77R15531 GJH-F                          
         By Duncan, et al.                                      S.B. No. 985
         Substitute the following for S.B. No. 985:
         By Davis of Dallas                                 C.S.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. Section 312.204(a), Tax Code, is amended to read
 1-7     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     the leasehold interest, if taxable, or of improvements or tangible
1-22     personal property located on the real property subject to the
1-23     leasehold interest, for a period not to exceed 10 years, on the
1-24     condition that the owner of the leasehold interest make specific
 2-1     improvements or repairs to the real property.  A tax abatement
 2-2     agreement under this section is subject to the rights of holders of
 2-3     outstanding bonds of the municipality.  An agreement exempting
 2-4     taxable real property may provide for the exemption of the real
 2-5     property in each year covered by the agreement only to the extent
 2-6     its value for that year exceeds its value for the year in which the
 2-7     agreement is executed.  An agreement exempting tangible personal
 2-8     property located on real property may provide for the exemption of
 2-9     tangible personal property located on the real property in each
2-10     year covered by the agreement other than tangible personal property
2-11     that was located on the real property at any time before the period
2-12     covered by the agreement with the municipality, and other than
2-13     inventory or supplies.  In a municipality that has a comprehensive
2-14     zoning ordinance, an improvement, repair, development, or
2-15     redevelopment taking place under an agreement under this section
2-16     must conform to the comprehensive zoning ordinance.
2-17           SECTION 2.  This Act takes effect immediately if it receives
2-18     a vote of two-thirds of all the members elected to each house, as
2-19     provided by Section 39, Article III, Texas Constitution.  If this
2-20     Act does not receive the vote necessary for immediate effect, this
2-21     Act takes effect September 1, 2001.