79R11863 ATP-D
By: Jones of Dallas H.B. No. 1380
Substitute the following for H.B. No. 1380:
By: Vo C.S.H.B. No. 1380
A BILL TO BE ENTITLED
AN ACT
relating to the creation of renaissance zones to promote the
relocation of businesses to certain areas of this state.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subtitle G, Title 10, Government Code, is
amended by adding Chapter 2312 to read as follows:
CHAPTER 2312. RENAISSANCE ZONES
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 2312.001. DEFINITIONS. In this chapter:
(1) "Business" includes a part of the operations of a
business entity.
(2) "Eligible business" means a business designated as
an eligible business under Section 2312.102.
(3) "Office" means the Texas Economic Development and
Tourism Office.
(4) "Relocate" means to establish a physical presence
at a new location, including:
(A) the transfer of an existing business
operation to a facility at a different location;
(B) the expansion of an existing business
operation to an additional location; or
(C) the establishment of an office or plant at a
different location.
(5) "Taxing unit" has the meaning assigned by Section
1.04, Tax Code.
(6) "Zone" means an area designated as a renaissance
zone under this chapter.
Sec. 2312.002. REINVESTMENT ZONE. A zone is a reinvestment
zone within the meaning of Section 1-g(a), Article VIII, Texas
Constitution.
[Sections 2312.003-2312.050 reserved for expansion]
SUBCHAPTER B. CREATION OF ZONE
Sec. 2312.051. NOMINATION OF AREA. (a) The governing body
of a taxing unit, singly or jointly with another taxing unit, may by
order or ordinance nominate an area located within the boundaries
of the taxing unit for designation as a zone by submitting an
application to the office.
(b) An application for designation as a zone shall contain:
(1) a copy of the order or ordinance nominating the
area as a zone;
(2) a map of the area showing existing streets and
highways and the boundaries of the area;
(3) an analysis and appropriate supporting documents
and statistics demonstrating that the area qualifies for
designation as a zone;
(4) information demonstrating that an eligible
business is likely to relocate to the area if the area is designated
as a zone; and
(5) any other information required by the office.
Sec. 2312.052. DESIGNATION BY OFFICE. (a) The office shall
review each application submitted by a taxing unit seeking
designation as a zone.
(b) The office must decide whether to designate an area as a
zone before the 90th day after the date on which the application is
submitted.
(c) The office shall decide whether to designate an area as
a zone based on:
(1) whether the criteria for designation as a zone
prescribed by Section 2312.053 are met; and
(2) the likelihood that an eligible business will
relocate to the area.
Sec. 2312.053. CRITERIA FOR DESIGNATION. (a) To be
designated as a zone an area must:
(1) 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 county in which the area is
located; and
(3) be an area classified as an area of pervasive
poverty, unemployment, and economic distress under Subsection (b).
(b) An area is an area of pervasive poverty, unemployment,
and economic distress if:
(1) the average rate of unemployment in the area
during the most recent 12-month period for which data is available
was at least 1-1/2 times the state average for that period; 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 governing body of the taxing unit
nominating the area 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.
(c) Labor force and population data under Subsection (b) are
considered current if:
(1) they are the most recently published estimates; or
(2) the renaissance zone application containing the
data is received by the office before the 61st day after the date
revised estimates of that data are published.
(d) For purposes of determining the average rate of
unemployment in the area under Subsection (b)(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.
[Sections 2312.054-2312.100 reserved for expansion]
SUBCHAPTER C. BOARD OF DIRECTORS; POWERS AND DUTIES OF BOARD
Sec. 2312.101. BOARD OF DIRECTORS. (a) A zone is governed
by a board of directors.
(b) The executive director of the office shall by rule
determine the number of directors, the qualifications of directors,
and the method of apportioning the appointment of directors among
the taxing units that nominated the area for designation as a zone.
The executive director of the office shall provide that each taxing
unit may appoint at least one director.
(c) A taxing unit must make its appointments to the board of
directors before the 30th day after the date on which the office
designates an area as a zone.
