By Brown S.B. No. 1732
76R6558 SMH-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to incentives for the modification of certain facilities
1-3 to reduce the emission of air contaminants.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Chapter 171, Tax Code, is amended by adding
1-6 Subchapter N to read as follows:
1-7 SUBCHAPTER N. TAX CREDIT FOR MODIFICATION OF EXISTING FACILITY
1-8 TO REDUCE EMISSION OF AIR CONTAMINANTS
1-9 Sec. 171.701. DEFINITION. In this subchapter, "facility"
1-10 has the meaning assigned by Section 382.003, Health and Safety
1-11 Code.
1-12 Sec. 171.702. APPLICABILITY. This subchapter applies only
1-13 to a corporation described by Section 382.0518(g), Health and
1-14 Safety Code.
1-15 Sec. 171.703. CREDIT. A corporation that qualifies under
1-16 this subchapter is entitled to receive a credit in the amount
1-17 allowed by this subchapter against the tax imposed under this
1-18 chapter.
1-19 Sec. 171.704. CREDIT FOR MODIFICATION OF EXISTING FACILITY.
1-20 (a) A corporation is eligible for a credit under this subchapter
1-21 only for expenditures relating to the modification of an existing
1-22 facility so that the facility will use an air pollution control
1-23 method at least as beneficial as that described by Section
1-24 382.003(9)(E)(ii), Health and Safety Code, considering the age and
2-1 remaining useful life of the facility.
2-2 (b) The amount of the credit is equal to the amount of the
2-3 corporation's expenditures described by Subsection (a).
2-4 Sec. 171.705. APPLICATION FOR CREDIT. (a) A corporation
2-5 must apply for a credit under this subchapter on or with the tax
2-6 report for the period for which the credit is claimed.
2-7 (b) The comptroller shall adopt an application form that a
2-8 corporation must use in applying for the credit.
2-9 Sec. 171.706. PERIOD FOR WHICH CREDIT MAY BE CLAIMED. (a)
2-10 Except as provided by Subsection (b), a corporation may claim a
2-11 credit under this subchapter for expenditures made during an
2-12 accounting period only against the tax owed for the corresponding
2-13 reporting period.
2-14 (b) A corporation may not claim a credit in an amount that
2-15 exceeds the amount of tax due for the report. If a credit exceeds
2-16 the amount of tax due for that report, the corporation may carry
2-17 the remaining credit forward to the following report if the
2-18 corporation operates the facility during that following reporting
2-19 period.
2-20 Sec. 171.707. ASSIGNMENT PROHIBITED. A corporation may not
2-21 convey, assign, or transfer a credit received under this subchapter
2-22 to another entity unless all of the assets of the corporation are
2-23 conveyed, assigned, or transferred in the same transaction.
2-24 SECTION 2. Section 312.002(a), Tax Code, is amended to read
2-25 as follows:
2-26 (a) A taxing unit may not enter into a tax abatement
2-27 agreement under this chapter and the governing body of a
3-1 municipality or county may not designate an area as a reinvestment
3-2 zone unless the governing body has established guidelines and
3-3 criteria governing tax abatement agreements by the taxing unit and
3-4 a resolution stating that the taxing unit elects to become eligible
3-5 to participate in tax abatement. The guidelines applicable to
3-6 property other than property described by Section 312.211(a) or
3-7 312.212(b) must provide for the availability of tax abatement for
3-8 both new facilities and structures and for the expansion or
3-9 modernization of existing facilities and structures.
3-10 SECTION 3. Sections 312.201(c) and (d), Tax Code, are
3-11 amended to read as follows:
3-12 (c) Area of a reinvestment zone designated for residential
3-13 tax abatement or commercial-industrial tax abatement may be
3-14 included in an overlapping or coincidental residential or
3-15 commercial-industrial zone. In that event, the zone in which the
3-16 property is considered to be located for purposes of executing an
3-17 agreement under Section 312.204, [or] 312.211, or 312.212 is
3-18 determined by the comprehensive zoning ordinance, if any, of the
3-19 municipality.
