b), Tax Code, is amended to read
2-15 as follows:
2-16 (b) A copy of a report made under this section shall be sent
2-17 to the comptroller. The comptroller by rule may require a
2-18 municipality to provide a summary of the report, together with any
2-19 additional information the comptroller determines necessary, on a
2-20 form prescribed by the comptroller [attorney general].
2-21 SECTION 5. Section 312.004(a), Tax Code, is amended to read
2-22 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
2-26 unit other than the county if [If] by statute the ad valorem tax
2-27 rate of the other [a] taxing unit [other than a county] is approved
3-1 by the commissioners court [of a county] or the [if a]
3-2 commissioners court is expressly required by statute to levy the ad
3-3 valorem taxes of the other [a] taxing unit. The tax abatement
3-4 agreement entered into on behalf of the other taxing unit is not
3-5 required to contain the same terms as the tax abatement agreement
3-6 entered into on behalf of the county [other than a county, a tax
3-7 abatement agreement executed by the commissioners court for county
3-8 taxes also applies to the taxation by the taxing unit of the
3-9 property subject to the agreement, if that property is otherwise
3-10 taxable by the taxing unit].
3-11 SECTION 6. Section 312.005, Tax Code, is amended to read as
3-12 follows:
3-13 Sec. 312.005. STATE ADMINISTRATION. (a) The comptroller
3-14 [Texas Department of Commerce] shall maintain a central registry of
3-15 reinvestment zones designated under this chapter and of ad valorem
3-16 tax abatement agreements executed under this chapter.
3-17 (b) Each taxing unit that designates a reinvestment zone or
3-18 executes a tax abatement agreement under this chapter shall deliver
3-19 to the [department and to the] comptroller before April 1 of the
3-20 year following the year in which the zone is designated or the
3-21 agreement is executed a report providing the following information:
3-22 (1) for a reinvestment zone, [a general description of
3-23 the zone, including its size, the types of property located in it,
3-24 its duration, and] the guidelines and criteria established for the
3-25 [reinvestment] zone under Section 312.002, including subsequent
3-26 amendments and modifications of the guidelines or criteria; and
3-27 (2) for a tax abatement agreement:
4-1 (A) a copy of the [each tax abatement]
4-2 agreement;
4-3 (B) the name of each party to the agreement;
4-4 (C) a statement of whether the agreement applies
4-5 to real property, tangible personal property, or both;
4-6 (D) the portion of the value of the property
4-7 that is exempt from taxation in each year covered by the agreement;
4-8 (E) the appraised value of the property before
4-9 the agreement takes effect;
4-10 (F) an estimate of any loss in ad valorem tax
4-11 revenue from the property during the term of the agreement;
4-12 (G) a statement of whether the business
4-13 conducted on the property is new or existing;
4-14 (H) the standard industrial classification, if
4-15 applicable, of the business conducted on the property;
4-16 (I) an estimate of the number of any jobs to be
4-17 created or retained by the business conducted on the property
4-18 during the term of the agreement;
4-19 (J) an estimate of the payroll of any jobs
4-20 described by Paragraph (I);
4-21 (K) an estimate of the timing of creation of any
4-22 jobs described by Paragraph (I);
4-23 (L) an estimate of the amount of any capital to
4-24 be invested by the property owner in the property during the term
4-25 of the agreement;
4-26 (M) an estimate of the timing of any capital
4-27 investments described by Paragraph (L);
5-1 (N) a copy of the analysis of costs and benefits
5-2 required by Section 312.2035; and
5-3 (O) any other information required by the
5-4 comptroller.
5-5 (c) A taxing unit that executes a tax abatement agreement
5-6 but does not comply with Subsection (b)(2) may not enter into
5-7 another tax abatement agreement until the taxing unit complies with
5-8 that subsection [to which the taxing unit is a party; and]
5-9 [(3) any other information required by the comptroller
5-10 to administer Subchapter F, Chapter 111].
5-11 (d) [(b)] The comptroller and the Texas Department of
5-12 Commerce [department] may provide assistance to a taxing unit on
5-13 request of its governing body or the presiding officer of its
5-14 governing body relating to the administration of this chapter,
5-15 including the designation of reinvestment zones, the adoption of
5-16 tax abatement guidelines, and the execution of tax abatement
5-17 agreements.
