80R6655 CLG-F

By: Brimer S.B. No. 1262

A BILL TO BE ENTITLED

AN ACT

relating to the enterprise zone program.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 2303.004, Government Code, is amended to read as follows:

Sec. 2303.004. JURISDICTION OF MUNICIPALITY OR COUNTY. (a) For the purposes of this chapter, territory in the extraterritorial jurisdiction of a municipality is considered to be in the jurisdiction of the municipality.

(b) The governing body of a county with a population of 750,000 or more may nominate for designation as an enterprise project a project or activity of a qualified business that is located in a municipality of the county or in the municipality's extraterritorial jurisdiction. This subsection may not be construed to prohibit the municipality from also being considered as a nominating entity for the enterprise project designation.

SECTION 2. Section 2303.401, Government Code, is amended to read as follows:

Sec. 2303.401. DEFINITIONS. In this subchapter:

(1) "Certified job" means a new or retained job that:

(A) has provided at least 1,820 hours of employment a year to a qualified employee of a qualified business as described by Section 2303.402;

(B) is intended to exist for at least three years after the date on which the comptroller makes the initial certification of hiring commitments for the qualified business under Section 2303.516(d); and

(C) has been certified by the comptroller as eligible for receipt of a state benefit under this chapter.

(2) "Hours of employment" means regular hours worked, overtime hours worked, paid vacation leave, additional paid holidays, and paid sick leave.

(3) "New [permanent] job" means any [a] new job [employment position] created by a qualified business as described by Section 2303.402 at the qualified business site or in an enterprise zone after the business's project or activity has been designated as an enterprise project [that:

[(A) has provided at least 1,820 hours of employment a year to a qualified employee; and

[(B) is intended to exist at the qualified business site for at least three years after the date on which a state benefit is received as authorized by this chapter].

(4) [(2)] "Retained job" means any [a] job that existed with a qualified business before designation of the business's project or activity as an enterprise project [that:

[(A) has provided employment to a qualified employee of at least 1,820 hours annually; and

[(B) is intended to be an employment position for at least three years after the date on which a state benefit is received as authorized by this chapter].

SECTION 3. Section 2303.405(b), Government Code, is amended to read as follows:

(b) An application must contain an economic analysis of the plans of the qualified business for expansion, revitalization, or other activity with regard to the enterprise project, including:

(1) the number of anticipated certified [new permanent] jobs the enterprise project will create during the designation period;

(2) the anticipated number of certified [permanent] jobs the enterprise project will retain during the designation period;

(3) the amount of investment to be made by the enterprise project;

(4) a complete description of the projected schedule for completion of the specific activity described by Section 2303.404(b) to be undertaken by the enterprise project;

(5) other information the bank requires;

(6) a description of the local effort made by the nominating body, the qualified business, and other affected entities to develop and revitalize the jurisdiction of the governmental entity nominating the project or activity; and

(7) if the nominating body is applying for a double or triple jumbo enterprise project, as defined by Section 2303.407, an indication of which of those types of designations is being sought.

SECTION 4. Section 2303.407, Government Code, is amended to read as follows:

Sec. 2303.407. ALLOCATION OF JOBS ELIGIBLE FOR TAX REFUND. (a) The bank shall allocate to an enterprise project the maximum number of certified [new permanent jobs or retained] jobs eligible based on the amount of capital investment made in the project and the refund per job with a maximum refund to be included in a computation of a tax refund for the project.

(b) A capital investment in a project of:

(1) $40,000 to $399,999 will result in a refund of up to $2,500 per job with a maximum refund of $25,000 for the creation or retention of 10 certified jobs;

(2) $400,000 to $999,999 will result in a refund of up to $2,500 per job with a maximum refund of $62,500 for the creation or retention of 25 certified jobs;

(3) $1,000,000 to $4,999,999 will result in a refund of up to $2,500 per job with a maximum refund of $312,500 for the creation or retention of 125 certified jobs;

(4) $5,000,000 to $149,999,999 will result in a refund of up to $2,500 per job with a maximum refund of $1,250,000 for the creation or retention of 500 certified jobs;

(5) $150,000,000 to $249,999,999 will result in a refund of up to $5,000 per job with a maximum refund of $2,500,000 for the creation or retention of 500 certified jobs; or

(6) $250,000,000 or more will result in a refund of up to $7,500 per job with a maximum refund of $3,750,000 for the creation or retention of 500 certified jobs.

