By Oliveira H.B. No. 1973
76R1569 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 (l) to read as follows:
1-7 (l) 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
1-11 312.212(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 as
1-15 follows:
1-16 (c) The chief appraiser shall determine the validity of each
1-17 application for exemption filed with the chief appraiser [him]
1-18 before the chief appraiser [he] submits the appraisal records for
1-19 review and determination of protests as provided by Chapter 41 [of
1-20 this code]. The chief appraiser shall rely on a certification
1-21 issued under Section 312.212(d) for the accuracy of the facts
1-22 stated in the certification.
1-23 SECTION 3. Section 111.301(a), Tax Code, is amended to read
1-24 as follows:
2-1 (a) An eligible person is entitled to a refund of state
2-2 sales and use taxes imposed under Chapter 151 and state franchise
2-3 taxes imposed under Chapter 171 paid in a calendar year for which
2-4 the person paid ad valorem taxes to a school district on property
2-5 that in that year is:
2-6 (1) located in a reinvestment zone established under
2-7 Chapter 312;
2-8 (2) exempt in whole or in part from the payment of ad
2-9 valorem taxes imposed by a municipality or a county under a tax
2-10 abatement agreement entered into with the municipality under
2-11 Section 312.204 or 312.211 or the county under Section 312.402
2-12 [Chapter 312]; and
2-13 (3) not subject to a tax abatement agreement entered
2-14 into by the school district.
2-15 SECTION 4. Section 311.016(b), Tax Code, is amended to read
2-16 as follows:
2-17 (b) A copy of a report made under this section shall be sent
2-18 to the comptroller. The comptroller may require a municipality to
2-19 provide a summary of the report, together with any additional
2-20 information the comptroller determines necessary, on a form
2-21 prescribed by the comptroller [attorney general].
2-22 SECTION 5. Section 312.004(a), Tax Code, is amended to read
2-23 as follows:
2-24 (a) The commissioners court of a county that enters into a
2-25 tax abatement agreement for a county may enter into a tax abatement
2-26 agreement applicable to the same property on behalf of a taxing
2-27 unit other than the county if [If] by statute the ad valorem tax
3-1 rate of the other [a] taxing unit [other than a county] is approved
3-2 by the commissioners court [of a county] or the [if a]
3-3 commissioners court is expressly required by statute to levy the ad
3-4 valorem taxes of the other [a] taxing unit. The tax abatement
3-5 agreement entered into on behalf of the other taxing unit is not
3-6 required to contain the same terms as the tax abatement agreement
3-7 entered into on behalf of the county [other than a county, a tax
3-8 abatement agreement executed by the commissioners court for county
3-9 taxes also applies to the taxation by the taxing unit of the
3-10 property subject to the agreement, if that property is otherwise
3-11 taxable by the taxing unit].
3-12 SECTION 6. Section 312.005, Tax Code, is amended to read as
3-13 follows:
3-14 Sec. 312.005. STATE ADMINISTRATION. (a) The comptroller
3-15 shall maintain a central registry of reinvestment zones designated
3-16 under this chapter and of ad valorem tax abatement agreements
3-17 executed under this chapter.
3-18 (b) Each taxing unit that designates a reinvestment zone or
3-19 executes a tax abatement agreement under this chapter shall deliver
3-20 to the comptroller before April 1 of the year following the year in
3-21 which the zone is designated or the agreement is executed a report
3-22 providing the following information:
3-23 (1) for a reinvestment zone, [a general description of
3-24 the zone, including its size, the types of property located in it,
3-25 its duration, and] the guidelines and criteria established for the
3-26 [reinvestment] zone under Section 312.002, including subsequent
3-27 amendments and modifications of the guidelines or criteria; and
4-1 (2) for a tax abatement agreement:
4-2 (A) a copy of the [each tax abatement]
4-3 agreement;
4-4 (B) the name of each party to the agreement;
4-5 (C) a statement of whether the agreement applies
4-6 to real property, tangible personal property, or both;
4-7 (D) the portion of the value of the property
4-8 that is exempt from taxation in each year covered by the agreement;
4-9 (E) the appraised value of the property before
4-10 the agreement takes effect;
4-11 (F) an estimate of any loss in ad valorem tax
4-12 revenue from the property during the term of the agreement;
4-13 (G) a statement of whether the business
4-14 conducted on the property is new or existing;
4-15 (H) the standard industrial classification, if
4-16 applicable, of the business conducted on the property;
4-17 (I) an estimate of the number of any jobs to be
4-18 created or retained by the business conducted on the property
4-19 during the term of the agreement;
4-20 (J) an estimate of the payroll of any jobs
4-21 described by Paragraph (I);
4-22 (K) an estimate of the timing of creation of any
4-23 jobs described by Paragraph (I);
4-24 (L) an estimate of the amount of any capital to
4-25 be invested by the property owner in the property during the term
4-26 of the agreement;
4-27 (M) an estimate of the timing of any capital
5-1 investments described by Paragraph (L);
5-2 (N) a copy of the analysis of costs and benefits
5-3 required by Section 312.2035; and
5-4 (O) any other information required by the
5-5 comptroller.
