By: Sibley S.B. No. 1409
Line and page numbers may not match official copy.
Bill not drafted by TLC or Senate E&E.
A BILL TO BE ENTITLED
AN ACT
1-1 relating to the creation of the Invest Texas program to encourage
1-2 capital investment and job creation.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Section 312.005 (a), Tax Code is amended to read
1-5 as follows:
1-6 (a) The Texas Department of Commerce shall maintain a
1-7 central registry of reinvestment zones designated under this
1-8 chapter and of ad valorem tax abatement agreements executed under
1-9 this chapter. Each taxing unit that designates a reinvestment zone
1-10 or executes a tax abatement agreement under this chapter shall
1-11 deliver to the department and to the comptroller before April 1 of
1-12 the year following the year in which the zone is designated or the
1-13 agreement is executed a report providing the following information:
1-14 (1) for a reinvestment zone, a general description of
1-15 the zone, including its size, the types of property located in it,
1-16 its duration, and the guidelines and criteria established for the
1-17 reinvestment zone under Section 312.002, including subsequent
1-18 amendments and modifications of the guidelines or criteria; and
1-19 (2) a copy of each tax abatement agreement to which
1-20 the taxing unit is a party[; and]
1-21 [(3) any other information required by the comptroller
2-1 to administer Subchapter F, Chapter 111].
2-2 SECTION 2. The Tax Code is amended by adding a new Chapter
2-3 313 to read as follows:
2-4 CHAPTER 313. THE INVEST TEXAS ACT
2-5 Sec. 313.001. SHORT TITLE. This Chapter may be cited as the
2-6 Invest Texas Act.
2-7 Sec. 313.002. DEFINITIONS. In this chapter:
2-8 (1) "Affiliate" means a person that, directly or
2-9 indirectly, controls, is controlled by, or is under common control
2-10 with another person.
2-11 (2) "Control" means the ownership, directly or
2-12 indirectly, of 75% or more of the voting securities of a
2-13 corporation, 75% or more of the equity interests of a partnership,
2-14 or 75% or more of the ownership interests of any other entity.
2-15 (3) "Deferred maintenance" means improvements
2-16 necessary for continued operations which do not improve
2-17 productivity or alter the process technology.
2-18 (4) "Existing facility" means any building, facility,
2-19 structure, or other real property improvement that has been in
2-20 operation for more than five years.
2-21 (5) "Existing value" means the taxable value of the
2-22 owner's real and personal property located on the property January
2-23 1 of the year of the execution of the contract plus the agreed upon
2-24 value of real and personal property improvements made after January
2-25 1 but before execution of the contract.
3-1 (6) "Expand" means the addition of buildings,
3-2 structures, fixed machinery, or equipment for the purpose of
3-3 increasing production capacity.
3-4 (7) "Modernize" means the replacement and upgrading of
3-5 existing facilities which increase the productive input or output,
3-6 updates the technology, or substantially lowers the cost of
3-7 operation, and extends the economic life of the facility.
3-8 Modernization may result from the construction, alteration, or
3-9 installation of buildings, structures, fixed machinery, or
3-10 equipment, but shall not be for the purpose of reconditioning,
3-11 refurbishing, repairing, or deferred maintenance.
3-12 (8) "New facility" means a property which is placed
3-13 into service for the first time by means other than expansion or
3-14 modernization.
3-15 (9) "Project" means one or more buildings, facilities,
3-16 structures, or real property improvements which are either owned or
3-17 leased by the same property owner or owned or leased by property
3-18 owners who are affiliates of each other, and located within two
3-19 miles of each other.
3-20 (10) "Property owner" means an owner or lessee of any
3-21 real property or real property improvements, including any
3-22 affiliate of the owner or lessee.
3-23 (11) "School district" means an entity subject to
3-24 Chapter 42, Education Code, organized primarily to provide general
3-25 elementary and secondary public education.
4-1 Sec. 313.003. EXEMPTIONS. (a) An owner of taxable real
4-2 property located in a school district may enter into a contract
4-3 with the governing body of a school district under this chapter to
4-4 exempt from ad valorem taxation for a period not to exceed ten
4-5 years, all or a portion of the market value of real property, or
4-6 tangible personal property located on the real property, or both,
4-7 that exceeds:
4-8 (1) $1 billion if the property owner proposes to
4-9 construct a new facility on the real property; or
4-10 (2) $500 million if the property owner proposes to
4-11 expand or modernize an existing facility on the real property.
4-12 (b) Existing value is not eligible for a tax exemption under
4-13 this chapter.
