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By: Keffer of Eastland H.B. No. 3548
A BILL TO BE ENTITLED
AN ACT
relating to economic development financing, programs, and
incentives.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter E, Chapter 481, Government Code, is
amended by adding Sections 481.078 to read as follows:
Sec. 481.078. TEXAS ENTERPRISE FUND. (a) The Texas
Enterprise Fund is an account in the general revenue fund.
(b) The following amounts shall be deposited in the fund:
(1) any amounts appropriated by the legislature for
the fund;
(2) $390,000,000 appropriated from the economic
stabilization fund; and
(3) gifts, grants, and other donations received for
the fund.
(c) The fund may be used for economic development,
infrastructure development, community development, job training
programs, and business incentives.
(d) Interest earned from the fund account shall be deposited
to the economic stabilization fund.
(e) The enterprise fund account may be temporarily used by
the Comptroller for cash management purposes.
(f) The Governor shall have authority to negotiate on behalf
of the state to grant money from the fund, and may only appropriate
funds along with the express written consent of the Lieutenant
Governor or Speaker of the House of Representatives.
(g) Before granting money from the fund, the Governor may
enter into a written agreement with the entity being granted funds
specifying that:
(1) if all or any portion of the amount of the grant is
used to build infrastructure or make any other type of capital
improvement, the state must:
(A) retain a lien or other interest in the
capital improvement in proportion to the percentage of the grant
amount used to pay for the capital improvement; and
(B) ensure that if the capital improvement is
sold, the recipient repays the department, with interest at the
agreed rate and terms, any state money used to pay for the capital
improvement and shares with this state a proportionate amount of
any profit realized from the sale; and
(2) if, upon the expiration of a date provided in the
agreement, the grant recipient fails to use an amount awarded under
this section for any of the purposes for which the grant was
intended, the recipient shall repay that amount and any related
interest to the state at the agreed rate and terms.
SECTION 2. Subtitle F, Title 4, Government Code, is amended
by adding Chapter 489 to read as follows:
CHAPTER 489. TEXAS ECONOMIC DEVELOPMENT BANK
SUBCHAPTER A. GENERAL PROVISIONS
Section 489.101. DEFINITIONS. In this chapter:
(1) "Account" means the community infrastructure
development revolving loan account.
(2) "Act" means the Development Corporation Act of
1979, Article 5190.6 Vernon's Texas Civil Statutes.
(3) "Bank" means the Texas Economic Development Bank.
(4) "Bonds" includes bonds, notes, and other evidences
of indebtedness.
(5) "Capital access loan" means a loan that is
entitled to be secured by the fund.
(6) "Child-care provider" means a small business that
operates or proposes to operate a day-care center or group day-care
home, as those terms are defined by Section 42.002, Human Resources
Code.
(7) "Day" means the period between 8 a.m. and 5 p.m. of
a day other than a Saturday, Sunday, or state or federal holiday.
(8) "Defense worker" means:
(A) an employee of the United States Department
of Defense, including a member of the armed forces and a government
civilian worker;
(B) an employee of a government agency or private
business, or an entity providing a department of defense related
function, who is employed on a defense facility;
(C) an employee of a business that provides
direct services or products to the department of defense and whose
job is directly dependent on defense expenditures; or
(D) an employee or private contractor employed by
the United States Department of Energy working on a defense or
department of energy facility in support of a department of defense
related project.
(9) "Defense worker job" means a department of defense
authorized permanent position or a position held or occupied by one
or more defense workers for more than 12 months.
(10) "Eligible borrower" means:
(A) a person who proposes to begin operating a
small business in an enterprise zone, as defined by subsection
(13), or a historically underutilized business;
(B) a nonprofit corporation; or
(C) a child-care provider.
(11) "Eligible community" means a local governmental
entity eligible for a grant under Section 486.003 and that is
located less than 25 miles from a defense base facility described by
Section 486.003(b)(1).
(12) "Eligible lending institution" means a financial
institution that makes commercial loans, is a depository of state
funds, and agrees to participate in the linked deposit program
established by this chapter and to provide collateral equal to the
amount of linked deposits placed with it.
(13) "Enterprise zone" means an area designated as an
enterprise zone under this chapter.
(14) "Financial institution" includes a bank, trust
company, banking association, savings and loan association,
mortgage company, investment bank, credit union, or nontraditional
financial institution.
(15) "Fund" means the Texas Economic Development Bank
Fund.
(16) "Historically underutilized business" means:
(A) a corporation formed for the purpose of
making a profit in which at least 51 percent of all classes of the
shares of stock or other equitable securities is owned by one or
more persons who are members of certain groups, including black
Americans, Hispanic Americans, women, Asian Pacific Americans, and
American Indians;
(B) a sole proprietorship formed for the purpose
of making a profit that is 100 percent owned, operated, and
controlled by a person described by Paragraph (A) of this
subdivision;
(C) a partnership formed for the purpose of
making a profit in which 51 percent of the assets and interest in
the partnership is owned by one or more persons described by
Paragraph (A) of this subdivision. Those persons must have
proportionate interest and demonstrate active participation in the
control, operation, and management of the partnership's affairs; or
(D) a joint venture in which each entity in the
joint venture is a historically underutilized business under this
subdivision.
(17) "Industrial development corporation" shall mean
a corporation created and existing under the provisions of the
Development Corporation Act of 1979 (V.T.C.S. article 5190.6).
(18) "Loan" includes a line of credit.
(19) "Medium-sized business" means a corporation,
partnership, sole proprietorship, or other legal entity that:
(A) is domiciled in this state or has at least 51
percent of its employees located in this state;
(B) is formed to make a profit; and
(C) employs 100 or more but fewer than 500
full-time employees.
(20) "Neighborhood enterprise association" means an
association certified as a neighborhood enterprise association
under Section 489.324.
(21) "Nominating body" means the governing body of a
municipality or county, or a combination of the governing bodies of
municipalities or counties, that nominates and applies for
designation of an area as an enterprise zone.
(22) "Nonprofit corporation" means a not for profit
corporation organized under the Texas Non-Profit Corporation Act
(Article 1396-1.01 et seq., Vernon's Texas Civil Statutes).
(23) "Nonprofit organization" means a private,
nonprofit, tax-exempt corporation, association, or organization
listed in Section 501(c)(3) Internal Revenue Code of 1986, that is
domiciled in this state or has at least 51 percent of its members
located in this state.
(24) "Office" means the Texas Economic Development
Office.
(25) "Panel" means the Defense Economic Adjustment
Assistance Panel.
(26) "Project" means a project as defined by the
Development Corporation Act of 1979 (V.T.C.S. article 5190.6).
(27) "Qualified business" means a person certified as
a qualified business under Section 489.328.
(28) "Qualified employee" means a person who:
(A) works for a qualified business; and
(B) performs at least 50 percent of the person's
service for the business in the readjustment zone.
(29) "Qualified hotel project" means a hotel proposed
to be constructed by a municipality or a nonprofit municipally
sponsored local government corporation created under the Texas
Transportation Corporation Act, Chapter 431, Transportation Code,
that is within 1,000 feet of a convention center owned by a
municipality having a population of 1,500,000 or more, including
shops, parking facilities, and any other facilities ancillary to
the hotel.
(30) "Readjustment zone" means an area designated as a
defense economic readjustment zone under this chapter.
(31) "Reserve account" means an account established in
a participating financial institution on approval of the office in
which money is deposited to serve as a source of additional revenue
to reimburse the financial institution for losses on loans enrolled
in the program.
(32) "Small business" means a corporation,
partnership, sole proprietorship, or other legal entity that:
(A) is domiciled in this state or has at least 51
percent of its employees located in this state;
(B) is formed to make a profit;
(C) is independently owned and operated; and
(D) employs fewer than 100 full-time employees.
Section 489.102. PURPOSE. (a) The office shall establish a
Texas Economic Development Bank for the purpose of providing
globally competitive, cost effective state incentives to expanding
or relocating businesses and to ensure that Texas communities and
businesses have access to capital for economic development.
(b) The bank shall offer a variety of financial incentives
to help Texas communities and businesses compete and succeed in the
global marketplace. The bank shall assist communities by providing
them with grants and debt financing with which to fund their
economic development efforts.
(c) The bank may provide qualifying communities with tax
incentives for expanding or relocating businesses and may offer
incentives to lenders to make loans to near bankable businesses and
low interest loans to qualifying businesses.
(d) The bank may offer bond based long-term debt financing
for capital investment in large commercial and industrial projects,
act as a link between businesses searching for investment capital
and potential investors, inform institutional lenders of Texas
economic development plans and strategies for each region of the
state and encourage them to support these plans in their marketing
and investment strategies.
(e) The bank may offer communities a one-stop source of
financing for their economic development efforts and technical
assistance in the development of their incentives programs to
attract and retain businesses as well as in the design of incentives
packages for specific prospects.
(f) The bank may also provide expanding or relocating
businesses with a single source for information concerning
financial incentives offered by Texas to relocating or expanding
businesses.
(g) The bank may allocate its resources as necessary to
efficiently meet the level of demand experienced by each program
under this chapter. The bank's effectiveness shall be measured on
the basis of the number of jobs created and retained and the total
non-state dollars leveraged as a result of its efforts.
(h) The bank shall charge fees to the beneficiaries of its
services as necessary. These fees may be used to support the bank's
administration of its programs and implementation of its
strategies.
Section 489.103. FUNDING. (a) The Texas Economic
Development Bank fund is a dedicated account in the general revenue
fund.
(b) Appropriations for the implementation and
administration of this chapter, funds deposited into the Capital
Access Fund No. 5035 and the Texas Leverage Program Fund No. 851,
investment earnings, fees charged under this chapter, federal
funds, and any other amounts received by the state under this
chapter shall be deposited in the Texas Economic Development Bank
Fund.
(c) Money in the fund may be appropriated only to the office
for use in carrying out the purposes of this chapter.
(d) The office may accept gifts, grants, and donations from
any source for the purposes of this chapter.
Section 489.104. POWERS OF THE OFFICE IN ADMINISTERING THE
TEXAS ECONOMIC DEVELOPMENT BANK FUND. (a) The office shall
administer the fund. In administering the fund, the office has the
powers necessary to carry out the purposes of this chapter,
including the power to:
(1) make, execute, and deliver contracts,
conveyances, and other instruments necessary to the exercise of its
powers;
(2) invest money in obligations and select and use
depositories for its money as determined proper by the office and
permitted by law;
(3) impose and collect fees and charges in connection
with any transaction and provide for reasonable penalties for
delinquent payment or performance; and
(4) issue bonds for economic development projects as
defined by the Industrial Development Corporation Act of 1979.
(b) In administering the Texas Small Business Industrial
Development Corporation, the office may:
(1) make loans through the purchase of or
participation in, and pledge, hypothecate, negotiate, and sell,
bonds, notes, and other evidences of indebtedness incurred by users
to finance projects that represent a direct loan, grant, or loan
participation, or the repayment of which is totally or partially
insured or otherwise guaranteed, by the United States of America,
by the state, or by any agency, office, or instrumentality of
either; and
(2) otherwise provide financing for users, either
directly or indirectly, in the manner that the Texas Small Business
Industrial Development Corporation determines to be necessary or
convenient for the performance of its public purposes, functions,
and duties under this chapter.
(c) The office shall adopt rules necessary to carry out the
purposes of this chapter.
Section 489.105. REPORTS; AUDITS. (a) On or before January
1 of each year, the office shall submit to the legislature an annual
status report on the activities of the Texas Economic Development
Bank.
(b) The financial transactions of the fund are subject to
audit by the state auditor as provided by Chapter 321.
Section 489.106. STATE LIABILITY PROHIBITED. The state and
its officers and employees are not liable to participants for
grants, loans, or other transactions under this chapter except as
specifically provided by law.
Section 489.107. PROGRAMS AND SERVICES CONSTITUTING THE
TEXAS ECONOMIC DEVELOPMENT BANK. The bank shall include, but is not
limited to, the following programs and services:
(1) the Texas Small Business Industrial Development
Corporation;
(2) the Capital Access Program;
(3) the Texas Leverage Fund;
(4) the Linked Deposit Program;
(5) the Enterprise Zone Program;
(6) the Industrial Revenue Bond Program;
(7) the Defense Economic Adjustment Assistance Grant
Program;
(8) the Defense Economic Readjustment Zone Program;
(9) the Defense Revolving Loan Program;
(10) the Texas Small Business Incubator Fund; and
(11) the federal Empowerment Zone, Enterprise
Community, and Renewal Community Program.
SUBCHAPTER B. FINANCE PROGRAMS
Section 489.201. TEXAS SMALL BUSINESS INDUSTRIAL
DEVELOPMENT CORPORATION. (a) The Texas Small Business Industrial
Development Corporation shall act on behalf of the state to carry
out the public purposes of this chapter. The Texas Small Business
Industrial Development Corporation shall be considered to be a
corporation within the meaning of the Development Corporation Act
of 1979 (Article 5190.6 Vernon's Texas Civil Statutes), shall be
organized and governed in accordance with the provisions of the
Act, and shall have all of the powers, and shall be subject to all of
the limitations, provided for corporations by the Act, except as
otherwise provided by this section. For purposes of the Act, the
state shall be considered to be the unit under whose auspices the
Texas Small Business Industrial Development Corporation is created
and the office shall be considered to be the governing body. To the
extent that the provisions of this section are inconsistent with
other provisions of the Act, the provisions of this section shall
control as to the existence, powers, limitations, organization,
administration, operation, and affairs of the Texas Small Business
Industrial Development Corporation.
(b) All bonds issued and delivered by the Texas Small
Business Industrial Development Corporation before September 1,
1987, and all proceedings authorizing those bonds are validated,
ratified, confirmed, and approved in all respects, and they are
incontestable.
(c) The governor shall appoint the board of directors of the
Texas Small Business Industrial Development Corporation. The
governor or his designee shall serve ex officio as a member of the
board of directors.