Sec. 2312.102. DESIGNATION OF ELIGIBLE BUSINESSES. (a)
The board of directors shall determine whether a business is an
eligible business.
(b) If the board of directors determines that a business
meets the requirements prescribed by Section 2312.151(b), the board
by order shall designate the business as an eligible business.
Sec. 2312.103. ADVERTISEMENT OF ZONE. The board of
directors shall advertise the existence of a zone and the benefits
of relocating to a zone to attract businesses to the zone and
encourage new business growth in the zone.
Sec. 2312.104. APPLICATION FOR AUTHORITY TO EXEMPT ELIGIBLE
BUSINESSES FROM FRANCHISE TAX. (a) The board of directors may
apply to the comptroller for authorization to grant a franchise tax
exemption to eligible businesses within the zone.
(b) If the comptroller determines that there is sufficient
money in the renaissance zone franchise tax exemption account
established under Subchapter E to offset an exemption from the
franchise tax for eligible businesses within the zone, the
comptroller shall approve the exemption.
(c) The comptroller may restrict the number of businesses in
a single zone or in all zones that may be granted franchise tax
exemptions if the comptroller determines that the money in the
account will support franchise tax exemptions for only that number
of businesses.
(d) The comptroller may adopt rules to implement this
section.
[Sections 2312.105-2312.150 reserved for expansion]
SUBCHAPTER D. INCENTIVES FOR BUSINESS RECRUITMENT
Sec. 2312.151. ELIGIBLE BUSINESS. (a) In this section,
"new job" means a new employment position that is intended to
provide at least 1,820 hours of employment a year.
(b) A business is an eligible business if:
(1) the business relocates from another state to or is
a new business created in a zone after the date on which the zone is
designated; and
(2) the business delivers a written statement to the
board of directors that guarantees that:
(A) the relocation of the business to or creation
of the business in the zone will create 50 or more new jobs in the
zone; and
(B) the business will invest a minimum of $1
million in real property improvements in the zone.
(c) An eligible business that has not created 50 or more new
jobs in the zone before the first anniversary of the date on which
the business is designated as an eligible business or that has not
invested $1 million or more in real property improvements before
the fifth anniversary of the date on which the business is
designated as an eligible business may not receive further tax
abatements or exemptions under this chapter.
(d) Only the property and operations of an eligible business
that are physically located in the zone are eligible for an
incentive under this chapter.
Sec. 2312.152. EXPIRATION. The designation of a business
as an eligible business expires on the 10th anniversary of the date
on which a business is designated as an eligible business.
Sec. 2312.153. SALES AND USE TAX EXEMPTIONS. An eligible
business is exempt from sales and use taxes as provided by Section
151.356, Tax Code.
Sec. 2312.154. FRANCHISE TAX EXEMPTION. An eligible
business is exempt from franchise taxes as provided by Section
171.088, Tax Code, only if:
(1) the eligible business is located in a zone for
which the comptroller has approved franchise tax exemptions under
Section 2312.104;
(2) the number of businesses previously granted
exemptions does not equal or exceed the maximum number of
businesses that may be granted exemptions in the zone or in all
zones, as determined by the comptroller under Section 2312.104(c);
and
(3) the board of directors grants the business an
exemption from the franchise tax.
Sec. 2312.155. LOCAL AD VALOREM TAX ABATEMENT. The
governing body of a taxing unit located wholly or partly in a zone
may enter into a tax abatement agreement as provided by Chapter 314,
Tax Code, with an eligible business operating in the zone if the
taxing unit may issue bonds payable from ad valorem taxes under
Section 1-g(b), Article VIII, Texas Constitution, or other law, for
the purpose of offsetting tax proceeds that would not be collected
as a result of a tax abatement agreement.
[Sections 2312.156-2312.200 reserved for expansion]
SUBCHAPTER E. RENAISSANCE ZONE FRANCHISE TAX EXEMPTION ACCOUNT
Sec. 2312.201. RENAISSANCE ZONE FRANCHISE TAX EXEMPTION
ACCOUNT. (a) The renaissance zone franchise tax exemption account
is a separate account in the general revenue fund.