5-6 (c) A taxing unit that executes a tax abatement agreement
5-7 but does not comply with Subsection (b)(2) may not enter into
5-8 another tax abatement agreement until the taxing unit complies with
5-9 that subsection [to which the taxing unit is a party; and]
5-10 [(3) any other information required by the comptroller
5-11 to administer this section and Subchapter F, Chapter 111].
5-12 (d) [(b)] The comptroller and the Texas Department of
5-13 Economic Development may provide assistance to a taxing unit on
5-14 request of its governing body or the presiding officer of its
5-15 governing body relating to the administration of this chapter. The
5-16 Texas Department of Economic Development [Commerce] and the
5-17 comptroller may provide technical assistance to a local governing
5-18 body regarding the designation of reinvestment zones, the adoption
5-19 of tax abatement guidelines, and the execution of tax abatement
5-20 agreements.
5-21 (e) On or before November 1 of each even-numbered year, the
5-22 comptroller shall:
5-23 (1) prepare a comprehensive report on the use of tax
5-24 abatements in encouraging economic development in this state; and
5-25 (2) deliver a copy of the report to:
5-26 (A) the governor, lieutenant governor, and
5-27 speaker of the house of representatives; and
6-1 (B) a taxing unit on request.
6-2 SECTION 7. Subchapter A, Chapter 312, Tax Code, is amended
6-3 by adding Section 312.007 to read as follows:
6-4 Sec. 312.007. PROPERTY TAX ABATEMENT ADVISORY COMMITTEE.
6-5 (a) The Property Tax Abatement Advisory Committee is created.
6-6 (b) The committee is composed of five members who are
6-7 designated by the executive director of the Texas Department of
6-8 Economic Development and reflect the diverse population of the
6-9 state. Two members must be municipal or county officials, and the
6-10 three other members must have economic development experience.
6-11 (c) The committee shall elect a presiding officer from among
6-12 its members.
6-13 (d) The committee shall meet at least twice a year and may
6-14 meet at other times at the call of the presiding officer. The
6-15 committee is subject to Chapter 551, Government Code.
6-16 (e) The committee may adopt rules for the committee's
6-17 internal procedures.
6-18 (f) Members of the committee are not entitled to
6-19 compensation for service on the committee.
6-20 (g) The department shall provide staff support for the
6-21 committee.
6-22 (h) Not later than September 1, 2000, the committee shall
6-23 deliver to the governor, lieutenant governor, speaker of the house
6-24 of representatives, executive director of the department, and
6-25 comptroller a report containing model:
6-26 (1) guidelines and criteria for tax abatement;
6-27 (2) tax abatement proposal forms for submission by
7-1 property owners to taxing units;
7-2 (3) tax abatement agreements, including:
7-3 (A) performance standards; and
7-4 (B) provisions for recapturing property tax
7-5 revenue under Section 312.205(a)(7) and for the payment of
7-6 penalties and interest under Section 312.205(b)(4); and
7-7 (4) analyses of costs and benefits under Section
7-8 312.2035.
7-9 (i) In preparing the report required by Subsection (h), the
7-10 committee shall consider the diverse characteristics and economic
7-11 development goals of communities throughout the state.
7-12 (j) The department shall furnish to a taxing unit on request
7-13 a copy of the report.
7-14 (k) This section expires and the committee is abolished
7-15 September 1, 2000.
7-16 SECTION 8. Subchapter B, Chapter 312, Tax Code, is amended
7-17 by adding Sections 312.2035 and 312.2045 to read as follows:
7-18 Sec. 312.2035. ANALYSIS OF COSTS AND BENEFITS. (a) A
7-19 municipality must perform an analysis of the costs and benefits of
7-20 a proposed tax abatement agreement before the municipality may
7-21 enter into the agreement under this subchapter.
7-22 (b) The costs examined must include:
7-23 (1) an estimate of any loss in ad valorem tax revenue
7-24 from the property covered by the agreement during the term of the
7-25 agreement;
7-26 (2) the impact of the agreement on the municipality's
7-27 ability to provide services; and
8-1 (3) any other cost the municipality determines to be
8-2 significant.