(d) A director, officer, employee, or member of the office
acting on behalf of the Texas Small Business Industrial Development
Corporation is not personally liable for damage, loss, or injury
resulting from the performance of the person's duties under this
chapter or on any contract, commitment, or agreement executed on
behalf of the Texas Small Business Industrial Development
Corporation under this chapter.
(e) All programs and expenditures of the Texas Small
Business Industrial Development Corporation must be approved on
behalf of the state by the office. Expenses incurred by the Texas
Small Business Industrial Development Corporation in the operation
and administration of its programs and affairs, including
expenditures for employees and program assistance or development,
shall be paid out of fees collected or revenues generated under this
chapter.
(f) The revenues and funds of the Texas Small Business
Industrial Development Corporation shall be deposited with one or
more financial institutions chosen for that purpose by the board of
directors.
(g) Notwithstanding any other provision of this Act,
"project" includes any use of amounts financed through the purchase
by the Texas Small Business Industrial Development Corporation of
bonds, notes, or other evidences of indebtedness of users under
this subsection if the uses are found by the board of directors of
the Texas Small Business Industrial Development Corporation to be
required or suitable for the promotion of economic development in
the state. Those findings may be based solely on a review by the
board of directors of the Texas Small Business Industrial
Development Corporation of the criteria used to determine
eligibility of a user for obtaining a direct loan, grant, loan
participation, insurance, or any other guarantee from the United
States of America, the state, or any agency or instrumentality of
either. Proceeds of bonds issued before September 1, 1987, may be
used to pay all or part of the costs of a project regardless of
whether the costs or project were within the definition of those
terms under the Texas Department of Commerce Act before that date,
or for any other purposes authorized by this chapter or the Act.
(h) The Texas Small Business Industrial Development
Corporation may not issue bonds for any purpose after September 1,
1987.
Section 489.202. INDUSTRIAL REVENUE BOND PROGRAM. (a) The
office shall review and approve the contents of any loan agreement
made in connection with Industrial Revenue Bonds issued under the
Act and shall prescribe rules and regulations setting forth minimum
standards for project eligibility and loan agreements.
(b) Industrial Development Corporations established under
the Act shall submit a transcript of proceedings in connection with
the issuance of the bonds to the office and request that the office
approve the bonds. On filing a request for the office's approval of
issuance of the bonds, the corporation shall pay to the office a
nonrefundable filing fee. The office shall set the amount of the
fee at a reasonable amount, but not less than $500 or more than
$25,000. If the office refuses to approve the bond issue solely on
the basis of law, the corporation may seek a writ of mandamus from
the Supreme Court, and for this purpose the executive head of the
office shall be considered a state officer as provided in Section
22.002, Government Code.
(c) No corporation shall sell or offer for sale any bonds or
other securities until a permit authorizing the corporation to
offer and sell such securities has been granted by the securities
commissioner under the registration provisions of The Securities
Act, as amended (Article 581-1 et seq., Vernon's Texas Civil
Statutes), except as the State Securities Board may exempt from
registration by rule, regulation, or order. Appeal from any
adverse decision of the securities commissioner or the State
Securities Board shall be as provided by the Administrative
Procedure and Texas Register Act, as amended (Chapter 2001,
Government Code). The substantial evidence rule shall apply in all
such appeals.
(d) The office by rule shall require corporations to file
fee schedules and bond procedures. Bond counsel and financial
advisors participating in an issue shall be mutually acceptable to
the corporation and the user.
Section 489.203. TEXAS LEVERAGE FUND. (a) Pursuant to the
provisions of Article III, Section 52-a, of the Texas Constitution
and the Development Corporation Act of 1979 (Article 5190.6
Vernon's Texas Civil Statutes), the office shall administer the
Texas Leverage Fund for the purpose of making loans secured by and
paid from economic development sales and use tax receipts to
certain local industrial development corporations to fund the cost
of eligible projects under the Act.
(b) The office shall review and approve the contents of any
lease, sale, or loan agreement made in connection with the Texas
Leverage Fund and shall prescribe rules and regulations setting
forth minimum standards for project eligibility and loan
agreements. In no event shall the office approve any agreement
unless it finds that the project sought to be financed is in
furtherance of the public purposes of the Act.
Section 489.204. CAPITAL ACCESS PROGRAM. (a) The office
shall administer the capital access program to assist a
participating financial institution in making loans to businesses
and nonprofit organizations that face barriers in accessing
capital.
(1) The office shall use money in the fund to make a
deposit in a participating financial institution's reserve account
in an amount specified by this chapter to be a source of money the
institution may receive as reimbursement for losses attributable to
loans in the program.
(2) The office shall determine the eligibility of a
financial institution to participate in the program and may set a
limit on the number of eligible financial institutions that may
participate in the program.
(3) To participate in the program, an eligible
financial institution must enter into a participation agreement
with the office that sets out the terms and conditions under which
the office will make contributions to the institution's reserve
account and specifies the criteria for a loan to qualify as a
capital access loan.
(b) To qualify as a capital access loan, a loan must:
(1) be made to a small or medium-sized business or to a
nonprofit organization;
(2) be used by the business or nonprofit organization
for any project, activity, or enterprise in this state that fosters
economic development; and
(3) meet any other criteria provided by this section.
(c) The office may provide by rule for criteria under which
a certain line of credit may be issued by an eligible financial
institution to a small or medium-sized business or nonprofit
organization qualifies to participate in the program; and may
authorize a consortium of financial institutions to participate in
the program subject to common underwriting guidelines.
(d) To qualify for participation in the program, a line of
credit must:
(1) be an account at a financial institution under
which the financial institution agrees to lend money to a person
from time to time to finance one or more projects, activities, or
enterprises that are authorized by this section; and
(2) contain the same restrictions, to the extent
possible, that are placed on a capital access loan that is not a
line of credit.
(e) Except as otherwise provided by this section, the office
may not determine the recipient, amount, or interest rate of a
capital access loan or the fees or other requirements related to the
loan.
(f) A loan is not eligible to be enrolled under this section
if the loan is for:
(1) construction or purchase of residential housing;
(2) simple real estate investments, excluding the
development or improvement of commercial real estate occupied by
the borrower's business or organization;
(3) inside bank transactions, as defined by the
office.
(g) The borrower of a capital access loan must apply the
loan to working capital or to the purchase, construction, or lease
of capital assets, including buildings and equipment used by the
business or non profit organization. Working capital uses include
the cost of exporting, accounts receivable, payroll, inventory, and
other financing needs of the business or organization.
(h) A capital access loan may be sold on the secondary
market under conditions as may be determined by the office.
(i) When enrolling a loan in the program, a participating
financial institution may specify an amount to be covered under the
program that is less than the total amount of the loan.
(j) Reserve Account. On approval by and after entering into
a participation agreement with the office, a participating
financial institution making a capital access loan shall establish
a reserve account. The reserve account shall be used by the
institution only to cover any losses arising from a default of a
capital access loan made by the institution under this section or as
otherwise provided by this section:
(1) When a participating financial institution makes a
loan enrolled in the program, the institution shall require the
borrower to pay to the institution a fee in an amount that is not
less than two percent but not more than three percent of the
principal amount of the loan, which the financial institution shall
deposit in the reserve account. The institution shall also deposit
in the reserve account an amount equal to the amount of the fee
received by the institution from the borrower under this
subsection. The institution may recover from the borrower all or
part of the amount the institution is required to pay under this
subsection in any manner agreed to by the institution and borrower.
(2) For each capital access loan made by a financial
institution, the institution shall certify to the office, within
the period prescribed by the office, that the institution has made a
capital access loan, the amount the institution has deposited in
the reserve account, including the amount of fees received from the
borrower, and, if applicable, that the borrower is located in or
financing a project, activity, or enterprise in an area designated
as an enterprise zone under Chapter 489,Subchapter C.
(3) On receipt of a certification made under
Subsection (j)(2) and subject to Subsection (k), the office shall
deposit in the institution's reserve account for each capital
access loan made by the institution:
(A) an amount equal to the amount deposited by
the institution for each loan if the institution:
(i) has assets of more than $1 billion; or
(ii) has previously enrolled loans in the
program that in the aggregate are more than $2 million;
(B) an amount equal to 150 percent of the total
amount deposited under Subsection (j)(1) for each loan if the
institution is not described by Subdivision (3)(A); or
(C) notwithstanding Subdivisions (3)(A) and
(3)(B), an amount equal to 200 percent of the total amount deposited
under Subsection (j)(1) for each loan if:
(i) the borrower is located in or financing
a project, activity, or enterprise in an area designated as an
enterprise zone under Subchapter C; or
(ii) the borrower is a small or medium-size
business or a nonprofit organization that operates or proposes to
operate a day-care center or a group day-care home, as those terms
are defined by Section 42.002, Human Resources Code.
(k) Limitations on State Contribution to Reserve Account.
(1) The amount deposited by the office into a participating
financial institution's reserve account for any single loan
recipient may not exceed $150,000 during a three-year period.
(2) The maximum amount the office may deposit into a
reserve account for each capital access loan made under this
section is the lesser of $35,000 or an amount equal to:
(A) eight percent of the loan amount if:
(i) the borrower is located in or financing
a project, activity, or enterprise in an area designated as an
enterprise zone under Subchapter C; or
(ii) the borrower is a small or medium-size
business or a nonprofit organization that operates or proposes to
operate a day-care center or a group day-care home, as those terms
are defined by Section 42.002, Human Resources Code; or
(B) six percent of the loan amount for any other
borrower.
(l) All of the money in a reserve account established under
this section is property of the state.
(1) The state is entitled to earn interest on the
amount of contributions made by the office, borrower, and
institution to a reserve account under this section. The office
shall withdraw monthly or quarterly from a reserve account the
amount of the interest earned by the state. The office shall
deposit the amount withdrawn under this subsection into the fund.
(2) If the amount in a reserve account exceeds an
amount equal to 33 percent of the balance of the financial
institution's outstanding capital access loans, the office may
withdraw the excess amount and deposit the amount in the fund. A
withdrawal of money authorized under this subsection may not reduce
an active reserve account to an amount that is less than $200,000.
(3) The office shall withdraw from the institution's
reserve account the total amount in the account and any interest
earned on the account and deposit the amount in the fund when:
(A) a financial institution is no longer eligible
to participate in the program or a participation agreement entered
into under this section expires without renewal by the office or
institution;
(B) the financial institution has no outstanding
capital access loans; and
(C) the financial institution has not made a
capital access loan within the preceding 24 months.
(m) Annual Report. A participating financial institution
shall submit an annual report to the office. The report must:
(1) provide information regarding outstanding capital
access loans, capital access loan losses, and any other information
on capital access loans the office considers appropriate;
(2) state the total amount of loans for which the
office has made a contribution from the fund under this section;
(3) include a copy of the institution's most recent
financial statement; and
(4) include information regarding the type and size of
businesses and nonprofit organizations with capital access loans.
Section 489.205. LINKED DEPOSIT PROGRAM. (a) A linked
deposit is a time deposit governed by a written deposit agreement
between the state and an eligible lending institution that
provides:
(1) that the eligible lending institution pay interest
on the deposit at a rate that is not less than the greater of:
(A) the current market rate of a United States
treasury bill or note of comparable maturity minus two percent; or
(B) 1.5 percent; and
(2) that the eligible lending institution agree to
lend the value of the deposit to an eligible borrower at a maximum
rate that is the current market rate of a United States treasury
bill or note of comparable maturity plus four percent.
(b) The office shall administer a linked deposit program to
encourage commercial lending for the development of:
(1) small businesses in enterprise zones;
(2) historically underutilized businesses;
(3) child-care services provided by and activities
engaged in this state by nonprofit organizations; and
(4) quality, affordable child-care services in this
state.
(c) Applications:
(1) In order to participate in the linked deposit
program, an eligible lending institution may solicit loan
applications from eligible borrowers.
(2) After reviewing an application and determining
that the applicant is an eligible borrower and is creditworthy, the
eligible lending institution shall send the application for a
linked deposit loan to the office.
(3) The eligible lending institution shall certify the
interest rate applicable to the specific eligible borrower and
attach it to the application sent to the office.
(4) After reviewing each linked deposit loan
application, the office shall approve or deny the application.
(c) After the office's acceptance of the application and the
lending institution originates a loan to an eligible borrower, the
office shall place a linked deposit with the applicable eligible
lending institution for the period of the loan, subject to
subsections (d) and (e). The office is not required to maintain the
deposit with the lending institution if the loan is extended,
renewed, or renegotiated unless the office accepts a new linked
deposit loan application under this section for the loan as
modified. Subject to the limitation described by Section
489.205(h), the comptroller shall place a time deposit at the
direction of the office at an interest rate described by Subsection
(a) and may modify the interest rate during the period of the loan,
notwithstanding any order of the State Depository Board to the
contrary.
(d) Before the placing of a linked deposit, the eligible
lending institution and the state, represented by the office, shall
enter into a written deposit agreement containing the conditions on
which the linked deposit is made. The deposit agreement must
provide that:
(1) the comptroller shall place the time deposit
within ten business days;
(2) the lending institution shall notify the office if
the borrower to which the deposit is linked defaults on the loan;
and
(3) in the event of a default, the comptroller shall
withdraw the linked deposit at the direction of the office.
(e) If a lending institution holding linked deposits ceases
to be a state depository, the comptroller may withdraw the linked
deposits at the direction of the office.
(f) On acceptance of its application to receive linked
deposits, an eligible lending institution shall loan money to an
eligible borrower in accordance with the deposit agreement and this
section. The eligible lending institution shall forward a
compliance report to the office.
(g) The state is not liable to an eligible lending
institution for payment of the principal, interest, or any late
charges on a loan made to an eligible borrower. Linked deposits are
not an extension of the state's credit within the meaning of any
state constitutional prohibition.
(h) The maximum amount of a loan under the linked deposit
program is $250,000.
(i) The borrower shall apply a loan granted under this
subchapter to working capital or to the purchase, construction, or
lease of capital assets, including land, buildings, and equipment.
