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78R4968 ATP-D
By: Giddings H.B. No. 2806
A BILL TO BE ENTITLED
AN ACT
relating to a pilot program creating reinvestment zones to promote
the relocation of businesses to certain areas of this state.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subtitle G, Title 10, Government Code, is
amended by adding Chapter 2312 to read as follows:
CHAPTER 2312. BUSINESS RECRUITMENT REINVESTMENT ZONES
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 2312.001. DEFINITIONS. In this chapter:
(1) "Business" includes a part of the operations of a
business entity.
(2) "Department" means the Texas Department of
Economic Development.
(3) "Eligible business" means a business designated as
an eligible business under Section 2312.102.
(4) "Relocate" means to establish a physical presence
at a new location, including:
(A) the transfer of an existing business
operation to a facility at a different location;
(B) the expansion of an existing business
operation to an additional location; or
(C) the establishment of an office or plant at a
different location.
(5) "Taxing unit" has the meaning assigned by Section
1.04, Tax Code.
(6) "Zone" means an area designated as a business
recruitment reinvestment zone under this chapter.
Sec. 2312.002. REINVESTMENT ZONE. A zone is a reinvestment
zone within the meaning of Section 1-g(a), Article VIII, Texas
Constitution.
[Sections 2312.003-2312.050 reserved for expansion]
SUBCHAPTER B. CREATION OF ZONE
Sec. 2312.051. NOMINATION OF AREA. (a) An area may be
nominated for designation as a zone only if each taxing unit located
wholly or partly in the area enters into an agreement to nominate
the area for designation as a zone.
(b) A taxing unit that is a party to an agreement under
Subsection (a), singly or jointly with another taxing unit, may
nominate an area for designation as a zone by submitting an
application to the department.
(c) An application for designation as a zone shall contain:
(1) a copy of the agreement under Subsection (a);
(2) a map of the area showing existing streets and
highways and the boundaries of the area;
(3) an analysis and appropriate supporting documents
and statistics demonstrating that the area qualifies for
designation as a zone;
(4) information demonstrating that an eligible
business is likely to relocate to the area if the area is designated
as a zone; and
(5) any other information required by the department.
Sec. 2312.052. DESIGNATION BY REVIEW BOARD. (a) A review
board, composed of the members of the governing body of the
department, shall review each application submitted by a taxing
unit seeking designation as a zone.
(b) The review board must decide whether to designate an
area as a zone before the 90th day after the date on which the
application is submitted.
(c) The review board shall decide whether to designate an
area as a zone based on:
(1) whether each taxing unit located wholly or partly
in the area has entered into the agreement to nominate the area as
required by Section 2312.051(a);
(2) whether the criteria for designation as a zone
prescribed by Section 2312.053 are met; and
(3) the likelihood that an eligible business will
relocate to the area.
Sec. 2312.053. CRITERIA FOR DESIGNATION. (a) To be
designated as a zone an area must:
(1) be located in a county that:
(A) is adjacent to the Gulf of Mexico;
(B) contains territory located within 50 miles of
an international border; or
(C) has a population of 500,000 or more;
(2) have a continuous boundary;
(3) be at least one square mile but not larger than the
greater of:
(A) 10 square miles, excluding lakes, waterways,
and transportation arteries; or
(B) an area, not to exceed 20 square miles, that
is equal to five percent of the total square mileage of the county
in which the area is located, excluding lakes, waterways, and
transportation arteries; and
(4) be an area in which the average rate of
unemployment during the most recent 12-month period for which data
is available was at least 1-1/2 times the state average for that
period.
(b) The review board may not designate more than:
(1) one zone in a single school district; or
(2) three zones in a single county.
Sec. 2312.054. NUMBER OF ZONES. The review board may not
designate more than 10 zones under this chapter.
[Sections 2312.055-2312.100 reserved for expansion]
SUBCHAPTER C. BOARD OF DIRECTORS; POWERS AND DUTIES OF BOARD
Sec. 2312.101. BOARD OF DIRECTORS. (a) A zone is governed
by a board of directors.
(b) The department shall by rule determine the number of
directors, the qualifications of directors, and the method of
apportioning the appointment of directors among the taxing units
that are located wholly or partly in the zone. The department shall
provide that each taxing unit may appoint at least one director.