8-3 (c) The benefits examined must include:
8-4 (1) an estimate of the number of any jobs to be
8-5 created or retained by the property owner in the reinvestment zone
8-6 during the term of the agreement;
8-7 (2) an estimate of the payroll of any jobs described
8-8 by Subdivision (1);
8-9 (3) an estimate of the timing of creation of any jobs
8-10 described by Subdivision (1);
8-11 (4) an estimate of the amount of any capital
8-12 investments to be made by the property owner in the reinvestment
8-13 zone during the term of the agreement;
8-14 (5) an estimate of the timing of any capital
8-15 investments described by Subdivision (4);
8-16 (6) an estimate of any increase in local sales tax
8-17 revenue to be generated by the property owner in the reinvestment
8-18 zone during the term of the agreement; and
8-19 (7) any other benefit the municipality determines to
8-20 be significant.
8-21 (d) A municipality may not enter into a tax abatement
8-22 agreement for which the analysis shows that the costs exceed the
8-23 benefits.
8-24 Sec. 312.2045. NOTICE OF TAX ABATEMENT AGREEMENT. (a) A
8-25 municipality that enters into a tax abatement agreement shall
8-26 either, at the option of the municipality:
8-27 (1) publish notice of the agreement not later than the
9-1 seventh day after the date the agreement is entered into in a
9-2 newspaper that is published daily in each county in which the
9-3 municipality is located; or
9-4 (2) post notice of the agreement not later than the
9-5 seventh day after the date the agreement is entered into at each
9-6 place where the governing body of a municipality is required by
9-7 Chapter 551, Government Code, to post notice of its meetings.
9-8 (b) The notice must include:
9-9 (1) the name of each party to the tax abatement
9-10 agreement;
9-11 (2) the portion of the value of the property that is
9-12 exempt from taxation in each year covered by the agreement; and
9-13 (3) a summary of the analysis of costs and benefits
9-14 required by Section 312.2035.
9-15 SECTION 9. Section 312.205, Tax Code, is amended to read as
9-16 follows:
9-17 Sec. 312.205. SPECIFIC TERMS OF TAX ABATEMENT AGREEMENT.
9-18 (a) An agreement made under Section 312.204 or 312.211 must:
9-19 (1) list the kind, number, and location of all
9-20 proposed improvements of the property to which the agreement
9-21 applies;
9-22 (2) provide access to and authorize inspection of the
9-23 property by municipal employees to ensure that the improvements or
9-24 repairs are made according to the specifications and conditions of
9-25 the agreement;
9-26 (3) limit the uses of the property consistent with the
9-27 general purpose of encouraging development or redevelopment of the
10-1 zone during the period that property tax exemptions are in effect;
10-2 (4) contain each term agreed to by the property owner,
10-3 including:
10-4 (A) an estimate of the number of any jobs to be
10-5 created or retained by the property owner in the reinvestment zone
10-6 during the term of the agreement;
10-7 (B) an estimate of the timing of creation of any
10-8 jobs described by Paragraph (A);
10-9 (C) an estimate of the payroll of any jobs
10-10 described by Paragraph (A);
10-11 (D) an estimate of the amount of any capital
10-12 investments to be made by the property owner in the reinvestment
10-13 zone during the term of the agreement; and
10-14 (E) an estimate of the timing of any capital
10-15 investments described by Paragraph (D);
10-16 (5) require the property owner to certify before
10-17 February 1 of each year to the governing body of each taxing unit
10-18 whether the owner is in compliance with each applicable term of the
10-19 agreement and, if not, state the reason for the noncompliance;
10-20 (6) state any circumstances under which the property
10-21 owner may be excused by the governing body of the municipality for
10-22 failing to comply with the agreement;
10-23 (7) provide for recapture by the governing body of the
10-24 municipality of all or part of the [recapturing] property tax
10-25 revenue lost as a result of the agreement if the owner of the
10-26 property fails to make the improvements or repairs as provided by
10-27 the agreement or fails to comply with any performance standard
11-1 contained in the agreement; and
11-2 (8) [(5) contain each term agreed to by the owner of
11-3 the property;]
11-4 [(6) require the owner of the property to certify
11-5 annually to the governing body of each taxing unit that the owner
11-6 is in compliance with each applicable term of the agreement; and]
11-7 [(7)] provide for cancellation or modification of the
11-8 agreement by [that] the governing body of the municipality [may
11-9 cancel or modify the agreement] if the property owner fails to
11-10 comply with the agreement and for written notice of the
11-11 cancellation or modification.