Section 489.206. SMALL BUSINESS INCUBATOR FUND. (a) The
Texas small business incubator fund is a revolving fund in the bank.
(b) The small business fund is composed of proceeds of bonds
issued under this chapter, financing application fees, loan
repayments, guarantee fees, royalty receipts, dividend income,
money appropriated by the legislature for authorized purposes of
the small business fund, amounts received by the state from loans,
loan guarantees, and equity investments made under this chapter,
amounts received by the state from federal grants or other sources,
and any other amounts received under this chapter and required by
the office to be deposited in the small business fund. The small
business fund contains a project account, an interest and sinking
account, and other accounts that the office authorizes to be
created and maintained. Money in the small business fund is
available for use by the office under this chapter.
Notwithstanding any other provision of this chapter, any money in
the small business fund may be used for debt service.
(c) Money in the project account of the small business fund,
minus the costs of issuance of bonds under this chapter and
necessary costs of administering the small business fund, may be
used to provide financing to foster and stimulate the development
of small businesses in this state. The office shall provide
financing from the small business fund on the terms and conditions
that the office determines to be reasonable, appropriate, and
consistent with the purposes and objectives of the small business
fund and this chapter, for the purpose of fostering and stimulating
the development of new or existing small businesses in this state.
SUBCHAPTER C. ENTERPRISE ZONES.
Section 489.301. SHORT TITLE. This subchapter may be cited
as the Texas Enterprise Zone Act.
Section 489.302. PURPOSES. The purposes of this subchapter
are to establish a process that clearly identifies severely
distressed areas of the state and provides incentives by state and
local government to induce private investment in those areas by
removing unnecessary governmental regulatory barriers to economic
growth and to provide tax incentives and economic development
program benefits.
Section 489.303. JURISDICTION OF MUNICIPALITY. For the
purposes of this subchapter, territory in the extraterritorial
jurisdiction of a municipality is considered to be in the
jurisdiction of the municipality.
Section 489.304. ASSISTANCE. (a) The office shall assist:
(1) a qualified business in obtaining the benefits of
any incentive or inducement program provided by law;
(2) a unit of local government in obtaining status as a
federal enterprise zone;
(3) the governing body of an enterprise zone in
obtaining assistance from another state agency, including training
and technical assistance to qualified businesses in a zone; and
(4) the governing body of an enterprise zone in
developing small business incubators.
(b) The office shall provide to persons desiring to locate
and engage in business in an enterprise zone information and
appropriate assistance relating to the required legal
authorization, including a state license, permit, certificate,
approval, registration, or charter, to engage in business in this
state.
(c) The office shall publicize existing tax incentives and
economic development programs in enterprise zones.
(d) On request the office shall offer to a unit of local
government having an enterprise zone within its jurisdiction
technical assistance relating to tax abatement and the development
of alternative revenue sources.
Section 489.305. COORDINATION WITH OTHER GOVERNMENTAL
ENTITIES. (a) In cooperation with the appropriate units of local
government and other state agencies, the office shall coordinate
and streamline state business assistance programs and permit or
license application procedures for businesses in enterprise zones.
(b) The office shall:
(1) work with the responsible state and federal
agencies to coordinate enterprise zone programs with other programs
carried out in an enterprise zone, including housing, community and
economic development, small business, banking, financial
assistance, transportation, and employment training programs;
(2) work to expedite, to the greatest extent possible,
the consideration of applications for those programs by
consolidating forms or by other means; and
(3) work, when possible, for the consolidation of
periodic reports required under those programs into one summary
report.
(c) The office shall encourage other state agencies in
awarding grants, loans, or services to give priority to businesses
in enterprise zones.
Section 489.306. CRITERIA FOR ENTERPRISE ZONE DESIGNATION.
(a) To be designated as an enterprise zone an area must:
(1) have a continuous boundary;
(2) 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 area, excluding lakes, waterways,
and transportation arteries, of the municipality, county, or
combination of municipalities or counties nominating the area as an
enterprise zone;
(3) be an area of pervasive poverty, unemployment, and
economic distress; and
(4) be nominated as an enterprise zone by an ordinance
or order adopted by the nominating body.
(b) The office may not designate an area as an enterprise
zone if three enterprise zones are located in the jurisdiction of
and were nominated as enterprise zones by the governing body of the
municipality or county nominating the area as an enterprise zone.
Section 489.307. AREA OF PERVASIVE POVERTY, UNEMPLOYMENT,
AND ECONOMIC DISTRESS. (a) An area is an area of pervasive
poverty, unemployment, and economic distress for the purposes of
Section 489.306 if:
(1) the average rate of unemployment in the area
during the most recent 12-month period for which data are available
was at least one and one-half times the state average for that
period; or
(2) the area had a population loss of at least 12
percent during the most recent six-year period or at least four
percent during the most recent three-year period; and
(A) the area is a low-income poverty area;
(B) the area is in a jurisdiction or pocket of
poverty eligible for urban development action grants under federal
law, according to the most recent certification available from the
United States Department of Housing and Urban Development;
(C) at least 70 percent of the residents or
households of the area have an income that is less than 80 percent
of the median income of the residents or households of the locality
or state, whichever is less; or
(D) the nominating body establishes to the
satisfaction of the office that:
(i) chronic abandonment or demolition of
commercial or residential structures exists in the area;
(ii) substantial tax arrearages for
commercial or residential structures exist in the area;
(iii) substantial losses of businesses or
jobs have occurred in the area;
(iv) the area is part of a disaster area
declared by the state or federal government during the preceding 18
months; or
(v) the area has had a substantial increase
in the number of individuals younger than 18 years of age arrested
due to criminal activity.
(b) Labor force and population data are considered current
if:
(1) they are the most recently published estimates; or
(2) the enterprise zone application containing the
data is received by the office before the 61st day after the date
revised estimates of that data are published.
(c) For purposes of determining the average rate of
unemployment in the area under Subsection (a)(1), individuals who
are employed by a business and whose principal place of employment
is on property for which the business has received a certificate of
completion under Section 361.609, Health and Safety Code, are not
considered.
Section 489.308. NOMINATION OF ENTERPRISE ZONE. (a) The
governing body of a municipality or county, individually or in
combination with other municipalities or counties, by ordinance or
order, as appropriate, may nominate as an enterprise zone an area
within its jurisdiction that meets the criteria under Section
489.306.
(b) Unless the nominating body holds a public hearing before
adopting an ordinance or order under this section, the ordinance or
order is not valid.
(c) The governing body of a county may not nominate
territory in a municipality, including extraterritorial
jurisdiction of a municipality, to be included in a proposed
enterprise zone unless the governing body of the municipality also
nominates the territory and together with the county files a joint
application under Section 489.310.
(d) The governing bodies of a combination of municipalities
or counties may not jointly nominate an area as an enterprise zone
unless the governing bodies have entered into a binding agreement
to administer the zone jointly.
(e) Notwithstanding Subsections (c) and (d), the governing
body of a county with a population of 1.3 million or more may
nominate territory in that county that is in the extraterritorial
jurisdiction of a municipality to be included in one or more of the
county's enterprise zones and the county shall administer a zone
that is established as the result of the nomination.
Section 489.309. NOMINATING ORDINANCE OR ORDER. (a) An
ordinance or order nominating an area as an enterprise zone must:
(1) describe precisely the area to be included in the
zone by a legal description or reference to roadways, lakes,
waterways, or municipal or county boundaries;
(2) state a finding that the area meets the
requirements of this chapter;
(3) summarize briefly the incentives, including tax
incentives, that, at the election of the nominating body, apply to
business enterprises in the area; and
(4) nominate the area as an enterprise zone.
(b) At least one of the incentives summarized under
Subsection (a)(3) must not apply throughout the governmental entity
or entities nominating the area as an enterprise zone.
(c) This section does not prohibit a municipality or county
from extending additional incentives, including tax incentives,
for business enterprises in an enterprise zone by a separate
ordinance or order.
Section 489.310. APPLICATION FOR DESIGNATION. (a) For an
area to be designated as an enterprise zone, the nominating body,
after nominating the area as an enterprise zone, must send to the
office a written application for designation of the area as an
enterprise zone.
(b) The application must include:
(1) a certified copy of the ordinance or order, as
appropriate, nominating the area as an enterprise zone;
(2) a map of the area showing existing streets and
highways;
(3) an analysis and appropriate supporting documents
and statistics demonstrating that the area qualifies for
designation as an enterprise zone;
(4) a statement that specifies each tax incentive,
grant, other financial incentive or benefit, or program to be
provided by the nominating body to business enterprises in the area
that is not to be provided throughout the governmental entity or
entities nominating the area as an enterprise zone;
(5) a statement of the economic development and
planning objectives for the area;
(6) a description of the functions, programs, and
services to be performed by a neighborhood enterprise association
in the area;
(7) an estimate of the economic impact of the
designation of the area as an enterprise zone on the revenues of the
governmental entity or entities nominating the area as an
enterprise zone, considering all the financial incentives and
benefits and the programs contemplated;
(8) a transcript or tape recording of all public
hearings on the proposed zone;
(9) if the application is a joint application, a
description and copy of the agreement between the applicants;
(10) the procedures for negotiating with residents,
community groups, and other entities affected by the designation of
the area as an enterprise zone and with qualified businesses in the
area;
(11) a description of the administrative authority, if
one is to be appointed for the enterprise zone under Section
489.319; and
(12) any additional information the office requires.
(c) Information required by Subsection (b) is for
evaluation purposes only.
Section 489.311. REVIEW OF APPLICATION. (a) On receipt of
an application for the designation of an enterprise zone the office
shall review the application to determine if the nominated area
qualifies for designation as an enterprise zone under this chapter.
(b) The office shall allow an applicant to correct any
omission or clerical error in the application and to return the
application to the office on or before the 10th day after the day on
which the office receives the application.
Section 489.312. DESIGNATION AGREEMENT. (a) If the office
determines that a nominated area for which a designation
application has been received satisfies the criteria under Section
489.306, the office shall negotiate with the nominating body for a
designation agreement.
(b) A designation agreement must:
(1) designate the nominated area as an enterprise
zone; and
(2) designate the administrative authority, if one is
to be appointed for the zone under Section 489.319, and describe its
functions and duties, which should include decision-making
authority and the authority to negotiate with affected entities.
(c) The office shall complete the negotiations and sign the
agreement not later than the 60th day after the day on which the
application is received unless the office extends that period to
the 90th day after the day on which the application was received.
(d) If an agreement is not completed within the 60-day
period provided by Subsection (c), the office shall provide to the
nominating body the specific areas of concern and a final proposal
for the agreement.
(e) If the agreement is not executed before the 91st day
after the day on which the application was received, the
application is considered to be denied.
Section 489.313. DENIAL OF APPLICATION; NOTICE. (a) The
office may deny an application for the designation of an enterprise
zone only if the office determines that the nominated area does not
satisfy the criteria under Section 489.306.
(b) The office shall inform the nominating body of the
specific reasons for denial of an application, including denial
under Section 489.312(e).
Section 489.314. PERIOD OF DESIGNATION. (a) An area may be
designated as an enterprise zone for a maximum of seven years. A
designation remains in effect until September 1 of the final year of
the designation.
(b) Notwithstanding Subsection (a), an area designated as a
federal enterprise zone, federal empowerment zone, or federal
enterprise community may be designated as an enterprise zone
without further qualification for longer than seven years but not
longer than the period permitted by federal law.
Section 489.315. AMENDING BOUNDARIES. (a) The nominating
body may amend the boundary of an enterprise zone by ordinance or
order, as appropriate, adopted after a public hearing on the issue.
(b) The amended boundary:
(1) must be continuous;
(2) may not exceed the original size requirement of
Section 489.306; and
(3) may not exclude any area originally included
within the boundary of the zone as designated.
(c) The entire enterprise zone with the amended boundary
must continue to meet the unemployment and economic distress
requirements of Section 489.306.
(d) A nominating body may not make more than one boundary
amendment annually for an enterprise zone.
(e) For each amendment of an enterprise zone boundary, the
nominating body shall pay the office a reasonable fee, in an amount
specified by the office, not to exceed $500. The office may use
fees collected under this subsection to administer this chapter and
for other purposes to advance this chapter.
Section 489.316. REMOVAL OF DESIGNATION. (a) The office
may remove the designation of an area as an enterprise zone if:
(1) the area no longer meets the criteria for
designation under this chapter or by rule adopted under this
chapter; or
(2) the office determines that the governing body of
the enterprise zone has not complied with commitments made in the
ordinance or order nominating the area as an enterprise zone.
(b) The removal of a designation does not affect the
validity of:
(1) a tax incentive or regulatory relief granted or
accrued before the removal; or
(2) bonds issued under this chapter.
Section 489.317. EXCEPTION TO LIMIT ON DESIGNATION.
Designation as an enterprise zone under this subchapter of an area
designated as a federal enterprise zone, federal empowerment zone,
or federal enterprise community located in a municipality or county
does not reduce the number of enterprise zones that the
municipality or county may have designated under this subchapter.
Section 489.318. ADMINISTRATION BY GOVERNING BODY. The
governing body of an enterprise zone is the governing body of the
municipality or county, or the governing bodies of the combination
of municipalities or counties, that applied to have the area
designated as an enterprise zone.
Section 489.319. ADMINISTRATION BY ADMINISTRATIVE
AUTHORITY. (a) The governing body of an enterprise zone may
delegate its administrative duties to an administrative authority
appointed by the governing body.
(b) An administrative authority must:
(1) be composed of 3, 5, 7, 9, 11, or 15 members;
(2) be a viable and responsive body generally
representative of all public or private entities that have a stake
in the development of the zone; and
(3) include enterprise zone residents and
representatives of the governing body of the zone and of local
businesses
Section 489.320. PARTICIPATION BY NEIGHBORHOOD ENTERPRISE
ASSOCIATIONS. Each neighborhood enterprise association organized
under Section 489.323 should:
(1) actively participate in the administration of the
enterprise zone for which the association was organized; and
(2) be encouraged to participate in planning and
carrying out activities in the enterprise zone.