4-14 Sec. 313.004. AUTHORITY TO ENTER INTO A CONTRACT. An owner
4-15 of taxable real property located in a school district may enter
4-16 into a contract with the governing body of a school district under
4-17 this chapter if:
4-18 (1) the property owner is or will be subject to
4-19 taxation under Chapter 171 of the Tax Code;
4-20 (2) the property owner has entered into a written
4-21 agreement that will remain in effect until the end of the tax
4-22 exemption period with the local workforce development board or the
4-23 public entity responsible for job placement, to give preference in
4-24 employment to residents of the workforce development area served by
4-25 the board or public entity;
5-1 (3) the property owner is not relocating from one
5-2 location in Texas to another;
5-3 (4) the property to be covered by the contract is not
5-4 subject to tax abatement under Chapter 312, Tax Code, or tax
5-5 increment financing under Chapter 311, Tax Code, by a school
5-6 district;
5-7 (5) the property to be covered by the contract is
5-8 located in a reinvestment zone designated by a municipality under
5-9 Sec. 312.201, Tax Code or a county under Sec. 312.401, Tax Code;
5-10 (6) the governing body of the school district has held
5-11 a public hearing on the proposed contract;
5-12 (7) the governing body of the school district has
5-13 adopted a resolution stating that:
5-14 (A) the property to be covered by the contract
5-15 is located in a reinvestment zone;
5-16 (B) the property to be covered by the contract
5-17 is not subject to tax abatement under Chapter 312, Tax Code or tax
5-18 increment financing under Chapter 311, Tax Code by a school
5-19 district;
5-20 (C) the governing body has held the hearing
5-21 required by Subdivision (6); and
5-22 (D) the governing body is willing to enter into
5-23 the contract; and
5-24 (8) the comptroller has authorized the owner and the
5-25 governing body of the school district to enter into the contract.
6-1 Sec. 313.005. AUTHORIZATION OF COMPTROLLER. (a) A property
6-2 owner must apply to the comptroller for authorization to enter into
6-3 a contract under this chapter on a form prescribed by the
6-4 comptroller. The application must include:
6-5 (1) a copy of the proposed contract between the
6-6 property owner and the school district;
6-7 (2) a copy of the most recent report required by
6-8 Section 171.203, Tax Code or a written statement that the property
6-9 owner will be subject to taxation under Chapter 171, Tax Code;
6-10 (3) a copy of the agreement described by Section
6-11 313.004(a)(2);
6-12 (4) a copy of the resolution described by Section
6-13 313.004(a)(7);
6-14 (5) an economic impact analysis of the proposed
6-15 project which must include:
6-16 (A) an estimate of the annual amount of state
6-17 sales and use taxes and corporate franchise taxes to be generated
6-18 by the property owner;
6-19 (B) an estimate of any secondary economic
6-20 benefits to be generated by the project; and
6-21 (C) any other information required by the
6-22 comptroller; and
6-23 (6) a nonrefundable application fee of $10,000.
6-24 (b) The Invest Texas Account is created as a dedicated
6-25 account in the general revenue fund. The application fee collected
7-1 by the Comptroller shall be deposited into the Invest Texas Account
7-2 and may only be used to administer this chapter.
7-3 (c) The comptroller shall:
7-4 (1) perform an analysis to determine whether
7-5 implementation of the proposed contract will have a negative fiscal
7-6 impact on state revenue;
7-7 (2) consider the economic impact analysis submitted by
7-8 the property owner under Section 313.005 (a)(5) when determining if
7-9 the implementation of the proposed contract will have a negative
7-10 fiscal impact on state revenue;
7-11 (3) consider the likelihood that the project would
7-12 have located, expanded, or been modernized in Texas without the tax
7-13 exemption authorized by this chapter;
7-14 (4) authorize the property owner and the governing
7-15 body of the school district to enter into the contract unless the
7-16 comptroller determines that implementation of the contract will
7-17 have a negative fiscal impact on state revenue; and
7-18 (5) notify the owner and the governing body of the
7-19 comptroller's action on the application.
7-20 (d) The comptroller may not act on applications made by a
7-21 property owner for more than one location in the state at the same
7-22 time.
7-23 Sec. 313.006. CONFIDENTIALITY OF PROPRIETARY INFORMATION.
7-24 Information that is provided to a school district or the
7-25 comptroller in connection with an application or request for tax
8-1 exemption under this chapter and that describes the specific
8-2 processes or business activities to be conducted or the equipment
8-3 or other property to be located on the property for which tax
8-4 exemption is sought is confidential and not subject to public
8-5 disclosure until the contract is executed. Such information in the
8-6 custody of a school district or comptroller after the contract is
8-7 executed is not confidential under this section.