5-18 (e) On or before November 1 of each even-numbered year, the
5-19 comptroller shall:
5-20 (1) prepare a comprehensive report on the use of tax
5-21 abatements in encouraging economic development in this state; and
5-22 (2) deliver a copy of the report to:
5-23 (A) the governor, lieutenant governor, and
5-24 speaker of the house of representatives; and
5-25 (B) a taxing unit on request.
5-26 SECTION 7. Subchapter A, Chapter 312, Tax Code, is amended
5-27 by adding Section 312.007 to read as follows:
6-1 Sec. 312.007. PROPERTY TAX ABATEMENT ADVISORY COMMITTEE.
6-2 (a) The Property Tax Abatement Advisory Committee is created.
6-3 (b) The committee is composed of five members who are
6-4 designated by the executive director of the Texas Department of
6-5 Commerce and reflect the diverse population of the state. Two
6-6 members must be municipal or county officials, and the three other
6-7 members must be economic development practitioners.
6-8 (c) The committee shall elect a presiding officer from among
6-9 its members.
6-10 (d) The committee shall meet at least twice a year and may
6-11 meet at other times at the call of the presiding officer. The
6-12 committee is subject to Chapter 551, Government Code.
6-13 (e) The committee may adopt rules for the committee's
6-14 internal procedures.
6-15 (f) Members of the committee are not entitled to
6-16 compensation for service on the committee.
6-17 (g) The department shall provide staff support for the
6-18 committee.
6-19 (h) Not later than September 1, 1998, the committee shall
6-20 deliver to the governor, lieutenant governor, speaker of the house
6-21 of representatives, executive director of the department, and
6-22 comptroller a report containing model:
6-23 (1) tax abatement proposal forms for submission by
6-24 property owners to taxing units;
6-25 (2) tax abatement agreements, including:
6-26 (A) performance standards; and
6-27 (B) provisions for recapturing property tax
7-1 revenue under Section 312.205(a)(7) and for the payment of
7-2 penalties and interest under Section 312.205(b)(4); and
7-3 (3) analyses of costs and benefits under Section
7-4 312.2035.
7-5 (i) In preparing the report required by Subsection (h), the
7-6 committee shall consider the diverse characteristics and economic
7-7 development goals of communities throughout the state.
7-8 (j) The department shall furnish to a taxing unit on request
7-9 a copy of the report.
7-10 (k) This section expires and the committee is abolished
7-11 September 1, 1998.
7-12 SECTION 8. Subchapter B, Chapter 312, Tax Code, is amended
7-13 by adding Sections 312.2035 and 312.2045 to read as follows:
7-14 Sec. 312.2035. ANALYSIS OF COSTS AND BENEFITS. (a) A
7-15 municipality must perform an analysis of the costs and benefits of
7-16 a proposed tax abatement agreement before the municipality may
7-17 enter into the agreement under this subchapter.
7-18 (b) The costs examined must include:
7-19 (1) an estimate of any loss in ad valorem tax revenue
7-20 from the property covered by the agreement during the term of the
7-21 agreement; and
7-22 (2) the impact of the agreement on the municipality's
7-23 ability to provide services.
7-24 (c) The benefits examined must include:
7-25 (1) an estimate of the number of any jobs to be
7-26 created or retained by the property owner in the reinvestment zone
7-27 during the term of the agreement;
8-1 (2) an estimate of the payroll of any jobs described
8-2 by Subdivision (1);
8-3 (3) an estimate of the timing of creation of any jobs
8-4 described by Subdivision (1);
8-5 (4) an estimate of the amount of any capital
8-6 investments to be made by the property owner in the reinvestment
8-7 zone during the term of the agreement;
8-8 (5) an estimate of the timing of any capital
8-9 investments described by Subdivision (4); and
8-10 (6) an estimate of any increase in local sales tax
8-11 revenue to be generated by the property owner in the reinvestment
8-12 zone during the term of the agreement.
8-13 (d) A municipality may not enter into a tax abatement
8-14 agreement for which the analysis shows that the costs exceed the
8-15 benefits.
