78R2612 SMH-D

By:  Mowery                                                       H.B. No. 905



A BILL TO BE ENTITLED

AN ACT

relating to the authority of a taxing unit to enter into and the 
terms of ad valorem tax abatement agreements.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:                        
	SECTION 1.  Section 312.002, Tax Code, is amended by adding 
Subsection (h) to read as follows:
	(h)  A taxing unit may not enter into a tax abatement 
agreement under this chapter unless in an election called by the 
taxing unit for that purpose a majority of the votes cast favor 
authorizing the taxing unit to enter into tax abatement agreements.  
The ballot shall be printed to permit voting for or against the 
proposition:  "Authorizing the (name of taxing unit) to enter into 
tax abatement agreements."
	SECTION 2.  Section 312.205, Tax Code, is amended to read as 
follows:        
	Sec. 312.205.  SPECIFIC TERMS OF TAX ABATEMENT AGREEMENT.  
(a)  An agreement made under Section 312.204 or 312.211 must:
		(1)  list the kind, number, and location of all 
proposed improvements of the property;
		(2)  provide access to and authorize inspection of the 
property by municipal employees to ensure that the improvements or 
repairs are made according to the specifications and conditions of 
the agreement;
		(3)  limit the uses of the property consistent with the 
general purpose of encouraging development or redevelopment of the 
zone during the period that property tax exemptions are in effect;
		(4)  provide for recapturing all or a specified portion 
of the property tax revenue lost as a result of the agreement if the 
owner of the property fails to comply with each term of [make the 
improvements or repairs as provided by] the agreement;
		(5)  contain each term agreed to by the owner of the 
property;              
		(6)  require the owner of the property to certify 
annually to the governing body of each taxing unit that the owner is 
in compliance with each applicable term of the agreement; [and]
		(7)  require the municipality to conduct an audit 
annually to determine whether the property owner is in compliance 
with each applicable term of the agreement;
		(8)  require the municipality to prepare a report of 
each compliance audit conducted under Subdivision (7) and present 
the report at a public hearing of the governing body of the 
municipality; and
		(9)  provide that the governing body of the 
municipality may cancel or modify the agreement if the property 
owner fails to comply with the agreement.
	(b)  An agreement made under Section 312.204 or 312.211 may 
include, at the option of the governing body of the municipality, 
provisions for:
		(1)  improvements or repairs by the municipality to 
streets, sidewalks, and utility services or facilities associated 
with the property, except that the agreement may not provide for 
lower charges or rates than are made for other services or 
properties of a similar character;
		(2)  an economic feasibility study, including a 
detailed list of estimated improvement costs, a description of the 
methods of financing all estimated costs, and the time when related 
costs or monetary obligations are to be incurred;
		(3)  a map showing existing uses and conditions of real 
property in the reinvestment zone;
		(4)  a map showing proposed improvements and uses in 
the reinvestment zone; and
		(5)  proposed changes of zoning ordinances, the master 
plan, the map, building codes, and city ordinances[; and
		[(6)  the recapture of all or a portion of property tax 
revenue lost as a result of the agreement if the owner of the 
property fails to create all or a portion of the number of new jobs 
provided by the agreement, if the appraised value of the property 
subject to the agreement does not attain a value specified in the 
agreement, or if the owner fails to meet any other performance 
criteria provided by the agreement, and payment of a penalty or 
interest, or both, on that recaptured property tax revenue].
	SECTION 3.  Section 312.208(a), Tax Code, is amended to read 
as follows:     
	(a)  At any time before the expiration of an agreement made 
under this subchapter, the agreement may be modified by the parties 
to the agreement to include other provisions that could have been 
included in the original agreement or to delete provisions that 
were not necessary to the original agreement.  The modification 
must be made by the same procedure by which the original agreement 
was approved and executed.  The original agreement may not be 
modified to extend beyond 10 years from the date of the original 
agreement.  The terms of the modified agreement must be at least as 
favorable overall to the taxing unit as the terms of the original 
agreement.
	SECTION 4.  (a)  This Act takes effect September 1, 2003.                      
	(b)  This Act applies only to a tax abatement agreement 
entered into on or after the effective date of this Act.  A tax 
abatement agreement entered into before the effective date of this 
Act is governed by the law as it existed immediately before the 
effective date of this Act, and that law is continued in effect for 
that purpose.