8-8 Sec. 313.007. MANDATORY CONTRACT PROVISIONS. (a) A
8-9 contract entered into under this chapter must:
8-10 (1) provide for the exemption of the real or personal
8-11 property in each year covered by the contract only to the extent
8-12 that its value for that year exceeds its value for the year in
8-13 which the contract is executed;
8-14 (2) require the property owner to:
8-15 (A) create during the term of the contract
8-16 family wage jobs with a total annual payroll of at least:
8-17 (i) $20 million if the owner proposes to
8-18 construct a new facility on the property; or
8-19 (ii) $10 million if the owner proposes to
8-20 expand an existing facility on the property; or
8-21 (B) retain, during the term of the contract,
8-22 family wage jobs with a total annual payroll of at least $10
8-23 million if the owner proposes to modernize an existing facility on
8-24 the property;
8-25 (3) list the kind, number, and location of all
9-1 proposed improvements of the property to which the contract
9-2 applies;
9-3 (4) list each term of the contract;
9-4 (5) provide access to and authorize inspection of the
9-5 property by the school district and the comptroller to ensure that
9-6 the improvements or repairs are made according to the
9-7 specifications and conditions of the contract;
9-8 (6) state any circumstances under which the property
9-9 owner may be excused by the governing body of the school district
9-10 for failing to comply with the contract;
9-11 (7) require the property owner to certify before
9-12 February 1 of each year to the governing body of the school
9-13 district whether the owner is in compliance with each applicable
9-14 term of the contract and, if not, state the reason for the
9-15 noncompliance;
9-16 (8) provide for recapture by the governing body of the
9-17 school district of property tax revenue lost as a result of the
9-18 contract if the owner of the property fails to make the
9-19 improvements or repairs as provided by the contract or fails to
9-20 comply with any applicable criteria contained in the contract; and
9-21 (9) provide for cancellation or modification of the
9-22 contract by the governing body of the school district if the
9-23 property owner fails to comply with the contract and for written
9-24 notice of the cancellation or modification.
9-25 (b) In this section, "family wage job" has the meaning
10-1 assigned that term by Section 481.151, Government Code.
10-2 Sec. 313.008. OPTIONAL CONTRACT PROVISIONS. A contract
10-3 entered into under this subchapter may include:
10-4 (1) the use to be made by the property owner of local
10-5 suppliers during the term of the contract;
10-6 (2) the provision of health benefits and child care
10-7 during the term of the contract by the property owner for employees
10-8 of the property owner who work at the property covered by the
10-9 contract;
10-10 (3) the percent of economically disadvantaged
10-11 employees to be hired by the property owner; and
10-12 (4) any other provision determined appropriate by the
10-13 governing body of the school district.
10-14 Sec. 313.009. DETERMINATION BY SCHOOL DISTRICT OF PROPERTY
10-15 OWNER'S COMPLIANCE WITH CONTRACT. (a) The governing body of the
10-16 school district, before April 1 of each year, shall determine
10-17 whether each property owner is in compliance with each term of the
10-18 contract and, if not, whether the noncompliance is excused.
10-19 (b) The governing body of the school district shall consider
10-20 any certification furnished by the property owner under Section
10-21 313.007(a) (7). The governing body of the school district may
10-22 require the property owner to present additional evidence the
10-23 governing body considers necessary to make the determination. The
10-24 burden of proof is on the property owner to show that the property
10-25 owner is in compliance with each term of the contract.
11-1 (c) The governing body of the school district shall certify
11-2 in writing to the property owner whether the owner is in compliance
11-3 with each term of the contract and, if not, whether the
11-4 noncompliance is excused.
11-5 (d) Each property owner who is a party to a contract under
11-6 this section is entitled to a hearing and to present evidence
11-7 before the governing body of the taxing unit in person or by legal
11-8 or other counsel on the issue of compliance with the contract.
11-9 Sec. 313.010. ACTION BY SCHOOL DISTRICT ON NONCOMPLIANCE.
11-10 (a) Except as provided by Subsection (b), if a property owner
11-11 fails to comply with a contract executed under this chapter, the
11-12 governing body of the school district shall:
11-13 (1) recapture the property tax revenue lost as a
11-14 result of the contract as provided by Section 313.007 (a)(8); and
11-15 (2) cancel or modify the contract and give written
11-16 notice of the cancellation or modification as provided by Section
11-17 313.007 (a)(9).
11-18 (b) The governing body of the school district may excuse the
11-19 property owner's failure to comply with the agreement under a
11-20 circumstance stated in the contract as provided by Section 313.007
11-21 (a)(6).