11-12 (b) An agreement made under Section 312.204 or 312.211 may
11-13 include[, at the option of the governing body of the municipality,]
11-14 provisions for:
11-15 (1) the use to be made by the property owner of local
11-16 suppliers during the term of the agreement;
11-17 (2) health benefits and child care during the term of
11-18 the agreement for employees of the property owner who work at the
11-19 property covered by the agreement;
11-20 (3) the percentage of any jobs to be created under
11-21 Subsection (a)(4)(A) to be given to economically disadvantaged
11-22 individuals as defined by Section 2303.402, Government Code;
11-23 (4) payment of a penalty in a specified amount and
11-24 interest at a specified rate if the municipality is entitled to
11-25 recapture lost property tax revenue under Subsection (a)(7);
11-26 (5) improvements or repairs by the municipality to
11-27 streets, sidewalks, and utility services or facilities associated
12-1 with the property, except that the agreement may not provide for
12-2 lower charges or rates than are made for other services or
12-3 properties of a similar character;
12-4 (6) [(2) an economic feasibility study, including a
12-5 detailed list of estimated improvement costs, a description of the
12-6 methods of financing all estimated costs, and the time when related
12-7 costs or monetary obligations are to be incurred;]
12-8 [(3)] a map showing existing uses and conditions of
12-9 real property in the reinvestment zone;
12-10 (7) [(4)] a map showing proposed improvements and uses
12-11 in the reinvestment zone; and
12-12 (8) [(5)] proposed changes of zoning ordinances, the
12-13 master plan, the map, building codes, and city ordinances.
12-14 SECTION 10. Section 312.206(a), Tax Code, is amended to read
12-15 as follows:
12-16 (a) If property taxes on property located in the taxing
12-17 jurisdiction of a municipality are abated under an agreement made
12-18 under Section 312.204 or 312.211, the governing body of each other
12-19 taxing unit eligible to enter into tax abatement agreements under
12-20 Section 312.002 in which the property is located may execute a
12-21 written tax abatement agreement with the owner of the property not
12-22 later than the 90th day after the date the municipal agreement is
12-23 executed. The agreement is not required to [must] contain terms
12-24 identical to those contained in the agreement with the municipality
12-25 [providing for the portion of the property that is to be exempt
12-26 from taxation under the agreement, the duration of the agreement,
12-27 and the provisions included in the agreement under Section 312.205,
13-1 even if the value of the property at the time the agreement is
13-2 executed is not the same as its value when the municipal agreement
13-3 was executed and even if improvements or repairs have been made to
13-4 the property since the municipal agreement was executed]. If the
13-5 governing body of the taxing unit by official action at any time
13-6 before the execution of the municipal agreement expresses an intent
13-7 to [enter into an agreement with the owner of property under this
13-8 subsection or to] be bound by the terms of the municipal agreement
13-9 if the municipality enters into an agreement under Section 312.204
13-10 or 312.211 with the owner relating to the property, the terms of
13-11 the municipal agreement regarding the share of the property to be
13-12 exempt in each year of the municipal agreement apply to the
13-13 taxation of the property by the taxing unit. Sections 312.2035,
13-14 312.2045, and 312.205 apply to a taxing unit that enters into a
13-15 tax abatement agreement under this section [If the taxing unit that
13-16 expressed its intent to enter into an agreement or to be bound by
13-17 the municipal agreement is a county, those terms of the municipal
13-18 agreement also apply to the taxation of the property by a taxing
13-19 unit in the county to which a county tax abatement agreement would
13-20 apply under Section 312.004].
13-21 SECTION 11. Subchapter B, Chapter 312, Tax Code, is amended
13-22 by adding Sections 312.212 and 312.213 to read as follows:
13-23 Sec. 312.212. CERTIFICATION OF COMPLIANCE. (a) The
13-24 governing body of a taxing unit that is a party to a tax abatement
13-25 agreement shall, before March 1 of each year, determine in the
13-26 manner provided by law for official action of the governing body
13-27 whether each property owner receiving a tax abatement under the
14-1 agreement is in compliance with each term of the agreement and, if
14-2 not, whether the noncompliance is excused.
14-3 (b) The governing body shall consider any certification
14-4 furnished by the property owner under Section 312.205(a)(5). The
14-5 governing body may require the property owner to present additional
14-6 evidence the governing body considers necessary to make the
14-7 determination. The burden of proof is on the property owner to
14-8 show that the property owner is in compliance with each term of the
14-9 agreement.