(c) A taxing unit must make its appointments to the board of
directors before the 30th day after the date on which the review
board designates an area as a zone. A taxing unit shall make
reasonable efforts to include members of the local business
community on the board of directors.
Sec. 2312.102. DESIGNATION OF ELIGIBLE BUSINESSES. (a)
The board of directors shall determine whether a business is an
eligible business.
(b) If the board of directors determines that a business
meets the requirements prescribed by Section 2312.151(b), the board
by order shall designate the business as an eligible business.
Sec. 2312.103. ADVERTISEMENT OF ZONE. The board of
directors shall advertise the existence of a zone and the benefits
of relocating to a zone to attract businesses to the zone and
encourage new business growth in the zone.
[Sections 2312.104-2312.150 reserved for expansion]
SUBCHAPTER D. INCENTIVES FOR BUSINESS RECRUITMENT
Sec. 2312.151. ELIGIBLE BUSINESS. (a) In this section,
"new job" means a new employment position that is intended to
provide at least 1,820 hours of employment a year.
(b) A business is an eligible business if:
(1) the business relocates from another state or
nation to a zone after the date on which the zone is designated;
(2) the business delivers a written statement to the
board of directors that guarantees that the relocation of the
business to the zone will create 100 or more new jobs in the zone;
and
(3) the business, or any property located in the zone
that is owned or controlled by the business, is not a gambling
place, as that term is defined by Section 47.01, Penal Code.
(c) An eligible business that has not created 100 or more
new jobs in the zone before the first anniversary of the date on
which the business is designated as an eligible business may not
receive further tax abatements or exemptions under this chapter.
Sec. 2312.152. FRANCHISE TAX EXEMPTION. An eligible
business is exempt from franchise taxes as provided by Section
171.088, Tax Code.
Sec. 2312.153. LOCAL AD VALOREM TAX ABATEMENT. The
governing body of a taxing unit located wholly or partly in a zone
shall enter into a tax abatement agreement as provided by Chapter
314, Tax Code, with an eligible business operating in the zone.
SECTION 2. Subchapter B, Chapter 171, Tax Code, is amended
by adding Section 171.088 to read as follows:
Sec. 171.088. EXEMPTION--CERTAIN CORPORATIONS LOCATED IN
BUSINESS RECRUITMENT REINVESTMENT ZONES. (a) A corporation
designated as an eligible business under Section 2312.102,
Government Code, is exempted from the franchise tax before the
sixth anniversary of the date on which the corporation is
designated as an eligible business.
(b) A corporation designated as an eligible business under
Section 2312.102, Government Code, is exempted from:
(1) 80 percent of the amount of franchise tax due for
the period beginning on the sixth anniversary and ending on the day
before the seventh anniversary of the date on which the corporation
is designated as an eligible business;
(2) 60 percent of the amount of franchise tax due for
the period beginning on the seventh anniversary and ending on the
day before the eighth anniversary of the date on which the
corporation is designated as an eligible business;
(3) 40 percent of the amount of franchise tax due for
the period beginning on the eighth anniversary and ending on the day
before the ninth anniversary of the date on which the corporation is
designated as an eligible business; and
(4) 20 percent of the amount of franchise tax due for
the period beginning on the ninth anniversary and ending on the day
before the 10th anniversary of the date on which the corporation is
designated as an eligible business.
SECTION 3. Subtitle B, Title 3, Tax Code, is amended by
adding Chapter 314 to read as follows:
CHAPTER 314. TAX ABATEMENT IN BUSINESS RECRUITMENT REINVESTMENT
ZONES
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 314.001. DEFINITIONS. In this chapter:
(1) "Eligible business" means a business designated as
an eligible business under Section 2312.102, Government Code.
(2) "Taxing unit" has the meaning assigned by Section
1.04.
Sec. 314.002. TAXING UNIT WITH TAX RATE SET BY
COMMISSIONERS COURT. (a) The commissioners court of a county that
enters into a tax abatement agreement for the county may enter into
a tax abatement agreement applicable to the same property on behalf
of a taxing unit other than the county if by statute the ad valorem
tax rate of the other taxing unit is approved by the commissioners
court or the commissioners court is expressly required by statute
to impose the ad valorem taxes of the other taxing unit. The tax
abatement agreement entered into on behalf of the other taxing unit
is not required to contain the same terms as the tax abatement
agreement entered into on behalf of the county.