(b) The account is composed of:
(1) money from the Texas Enterprise Fund awarded to
the account;
(2) gifts, grants, and donations; and
(3) legislative appropriations.
(c) Money in the account may be used only to offset the
exemptions from the franchise tax granted to eligible businesses
within renaissance zones.
SECTION 2. Subchapter H, Chapter 151, Tax Code, is amended
by adding Section 151.356 to read as follows:
Sec. 151.356. ITEMS SOLD TO OR USED BY CERTAIN BUSINESSES
LOCATED IN RENAISSANCE ZONES. (a) A taxable item sold, leased, or
rented to or stored, used, or consumed by a business designated as
an eligible business under Section 2312.102, Government Code, is
exempted from the taxes imposed by this chapter if the item is for
the exclusive use and benefit of the eligible business's operations
within the renaissance zone.
(b) The exemption provided by this section does not apply to
an item that is to be leased, sold, or lent by the eligible
business.
SECTION 3. Subchapter B, Chapter 171, Tax Code, is amended
by adding Section 171.088 to read as follows:
Sec. 171.088. EXEMPTION--CERTAIN CORPORATIONS LOCATED IN
RENAISSANCE ZONES. (a) To the extent that the corporation's
taxable activities occur within a renaissance zone, a corporation
designated as an eligible business under Section 2312.102,
Government Code, is exempted from the franchise tax before the
fifth anniversary of the date on which the corporation is
designated as an eligible business.
(b) To the extent that the corporation's taxable activities
occur within a renaissance zone, a corporation designated as an
eligible business under Section 2312.102, Government Code, is
exempted from:
(1) 80 percent of the amount of franchise tax due for
the period beginning on the fifth anniversary and ending on the day
before the sixth anniversary of the date on which the corporation is
designated as an eligible business;
(2) 60 percent of the amount of franchise tax due for
the period beginning on the sixth anniversary and ending on the day
before the seventh anniversary of the date on which the corporation
is designated as an eligible business;
(3) 40 percent of the amount of franchise tax due for
the period beginning on the seventh anniversary and ending on the
day before the eighth anniversary of the date on which the
corporation is designated as an eligible business;
(4) 20 percent of the amount of franchise tax due for
the period beginning on the eighth anniversary and ending on the day
before the ninth anniversary of the date on which the corporation is
designated as an eligible business; and
(5) 10 percent of the amount of franchise tax due for
the period beginning on the ninth anniversary and ending on the day
before the 10th anniversary of the date on which the corporation is
designated as an eligible business.
SECTION 4. Subtitle B, Title 3, Tax Code, is amended by
adding Chapter 314 to read as follows:
CHAPTER 314. TAX ABATEMENT IN RENAISSANCE ZONES
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 314.001. DEFINITIONS. In this chapter:
(1) "Eligible business" means a business designated as
an eligible business under Section 2312.102, Government Code.
(2) "Taxing unit" has the meaning assigned by Section
1.04.
Sec. 314.002. TAXING UNIT WITH TAX RATE SET BY
COMMISSIONERS COURT. (a) The commissioners court of a county that
enters into a tax abatement agreement for the county may enter into
a tax abatement agreement applicable to the same property on behalf
of a taxing unit other than the county if by statute the ad valorem
tax rate of the other taxing unit is approved by the commissioners
court or the commissioners court is expressly required by statute
to impose the ad valorem taxes of the other taxing unit. The tax
abatement agreement entered into on behalf of the other taxing unit
is not required to contain the same terms as the tax abatement
agreement entered into on behalf of the county.
(b) This section does not apply to a taxing unit because the
county tax assessor-collector is required by law to assess or
collect the taxing unit's ad valorem taxes.
Sec. 314.003. STATE ADMINISTRATION. (a) The comptroller
shall maintain a central registry of ad valorem tax abatement
agreements executed under this chapter. The chief appraiser of
each appraisal district that appraises property for a taxing unit
that is located wholly or partly in a reinvestment zone and has
executed a tax abatement agreement under this chapter shall deliver
to the comptroller before July 1 of the year following the year in
which the zone is designated or the agreement is executed a report
providing the following information:
(1) a general description of the reinvestment zone,
including its boundaries and the taxing units that are located
wholly or partly in the zone;
(2) a copy of each tax abatement agreement to which a
taxing unit that participates in the appraisal district is a party;
and
(3) any other information required by the comptroller
to administer this section.
