By:  Duncan, West                                      S.B. No. 985
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to authorizing the governing body of a municipality to
 1-3     enter into a tax abatement agreement with the owner of a leasehold
 1-4     interest in real property that is located in a reinvestment zone.
 1-5           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-6           SECTION 1.  Subsection (a), Section 312.204, Tax Code, is
 1-7     amended to read as follows:
 1-8           (a)  The governing body of a municipality eligible to enter
 1-9     into tax abatement agreements under Section 312.002 may agree in
1-10     writing with the owner of taxable real property that is located in
1-11     a reinvestment zone, but that is not in an improvement project
1-12     financed by tax increment bonds, to exempt from taxation a portion
1-13     of the value of the real property or of tangible personal property
1-14     located on the real property, or both, for a period not to exceed
1-15     10 years, [subject to the rights of holders of outstanding bonds of
1-16     the municipality,] on the condition that the owner of the property
1-17     make specific improvements or repairs to the property.  The
1-18     governing body of an eligible municipality may agree in writing
1-19     with the owner of a leasehold interest in real property that is
1-20     located in a reinvestment zone to exempt a portion of the value of
1-21     tangible personal property located on the real property, for a
1-22     period not to exceed 10 years, on the condition that the owner of
1-23     the leasehold interest make specific improvements or repairs to the
1-24     real property.  A tax abatement agreement under this section is
1-25     subject to the rights of holders of outstanding bonds of the
 2-1     municipality.  An agreement exempting taxable real property may
 2-2     provide for the exemption of the real property in each year covered
 2-3     by the agreement only to the extent its value for that year exceeds
 2-4     its value for the year in which the agreement is executed.  An
 2-5     agreement exempting tangible personal property located on real
 2-6     property may provide for the exemption of tangible personal
 2-7     property located on the real property in each year covered by the
 2-8     agreement other than tangible personal property that was located on
 2-9     the real property at any time before the period covered by the
2-10     agreement with the municipality, and other than inventory or
2-11     supplies.  In a municipality that has a comprehensive zoning
2-12     ordinance, an improvement, repair, development, or redevelopment
2-13     taking place under an agreement under this section must conform to
2-14     the comprehensive zoning ordinance.
2-15           SECTION 2.  This Act takes effect immediately if it receives
2-16     a vote of two-thirds of all the members elected to each house, as
2-17     provided by Section 39, Article III, Texas Constitution.  If this
2-18     Act does not receive the vote necessary for immediate effect, this
2-19     Act takes effect September 1, 2001.