3-20 (d) The governing body may not adopt an ordinance
3-21 designating an area as a reinvestment zone until the governing body
3-22 has held a public hearing on the designation and has found that the
3-23 improvements sought are feasible and practical and would be a
3-24 benefit to the land to be included in the zone and to the
3-25 municipality after the expiration of an agreement entered into
3-26 under Section 312.204, [or] 312.211, or 312.212, as applicable. At
3-27 the hearing, interested persons are entitled to speak and present
4-1 evidence for or against the designation. Not later than the
4-2 seventh day before the date of the hearing, notice of the hearing
4-3 must be:
4-4 (1) published in a newspaper having general
4-5 circulation in the municipality; and
4-6 (2) delivered in writing to the presiding officer of
4-7 the governing body of each taxing unit that includes in its
4-8 boundaries real property that is to be included in the proposed
4-9 reinvestment zone.
4-10 SECTION 4. Section 312.2041(a), Tax Code, is amended to read
4-11 as follows:
4-12 (a) Not later than the seventh day before the date on which
4-13 a municipality enters into an agreement under Section 312.204, [or]
4-14 312.211, or 312.212, the governing body of the municipality or a
4-15 designated officer or employee of the municipality shall deliver to
4-16 the presiding officer of the governing body of each other taxing
4-17 unit in which the property to be subject to the agreement is
4-18 located a written notice that the municipality intends to enter
4-19 into the agreement. The notice must include a copy of the proposed
4-20 agreement.
4-21 SECTION 5. Sections 312.205(a) and (b), Tax Code, are
4-22 amended to read as follows:
4-23 (a) An agreement made under Section 312.204, [or] 312.211,
4-24 or 312.212 must:
4-25 (1) list the kind, number, and location of all
4-26 proposed improvements of the property;
4-27 (2) provide access to and authorize inspection of the
5-1 property by municipal employees to ensure that the improvements or
5-2 repairs are made according to the specifications and conditions of
5-3 the agreement;
5-4 (3) limit the uses of the property consistent with the
5-5 general purpose of encouraging development or redevelopment of the
5-6 zone during the period that property tax exemptions are in effect;
5-7 (4) provide for recapturing property tax revenue lost
5-8 as a result of the agreement if the owner of the property fails to
5-9 make the improvements or repairs as provided by the agreement;
5-10 (5) contain each term agreed to by the owner of the
5-11 property;
5-12 (6) require the owner of the property to certify
5-13 annually to the governing body of each taxing unit that the owner
5-14 is in compliance with each applicable term of the agreement; and
5-15 (7) provide that the governing body of the
5-16 municipality may cancel or modify the agreement if the property
5-17 owner fails to comply with the agreement.
5-18 (b) An agreement made under Section 312.204, [or] 312.211,
5-19 or 312.212 may include, at the option of the governing body of the
5-20 municipality, provisions for:
5-21 (1) improvements or repairs by the municipality to
5-22 streets, sidewalks, and utility services or facilities associated
5-23 with the property, except that the agreement may not provide for
5-24 lower charges or rates than are made for other services or
5-25 properties of a similar character;
5-26 (2) an economic feasibility study, including a
5-27 detailed list of estimated improvement costs, a description of the
6-1 methods of financing all estimated costs, and the time when related
6-2 costs or monetary obligations are to be incurred;
6-3 (3) a map showing existing uses and conditions of real
6-4 property in the reinvestment zone;
6-5 (4) a map showing proposed improvements and uses in
6-6 the reinvestment zone; and
6-7 (5) proposed changes of zoning ordinances, the master
6-8 plan, the map, building codes, and city ordinances.