8-16 Sec. 312.2045. NOTICE OF TAX ABATEMENT AGREEMENT. (a) A
8-17 municipality that enters into a tax abatement agreement shall
8-18 either, at the option of the municipality:
8-19 (1) publish notice of the agreement not later than the
8-20 seventh day after the date the agreement is entered into in a
8-21 newspaper that is published daily in each county in which the
8-22 municipality is located; or
8-23 (2) post notice of the agreement not later than the
8-24 seventh day after the date the agreement is entered into at each
8-25 place where the governing body of a municipality is required by
8-26 Chapter 551, Government Code, to post notice of its meetings.
8-27 (b) The notice must include:
9-1 (1) the name of each party to the tax abatement
9-2 agreement;
9-3 (2) the portion of the value of the property that is
9-4 exempt from taxation in each year covered by the agreement; and
9-5 (3) a summary of the analysis of costs and benefits
9-6 required by Section 312.2035.
9-7 SECTION 9. Section 312.205, Tax Code, is amended to read as
9-8 follows:
9-9 Sec. 312.205. SPECIFIC TERMS OF TAX ABATEMENT AGREEMENT.
9-10 (a) An agreement made under Section 312.204 must:
9-11 (1) list the kind, number, and location of all
9-12 proposed improvements of the property to which the agreement
9-13 applies;
9-14 (2) provide access to and authorize inspection of the
9-15 property by municipal employees to ensure that the improvements or
9-16 repairs are made according to the specifications and conditions of
9-17 the agreement;
9-18 (3) limit the uses of the property consistent with the
9-19 general purpose of encouraging development or redevelopment of the
9-20 zone during the period that property tax exemptions are in effect;
9-21 (4) contain each term agreed to by the property owner,
9-22 including:
9-23 (A) an estimate of the number of any jobs to be
9-24 created or retained by the property owner in the reinvestment zone
9-25 during the term of the agreement;
9-26 (B) an estimate of the timing of creation of any
9-27 jobs described by Paragraph (A);
10-1 (C) an estimate of the payroll of any jobs
10-2 described by Paragraph (A);
10-3 (D) an estimate of the amount of any capital
10-4 investments to be made by the property owner in the reinvestment
10-5 zone during the term of the agreement; and
10-6 (E) an estimate of the timing of any capital
10-7 investments described by Paragraph (D);
10-8 (5) require the property owner to certify before
10-9 February 1 of each year to the governing body of each taxing unit
10-10 whether the owner is in compliance with each applicable term of the
10-11 agreement and, if not, state the reason for the noncompliance;
10-12 (6) state any circumstances under which the property
10-13 owner may be excused by the governing body of the municipality for
10-14 failing to comply with the agreement;
10-15 (7) provide for recapture by the governing body of the
10-16 municipality of all or part of the [recapturing] property tax
10-17 revenue lost as a result of the agreement if the owner of the
10-18 property fails to make the improvements or repairs as provided by
10-19 the agreement or fails to comply with any performance standard
10-20 contained in the agreement;
10-21 [(5) contain each term agreed to by the owner of the
10-22 property;]
10-23 [(6) require the owner of the property to certify
10-24 annually to the governing body of each taxing unit that the owner
10-25 is in compliance with each applicable term of the agreement;] and
10-26 (8) [(7)] provide for cancellation or modification of
10-27 the agreement by [that] the governing body of the municipality [may
11-1 cancel or modify the agreement] if the property owner fails to
11-2 comply with the agreement and for written notice of the
11-3 cancellation or modification.
