1-1     By:  Duncan                                            S.B. No. 985
 1-2           (In the Senate - Filed February 28, 2001; March 1, 2001, read
 1-3     first time and referred to Committee on Intergovernmental
 1-4     Relations; April 19, 2001, reported favorably by the following
 1-5     vote:  Yeas 7, Nays 0; April 19, 2001, sent to printer.)
 1-6                            A BILL TO BE ENTITLED
 1-7                                   AN ACT
 1-8     relating to authorizing the governing body of a municipality to
 1-9     enter into a tax abatement agreement with the owner of a leasehold
1-10     interest in real property that is located in a reinvestment zone.
1-11           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-12           SECTION 1.  Subsection (a), Section 312.204, Tax Code, is
1-13     amended to read as follows:
1-14           (a)  The governing body of a municipality eligible to enter
1-15     into tax abatement agreements under Section 312.002 may agree in
1-16     writing with the owner of taxable real property that is located in
1-17     a reinvestment zone, but that is not in an improvement project
1-18     financed by tax increment bonds, to exempt from taxation a portion
1-19     of the value of the real property or of tangible personal property
1-20     located on the real property, or both, for a period not to exceed
1-21     10 years, [subject to the rights of holders of outstanding bonds of
1-22     the municipality,] on the condition that the owner of the property
1-23     make specific improvements or repairs to the property.  The
1-24     governing body of an eligible municipality may agree in writing
1-25     with the owner of a leasehold interest in real property that is
1-26     located in a reinvestment zone to exempt a portion of the value of
1-27     tangible personal property located on the real property, for a
1-28     period not to exceed 10 years, on the condition that the owner of
1-29     the leasehold interest make specific improvements or repairs to the
1-30     real property.  A tax abatement agreement under this section is
1-31     subject to the rights of holders of outstanding bonds of the
1-32     municipality.  An agreement exempting taxable real property may
1-33     provide for the exemption of the real property in each year covered
1-34     by the agreement only to the extent its value for that year exceeds
1-35     its value for the year in which the agreement is executed.  An
1-36     agreement exempting tangible personal property located on real
1-37     property may provide for the exemption of tangible personal
1-38     property located on the real property in each year covered by the
1-39     agreement other than tangible personal property that was located on
1-40     the real property at any time before the period covered by the
1-41     agreement with the municipality, and other than inventory or
1-42     supplies.  In a municipality that has a comprehensive zoning
1-43     ordinance, an improvement, repair, development, or redevelopment
1-44     taking place under an agreement under this section must conform to
1-45     the comprehensive zoning ordinance.
1-46           SECTION 2.  This Act takes effect immediately if it receives
1-47     a vote of two-thirds of all the members elected to each house, as
1-48     provided by Section 39, Article III, Texas Constitution.  If this
1-49     Act does not receive the vote necessary for immediate effect, this
1-50     Act takes effect September 1, 2001.
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