Section 489.321. LIAISON. The governing body of an
enterprise zone shall designate a liaison to communicate and
negotiate with:
(1) the office;
(2) the administrative authority, if one exists;
(3) an enterprise project; and
(4) other entities in or affected by the enterprise
zone.
Section 489.322. ANNUAL REPORT. (a) Not later than October
1 of each year, the governing body of an enterprise zone shall
submit to the office a report in the form required by the office.
(b) The report must be approved by the enterprise zone's
administrative authority, if one exists.
(c) The report must include for the year preceding the date
of the report:
(1) a list of local incentives for community
development available in the zone;
(2) the use of local incentives for which the
governing body provided in the ordinance or order nominating the
enterprise zone and the effect of those incentives on revenue;
(3) the number of businesses assisted, located, and
retained in the zone since its designation due to the existence of
the enterprise zone;
(4) a summary of all industrial revenue bonds issued
to finance projects located in the zone; and
(5) a description of all efforts made to attain
revitalization goals for the zone.
Section 489.323. ORGANIZATION OF NEIGHBORHOOD ENTERPRISE
ASSOCIATION. (a) Individuals residing in an enterprise zone may
organize a neighborhood enterprise association.
(b) Only one association may exist for a geographic
neighborhood area.
(c) The association must:
(1) be a nonprofit corporation organized under the
Texas Non-Profit Corporation Act (Article 1396-1.01 et seq.,
Vernon's Texas Civil Statutes); and
(2) be eligible for federal tax exemption under
Section 501(c) of the Internal Revenue Code of 1986 (26 U.S.C.
Section 501(c)).
(d) The articles of incorporation must:
(1) describe the geographic neighborhood area of the
association; and
(2) authorize the association to engage in business
only in the enterprise zone in which the neighborhood area is
located.
(e) The incorporators shall publish in a newspaper of
general circulation in the governmental entity or entities that
applied to have the area designated as an enterprise zone an
explanation of the proposed association and the incorporators'
rights in the association.
(f) A copy of the association's articles of incorporation
and bylaws shall be available for public inspection at:
(1) the office of the city manager or comparable
municipal officer if the entity is a municipality; or
(2) the county judge's office if the entity is a
county.
Section 489.324. CERTIFICATION OF ASSOCIATION. (a) After
a neighborhood enterprise association is organized, the
association's board of directors must apply to the governing body
of the enterprise zone or to the office for certification as a
neighborhood enterprise association.
(b) The governing body of the enterprise zone or the office
may not grant certification unless the association has hired or
appointed a suitable chief executive officer.
Section 489.325. MEMBERSHIP; VOTING. (a) The membership
of a neighborhood enterprise association may be composed only of
residents of the enterprise zone.
(b) An individual is entitled to be a member of a
neighborhood enterprise association if the individual is:
(1) a resident of the association's geographic
neighborhood area; and
(2) of voting age.
(c) To be entitled to vote, a member of the association must
have been a resident of the association's neighborhood area for at
least one year.
Section 489.326. POWERS OF NEIGHBORHOOD ENTERPRISE
ASSOCIATIONS. (a) A neighborhood enterprise association may
purchase or lease publicly or privately owned real property.
(b) A neighborhood enterprise association with the approval
of and in coordination with the responsible state or local
governmental entity may:
(1) establish crime watch patrols in the association's
geographic neighborhood area;
(2) establish volunteer day-care centers;
(3) organize recreational activities for the
association's geographic neighborhood area youth;
(4) provide garbage collection;
(5) maintain and improve streets, bridges, and water
and sewer lines;
(6) provide energy or water conservation projects;
(7) provide health and clinic services;
(8) provide drug abuse programs;
(9) provide senior citizen assistance programs;
(10) maintain parks;
(11) rehabilitate, renovate, operate, or maintain low
or moderate income housing; and
(12) provide other types of public services as
authorized by law or rule.
(c) A service may be provided under Subsection (b) by the
association or, if feasible and prudent and after agreement with
the appropriate state or local governmental entity, by a private
firm or organization.
(d) The governmental entity responsible for providing a
service may contract with a neighborhood enterprise association to
provide services in an amount equal to the amount saved by the
entity by the provision of the service under the contract.
(e) A neighborhood enterprise association has powers
established by other law or rule, including powers available to
similar corporations under state law.
(f) A neighborhood enterprise association may enter into a
contract and participate in a joint venture with the state or a
state agency or institution.
(g) A neighborhood enterprise association may receive money
without approval of the governing body of the enterprise zone.
Section 489.327. APPROVED PROJECTS. (a) On approval of the
governing body of an enterprise zone, a neighborhood enterprise
association may carry out projects other than those under Section
489.326(b). The association must submit to the governing body an
application that describes the nature and benefit of the project
and that specifically states:
(1) how the project will contribute to the self-help
efforts of the residents of the association's geographic
neighborhood area;
(2) how the residents of the geographic neighborhood
area will be involved in the planning and implementation of the
project;
(3) whether there are sufficient resources to complete
the project and whether the association will be fiscally
responsible for the project; and
(4) whether the project will enhance the enterprise
zone by:
(A) creating permanent jobs;
(B) physically improving the housing stock;
(C) stimulating neighborhood business activity;
or
(D) preventing crime.
(b) If the governing body of an enterprise zone does not
disapprove an application submitted under Subsection (a) before the
45th day after the day of receipt of the application, the
application is considered to be approved.
(c) If the governing body of an enterprise zone disapproves
an application submitted under Subsection (a), the governing body
shall notify the association of the specific reasons for the
decision and shall allow the association to amend the application
on or before the 60th day after the date of the notification.
(d) The association shall furnish to the governing body of
the enterprise zone:
(1) an annual statement of the programmatic and
financial status of each approved project; and
(2) an audited financial statement of the project.
Section 489.328. QUALIFIED BUSINESS. (a) A person is a
qualified business if the office, for the purpose of state benefits
under this chapter, or the governing body of an enterprise zone, for
the purpose of local benefits, certifies that:
(1) the person is engaged in or has provided
substantial commitment to initiate the active conduct of a trade or
business in the enterprise zone; and
(2) at least 25 percent of the person's new employees
in the enterprise zone are:
(A) residents of any enterprise zone in the
jurisdiction of the governing body of the enterprise zone; or
(B) economically disadvantaged individuals.
(b) The governing body of an enterprise zone may certify a
franchise or subsidiary of a new or existing business as a qualified
business if the franchise or subsidiary:
(1) is located entirely in the enterprise zone; and
(2) maintains separate books and records of the
business activity conducted in the zone.
(c) For the purposes of this section, an economically
disadvantaged individual is an individual who:
(1) was unemployed for at least three months before
obtaining employment with the qualified business;
(2) receives public assistance benefits, including
welfare payments or food stamps, based on need and intended to
alleviate poverty;
(3) is an economically disadvantaged individual, as
defined by Section 4(8), Job Training Partnership Act (29 U.S.C.
Section 1503(8));
(4) is an individual with handicaps, as defined by 29
U.S.C. Section 706(8);
(5) is an inmate, as defined by Section 498.001;
(6) is entering the workplace after being confined in
a facility operated by the institutional division of the Texas
Department of Criminal Justice or under contract with the Texas
Department of Criminal Justice;
(7) has been released by the Texas Youth Commission
and is on parole, if state law provides for such a person to be on
parole; or
(8) meets the current low income or moderate income
limits developed under Section 8, United States Housing Act of 1937
(42 U.S.C. Section 1437f et seq.).
Section 489.329. PROHIBITION ON QUALIFIED BUSINESS
CERTIFICATION. If the office determines that the governing body of
an enterprise zone is not complying with this subchapter, the
office shall prohibit the certification of a qualified business in
the zone until the office determines that the governing body is
complying with this subchapter. The office may not designate more
than 85 businesses as enterprise projects during any biennium.
Section 489.330. REQUEST FOR APPLICATION FOR ENTERPRISE
PROJECT DESIGNATION. (a) A qualified business in an enterprise
zone described by Subsection (b) may request that the governing
body of the enterprise zone apply to the office for designation of
the business as an enterprise project. The request must also be made
to the enterprise zone's administrative authority, if one exists.
(b) A request may be made under this section only to the
governing body of an enterprise zone that has:
(1) an unemployment rate that is at least one and
one-half times the state average; or
(2) a population loss of at least:
(A) 12 percent during the most recent six-year
period; or
(B) four percent during the most recent
three-year period.
Section 489.331. APPLICATION FOR ENTERPRISE PROJECT
DESIGNATION. (a) If the governing body of an enterprise zone or the
governing body and administrative authority of an enterprise zone,
as appropriate, approve a request made under Section 489.330, the
governing body may apply to the office for the designation of the
qualified business as an enterprise project.
(b) An application must:
(1) describe completely the conditions in the
enterprise zone that constitute pervasive poverty, unemployment,
and economic distress for purposes of Section 489.306;
(2) describe the procedures and efforts of the
governmental entity or entities that applied to have the area
designated as an enterprise zone to facilitate and encourage
participation by and negotiation among all affected entities in
the zone in which the qualified business is located;
(3) contain an economic analysis of the plans of the
qualified business for expansion, revitalization, or other
activity in the enterprise zone, including:
(A) the number of anticipated new permanent jobs
the business will create;
(B) the anticipated number of permanent jobs the
business will retain;
(C) the amount of investment to be made in the
zone; and
(D) other information the office requires; and
(4) describe the local effort made by the governmental
entity or entities that applied to have the area designated as an
enterprise zone, the administrative authority, if one exists, the
qualified business, and other affected entities to develop and
revitalize the zone.
(c) For the purposes of this section, local effort to
develop and revitalize an enterprise zone is:
(1) the willingness of public entities in the zone to
provide services, incentives, and regulatory relief authorized by
this chapter and to negotiate with the qualified business for which
application is made and with neighborhood enterprise associations
and other local groups or businesses to achieve the public purposes
of this chapter; and
(2) the effort of the qualified business and other
affected entities to cooperate in achieving those public purposes.
(d) Factors to be considered in evaluating the local effort
of a public entity include:
(1) tax abatement, deferral, refunds, or other tax
incentives;
(2) regulatory relief, including:
(A) zoning changes or variances;
(B) exemptions from unnecessary building code
requirements, impact fees, or inspection fees; and
(C) streamlined permitting;
(3) enhanced municipal services, including:
(A) improved police and fire protection;
(B) institution of community crime prevention
programs; and
(C) special public transportation routes or
reduced fares;
(4) improvements in community facilities, including:
(A) capital improvements in water and sewer
facilities;
(B) road repair; and
(C) creation or improvement of parks;
(5) improvements to housing, including:
(A) low-interest loans for housing
rehabilitation, improvement, or new construction; and
(B) transfer of abandoned housing to individuals
or community groups;
(6) business and industrial development services,
including:
(A) low-interest loans for business;
(B) use of surplus school buildings or other
underutilized publicly owned facilities as small business
incubators;
(C) provision of publicly owned land for
development purposes, including residential, commercial, or
industrial development;
(D) creation of special one-stop permitting and
problem resolution centers or ombudsmen; and
(E) promotion and marketing services; and
(7) job training and employment services, including:
(A) retraining programs;
(B) literacy and employment skills programs;
(C) vocational education; and
(D) customized job training.
(e) Factors to be considered in evaluating the local effort
of a private entity include:
(1) the willingness to negotiate or cooperate in the
achievement of the purposes of this chapter;
(2) commitments to hire underskilled, inexperienced,
disadvantaged, or displaced workers who reside in the enterprise
zone;
(3) commitments to hire minority workers and to
contract with minority-owned businesses;
(4) provision of technical and vocational job training
for enterprise zone residents or economically disadvantaged
employees;
(5) provision of child care for employees;
(6) commitments to implement and contribute to a
tutoring or mentoring program for area students;
(7) prevention or reduction of juvenile crime
activity; and
(8) the willingness to make contributions to the
well-being of the community, such as job training, or the donation
of land for parks or other public purposes.
Section 489.332. ENTERPRISE PROJECT DESIGNATION. (a) The
office may designate a business as an enterprise project only if the
office determines that:
(1) the business is a qualified business under Section
489.328 that is located in or has made a substantial commitment to
locate in an enterprise zone described by Section 489.330(b);
(2) the governing body of the enterprise zone making
the application has demonstrated that a high level of cooperation
exists among public, private, and neighborhood entities in the
zone;
(3) the designation will contribute significantly to
the achievement of the plans of the governing body making the
application for development and revitalization of the zone; and
(4) if the business is seeking job retention benefits:
(A) the permanent employees of the business will
be permanently laid off;
(B) the business will close down permanently;
(C) the business will relocate out-of-state;
(D) a 10 percent increase in the production
capacity of the business will occur;
(E) a 10 percent decrease in overall cost per
unit produced will occur; or
(F) the business facility has been legitimately
destroyed or impaired because of fire, flood, tornado, hurricane,
or any other natural disaster.
(b) The office shall designate qualified businesses as
enterprise projects on a competitive basis. The office shall
establish a minimum scoring threshold that must be met by the
qualified business applying for a project designation and make its
designation decisions using a weighted scale in which:
(1) 50 percent of the evaluation depends on the
economic distress of:
(A) the enterprise zone in which a proposed
enterprise project is located; and
(B) the area within the enterprise zone where the
project is located;
(2) 25 percent of the evaluation depends on the local
effort to achieve development and revitalization of the enterprise
zone; and
(3) 25 percent of the evaluation depends on the
evaluation criteria as determined by the office, which must
include:
(A) the level of cooperation and support the
project applicant commits to the revitalization goals of the zone;
and
(B) the type and wage level of the jobs to be
created or retained by the business.
(c) The office may remove an enterprise project designation
if it determines that the business is not complying with a
requirement for its designation.