11-22 Sec. 313.011. DETERMINATION BY COMPTROLLER OF PROPERTY
11-23 OWNER'S COMPLIANCE WITH CONTRACT. (a) As part of the annual study
11-24 required by Section 403.302, Government Code, the comptroller shall
11-25 determine whether a property owner is in compliance with each term
12-1 of a contract entered into under this chapter.
12-2 (b) If the comptroller finds that the property owner is not
12-3 in compliance with each term of the contract, the comptroller, at
12-4 the time the comptroller publishes preliminary findings under
12-5 Section 403.302, Government Code, shall notify the governing body
12-6 of the school district of the finding.
12-7 (c) The school district may protest the comptroller's
12-8 finding in the manner provided by Section 403.303, Government Code.
12-9 (d) If the comptroller determines that the property owner is
12-10 not in compliance with each term of the contract, the comptroller
12-11 may not take the contract into account for purposes of determining
12-12 the total taxable value of all property in the school district
12-13 under Section 403.302, Government Code, for the year covered by the
12-14 study.
12-15 (e) A protesting school district may appeal a determination
12-16 of a protest by the comptroller in the manner provided by Section
12-17 403.303, Government Code.
12-18 (f) A determination by the comptroller under this section
12-19 does not affect the rights of the property owner under the
12-20 contract.
12-21 Sec. 313.012. NOTICE OF CONTRACT. (a) A school district
12-22 that enters into a contract under this subsection shall either, at
12-23 the option of the school district:
12-24 (1) publish notice of the contract in a newspaper that
12-25 is published daily in each county in which the school district is
13-1 located; or
13-2 (2) post notice of the contract at each place where
13-3 the governing body of a school district is required by Chapter 551,
13-4 Government Code, to post notice of its meetings.
13-5 (b) The notice must include:
13-6 (1) the name of each party to the contract;
13-7 (2) a statement of whether the contract applies to
13-8 real property, tangible personal property, or both;
13-9 (3) the portion of the value of the property exempted
13-10 from taxation each year under the contract; and
13-11 (4) a summary of the state economic impact analysis
13-12 required by Section 313.005(6).
13-13 Sec. 313.013. LIMITATIONS ON CONTRACT. (a) A contract
13-14 executed under this chapter may not be modified to extend beyond 10
13-15 years from the first year of the exemption.
13-16 (b) Notwithstanding subsection (a), a property owner may
13-17 enter into a new contract, for a period not to exceed 10 years,
13-18 with respect to improvements and tangible personal property which
13-19 upgrade or retrofit the operations or equipment located on real
13-20 property already subject to a contract under this chapter.
13-21 Sec. 313.014. MODIFICATION OR TERMINATION OF CONTRACT.
13-22 (a) At any time before the expiration of a contract made under
13-23 this chapter, the contract may be modified by the parties to the
13-24 contract to include other provisions that could have been included
13-25 in the original contract or to delete provisions that were not
14-1 necessary to the original contract. The modification must be made
14-2 by the same procedure by which the original contract was approved
14-3 and executed.
14-4 (b) A contract made under this chapter may be terminated by
14-5 the mutual consent of the parties in the same manner that the
14-6 contract was approved and executed.
14-7 Sec. 313.015. COORDINATION WITH CHAPTER 312, TAX CODE.
14-8 (a) With respect to any tax abatement agreement under Chapter 312,
14-9 Tax Code, which was entered into by a school district on or after
14-10 January 1, 1997 and before September 1, 1997, the school district
14-11 and the property owner may agree to terminate such agreement and
14-12 enter into a new contract under this chapter, irrespective of
14-13 whether improvement or repairs to the property subject to the
14-14 agreement have been completed.
14-15 (b) A school district and a property owner that entered into
14-16 a tax abatement agreement under Chapter 312, Tax Code, on or after
14-17 January 1, 1997 and on or before September 1, 1997, and then enter
14-18 into a new contract as described above may agree on or before
14-19 September 1, 1997 that Chapter 312, Tax Code, shall apply to their
14-20 new contract for a specified number of years and that a contract
14-21 under this chapter shall apply after the expiration of such number
14-22 of years, provided that the total number of years abated under
14-23 Chapter 312, Tax Code, or exempted under Chapter 313, Tax Code,
14-24 shall not exceed 10 years.