(b) The comptroller may provide assistance to a taxing unit
on request of its governing body or the presiding officer of its
governing body relating to the administration of this chapter. The
Texas Economic Development and Tourism Office and the comptroller
may provide technical assistance to a local governing body
regarding the execution of tax abatement agreements.
(c) Only the property of an eligible business that is
physically located in a renaissance zone is eligible for an
abatement under this chapter.
[Sections 314.004-314.050 reserved for expansion]
SUBCHAPTER B. TAX ABATEMENT
Sec. 314.051. REINVESTMENT ZONE. Designation of an area as
a renaissance zone under Chapter 2312, Government Code, constitutes
designation of the area as a reinvestment zone under this chapter
without procedural requirements other than those provided by
Chapter 2312, Government Code.
Sec. 314.052. TAX ABATEMENT AGREEMENT. (a) The governing
body of a taxing unit authorized to enter into tax abatement
agreements under Section 2312.155, Government Code, may agree in
writing with an eligible business to exempt from taxation a portion
of the value of the property owned by the eligible business as
provided by this section.
(b) A tax abatement agreement shall provide that:
(1) 100 percent of the value of the taxable property is
exempt from taxation before the seventh anniversary of the date on
which the business is designated as an eligible business;
(2) 75 percent of the value of the taxable property is
exempt from taxation for the period beginning on the seventh
anniversary and ending on the day before the eighth anniversary of
the date on which the business is designated as an eligible
business;
(3) 50 percent of the value of the taxable property is
exempt from taxation for the period beginning on the eighth
anniversary and ending on the day before the ninth anniversary of
the date on which the business is designated as an eligible
business; and
(4) 25 percent of the value of the taxable property is
exempt from taxation for the period beginning on the ninth
anniversary and ending on the day before the 10th anniversary of the
date on which the business is designated as an eligible business.
(c) A tax abatement agreement expires on the 10th
anniversary of the date on which the business is designated as an
eligible business.
Sec. 314.053. SPECIFIC TERMS OF TAX ABATEMENT AGREEMENT.
(a) An agreement made under this chapter must:
(1) provide for recapturing property tax revenue lost
as a result of the agreement if the property ceases to be owned by an
eligible business; and
(2) require the owner of the property to certify
annually to the governing body of the taxing unit that the owner is
an eligible business and is in compliance with each applicable term
of the agreement.
(b) An agreement made under this chapter may include any
term agreed on by the taxing unit and the eligible business that
does not alter the terms prescribed by this subchapter.
Sec. 314.054. APPROVAL BY GOVERNING BODY. (a) To be
effective, an agreement made under this chapter must be approved by
the affirmative vote of a majority of the members of the governing
body of the taxing unit at a regularly scheduled meeting of the
governing body.
(b) On approval by the governing body, an agreement may be
executed in the same manner as other contracts made by the taxing
unit.
Sec. 314.055. MODIFICATION OR TERMINATION OF AGREEMENT.
(a) At any time before the expiration of an agreement made under
this chapter, the agreement may be modified by the parties to the
agreement to include other provisions that could have been included
in the original agreement or to delete provisions that were not
necessary to the original agreement. The agreement may not be
modified to alter the terms expressly imposed by this subchapter.
(b) The modification must be made by the same procedure by
which the original agreement was approved and executed.
(c) The original agreement may not be modified to extend
beyond the 10th anniversary of the date on which the business is
designated as an eligible business.
Sec. 314.056. USE OF BOND PROCEEDS BY TAXING UNIT. A taxing
unit authorized to issue bonds payable from ad valorem taxes under
Section 1-g(b), Article VIII, Texas Constitution, or other law, may
use the proceeds of the bonds to offset the tax proceeds that would
not be collected by the taxing unit as a result of tax abatement
agreements entered into with eligible businesses under this chapter
if the use of proceeds in that manner is consistent with the purpose
for which the bonds were issued.