(d) The maximum number of qualified businesses that the
office may designate as enterprise projects for each nominating
body during any biennium is:
(1) four, plus two additional bonus projects the
office may award in a municipality or county with a population of
less than 250,000; or
(2) six, if the governing body of the enterprise zone
is the governing body of a municipality or county with a population
of 250,000 or more.
Section 489.333. ALLOCATION OF JOBS ELIGIBLE FOR TAX
REFUND. (a) When the office designates a business as an enterprise
project, the office shall allocate to the project the maximum
number of new permanent jobs or retained jobs eligible to be
included in a computation of a tax refund for the project.
(b) Until September 1, 2005, the maximum number of new
permanent jobs or retained jobs may not exceed 250, or a number
equal to 110 percent of the number of anticipated new permanent jobs
or retained jobs specified in the application for designation of
the business as an enterprise project under Section 489.331,
whichever is less.
(c) Effective September 1, 2005, the maximum number of new
permanent jobs or retained jobs may not exceed 625, or a number
equal to 110 percent of the number of anticipated new permanent jobs
or retained jobs specified in the application for designation of
the business as an enterprise project under Section 489.331,
whichever is less.
Section 489.334. DURATION OF CERTAIN DESIGNATIONS. The
office's designation of a qualified business as an enterprise
project is effective until the fifth anniversary of the date on
which the designation is made regardless of whether the enterprise
zone in which the project is located expires before the fifth
anniversary of the project.
Section 489.335. EXEMPTIONS FROM STATE REGULATION;
SUSPENSION OF LOCAL REGULATION. (a) A state agency may exempt from
its regulation a qualified business, qualified employee, qualified
property, or neighborhood enterprise association in an enterprise
zone if the exemption is consistent with:
(1) the purposes of this subchapter; and
(2) the protection and promotion of the general health
and welfare.
(b) A local government may suspend local regulation,
including an ordinance, rule, or standard, relating to zoning,
licensing, or building codes in an enterprise zone.
(c) An exemption from or suspension of regulation under this
section must be adopted in the same manner that the regulation was
adopted.
(d) The authorization provided by Subsection (a) or (b) does
not apply to regulation:
(1) that relates to:
(A) civil rights;
(B) equal employment;
(C) equal opportunity;
(D) fair housing rights; or
(E) preservation of historical sites or
historical artifacts;
(2) the relaxation of which is likely to harm the
public safety or public health, including environmental health; or
(3) that is specifically imposed by law.
(e) For the purposes of this section, property is classified
as qualified property if the property is:
(1) tangible personal property located in the
enterprise zone that was:
(A) acquired by a taxpayer not earlier than the
90th day before the date on which the area was designated as an
enterprise zone; and
(B) used predominantly by the taxpayer in the
active conduct of a trade or business;
(2) real property located in the enterprise zone that
was:
(A) acquired by a taxpayer not earlier than the
90th day before the date on which the area was designated as an
enterprise zone and was used predominantly by the taxpayer in the
active conduct of a trade or business; or
(B) the principal residence of the taxpayer on
the date of the sale or exchange; or
(3) an interest in an entity that was certified as a
qualified business under Section 2303.402 for the entity's most
recent tax year ending before the date of the sale or exchange.
Section 489.336. REVIEW OF STATE AGENCY RULES; REPORT. (a)
A state agency rule adopted after September 1, 1987, may provide,
when applicable, encouragements and incentives to increase:
(1) the renovation, improvement, or new construction
of housing in enterprise zones; and
(2) the economic viability and profitability of
business and commerce in enterprise zones.
(b) Annually each state agency shall:
(1) review the rules it administers that:
(A) may adversely affect:
(i) the renovation, improvement, or new
construction of housing in enterprise zones; or
(ii) the economic viability and
profitability of business and commerce in enterprise zones; or
(B) may otherwise affect the implementation of
this chapter; and
(2) report the results of the review to the office.
(c) The office shall disseminate the reports to the
governing bodies of enterprise zones and others as necessary to
advance the purposes of this subchapter.
(d) To contribute to the implementation of this subchapter,
an agency may waive, modify, provide exemptions to, or otherwise
minimize the adverse effects of the rules it administers on the
renovation, improvement, or new construction of housing in
enterprise zones or on the economic viability and profitability of
business and commerce in enterprise zones.
Section 489.337. STATE PREFERENCES. (a) A state agency
shall give preference to the governing body of an enterprise zone or
a qualified business or qualified employee located in an enterprise
zone over other eligible applicants for grants or loans that are
administered by the state agency if:
(1) at least 50 percent of the grant or loan will be
spent for the direct benefit of the enterprise zone; and
(2) the purpose of the grant or loan is to:
(A) promote economic development in the
community; or
(B) construct, improve, extend, repair, or
maintain public facilities in the community.
(b) The comptroller may and is encouraged to deposit state
money in financial institutions located or doing business in
enterprise zones.
(c) A state agency may and is encouraged to contract with
businesses located in enterprise zones.
(d) The office may give preference to enterprise zones in
granting economic development money or other benefits.
Section 489.338. STATE TAX REFUNDS AND CREDITS; REPORT.
(a) Subject to Section 489.351, an enterprise project is entitled
to:
(1) a refund of state taxes under Section 151.429, Tax
Code; and
(2) until September 1, 2005, a franchise tax credit
under Subchapter P or Q, Chapter 171, Tax Code.
(b) Subject to Section 489.351, a qualified business is
entitled to a refund of state taxes under Sections 151.431 and
171.501, Tax Code.
(c) Not later than the 60th day after the last day of each
fiscal year, the comptroller shall report to the office the
statewide total of the tax refunds and credits made under this
section during that fiscal year.
Section 489.339. LOCAL SALES AND USE TAX REFUNDS. (a) To
encourage the development of areas designated as enterprise zones,
the governing body of a municipality through a program may refund
its local sales and use taxes paid by a qualified business on:
(1) the purchase, lease, or rental of equipment or
machinery for use in an enterprise zone;
(2) the purchase of material for use in remodeling,
rehabilitating, or constructing a structure in an enterprise zone;
(3) labor for remodeling, rehabilitating, or
constructing a structure in an enterprise zone; and
(4) electricity and natural gas purchased and consumed
in the normal course of business in the enterprise zone.
(b) To promote the public health, safety, or welfare, the
governing body of a municipality or county through a program may
refund its local sales and use taxes paid by a qualified business or
qualified employee.
(c) The governing body of a municipality or county that is
the governing body of an enterprise zone may provide for the partial
or total refund of its local sales and use taxes paid by a person
making a taxable purchase, lease, or rental for development or
revitalization in the zone.
(d) A person entitled to a refund of local sales and use
taxes under this section shall pay the entire amount of state and
local sales and use taxes at the time the taxes would be due if an
agreement for the refund did not exist.
(e) An agreement to refund local sales and use taxes under
this section must:
(1) be written;
(2) contain an expiration date; and
(3) require that the person entitled to the refund
provide to the municipality or county making the refund the
documentation necessary to support a refund claim.
(f) The municipality or county shall make the refund
directly to the person entitled to the refund in the manner provided
by the agreement.
Section 489.340. REFUND, REBATE, OR PAYMENT OF TAX PROCEEDS
TO QUALIFIED HOTEL PROJECT. (a) For a period that may not exceed 10
years, a governmental body, including a municipality, county, or
political subdivision, may agree to rebate, refund, or pay eligible
taxable proceeds to the owner of a qualified hotel project at which
the eligible taxable proceeds were generated.
(b) A municipality with a population of 1,500,000 or more
may agree to guarantee from hotel occupancy taxes the bonds or other
obligations of a municipally sponsored local government
corporation created under the Texas Transportation Corporation Act
(Article 15281, Vernon's Texas Civil Statutes) that were issued or
incurred to pay the cost of construction, remodeling, or
rehabilitation of a qualified hotel project.
(c) An a agreement under this section must be in writing,
contain an expiration date, and require the beneficiary to provide
documentation necessary to support a claim.
(d) A governmental body that makes an agreement under this
section shall make the rebate, refund, or payment directly to the
beneficiary.
(e) In this section, "eligible taxable proceeds" means
taxable proceeds generated, paid, or collected by a qualified hotel
project or a business at a qualified hotel project, including hotel
occupancy taxes, ad valorem taxes, sales and use taxes, and mixed
beverage taxes.
Section 489.341. REDUCTION OR ELIMINATION OF LOCAL FEES OR
TAXES. (a) To promote the public health, safety, or welfare, the
governing body of a municipality or county through a program may
reduce or eliminate fees or taxes that it imposes on a qualified
business or qualified employee.
(b) This section does not apply to sales and use taxes or
property taxes.
Section 489.342. TAX INCREMENT FINANCING AND ABATEMENT;
LIMITATIONS ON APPRAISED VALUE. Designation of an area as an
enterprise zone is also designation of the area as a reinvestment
zone for:
(1) tax increment financing under Chapter 311, Tax
Code;
(2) tax abatement under Chapter 312, Tax Code; and
(3) limitations on appraised value under Chapter 313,
Tax Code.
Section 489.343. TAX EXEMPTION FOR NEIGHBORHOOD ENTERPRISE
ASSOCIATION. A neighborhood enterprise association is exempt from
state and local taxes during the period of the designation of the
enterprise zone in which it is located. The exemption applies to
tax arrearages and other back assessments on proper leased under
Section 489.347.
Section 489.344. DEVELOPMENT BONDS. To finance a project
in an enterprise zone, bonds may be issued under:
(1) Chapter 1433; or
(2) the Development Corporation Act of 1979 (Article
5190.6, Vernon's Texas Civil Statutes).
Section 489.345. INDUSTRIAL DEVELOPMENT CORPORATION. (a)
The governing body of a municipality that is the governing body of
an enterprise zone may create, in accordance with the Development
Corporation Act of 1979 (Article 5190.6, Vernon's Texas Civil
Statutes), an industrial development corporation for use by the
enterprise zone.
(b) A corporation created under this section has the powers
and is subject to the limitations of a corporation created under the
Development Corporation Act of 1979. To the extent of a conflict
between this section and that Act, that Act prevails.
(c) The articles of incorporation of a corporation created
under this section must state that the corporation is governed by
this section.
(d) The governing body of the municipality that creates an
industrial development corporation shall appoint the board of
directors of the corporation.
Section 489.346. OTHER LOCAL INCENTIVES. (a) The
governing body of a municipality or county that is the governing
body of an enterprise zone may:
(1) defer compliance in the zone with the subdivision
and development ordinances or rules, other than those relating to
streets and roads or sewer or water services, of the municipality or
county, as appropriate;
(2) give priority to the zone for the receipt of:
(A) community development block grant money;
(B) industrial revenue bonds; or
(C) funds received under the federal Job Training
Partnership Act (29 U.S.C. Section 1501 et seq.);
(3) adopt and implement a plan for police protection
in the zone;
(4) amend the zoning ordinances of the municipality or
county, as appropriate, to promote economic development in the
zone;
(5) establish permitting preferences for businesses
in the zone;
(6) establish simplified, accelerated, or other
special permit procedures for businesses in the zone;
(7) waive development fees for projects in the zone;
(8) create a local enterprise zone fund for funding
bonds or other programs or activities to develop or revitalize the
zone;
(9) for qualified businesses in the zone, reduce rates
charged by:
(A) a utility owned by the municipality or
county, as appropriate; or
(B) a cooperative corporation or utility owned by
private investors, subject to the requirements of Subsection (b);
(10) in issuing housing finance bonds, give priority
to persons or projects in the zone;
(11) in providing services, give priority to local
economic development, educational, job training, or transportation
programs that benefit the zone; or
(12) sell real property owned by the municipality or
county, as appropriate, and located in the enterprise zone in
accordance with Section 489.348.
(b) A reduction in utility rates under Subsection (a)(9)(B)
is subject to the agreement of the affected utility and the approval
of the appropriate regulatory authority. The rates may be reduced
up to but not more than five percent below the lowest rate
authorized for a person described by Subsection (a)(9)(B). A
qualified enterprise project or the governing body of the
enterprise zone may petition the appropriate utility and the
appropriate regulatory authority to receive a reduced rate under
this section, and the regulatory authority may order that rates be
reduced. In making its determination under this section, the
regulatory authority shall consider revitalization goals for the
enterprise zone. In setting the rates of the utility the
appropriate regulatory authority shall allow the utility to recover
the amount of the reduction.
Section 489.347. LEASE OF PUBLIC PROPERTY TO NEIGHBORHOOD
ENTERPRISE ASSOCIATION. (a) The state or a local government may
lease to a neighborhood enterprise association real property
located in the association's geographical neighborhood area that is
owned by the governmental entity and that is not being used by the
entity.
(b) The lease must be for a term of not less than 20 years
and the full amount of the rental fees under the lease may not
exceed $1 a year.
(c) The state or local government shall renew the lease on
its expiration if the association has continuously complied with
this subchapter during the lease term.
Section 489.348. DISPOSITION OF PUBLIC PROPERTY IN
ENTERPRISE ZONE. (a) After an area is designated as an enterprise
zone, the state, a municipality, or a county that owns a surplus
building or vacant land in the zone may dispose of the building or
land by:
(1) selling the building or land at a public auction;
(2) selling the land to a neighborhood enterprise
association; or
(3) establishing an urban homestead program described
by Subsection (c).
(b) A municipality or county may sell a surplus building or
vacant land in the enterprise zone at less than fair market value if
the governing body of the municipality or county by ordinance or
order, as appropriate, adopts criteria that specify the conditions
and circumstances under which the sale may occur and the public
purpose to be achieved by the sale. The building or land may be sold
to a buyer who is not the highest bidder if the criteria and public
purpose specified in the ordinance or order are satisfied. A copy
of the ordinance or order must be filed with the office not later
than the day on which the sale occurs.
(c) An urban homestead program must provide that:
(1) the state, municipality, or county is to sell to an
individual a residence or part of a residence that it owns for an
amount not to exceed $100;
(2) as a condition of the sale, the individual must
agree to live in the residence for at least seven years and to
renovate or remodel the residence to meet the level of maintenance
stated in an agreement between the individual and the governmental
entity; and
(3) after the individual satisfies the seven-year
residency and property improvement requirements of the agreement,
the governmental entity shall assign the residence to the
individual.