(b) This section does not apply to a taxing unit because the
county tax assessor-collector is required by law to assess or
collect the taxing unit's ad valorem taxes.
Sec. 314.003. STATE ADMINISTRATION. (a) The comptroller
shall maintain a central registry of ad valorem tax abatement
agreements executed under this chapter. The chief appraiser of
each appraisal district that appraises property for a taxing unit
that is located wholly or partly in a reinvestment zone and has
executed a tax abatement agreement under this chapter shall deliver
to the comptroller before July 1 of the year following the year in
which the zone is designated or the agreement is executed a report
providing the following information:
(1) a general description of the reinvestment zone,
including its boundaries and the taxing units that are located
wholly or partly in the zone;
(2) a copy of each tax abatement agreement to which a
taxing unit that participates in the appraisal district is a party;
and
(3) any other information required by the comptroller
to administer this section.
(b) The comptroller may provide assistance to a taxing unit
on request of its governing body or the presiding officer of its
governing body relating to the administration of this chapter. The
Texas Department of Economic Development and the comptroller may
provide technical assistance to a local governing body regarding
the execution of tax abatement agreements.
[Sections 314.004-314.050 reserved for expansion]
SUBCHAPTER B. TAX ABATEMENT
Sec. 314.051. REINVESTMENT ZONE. Designation of an area as
a business recruitment reinvestment zone under Chapter 2312,
Government Code, constitutes designation of the area as a
reinvestment zone under this chapter without procedural
requirements other than those provided by Chapter 2312, Government
Code.
Sec. 314.052. TAX ABATEMENT AGREEMENT. (a) The governing
body of a taxing unit required to enter into tax abatement
agreements under Section 2312.153, Government Code, shall agree in
writing with an eligible business to exempt from taxation a portion
of the value of the property owned by the eligible business as
provided by this section.
(b) A tax abatement agreement shall provide that:
(1) 100 percent of the value of the taxable property is
exempt from taxation before the sixth anniversary of the date on
which the business is designated as an eligible business;
(2) 80 percent of the value of the taxable property is
exempt from taxation for the period beginning on the sixth
anniversary and ending on the day before the seventh anniversary of
the date on which the business is designated as an eligible
business;
(3) 60 percent of the value of the taxable property is
exempt from taxation for the period beginning on the seventh
anniversary and ending on the day before the eighth anniversary of
the date on which the business is designated as an eligible
business;
(4) 40 percent of the value of the taxable property is
exempt from taxation for the period beginning on the eighth
anniversary and ending on the day before the ninth anniversary of
the date on which the business is designated as an eligible
business; and
(5) 20 percent of the value of the taxable property is
exempt from taxation for the period beginning on the ninth
anniversary and ending on the day before the 10th anniversary of the
date on which the business is designated as an eligible business.
(c) A tax abatement agreement expires on the 10th
anniversary of the date on which the business is designated as an
eligible business.
Sec. 314.053. SPECIFIC TERMS OF TAX ABATEMENT AGREEMENT.
(a) An agreement made under this chapter must:
(1) provide for recapturing property tax revenue lost
as a result of the agreement if the property ceases to be owned by an
eligible business; and
(2) require the owner of the property to certify
annually to the governing body of the taxing unit that the owner is
an eligible business and is in compliance with each applicable term
of the agreement.
(b) An agreement made under this chapter may include any
term agreed on by the taxing unit and the eligible business that
does not alter the terms prescribed by this subchapter.
Sec. 314.054. APPROVAL BY GOVERNING BODY. (a) To be
effective, an agreement made under this chapter must be approved by
the affirmative vote of a majority of the members of the governing
body of the taxing unit at a regularly scheduled meeting of the
governing body.
(b) On approval by the governing body, an agreement may be
executed in the same manner as other contracts made by the taxing
unit.
Sec. 314.055. MODIFICATION OR TERMINATION OF AGREEMENT.
(a) At any time before the expiration of an agreement made under
this chapter, 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 agreement may not be
modified to alter the terms expressly imposed by this subchapter.
(b) The modification must be made by the same procedure by
which the original agreement was approved and executed.
(c) The original agreement may not be modified to extend
beyond the 10th anniversary of the date on which the business is
designated as an eligible business.
SECTION 4. This Act takes effect September 1, 2003.