14-10 (c) Each property owner who is a party to the tax abatement
14-11 agreement is entitled to a hearing and to present evidence before
14-12 the governing body of the taxing unit in person or by a
14-13 representative on the issue of compliance with the terms of the
14-14 agreement.
14-15 (d) The governing body shall certify in writing to the
14-16 property owner whether the owner is in compliance with each term of
14-17 the tax abatement agreement and, if not, whether the noncompliance
14-18 is excused.
14-19 Sec. 312.213. ACTION BY TAXING UNIT ON NONCOMPLIANCE.
14-20 (a) Except as provided by Subsection (b), if a property owner
14-21 fails to comply with a tax abatement agreement, the governing body
14-22 of the taxing unit shall:
14-23 (1) recapture all or part of the property tax revenue
14-24 lost as a result of the agreement as provided by Section
14-25 312.205(a)(7); and
14-26 (2) cancel or modify the agreement and give written
14-27 notice of the cancellation or modification as provided by Section
15-1 312.205(a)(8).
15-2 (b) The governing body of the taxing unit may excuse the
15-3 property owner's failure to comply with the agreement under a
15-4 circumstance stated in the tax abatement agreement as provided by
15-5 Section 312.205(a)(6).
15-6 SECTION 12. Sections 312.402(a), (c), and (e), Tax Code, are
15-7 amended to read as follows:
15-8 (a) The commissioners court may execute a tax abatement
15-9 agreement with the owner of taxable real property located in a
15-10 reinvestment zone designated under this subchapter. [The
15-11 execution, duration, and other terms of an agreement made under
15-12 this section are governed by the provisions of] Sections
15-13 312.2035-312.205 apply [312.204, 312.205, and 312.211 applicable]
15-14 to [a municipality. Section 312.2041 applies to] an agreement made
15-15 by a county under this section in the same manner as those sections
15-16 apply [it applies] to an agreement made by a municipality [under
15-17 Section 312.204 or 312.211].
15-18 (c) If [on or after September 1, 1989,] property subject to
15-19 an agreement with a county under this section is annexed by a
15-20 municipality during the existence of the agreement, the terms of
15-21 the county agreement regarding the share of the property to be
15-22 exempt in each year of the agreement apply to the taxation of the
15-23 property by the municipality if before the annexation the governing
15-24 body of the municipality by official action expresses an intent to
15-25 [enter into an agreement with the owner of the property to abate
15-26 taxes on the property if it is annexed or to] be bound by the terms
15-27 of the county agreement after annexation[, even if that official
16-1 action of the governing body of the municipality expressing that
16-2 intent occurs before September 1, 1989].
16-3 (e) An agreement made under this section by a county or
16-4 other taxing unit is subject to certification and may be canceled,
16-5 modified, or terminated in the same manner and subject to the same
16-6 limitations as provided by Sections [Section] 312.208, 312.212, and
16-7 312.213 for an agreement made under Subchapter B.
16-8 SECTION 13. As soon as practicable on or after the effective
16-9 date of this Act, the attorney general shall transfer to the
16-10 comptroller the copies of the reports by governing bodies of
16-11 municipalities on the status of reinvestment zones consistent with
16-12 this Act.
16-13 SECTION 14. The executive director of the Texas Department
16-14 of Economic Development shall designate the members of the Property
16-15 Tax Abatement Advisory Committee as soon as practicable on or after
16-16 the effective date of this Act.
16-17 SECTION 15. (a) Except as provided by Subsection (b) of
16-18 this section, this Act applies only to a tax abatement agreement
16-19 entered into on or after the effective date of this Act. A tax
16-20 abatement agreement entered into before the effective date of this
16-21 Act is governed by the law as it existed immediately before the
16-22 effective date of this Act, and that law is continued in effect for
16-23 that purpose.
16-24 (b) Sections 11.45(c) and 312.402(e), Tax Code, as amended
16-25 by this Act, and Sections 11.43(l), 312.212, and 312.213, Tax Code,
16-26 as added by this Act, apply to a tax abatement agreement entered
16-27 into before, on, or after the effective date of this Act.
17-1 (c) This Act applies only to ad valorem taxes imposed on or
17-2 after January 1, 2000.
17-3 SECTION 16. This Act takes effect September 1, 1999.
17-4 SECTION 17. The importance of this legislation and the
17-5 crowded condition of the calendars in both houses create an
17-6 emergency and an imperative public necessity that the
17-7 constitutional rule requiring bills to be read on three several
17-8 days in each house be suspended, and this rule is hereby suspended.