Section 489.349. WAIVER OF PERFORMANCE BOND. A
subcontractor is not required to execute a performance bond under
Chapter 2253 if:
(1) the construction, alteration, repair, or other
public work to be performed under the contract is entirely in an
enterprise zone; and
(2) the amount of the contract does not exceed
$200,000.
Section 489.350. LIABILITY OF CONTRACTOR OR ARCHITECT. A
contractor or architect who constructs or rehabilitates a building
in an enterprise zone is liable for any structural defect in the
building only for the period ending on the 10th anniversary of the
date on which beneficial occupancy of the building begins after the
construction or rehabilitation, notwithstanding a statute of
limitations to the contrary.
Section 489.351. MONITORING QUALIFIED BUSINESS OR
ENTERPRISE PROJECT COMMITMENTS. (a) The comptroller may monitor a
qualified business or enterprise project to determine whether and
to what extent the business or project has followed through on any
commitments made by it or on its behalf under this chapter.
(b) The comptroller may determine that the business or
project is not entitled to a refund or credit of state taxes under
Section 489.338 if the comptroller finds that:
(1) the business or project is not willing to
cooperate with the comptroller with the information the comptroller
needs to make the determination under Subsection (a); or
(2) the business or project has substantially failed
to follow through on any commitments made by it or on its behalf
under this chapter.
SUBCHAPTER D. ASSISTANCE TO DEFENSE DEPENDENT COMMUNITIES
Section 489.401. DEFENSE ECONOMIC READJUSTMENT ZONES. (a)
The office shall assist:
(1) a qualified business in obtaining the benefits of
any state incentive or inducement program provided by law;
(2) the governing body of a readjustment zone in
obtaining assistance from another state agency, including job
training and technical assistance to qualified businesses in a
zone; and
(3) the governing body of a readjustment zone in
encouraging small business development.
(b) The office shall provide to persons desiring to locate
and engage in business in a readjustment zone information and
appropriate assistance relating to the required legal
authorization, including a state license, permit, certificate,
approval, registration, or charter, to engage in business in this
state.
(c) The office shall publicize existing tax incentives and
economic development programs in readjustment zones.
(d) On request the office shall offer to a unit of local
government having a readjustment zone within its jurisdiction
technical assistance relating to tax abatement and the development
of alternative revenue sources.
Section 489.402. COORDINATION WITH OTHER GOVERNMENTAL
ENTITIES. (a) In cooperation with the appropriate units of local
government and other state agencies, the office shall coordinate
and streamline state business assistance programs and permit or
license application procedures for businesses in readjustment
zones.
(b) The office shall work with the responsible state and
federal agencies to coordinate readjustment zone programs with
other programs carried out in a readjustment zone, including
housing, community and economic development, small business,
banking, financial assistance, transportation, and employment
training programs.
(c) The office shall encourage other state agencies in
awarding grants, loans, or services to give priority to businesses
in readjustment zones.
(d) For the purposes of this subchapter, territory in the
extraterritorial jurisdiction of a municipality is considered to be
in the jurisdiction of the municipality.
Section 489.403. CRITERIA FOR READJUSTMENT ZONE
DESIGNATION. (a) To be designated as a readjustment zone an area
must:
(1) have a continuous boundary;
(2) be at least one square mile but not larger than 20
square miles, excluding lakes, waterways, and transportation
arteries of the municipality, county, or combination of
municipalities or counties nominating the area as a readjustment
zone;
(3) be located in an adversely affected
defense-dependent community;
(4) have at least 50 percent of its area located in an
existing or former United States Department of Defense facility;
and
(5) be nominated as a readjustment zone by an
ordinance or order adopted by the nominating body.
(b) An area is not prohibited from being included in a
readjustment zone because the area is also included in an
enterprise zone designated under Subchapter C.
Section 489.404. ADVERSELY AFFECTED DEFENSE-DEPENDENT
COMMUNITY. A municipality or county is an adversely affected
defense-dependent community if the office determines that:
(1) the municipality or county requires assistance
because of:
(A) the proposed or actual establishment,
realignment, or closure of a defense facility;
(B) the cancellation or termination of a United
States Department of Defense contract or the failure of the
department of defense to proceed with an approved major weapon
system program;
(C) a publicly announced planned major reduction
in department of defense spending that would directly and adversely
affect the municipality or county; or
(D) the closure or a significant reduction of the
operations of a defense facility as the result of a merger,
acquisition, or consolidation of a defense contractor operating the
facility; and
(2) the municipality or county is expected to
experience, during the period between the beginning of the federal
fiscal year during which an event described by Subdivision (1) is
finally approved and the date that the event is to be substantially
completed, a direct loss of:
(A) 2,500 or more defense worker jobs in any area
of the municipality or county that is located in an urbanized area
of a metropolitan statistical area;
(B) 1,000 or more defense worker jobs in any area
of the municipality or county that is not located in an urbanized
area of a metropolitan statistical area; or
(C) one percent of the civilian jobs in the
municipality or county.
Section 489.405. NOMINATION OF READJUSTMENT ZONE. (a) The
governing body of a municipality or county that is an adversely
affected defense-dependent community individually or in
combination with other municipalities or counties that are
adversely affected defense-dependent communities, by ordinance or
order, as appropriate, may nominate as a readjustment zone an area
within its jurisdiction that meets the criteria under Section
489.403.
(b) Unless the nominating body holds a public hearing before
adopting an ordinance or order under this section the ordinance or
order is not valid.
(c) The governing body of a county may not nominate
territory in a municipality, including extraterritorial
jurisdiction of a municipality, to be included in a proposed
readjustment zone unless the governing body of the municipality
also nominates the territory and together with the county files a
joint application under Section 489.407.
(d) The governing bodies of a combination of municipalities
or counties may not jointly nominate an area as a readjustment zone
unless the governing bodies have entered into a binding agreement
to administer the zone jointly.
Section 489.406. NOMINATING ORDINANCE OR ORDER. (a) An
ordinance or order nominating an area as a readjustment zone must:
(1) describe precisely the area to be included in the
zone by a legal description or reference to roadways, lakes,
waterways, or municipal or county boundaries;
(2) state a finding that the area meets the
requirements of this chapter;
(3) summarize briefly the incentives, including tax
incentives, that, at the election of the nominating body, apply to
business enterprises in the area; and
(4) nominate the area as a readjustment zone.
(b) At least one of the incentives summarized under
Subsection (a)(3) must not be offered elsewhere within the
jurisdiction except within an enterprise zone designated under
Subchapter C.
(c) This section does not prohibit a municipality or county
from extending additional incentives, including tax incentives,
for business enterprises in a readjustment zone by a separate
ordinance or order.
Section 489.407. APPLICATION FOR DESIGNATION. (a) For an
area to be designated as a readjustment zone, the nominating body,
after nominating the area as a readjustment zone, must send to the
office a written application for designation of the area as a
readjustment zone.
(b) The application must include:
(1) a certified copy of the ordinance or order, as
appropriate, nominating the area as a readjustment zone;
(2) a map of the area showing existing streets and
highways;
(3) an analysis and appropriate supporting documents
and statistics demonstrating that the area qualifies for
designation as a readjustment zone;
(4) a statement that specifies each tax incentive,
grant, other financial incentive or benefit, or program to be
provided by the nominating body to business enterprises in the area
that is not to be provided throughout the governmental entity or
entities nominating the area as a readjustment zone;
(5) a statement of the economic development and
planning objectives for the area;
(6) an estimate of the economic impact of the
designation of the area as a readjustment zone on the revenues of
the governmental entity or entities nominating the area as a
readjustment zone, considering all the financial incentives and
benefits and the programs contemplated;
(7) a transcript or tape recording of all public
hearings on the proposed zone;
(8) if the application is a joint application, a
description and copy of the agreement between the applicants;
(9) the procedures for negotiating with residents,
community groups, and other entities affected by the designation of
the area as a readjustment zone and with qualified businesses in the
area;
(10) a description of the administrative authority, if
one is to be appointed for the readjustment zone under Section
489.415; and
(11) any additional information the office requires.
(c) Information required by Subsection (b) is for
evaluation purposes only.
Section 489.408. REVIEW OF APPLICATION. (a) On receipt of
an application for the designation of a readjustment zone, the
office shall review the application to determine if the nominated
area qualifies for designation as a readjustment zone under this
chapter.
(b) The office shall allow an applicant to correct any
omission or clerical error in the application and to return the
application to the office on or before the 15th day after the date
on which the office receives the application.
Section 489.409. DESIGNATION AGREEMENT. (a) If the office
determines that a nominated area for which a designation
application has been received satisfies the criteria under Section
489.403, the office shall negotiate with the nominating body for a
designation agreement.
(b) A designation agreement must:
(1) designate the nominated area as a readjustment
zone; and
(2) designate the administrative authority, if one is
to be appointed for the zone under Section 489.415, and describe its
functions and duties, which should include decision-making
authority and the authority to negotiate with affected entities.
(c) The office shall complete the negotiations and sign the
agreement not later than the 60th day after the date on which the
application is received unless the office extends that period to
the 90th day after the date on which the application was received.
(d) If an agreement is not completed within the 60-day
period provided by Subsection (c), the office shall provide to the
nominating body the specific areas of concern and a final proposal
for the agreement.
(e) If the agreement is not executed before the 91st day
after the date on which the application was received, the
application is considered to be denied.
Section 489.410. DENIAL OF APPLICATION; NOTICE. (a) The
office may deny an application for the designation of a
readjustment zone only if the office determines that the nominated
area does not satisfy the criteria under Section 489.403.
(b) The office shall inform the nominating body of the
specific reasons for denial of an application, including denial
under Section 489.409(e).
Section 489.411. PERIOD OF DESIGNATION. An area may be
designated as a readjustment zone for a maximum of seven years. A
designation remains in effect until September 1 of the final year of
the designation.
Section 489.412. AMENDING BOUNDARIES. (a) The nominating
body may amend the boundary of a readjustment zone by ordinance or
order, as appropriate, adopted after a public hearing on the issue.
(b) The amended boundary:
(1) must be continuous;
(2) may not exceed the original size requirement of
Section 486.403; and
(3) may not exclude any qualified business designated
as a defense readjustment project included within the boundary of
the zone as designated.
(c) The readjustment zone with the amended boundary must
continue to meet the location requirements of Section
486.403(a)(4).
(d) A nominating body may not make more than one boundary
amendment annually for a readjustment zone.
(e) For each amendment of a readjustment zone boundary, the
nominating body shall pay the office a reasonable fee, in an amount
specified by the office, not to exceed $500. The office may use fees
collected under this subsection to administer this chapter and for
other purposes to advance this chapter.
Section 489.413. REMOVAL OF DESIGNATION. (a) The office
may remove the designation of an area as a readjustment zone if:
(1) the area no longer meets the criteria for
designation under this chapter or by rule adopted under this
chapter; or
(2) the office determines that the governing body of
the readjustment zone has not complied with commitments made in the
ordinance or order nominating the area as a readjustment zone.
(b) The removal of a designation does not affect the
validity of a tax incentive or regulatory relief granted or accrued
before the removal.
Section 489.414. ADMINISTRATION BY GOVERNING BODY. The
governing body of a readjustment zone is the governing body of the
municipality or county, or the governing bodies of the combination
of municipalities or counties, that applied to have the area
designated as a readjustment zone.
Section 489.415. ADMINISTRATION BY ADMINISTRATIVE
AUTHORITY. (a) The governing body of a readjustment zone may
delegate its administrative duties to an administrative authority
appointed by the governing body.
(b) An administrative authority must:
(1) be composed of 3, 5, 7, 9, 11, or 15 members;
(2) be a viable and responsive body generally
representative of all public or private entities that have a stake
in the development of the zone; and
(3) if the readjustment zone includes private
residences, include:
(A) an elected official representing
readjustment zone residents and businesses; or
(B) at least two readjustment zone residents.
Section 489.416. LIAISON. The governing body of a
readjustment zone shall designate a liaison to communicate and
negotiate with:
(1) the office;
(2) the administrative authority, if one exists;
(3) a defense readjustment project; and
(4) other entities in or affected by the readjustment
zone.
Section 489.417. ANNUAL REPORT. (a) Not later than October
1 of each year, the governing body of a readjustment zone shall
submit to the office a report in the form required by the office.
(b) The report must be approved by the readjustment zone's
administrative authority, if one exists.
(c) The report must include for the year preceding the date
of the report:
(1) a list of local incentives for community
development available in the zone;
(2) the use of local incentives for which the
governing body provided in the ordinance or order nominating the
readjustment zone and the effect of those incentives on revenue;
(3) the number of businesses assisted, located, and
retained in the zone since its designation due to the existence of
the readjustment zone;
(4) a summary of all industrial revenue bonds issued
to finance projects located in the zone; and
(5) a description of all efforts made to attain
revitalization goals for the zone.
Section 489.418. QUALIFIED BUSINESS. (a) A person is a
qualified business if the office, for the purpose of state benefits
under this chapter, or the governing body of a readjustment zone,
for the purpose of local benefits, certifies that:
(1) the person is engaged in or has provided
substantial commitment to initiate the active conduct of a trade or
business in the readjustment zone; and
(2) at least 25 percent of the person's new employees
in the readjustment zone are:
(A) residents of the governing jurisdiction;
(B) economically disadvantaged individuals, as
defined by Section 489.328(c); or
(C) dislocated defense workers.
(b) The governing body of a readjustment zone may certify a
franchise or subsidiary of a new or existing business as a qualified
business if the franchise or subsidiary:
(1) is located entirely in the readjustment zone; and
(2) maintains separate books and records of the
business activity conducted in the zone.
Section 489.419. PROHIBITION ON QUALIFIED BUSINESS
CERTIFICATION. If the office determines that the governing body of
a readjustment zone is not complying with this chapter, the office
shall prohibit the certification of a qualified business in the
zone until the office determines that the governing body is
complying with this chapter. The office may not designate more than
two businesses in a single readjustment zone as defense
readjustment projects.