6-9 SECTION 6. Sections 312.206(a) and (c), Tax Code, are
6-10 amended to read as follows:
6-11 (a) If property taxes on property located in the taxing
6-12 jurisdiction of a municipality are abated under an agreement made
6-13 under Section 312.204, [or] 312.211, or 312.212, the governing body
6-14 of each other taxing unit eligible to enter into tax abatement
6-15 agreements under Section 312.002 in which the property is located
6-16 may execute a written agreement with the owner of the property not
6-17 later than the 90th day after the date the municipal agreement is
6-18 executed. The agreement must contain terms identical to those
6-19 contained in the agreement with the municipality providing for the
6-20 portion of the property that is to be exempt from taxation under
6-21 the agreement, the duration of the agreement, and the provisions
6-22 included in the agreement under Section 312.205, even if the value
6-23 of the property at the time the agreement is executed is not the
6-24 same as its value when the municipal agreement was executed and
6-25 even if improvements or repairs have been made to the property
6-26 since the municipal agreement was executed. If the governing body
6-27 of the taxing unit by official action at any time before the
7-1 execution of the municipal agreement expresses an intent to enter
7-2 into an agreement with the owner of property under this subsection
7-3 or to be bound by the terms of the municipal agreement if the
7-4 municipality enters into an agreement under Section 312.204, [or]
7-5 312.211, or 312.212 with the owner relating to the property, the
7-6 terms of the municipal agreement regarding the share of the
7-7 property to be exempt in each year of the municipal agreement apply
7-8 to the taxation of the property by the taxing unit. If the taxing
7-9 unit that expressed its intent to enter into an agreement or to be
7-10 bound by the municipal agreement is a county, those terms of the
7-11 municipal agreement also apply to the taxation of the property by a
7-12 taxing unit in the county to which a county tax abatement agreement
7-13 would apply under Section 312.004.
7-14 (c) If the governing body of a municipality designates a
7-15 reinvestment zone that includes property in the extraterritorial
7-16 jurisdiction of the municipality, the governing body of a taxing
7-17 unit eligible to enter into tax abatement agreements under Section
7-18 312.002 in which the property is located may execute a written
7-19 agreement with the owner of the property to exempt from its
7-20 property taxes all or part of the value of the property in the same
7-21 manner and subject to the same restrictions as provided by Section
7-22 312.204, [or] 312.211, or 312.212 for a municipality. The taxing
7-23 unit may execute an agreement even if the municipality does not
7-24 execute an agreement for the property, and the terms of the
7-25 agreement are not required to be identical to the terms of a
7-26 municipal agreement. However, if the governing body of another
7-27 eligible taxing unit has previously executed an agreement to exempt
8-1 all or part of the value of the property and that agreement is
8-2 still in effect, the terms of the subsequent agreement relating to
8-3 the share of the property that is to be exempt in each year that
8-4 the existing agreement remains in effect must be identical to those
8-5 of the existing agreement.
8-6 SECTION 7. Subchapter B, Chapter 312, Tax Code, is amended
8-7 by adding Section 312.212 to read as follows:
8-8 Sec. 312.212. AGREEMENT BY MUNICIPALITY RELATING TO
8-9 MODIFICATION OF EXISTING FACILITY TO REDUCE EMISSION OF AIR
8-10 CONTAMINANTS. (a) In this section, "facility" has the meaning
8-11 assigned by Section 382.003, Health and Safety Code.
8-12 (b) This section applies only to:
8-13 (1) a facility owned by a person described by Section
8-14 382.0518(g), Health and Safety Code; and
8-15 (2) the real property on which the facility is
8-16 located.
8-17 (c) The governing body of a municipality eligible to enter
8-18 into a tax abatement agreement under Section 312.002 may agree in
8-19 writing with the owner of taxable real property described by
8-20 Subsection (b) that is located in a reinvestment zone but that is
8-21 not in an improvement project financed by tax increment bonds to
8-22 exempt from taxation a portion of the value of the real property or
8-23 of tangible personal property located on the real property, or
8-24 both. Property may not be exempted under this section for a period
8-25 that exceeds 10 years. An exemption is subject to the rights of
8-26 holders of outstanding bonds of the municipality and may be granted
8-27 only on the condition that the owner of the property modify the
9-1 facility located on the real property so that the facility will use
9-2 an air pollution control method at least as beneficial as that
9-3 described by Section 382.003(9)(E)(ii), Health and Safety Code,
9-4 considering the age and remaining useful life of the facility. An
9-5 agreement may provide for the exemption of the real property in
9-6 each year covered by the agreement only to the extent its value for
9-7 that year exceeds its value for the year in which the agreement is
9-8 executed. An agreement may provide for the exemption of tangible
9-9 personal property located on the real property in each year covered
9-10 by the agreement other than tangible personal property that was
9-11 located on the real property before the date the agreement is
9-12 executed and other than inventory or supplies. In a municipality
9-13 that has a comprehensive zoning ordinance, a modification required
9-14 by an agreement under this section must conform to that ordinance.