Sec. 314.057. ISSUANCE OF BONDS. (a) A municipality may
issue bonds, the proceeds of which may be used to pay the cost to the
municipality under tax abatement agreements entered into with
eligible businesses in the renaissance zone on behalf of which the
bonds were issued or to satisfy claims of holders of the bonds or
notes. The municipality may issue refunding bonds for the payment
or retirement of bonds previously issued by the municipality under
this section.
(b) Bonds issued under this section are payable, as to both
principal and interest, from ad valorem taxes.
(c) Bonds are issued under this section by ordinance of the
municipality without any additional approval other than that of the
attorney general.
(d) Bonds issued under this section, together with the
interest on and income from those bonds, are exempt from all taxes.
(e) The bonds may be issued in one or more series. The
ordinance approving a bond, or the trust indenture or mortgage
issued in connection with the bond, shall provide:
(1) the date that the bond bears;
(2) that the bond is payable on demand or at a
specified time;
(3) the interest rate that the bond bears;
(4) the denomination of the bond;
(5) whether the bond is in coupon or registered form;
(6) the conversion or registration privileges of the
bond;
(7) the rank or priority of the bond;
(8) the manner of execution of the bond;
(9) the medium of payment in which and the place or
places at which the bond is payable;
(10) the terms of redemption, with or without premium,
to which the bond is subject;
(11) the manner in which the bond is secured; and
(12) any other characteristic of the bond.
(f) A bond issued under this section is fully negotiable.
In a suit, action, or other proceeding involving the validity or
enforceability of a bond issued under this section or the security
of a bond issued under this section, if the bond recites in
substance that it was issued by the municipality for a renaissance
zone, the bond or note is conclusively considered to have been
issued for that purpose, and the development or redevelopment of
the zone is conclusively considered to have been planned, located,
and carried out as provided by this chapter.
(g) A bank, trust company, savings bank or institution,
savings and loan association, investment company or other person
carrying on a banking or investment business, an insurance company,
insurance association, or other person carrying on an insurance
business, or an executor, administrator, curator, trustee, or other
fiduciary may invest any sinking funds, money, or other funds
belonging to it or in its control in bonds issued under this
section. The bonds are authorized security for all public
deposits. A person, political subdivision, or public or private
officer may use funds owned or controlled by the person, political
subdivision, or officer to purchase bonds issued under this
section. This subsection does not relieve any person of the duty to
exercise reasonable care in selecting securities.
(h) A bond issued under this section is not a general
obligation of the issuing municipality. A bond issued under this
section does not give rise to a charge against the general credit or
taxing powers of the municipality and is not payable except as
provided by this section. A bond issued under this section must
state the restrictions of this subsection on its face.
(i) A bond issued under this section may not be included in
any computation of the debt of the issuing municipality.
(j) A municipality may not issue bonds in an amount that
exceeds the total cost to the municipality under tax abatement
agreements entered into with eligible businesses in the renaissance
zone for which the bonds are issued.
(k) A bond issued under this section must mature within 20
years of the date of issue.
SECTION 5. Subchapter C, Chapter 321, Tax Code, is amended
by adding Section 321.2081 to read as follows:
Sec. 321.2081. REALLOCATION OF PROCEEDS FOR CERTAIN
EXEMPTIONS. Notwithstanding any other law, a municipality may
reallocate sales and use tax proceeds to offset revenue not
received as a result of the operation of Sections 151.356 and
321.208.
SECTION 6. Subchapter C, Chapter 323, Tax Code, is amended
by adding Section 323.2071 to read as follows:
Sec. 323.2071. REALLOCATION OF PROCEEDS FOR CERTAIN
EXEMPTIONS. Notwithstanding any other law, a county may reallocate
sales and use tax proceeds to offset revenue not received as a
result of the operation of Sections 151.356 and 323.207.
SECTION 7. This Act takes effect September 1, 2005.