Section 489.420. REQUEST FOR APPLICATION FOR DEFENSE
READJUSTMENT PROJECT DESIGNATION. A qualified business in a
readjustment zone may request that the governing body of the
readjustment zone apply to the office for designation of the
business as a defense readjustment project. The request must also
be made to the readjustment zone's administrative authority, if one
exists.
Section 489.421. APPLICATION FOR DEFENSE READJUSTMENT
PROJECT DESIGNATION. (a) If the governing body of a readjustment
zone or the governing body and administrative authority of a
readjustment zone, as appropriate, approve a request made under
Section 489.420, the governing body may apply to the office for the
designation of the qualified business as a defense readjustment
project.
(b) An application must:
(1) describe the procedures and efforts of the
governmental entity or entities that applied to have the area
designated as a readjustment zone to facilitate and encourage
participation by and negotiation among affected entities in the
zone in which the qualified business is located;
(2) contain an economic analysis of the plans of the
qualified business for expansion, revitalization, or other
activity in the readjustment zone, including:
(A) the number of anticipated new permanent jobs
the business will create;
(B) the anticipated number of permanent jobs the
business will retain;
(C) the amount of investment to be made in the
zone; and
(D) other information the office requires; and
(3) describe the local effort made by the governmental
entity or entities that applied to have the area designated as a
readjustment zone, the administrative authority, if one exists, the
qualified business, and other affected entities to develop and
revitalize the zone.
(c) For the purposes of this section, local effort to
develop and revitalize a readjustment zone is:
(1) the willingness of public entities in the zone to
provide services, incentives, and regulatory relief authorized by
this chapter and to negotiate with the qualified business for which
application is made and with other local groups or businesses to
achieve the public purposes of this chapter; and
(2) the effort of the qualified business and other
affected entities to cooperate in achieving those public purposes.
(d) Factors to be considered in evaluating the local effort
of a public entity include:
(1) tax abatement, deferral, refunds, or other tax
incentives;
(2) regulatory relief, including:
(A) zoning changes or variances;
(B) exemptions from unnecessary building code
requirements, impact fees, or inspection fees; and
(C) streamlined permitting;
(3) enhanced municipal services, including:
(A) improved police and fire protection;
(B) institution of community crime prevention
programs; and
(C) special public transportation routes or
reduced fares;
(4) improvements in community facilities, including:
(A) capital improvements in water and sewer
facilities;
(B) road repair; and
(C) creation or improvement of parks;
(5) improvements to housing, including:
(A) low-interest loans for housing
rehabilitation, improvement, or new construction; and
(B) transfer of abandoned housing to individuals
or community groups;
(6) business and industrial development services,
including:
(A) low-interest loans for business;
(B) use of surplus school buildings or other
underutilized publicly owned facilities as small business
incubators;
(C) provision of publicly owned land for
development purposes, including residential, commercial, or
industrial development;
(D) creation of special one-stop permitting and
problem resolution centers or ombudsmen;
(E) promotion and marketing services; and
(7) job training and employment services, including:
(A) retraining programs;
(B) literacy and employment skills programs;
(C) vocational education; and
(D) customized job training.
(e) Factors to be considered in evaluating the local effort
of a private entity include:
(1) the willingness to negotiate or cooperate in the
redevelopment of vacated defense facilities and the creation of
high-skilled, high wage jobs;
(2) commitments to hire dislocated defense workers and
economically disadvantaged workers;
(3) commitments to hire minority workers and to
contract with minority-owned businesses;
(4) provision of technical and vocational job training
for residents of the nominating body's jurisdiction or economically
disadvantaged employees;
(5) provision of child care for employees;
(6) commitments to implement and contribute to a
tutoring or mentoring program for area students;
(7) prevention or reduction of juvenile crime; and
(8) the willingness to make contributions to the
well-being of the community, such as job training, or the donation
of land for parks or other public purposes.
Section 489.422. DEFENSE READJUSTMENT PROJECT DESIGNATION.
(a) The office may designate a qualified business as a defense
readjustment project only if the office determines that:
(1) the business is a qualified business under Section
489.418 that is located in or has made a substantial commitment to
locate in a defense readjustment zone;
(2) the governing body of the readjustment zone making
the application has demonstrated that a high level of cooperation
exists among public, private, and neighborhood entities in the
zone; and
(3) the designation will contribute significantly to
the achievement of the plans of the governing body making the
application for development and revitalization of the zone.
(b) The office shall designate qualified businesses as
defense readjustment projects on a competitive basis. The office
shall make its designation decisions using a weighted scale in
which:
(1) 50 percent of the evaluation is based on the effect
of the loss of defense expenditures and employment on the
community;
(2) 25 percent of the evaluation depends on the local
effort to achieve development and revitalization of the
readjustment zone; and
(3) 25 percent of the evaluation depends on the
evaluation criteria as determined by the office, which must
include:
(A) the level of cooperation and support the
project applicant commits to the revitalization goals of the zone;
and
(B) the type and wage level of the jobs to be
created or retained by the business.
(c) The office may remove a defense readjustment project
designation if it determines that the business is not complying
with a requirement for its designation.
Section 489.423. ALLOCATION OF JOBS ELIGIBLE FOR TAX
REFUND. When the office designates a business as a defense
readjustment project, the office shall allocate to the project the
maximum number of new permanent jobs or retained jobs eligible to be
included in a computation of a tax refund for the project. The
number may not exceed 500 or a number equal to 110 percent of the
number of anticipated new permanent jobs or retained jobs specified
in the application for designation of the business as a defense
readjustment project under Section 489.421, whichever is less.
Section 489.424. DURATION OF CERTAIN DESIGNATIONS. The
office's designation of a qualified business as a defense
readjustment project is effective until the fifth anniversary of
the date on which the designation is made regardless of whether the
readjustment zone in which the project is located expires before
the fifth anniversary of the project.
Section 489.425. EXEMPTIONS FROM STATE REGULATION;
SUSPENSION OF LOCAL REGULATION. (a) A state agency may exempt from
its regulation a qualified business, qualified employee, or
qualified property in a readjustment zone if the exemption is
consistent with:
(1) the purposes of this subchapter; and
(2) the protection and promotion of the general health
and welfare.
(b) A local government may suspend local regulation,
including an ordinance, rule, or standard, relating to zoning,
licensing, or building codes in a readjustment zone.
(c) An exemption from or suspension of regulation under this
section must be adopted in the same manner that the regulation was
adopted.
(d) The authorization provided by Subsection (a) or (b) does
not apply to regulation:
(1) that relates to:
(A) civil rights;
(B) equal employment;
(C) equal opportunity;
(D) fair housing rights; or
(E) preservation of historical sites or
historical artifacts;
(2) the relaxation of which is likely to harm the
public safety or public health, including environmental health; or
(3) that is specifically imposed by law.
(e) For the purposes of this section, property is classified
as qualified property if the property is:
(1) tangible personal property located in the
readjustment zone that was acquired from the federal government by
lease or deed or:
(A) acquired by a taxpayer not earlier than the
90th day before the date on which the area was designated as a
readjustment zone; and
(B) used predominantly by the taxpayer in the
active conduct of a trade or business;
(2) real property located in the readjustment zone
that was acquired from the federal government by lease or deed or:
(A) acquired by a taxpayer not earlier than the
90th day before the date on which the area was designated as a
readjustment zone and was used predominantly by the taxpayer in the
active conduct of a trade or business; or
(B) the principal residence of the taxpayer on
the date of the sale or exchange; or
(3) an interest in an entity that was certified as a
qualified business under Section 489.418 for the entity's most
recent tax year ending before the date of the sale or exchange.
Section 489.426. REVIEW OF STATE AGENCY RULES; REPORT. (a)
A state agency by rule may provide, when applicable, encouragements
and incentives to increase:
(1) the renovation, improvement, or new construction
of housing in readjustment zones; and
(2) the economic viability and profitability of
business and commerce in readjustment zones.
(b) The office shall disseminate the reports to the
governing bodies of readjustment zones and others as necessary to
advance the purposes of this chapter.
(c) To contribute to the implementation of this chapter, an
agency may waive, modify, provide exemptions to, or otherwise
minimize the adverse effects of the rules it administers on the
renovation, improvement, or new construction of housing in
readjustment zones or on the economic viability and profitability
of business and commerce in readjustment zones.
Section 489.427. STATE PREFERENCES. (a) A state agency
shall give preference to the governing body of a readjustment zone
or a qualified business or qualified employee located in a
readjustment zone over other eligible applicants for grants, loans,
or credit enhancements that are administered by the state agency
if:
(1) at least 50 percent of the grant, loan, or credit
enhancement will be spent for the direct benefit of the
readjustment zone; and
(2) the purpose of the grant, loan, or credit
enhancement is to:
(A) promote economic development in the
community; or
(B) construct, improve, extend, repair, or
maintain public facilities in the community.
(b) The comptroller may and is encouraged to deposit state
money in financial institutions located or doing business in
readjustment zones.
(c) A state agency may and is encouraged to contract with
businesses located in readjustment zones.
(d) The office or another state agency may give preference
to readjustment zones in granting economic development money or
other benefits.
Section 489.428. STATE TAX REFUNDS AND CREDITS; REPORT.
(a) Subject to Section 489.437, defense readjustment project is
eligible for:
(1) a refund of state taxes under Section 151.4291,
Tax Code;
(2) until September 1, 2005, a franchise tax credit
under Subchapter P or Q, Chapter 171, Tax Code; and
(3) the exclusion of receipts from service performed
in a readjustment zone in the determination of gross receipts from
business done in this state under Sections 171.103 and 171.1032,
Tax Code.
(b) Not later than the 60th day after the last day of each
fiscal year, the comptroller shall report to the office the
statewide total of the tax refunds or credits made under this
section during that fiscal year.
Section 489.429. LOCAL SALES AND USE TAX REFUNDS. (a) To
encourage the development of areas designated as readjustment
zones, the governing body of a municipality through a program may
refund its local sales and use taxes paid by a qualified business
on:
(1) the purchase, lease, or rental of equipment or
machinery for use in a readjustment zone;
(2) the purchase of material for use in remodeling,
rehabilitating, or constructing a structure in a readjustment zone;
(3) labor for remodeling, rehabilitating, or
constructing a structure in a readjustment zone; and
(4) electricity and natural gas purchased and consumed
in the normal course of business in the readjustment zone.
(b) To promote the public health, safety, or welfare, the
governing body of a municipality or county through a program may
refund its local sales and use taxes paid by a qualified business or
qualified employee.
(c) The governing body of a municipality or county that is
the governing body of a readjustment zone may provide for the
partial or total refund of its local sales and use taxes paid by a
person making a taxable purchase, lease, or rental for development
or revitalization in the zone.
(d) A person eligible for a refund of local sales and use
taxes under this section shall pay the entire amount of state and
local sales and use taxes at the time the taxes would be due if an
agreement for the refund did not exist.
(e) An agreement to refund local sales and use taxes under
this section must:
(1) be written;
(2) contain an expiration date; and
(3) require that the person eligible for the refund
provide to the municipality or county making the refund the
documentation necessary to support a refund claim.
(f) The municipality or county shall make the refund
directly to the person eligible for the refund in the manner
provided by the agreement.
Section 489.430. REDUCTION OR ELIMINATION OF LOCAL FEES OR
TAXES. (a) To promote the public health, safety, or welfare, the
governing body of a municipality or county through a program may
reduce or eliminate fees or taxes that it imposes on a qualified
business or qualified employee.
(b) This section does not apply to sales and use taxes or
property taxes.
Section 489.431. TAX INCREMENT FINANCING AND ABATEMENT.
Designation of an area as a readjustment zone is also designation of
the area as a reinvestment zone for:
(1) tax increment financing under Chapter 311, Tax
Code; and
(2) tax abatement under Chapter 312, Tax Code.
Section 489.432. DEVELOPMENT BONDS. To finance a project
in a readjustment zone, bonds may be issued under:
(1) Chapter 1433; or
(2) the Development Corporation Act of 1979 (Article
5190.6, Vernon's Texas Civil Statutes).
Section 489.433. OTHER LOCAL INCENTIVES. (a) The
governing body of a municipality or county that is the governing
body of a readjustment zone may:
(1) defer compliance in the zone with the subdivision
and development ordinances or rules, other than those relating to
streets and roads or sewer or water services, of the municipality or
county, as appropriate;
(2) give priority to the zone for the receipt of:
(A) community development block grant money;
(B) industrial revenue bonds; or
(C) funds received for job training;
(3) adopt and implement a plan for police protection
in the zone;
(4) amend the zoning ordinances of the municipality or
county, as appropriate, to promote economic development in the
zone;
(5) establish permitting preferences for businesses
in the zone;
(6) establish simplified, accelerated, or other
special permit procedures for businesses in the zone;
(7) waive development fees for projects in the zone;
(8) create a local readjustment zone fund for funding
bonds or other programs or activities to develop or revitalize the
zone;
(9) for qualified businesses in the zone, reduce rates
charged by:
(A) a utility owned by the municipality or
county, as appropriate; or
(B) a cooperative corporation or utility owned by
private investors, subject to the requirements of Subsection (b);
(10) in issuing housing finance bonds, give priority
to persons or projects in the zone;
(11) in providing services, give priority to local
economic development, educational, job training, or transportation
programs that benefit the zone; or
(12) sell real property owned by the municipality or
county, as appropriate, and located in the readjustment zone in
accordance with Section 489.434.
(b) A reduction in utility rates under Subsection (a)(9)(B)
is subject to the agreement of the affected utility and the approval
of the appropriate regulatory authority under Title 2, Utilities
Code. The rates may be reduced up to but not more than five percent
below the lowest rate allowable for that customer class. In making
its determination under this section, the regulatory authority
shall consider revitalization goals for the readjustment zone. In
setting the rates of the utility the appropriate regulatory
authority shall allow the utility to recover the amount of the
reduction.