9-15 (d) A property owner who enters into an abatement agreement
9-16 under this section must, on modification of the facility as
9-17 described by Subsection (c), furnish information to the Texas
9-18 Natural Resource Conservation Commission sufficient to establish
9-19 that the property owner has completed the modification. If after
9-20 reviewing the furnished information the executive director of the
9-21 commission determines that the property owner has modified the
9-22 facility as described by Subsection (c), the executive director
9-23 shall issue a letter to the property owner stating that
9-24 determination. The commission may charge the property owner a fee
9-25 not to exceed the administrative cost of processing the
9-26 information, making the determination, and issuing the
9-27 determination letter. The commission may adopt rules to implement
10-1 this subsection.
10-2 (e) A property owner may not receive a tax abatement under
10-3 this section unless the property owner includes with the
10-4 application required by Section 11.43 for an exemption under
10-5 Section 11.28 filed with the chief appraiser of each appraisal
10-6 district that appraises the property a copy of the letter issued by
10-7 the executive director of the Texas Natural Resource Conservation
10-8 Commission under Subsection (d). An agreement under this section
10-9 takes effect on January 1 of the first tax year that begins after
10-10 the date the owner files the copy of the letter with the chief
10-11 appraiser. The chief appraiser shall accept the copy of the letter
10-12 as conclusive evidence that the property owner has modified the
10-13 facility as described by Subsection (c).
10-14 (f) An agreement under this section may prohibit a property
10-15 owner who modifies a facility in order to comply with Subsection
10-16 (c) from modifying the facility after the date the agreement
10-17 expires so that the facility no longer complies with that
10-18 subsection, unless the property owner is required by law to modify
10-19 the facility in that manner.
10-20 (g) A municipality may enter into a tax abatement agreement
10-21 covering property described by Subsection (b) under this section or
10-22 Section 312.204, but not under both sections. Section 312.204
10-23 applies to an agreement entered into under this section except as
10-24 otherwise provided by this section.
10-25 SECTION 8. Section 312.402(a), Tax Code, is amended to read
10-26 as follows:
10-27 (a) The commissioners court may execute a tax abatement
11-1 agreement with the owner of taxable real property located in a
11-2 reinvestment zone designated under this subchapter. The execution,
11-3 duration, and other terms of an agreement made under this section
11-4 are governed by the provisions of Sections 312.204, 312.205, [and]
11-5 312.211, and 312.212 applicable to a municipality. Section
11-6 312.2041 applies to an agreement made by a county under this
11-7 section in the same manner as it applies to an agreement made by a
11-8 municipality under Section 312.204, [or] 312.211, or 312.212.
11-9 SECTION 9. Subchapter E, Chapter 36, Utilities Code, is
11-10 amended by adding Section 36.209 to read as follows:
11-11 Sec. 36.209. RECOVERY OF COSTS OF MODIFICATION OF EXISTING
11-12 FACILITY TO REDUCE EMISSION OF AIR CONTAMINANTS. (a) In this
11-13 section, "facility" has the meaning assigned by Section 382.003,
11-14 Health and Safety Code.
11-15 (b) Notwithstanding Section 36.201, in establishing rates
11-16 for an electric utility, the commission may allow timely recovery
11-17 of the reasonable costs of modification of an existing facility so
11-18 that the facility will use an air pollution control method at least
11-19 as beneficial as that described by Section 382.003(9)(E)(ii),
11-20 Health and Safety Code, considering the age and remaining useful
11-21 life of the facility.
11-22 SECTION 10. (a) A corporation may claim the credit under
11-23 Subchapter N, Chapter 171, Tax Code, as added by this Act, only for
11-24 an expenditure made on or after the effective date of this Act and
11-25 only on a franchise tax report due under Chapter 171, Tax Code, on
11-26 or after January 1, 2000.
11-27 (b) Section 312.212, Tax Code, as added by this Act, applies
12-1 only to ad valorem taxes imposed for a tax year beginning on or
12-2 after January 1, 2000.
12-3 SECTION 11. The importance of this legislation and the
12-4 crowded condition of the calendars in both houses create an
12-5 emergency and an imperative public necessity that the
12-6 constitutional rule requiring bills to be read on three several
12-7 days in each house be suspended, and this rule is hereby suspended,
12-8 and that this Act take effect and be in force from and after its
12-9 passage, and it is so enacted.