11-4 (b) An agreement made under Section 312.204 may include [,
11-5 at the option of the governing body of the municipality,]
11-6 provisions for:
11-7 (1) the use to be made by the property owner of local
11-8 suppliers during the term of the agreement;
11-9 (2) health benefits and child care during the term of
11-10 the agreement for employees of the property owner who work at the
11-11 property covered by the agreement;
11-12 (3) the percentage of any jobs to be created under
11-13 Subsection (a)(4)(A) to be given to economically disadvantaged
11-14 individuals as defined by Section 2303.402, Government Code;
11-15 (4) payment of a penalty in a specified amount and
11-16 interest at a specified rate if the municipality is entitled to
11-17 recapture lost property tax revenue under Subsection (a)(7);
11-18 (5) improvements or repairs by the municipality to
11-19 streets, sidewalks, and utility services or facilities associated
11-20 with the property, except that the agreement may not provide for
11-21 lower charges or rates than are made for other services or
11-22 properties of a similar character;
11-23 (6) [(2) an economic feasibility study, including a
11-24 detailed list of estimated improvement costs, a description of the
11-25 methods of financing all estimated costs, and the time when related
11-26 costs or monetary obligations are to be incurred;]
11-27 [(3)] a map showing existing uses and conditions of
12-1 real property in the reinvestment zone;
12-2 (7) [(4)] a map showing proposed improvements and uses
12-3 in the reinvestment zone; and
12-4 (8) [(5)] proposed changes of zoning ordinances, the
12-5 master plan, the map, building codes, and city ordinances.
12-6 SECTION 10. Section 312.206(a), Tax Code, is amended to read
12-7 as follows:
12-8 (a) If property taxes on property located in the taxing
12-9 jurisdiction of a municipality are abated under an agreement made
12-10 under Section 312.204, the governing body of each other taxing unit
12-11 eligible to enter into tax abatement agreements under Section
12-12 312.002 in which the property is located may execute a written tax
12-13 abatement agreement with the owner of the property not later than
12-14 the 90th day after the date the municipal agreement is executed.
12-15 The agreement is not required to [must] contain terms identical to
12-16 those contained in the agreement with the municipality [providing
12-17 for the portion of the property that is to be exempt from taxation
12-18 under the agreement, the duration of the agreement, and the
12-19 provisions included in the agreement under Section 312.205, even if
12-20 the value of the property at the time the agreement is executed is
12-21 not the same as its value when the municipal agreement was executed
12-22 and even if improvements or repairs have been made to the property
12-23 since the municipal agreement was executed]. If the governing body
12-24 of the taxing unit by official action at any time before the
12-25 execution of the municipal agreement expresses an intent to [enter
12-26 into an agreement with the owner of property under this subsection
12-27 or to] be bound by the terms of the municipal agreement if the
13-1 municipality enters into an agreement under Section 312.204 with
13-2 the owner relating to the property, the terms of the municipal
13-3 agreement regarding the share of the property to be exempt in each
13-4 year of the municipal agreement apply to the taxation of the
13-5 property by the taxing unit. Sections 312.2035, 312.2045, and
13-6 312.205 apply to a taxing unit that enters into a tax abatement
13-7 agreement under this section [If the taxing unit that expressed its
13-8 intent to enter into an agreement or to be bound by the municipal
13-9 agreement is a county, those terms of the municipal agreement also
13-10 apply to the taxation of the property by a taxing unit in the
13-11 county to which a county tax abatement agreement would apply under
13-12 Section 312.004].
13-13 SECTION 11. Subchapter B, Chapter 312, Tax Code, is amended
13-14 by adding Sections 312.211 and 312.212 to read as follows:
13-15 Sec. 312.211. CERTIFICATION OF COMPLIANCE. (a) The
13-16 governing body of a taxing unit that is a party to a tax abatement
13-17 agreement shall, before April 1 of each year, determine in the
13-18 manner provided by law for official action of the governing body
13-19 whether each property owner receiving a tax abatement under the
13-20 agreement is in compliance with each term of the agreement and, if
13-21 not, whether the noncompliance is excused.
13-22 (b) The governing body shall consider any certification
13-23 furnished by the property owner under Section 312.205(a)(5). The
13-24 governing body may require the property owner to present additional
13-25 evidence the governing body considers necessary to make the
13-26 determination. The burden of proof is on the property owner to
13-27 show that the property owner is in compliance with each term of the
14-1 agreement.
14-2 (c) Each property owner who is a party to the tax abatement
14-3 agreement is entitled to a hearing and to present evidence before
14-4 the governing body of the taxing unit in person or by a
14-5 representative on the issue of compliance with the terms of the
14-6 agreement.
14-7 (d) The governing body shall certify in writing to the
14-8 property owner whether the owner is in compliance with each term of
14-9 the tax abatement agreement and, if not, whether the noncompliance
14-10 is excused.