14-25 Sec. 313.016. EVALUATION AND ANNUAL REPORT. (a) On or
15-1 before November 1 of each even-numbered year, the comptroller
15-2 shall:
15-3 (1) prepare a comprehensive report on:
15-4 (A) the use and effectiveness of contracts
15-5 executed under this chapter in encouraging economic development in
15-6 this state;
15-7 (B) the fiscal impact on this state and school
15-8 districts in this state of those tax contracts, including the
15-9 market value of property that is exempt from taxation under this
15-10 chapter; and
15-11 (C) any other relevant information that the
15-12 comptroller determines is applicable to this chapter; and
15-13 (2) deliver a copy of the report to the governor, the
15-14 speaker of the house of representatives, the lieutenant governor
15-15 and each school district that entered into a contract under this
15-16 chapter during the period covered by the report.
15-17 (b) The comptroller may prescribe a form to collect
15-18 information necessary to compile the report described in this
15-19 subsection from a property owner that has entered into a contract
15-20 under this chapter.
15-21 Sec. 313.017. PROMOTION AND MARKETING OF INVEST TEXAS
15-22 PROGRAM. The Comptroller and the Texas Department of Commerce
15-23 shall jointly promote and market the program created under this
15-24 chapter.
15-25 Sec. 313.018. RULES AND FORMS. The Comptroller shall adopt
16-1 rules and forms for the administration of this chapter. The rules
16-2 must include guidelines for the state economic impact analysis to
16-3 be submitted by the property owner under Section 313.005(a) (5)
16-4 Sec. 313.019. EXPIRATION DATE. If not continued in effect,
16-5 this chapter expires September 1, 2001.
16-6 SECTION 3. Section 41.009(b), Education Code, is amended to
16-7 read as follows:
16-8 (b) The commissioner shall determine the wealth per student
16-9 of a school district under this chapter as if any tax abatement
16-10 agreement executed under Chapter 312, Tax Code by a school district
16-11 on or after May 31, 1993, had not been executed.
16-12 SECTION 4. Section 403.302(d), Government Code, is amended
16-13 to read as follows:
16-14 (d) For the purposes of this section, "taxable value" means
16-15 market value less:
16-16 (1) the total dollar amount of any exemptions of part
16-17 but not all of the value of taxable property required by the
16-18 constitution or a statute that a district lawfully granted in the
16-19 year that is the subject of the study;
16-20 (2) the total dollar amount of:
16-21 (A) any exemptions granted before May 31, 1993,
16-22 within a reinvestment zone under agreements authorized by Chapter
16-23 312, Tax Code; and
16-24 (B) any exemptions granted within a reinvestment
16-25 zone under contracts authorized by Chapter 313, Tax Code;
17-1 (3) the total dollar amount of any captured appraised
17-2 value of property that is located in a reinvestment zone and that
17-3 is eligible for tax increment financing under Chapter 311, Tax
17-4 Code;
17-5 (4) the total dollar amount of any exemptions granted
17-6 under Section 11.251, Tax Code;
17-7 (5) the difference between the market value and the
17-8 productivity value of land that qualifies for appraisal on the
17-9 basis of its productive capacity, except that the productivity
17-10 value may not exceed the fair market value of the land;
17-11 (6) the portion of the appraised value of residence
17-12 homesteads of the elderly on which school district taxes are not
17-13 imposed in the year that is the subject of the study, calculated as
17-14 if the residence homesteads were appraised at the full value
17-15 required by law;
17-16 (7) a portion of the market value of property not
17-17 otherwise fully taxable by the district at market value because of
17-18 action required by statute or the constitution of this state that,
17-19 if the tax rate adopted by the district is applied to it, produces
17-20 an amount equal to the difference between the tax that the district
17-21 would have imposed on the property if the property were fully
17-22 taxable at market value and the tax that the district is actually
17-23 authorized to impose on the property; and
17-24 (8) the market value of all tangible personal
17-25 property, other than manufactured homes, owned by a family or
18-1 individual and not held or used for the production of income.
18-2 SECTION 5. REPEALER. Subchapter F, Chapter 111, Tax Code,
18-3 is repealed.
18-4 SECTION 6. The change in law made by Section 5 of this Act
18-5 applies only to an application for a refund filed with the
18-6 comptroller on or after the effective date of this Act. An
18-7 application filed with the comptroller before the effective date of
18-8 this Act is covered by the law in effect immediately before the
18-9 effective date of this Act, and that law is continued in effect for
18-10 that purpose.
18-11 SECTION 7. This Act takes effect September 1, 1997.
18-12 SECTION 8. The importance of this legislation and the
18-13 crowded condition of the calendars in both houses create an
18-14 emergency and an imperative public necessity that the
18-15 constitutional rule requiring bills to be read on three several
18-16 days in each house be suspended, and this rule is hereby suspended.