Section 489.434. DISPOSITION OF PUBLIC PROPERTY IN
READJUSTMENT ZONE. (a) After an area is designated as a
readjustment zone, the state, a municipality, or a county that owns
a surplus building (including any structure) or vacant land in the
zone may dispose of the building or land by:
(1) selling the building or land at a public auction;
(2) selling the building or land without notice or
bidding as provided by Subsection (d); or
(3) establishing an urban homestead program described
by Subsection (e).
(b) A municipality or county may sell a surplus building or
vacant land in the readjustment zone at less than fair market value
if the governing body of the municipality or county by ordinance or
order, as appropriate, adopts criteria that specify the conditions
and circumstances under which the sale may occur and the public
purpose to be achieved by the sale. A copy of the ordinance or order
must be filed with the office not later than the day on which the
sale occurs.
(c) If the surplus building or vacant land is sold at a
public auction, the building or land may be sold to a buyer who is
not the highest bidder if the criteria and public purpose specified
in the ordinance or order adopted under Subsection (b) are
satisfied.
(d) The surplus building or vacant land may be sold without
complying with notice or bidding requirements (including election
or voter approval requirements imposed by other law, if any) if the
criteria and public purpose specified in the ordinance or order
adopted under Subsection (b) are satisfied.
(e) An urban homestead program must provide that:
(1) the state, municipality, or county is to sell to an
individual a residence or part of a residence that it owns for an
amount not to exceed $100;
(2) as a condition of the sale, the individual must
agree by covenant in the deed conveying the residence to live in the
residence for at least seven years and to renovate or remodel the
residence to meet the level of maintenance stated in an agreement
between the individual and the governmental entity; and
(3) after the individual satisfies the seven-year
residency and property improvement requirements of the agreement,
the governmental entity shall assign the residence to the
individual.
Section 489.435. WAIVER OF PERFORMANCE BOND. A
subcontractor is not required to execute a performance bond under
Chapter 2253 if:
(1) the construction, alteration, repair, or other
public work to be performed under the contract is entirely in a
readjustment zone; and
(2) the amount of the contract does not exceed
$200,000.
Section 489.436. LIABILITY OF CONTRACTOR OR ARCHITECT. A
contractor or architect who constructs or rehabilitates a building
in a readjustment zone is liable for any structural defect in the
building only for the period ending on the 10th anniversary of the
date on which beneficial occupancy of the building begins after the
construction or rehabilitation, notwithstanding a statute of
limitations to the contrary.
Section 489.437. MONITORING DEFENSE READJUSTMENT PROJECT
COMMITMENTS. (a) The office may monitor a defense readjustment
project to determine whether and to what extent the project has
followed through on any commitments made by it or on its behalf
under this subchapter.
(b) The office may determine that the defense readjustment
project is not eligible for state tax refunds and credits under
Section 489.428 if the office finds that:
(1) the project is not willing to cooperate with the
office in providing the office with the information the office
needs to make the determination under Subsection (a); or
(2) the project has substantially failed to follow
through on its commitments made by it or on its behalf under this
chapter.
Section 489.438. GRANTS TO LOCAL AREAS AFFECTED BY DEFENSE
BASE REDUCTION. (a) A local governmental entity is eligible for a
grant under this section if it is:
(1) a municipality or county that is an adversely
affected defense-dependent community;
(2) a regional planning commission that has an
adversely affected defense-dependent community within its
boundaries;
(3) a public junior college district all or part of
which is located in an adversely affected defense-dependent
community; or
(4) a campus or extension center for education
purposes of the Texas State Technical College System located in an
adversely affected defense-dependent community.
(b) A municipality or county is an adversely affected
defense-dependent community if the office determines that:
(1) the municipality or county includes within its
boundaries a defense facility that the office of defense or
applicable military office has publicly proposed for closure or
realignment; or
(2) the municipality or county:
(A) requires assistance because of:
(i) the proposed or actual establishment,
realignment, or closure of a defense facility;
(ii) the cancellation or termination of a
United States Department of Defense contract or the failure of the
department of defense to proceed with an approved major weapon
system program;
(iii) a publicly announced planned major
reduction in department of defense spending that would directly and
adversely affect the municipality or county; or
(iv) the closure or a significant reduction
of the operations of a defense facility as the result of a merger,
acquisition, or consolidation of a defense contractor operating the
facility; and
(B) is expected to experience, during the period
between the beginning of the federal fiscal year during which an
event described by Subdivision (2)(A) is finally approved and the
date that the event is to be substantially completed, a direct loss
of:
(i) 2,500 or more defense worker jobs in any
area of the municipality or county that is located in an urbanized
area of a metropolitan statistical area;
(ii) 1,000 or more defense worker jobs in
any area of the municipality or county that is not located in an
urbanized area of a metropolitan statistical area; or
(iii) defense worker jobs representing one
percent of the lobs in the municipality or county.
(c) From money appropriated under this chapter, the office
may make a grant to an eligible local governmental entity to allow
the entity to meet a matching money or investment requirement in
order to receive from the United States assistance that is provided
to allow the local governmental entity to respond to or recover from
an event described by Section 489.438(b). In addition, a grant may
be made to an eligible local governmental entity to match the
entity's contribution for a purpose described in Section 486.005 on
a closed or realigned defense facility.
(d) A grant may not be less than $50,000 or more than the
least of:
(1) 50 percent of the amount of matching money or
investment that the local governmental entity is required to
provide, subject to Subsection (c);
(2) 50 percent of the local governmental entity's
investment for purposes described in Section 486.005, in cases
where United States assistance is not available; or
(3) $2 million.
(e) If the local governmental entity demonstrates to the
office that, because of a limited budget, resources are not
available to provide 50 percent of the amount of matching money or
investment that the local governmental entity is required to
provide, the grant may be not more than 80 percent of the amount of
that matching money or investment requirement, but may not be more
than $2 million.
(f) The office may make a grant to an eligible local
governmental entity described by Section 486.003(a)(3) or (4)
without regard to the availability or acquisition of matching
money.
(g) The local governmental entity may use the proceeds of
the grant for purchase of property from the department of defense or
its designated agent, new construction, rehabilitation, or
renovation of facilities or infrastructure, or purchase of capital
equipment or insurance.
(1) The local governmental entity may deliver the
money to a special district, development corporation, or other
instrumentality of the state or the local governmental entity for
use as provided by this chapter and other applicable law.
(2) An eligible local governmental entity described by
Section 486.003(a)(3) or (4) may use the proceeds of the grant to
purchase or lease equipment to train defense workers whose jobs
have been threatened or lost because of an event described by
Section 486.003 (b)(2)(A).
(h) The office shall establish a defense economic
adjustment assistance panel within the office. The panel consists
of at least three and not more than five professional full-time
employees of the office appointed by the executive director of the
office.
(i) A local governmental entity may apply for a grant under
this chapter to the office on a form prescribed by the office. The
office shall establish periodic application cycles to enable the
panel and office to evaluate groups of applicants in relation to
each other.
(j) The panel shall evaluate each application and assign the
applicant a score based on:
(1) the significance of the adverse effect within the
local governmental entity, including the number of jobs lost in
relation to the workforce in the local governmental entity's
jurisdiction and the effect on the area's economy and tax revenue;
(2) the extent to which the local governmental entity
has used its existing resources to promote local economic
development;
(3) the amount of any grant that the local
governmental entity has previously received under this chapter;
(4) the anticipated number of jobs to be created in
relation to the amount of the grant sought; and
(5) the extent to which the grant will affect the
region in which the local governmental entity is located.
(k) The panel shall submit its scores to the office's
governing body. The governing body shall use the scores to
determine whether to make a grant to an applicant. The governing
body may not make a grant unless the legislature has appropriated
the money for the grant.
Section 489.439. REVOLVING LOANS TO COMMUNITIES
POTENTIALLY AFFECTED BY DEFENSE BASE REDUCTION PROCESS (a) The
office shall administer a revolving loan program for assistance to
an eligible community in developing infrastructure to minimize the
possibility of or the negative effects of defense base reduction on
the eligible community. The loans may be granted to an eligible
community before the neighboring defense base is closed.
(b) The office shall establish criteria and procedures for
evaluations of applications for loans under the program.
(c) The office shall establish categories of eligible
infrastructure projects for which an eligible community may apply
for a loan.
SECTION 3. Section 151.429(g), Tax Code, is amended to read
as follows:
(g) The refund provided by this section is conditioned on
the enterprise project maintaining at least the same level of
employment of qualified employees as existed at the time it
qualified for a refund for a period of three years from that date.
The comptroller [Texas Department of Economic Development] shall
annually certify [to the comptroller] whether that level of
employment of qualified employees has been maintained. On [the
Texas Department of Economic Development] certifying that such a
level has not been maintained, the comptroller shall assess that
portion of the refund attributable to any such decrease in
employment, including penalty and interest from the date of the
refund.
SECTION 4. Section 151.4291(g), Tax Code, is amended to
read as follows:
(g) The refund provided by this section is conditioned on
the defense readjustment project maintaining at least the same
level of employment of qualified employees as existed at the time it
qualified for a refund for a period of three years from that date.
The comptroller [Texas Department of Economic Development] shall
annually certify to [the comptroller and] the Legislative Budget
Board whether that level of employment of qualified employees has
been maintained. On [the Texas Department of Economic Development]
certifying that such a level has not been maintained, the
comptroller shall assess that portion of the refund attributable to
any such decrease in employment, including penalty and interest
from the date of the refund.
SECTION 5. Section 151.431, Tax Code, subsections (a), (b)
and (c), are amended to read as follows:
Section 151.431. Sales and Use Tax Refund for Job
Retention. (a) A qualified business operating in the enterprise
zone's jurisdiction for at least three consecutive years may apply
for and be granted a onetime refund of sales and use tax paid by the
qualified business after certification of the qualified business as
provided by Subsection (b) of this section to a vendor or directly
to the state for the purchase of equipment or machinery sold to the
business for use in an enterprise zone if the governing body or
bodies certify to the comptroller [Texas Department of Economic
Development] that the business is retaining 10 or more jobs held by
qualified employees during the year. For the purposes of this
subsection "job" means an existing employment position of a
qualified business that has provided employment to a qualified
employee of at least 1,820 hours annually.
(b) Only qualified businesses that have been certified as
eligible for a refund under this section by the governing body or
bodies to the [department and by the department to the]
comptroller, including certification of the number of jobs
retained, are entitled to the refund. During each calendar year, no
more than three eligible qualified businesses may be certified to
the department by a municipality or county, subject to Subsection
(c).
(c) If a municipality or county sponsors more than one
enterprise zone, that municipality or county may certify to the
comptroller [department] only a total of three eligible qualified
businesses from all enterprise zones of which it is the governing
body or one of the governing bodies and must allocate the three
certifications for which it is eligible as evenly as possible among
those zones. If an enterprise zone has more than one governing
body, it is entitled to only the number of certifications that is
equal to the total that all of its governing bodies may allocate to
it, but in no case is it entitled to more than three certifications.
A certification that must be allocated to a particular zone but
would exceed the three allowable to that zone may not be made. The
comptroller [department] by rule may require:
(1) multiple governing bodies jointly to certify all
or some of the certifications for which a zone is eligible; and
(2) governing bodies to follow uniform procedures or
selection criteria in selecting the qualified businesses certified
to it under this section.
SECTION 6. Section 171.501, Tax Code, subsections (a), (b)
and (c), are amended to read as follows:
Section 171.501. Refund for Job Creation in Enterprise
Zone. (a) A corporation that has been certified a qualified
business as provided by Chapter 489, Subchapter C [2303],
Government Code may apply for and be granted a refund of franchise
tax paid with an initial or annual report if the governing body or
bodies certify to the comptroller [Texas Department of Economic
Development] that the business has created 10 or more new jobs in
its enterprise zone held by qualified employees during the calendar
year that contains the end of the accounting period on which the
report is based. [The Texas Department of Economic Development
shall certify eligibility for any refund to the comptroller.]
(b) Only qualified businesses that have been certified as
eligible for a refund under this section by the governing body or
bodies [to the department and by the department] to the comptroller
are entitled to the refund. During each calendar year, no more than
three eligible qualified businesses may be certified to the
department by a municipality or county, subject to Subsection (c).
(c) If a municipality or county sponsors more than one
enterprise zone, that municipality or county may certify to the
comptroller [department] only a total of three eligible qualified
businesses from all enterprise zones of which it is the governing
body or one of the governing bodies and must allocate the three
certifications for which it is eligible as evenly as possible among
those zones. If an enterprise zone has more than one governing
body, it is entitled to only the number of certifications that is
equal to the total that all of its governing bodies may allocate to
it, but in no case is it entitled to more than three certifications.
A certification that must be allocated to a particular zone but
would exceed the three allowable to that zone may not be made. The
comptroller [department] by rule may require:
(1) multiple governing bodies jointly to certify all
or some of the certifications for which a zone is eligible; and
(2) governing bodies to follow uniform procedures or
selection criteria in selecting the qualified businesses certified
to it under this section.
SECTION 7. The following laws are repealed: (1) Section
43.412, Government Code; (2) Section 481.023(c), Government Code;
(3) Subchapters BB and N, Chapter 481, Government Code; (4) Chapter
486, Government Code; (5) Chapter 2303, Government Code; (6)
Chapter 2310, Government Code; and (7) Section 4 and Section 24,
Subsections (a), (b) and (c), Development Corporation Act of 1979
(Article 5190.6, Vernon's Texas Civil Statutes).
SECTION 8. Section 481.194(b), Government Code, is
repealed.
SECTION 9. Section 481.003, Government Code, is amended to
read as follows:
Sec. 481.003. SUNSET PROVISION. The Texas Department of
Economic Development is subject to Chapter 325 (Texas Sunset Act).
Unless continued in existence as provided by that chapter, the
department is abolished and this chapter expires September 1, 2012
[2003].
SECTION 10. This Act takes effect September 1, 2003.