14-11 Sec. 312.212. ACTION BY TAXING UNIT ON NONCOMPLIANCE. (a)
14-12 Except as provided by Subsection (b), if a property owner fails to
14-13 comply with a tax abatement agreement, the governing body of the
14-14 taxing unit shall:
14-15 (1) recapture all or part of the property tax revenue
14-16 lost as a result of the agreement as provided by Section
14-17 312.205(a)(7); and
14-18 (2) cancel or modify the agreement and give written
14-19 notice of the cancellation or modification as provided by Section
14-20 312.205(a)(8).
14-21 (b) The governing body of the taxing unit may excuse the
14-22 property owner's failure to comply with the agreement under a
14-23 circumstance stated in the tax abatement agreement as provided by
14-24 Section 312.205(a)(6).
14-25 SECTION 12. Sections 312.402(a), (c), and (e), Tax Code, are
14-26 amended to read as follows:
14-27 (a) The commissioners court may execute a tax abatement
15-1 agreement with the owner of taxable real property located in a
15-2 reinvestment zone designated under this subchapter. [The
15-3 execution, duration, and other terms of an agreement made under
15-4 this section are governed by the provisions of] Sections
15-5 312.2035-312.205 apply [312.204 and 312.205 applicable] to [a
15-6 municipality. Section 312.2041 applies to] an agreement made by a
15-7 county under this section in the same manner as those sections
15-8 apply [it applies] to an agreement made by a municipality [under
15-9 Section 312.204].
15-10 (c) If [on or after September 1, 1989,] property subject to
15-11 an agreement with a county under this section is annexed by a
15-12 municipality during the existence of the agreement, the terms of
15-13 the county agreement regarding the share of the property to be
15-14 exempt in each year of the agreement apply to the taxation of the
15-15 property by the municipality if before the annexation the governing
15-16 body of the municipality by official action expresses an intent to
15-17 [enter into an agreement with the owner of the property to abate
15-18 taxes on the property if it is annexed or to] be bound by the terms
15-19 of the county agreement after annexation[, even if that official
15-20 action of the governing body of the municipality expressing that
15-21 intent occurs before September 1, 1989].
15-22 (e) An agreement made under this section by a county or
15-23 other taxing unit is subject to certification and may be canceled,
15-24 modified, or terminated in the same manner and subject to the same
15-25 limitations as provided by Sections [Section] 312.208, 312.211, and
15-26 312.212 for an agreement made under Subchapter B.
15-27 SECTION 13. (a) The comptroller and the Texas Department of
16-1 Commerce shall coordinate the transfer of the administration of the
16-2 central registry of reinvestment zones and of ad valorem tax
16-3 abatement agreements consistent with this Act. The transfer of
16-4 administration from the Texas Department of Commerce to the
16-5 comptroller shall occur as soon as practicable on or after the
16-6 effective date of this Act.
16-7 (b) The transfer required by Subsection (a) of this section
16-8 includes files and related materials used by the Texas Department
16-9 of Commerce.
16-10 SECTION 14. As soon as practicable on or after the effective
16-11 date of this Act, the attorney general shall transfer to the
16-12 comptroller the copies of the reports by governing bodies of
16-13 municipalities on the status of reinvestment zones consistent with
16-14 this Act.
16-15 SECTION 15. The executive director of the Texas Department
16-16 of Commerce shall designate the members of the Property Tax
16-17 Abatement Advisory Committee as soon as practicable on or after the
16-18 effective date of this Act.
16-19 SECTION 16. (a) The changes in law made by this Act apply
16-20 only to a tax abatement agreement entered into on or after the
16-21 effective date of this Act. A tax abatement agreement entered into
16-22 before the effective date of this Act is governed by the law as it
16-23 existed immediately before the effective date of this Act, and that
16-24 law is continued in effect for that purpose.
16-25 (b) This Act applies only to ad valorem taxes imposed on or
16-26 after January 1, 1998.
16-27 SECTION 17. This Act takes effect September 1, 1997.
17-1 SECTION 18. The importance of this legislation and the
17-2 crowded condition of the calendars in both houses create an
17-3 emergency and an imperative public necessity that the
17-4 constitutional rule requiring bills to be read on three several
17-5 days in each house be suspended, and this rule is hereby suspended.