(c) A capital investment in the range amount and the creation or retention of the number of certified jobs described by Subsection (b)(5) is considered a double jumbo enterprise project.

(d) A capital investment in the range amount and the creation or retention of the number of certified jobs described by Subsection (b)(6) is considered a triple jumbo enterprise project.

SECTION 5. Sections 2303.504(b) and (c), Government Code, are amended to read as follows:

(b) At the time of receipt of any tax benefit available as a result of participating in the enterprise zone program, including a state sales and use tax refund [or franchise tax credit], a fee in an amount equal to three percent of the amount of the tax benefit shall be transferred to the Texas economic development bank fund under Subchapter B, Chapter 489, to defray the cost of administering this chapter. The fee does not reduce the amount of the refund to which the enterprise project is entitled under Section 2303.4071.

(c) Not later than the 60th day after the last day of each fiscal year, the comptroller shall report to the bank the statewide total of actual certified jobs created, actual certified jobs retained, and the tax refunds made under this section during that fiscal year.

SECTION 6. Section 2303.517, Government Code, is amended to read as follows:

Sec. 2303.517. REPORT. Before obtaining a state benefit, the qualified business must submit to the bank a certified report of the actual number of certified jobs created or retained and the capital investment made at or committed to the qualified business site.

SECTION 7. Section 151.429, Tax Code, is amended by amending Subsections (a), (b), (c), (e), and (g) and adding Subsections (c-1) and (c-2) to read as follows:

(a) An enterprise project is eligible for a refund in the amount provided by this section of the taxes imposed by this chapter on purchases of taxable items for use at the qualified business site [:

[(1) equipment or machinery sold to an enterprise project for use at the qualified business site;

[(2) building materials sold to an enterprise project for use in remodeling, rehabilitating, or constructing a structure at the qualified business site;

[(3) labor for remodeling, rehabilitating, or constructing a structure by an enterprise project at the qualified business site; and

[(4) electricity and natural gas purchased and consumed in the normal course of business at the qualified business site].

(b) Subject to the limitations provided by Subsection (c) or (c-1) of this section, an enterprise project qualifies for a refund of taxes under this section based on the amount of capital investment made at the qualified business site and refund per job with a maximum refund to be included in a computation of a tax refund for the project. A capital investment at the qualified business site of:

(1) $40,000 to $399,999 will result in a refund of up to $2,500 per job with a maximum refund of $25,000 for the creation or retention of 10 certified jobs;

(2) $400,000 to $999,999 will result in a refund of up to $2,500 per job with a maximum refund of $62,500 for the creation or retention of 25 certified jobs;

(3) $1,000,000 to $4,999,999 will result in a refund of up to $2,500 per job with a maximum refund of $312,500 for the creation or retention of 125 certified jobs;

(4) $5,000,000 to $149,999,999 will result in a refund of up to $2,500 per job with a maximum refund of $1,250,000 for the creation or retention of 500 certified jobs;

(5) $150,000,000 to $249,999,999 will result in a refund of up to $5,000 per job with a maximum refund of $2,500,000 for the creation or retention of 500 certified jobs; or

(6) $250,000,000 or more will result in a refund of up to $7,500 per job with a maximum refund of $3,750,000 for the creation or retention of 500 certified jobs.

(c) The total amount of tax refund that an enterprise project may apply for in a state fiscal year may not exceed $250,000. If an enterprise project qualifies in a state fiscal year for a refund of taxes in an amount in excess of the limitation provided by this subsection, it may apply for a refund of those taxes in a subsequent year, subject to the $250,000 limitation for each year. The total amount that may be refunded to an enterprise project under this section may not exceed the amount determined by multiplying $250,000 by the number of state fiscal years during which the enterprise project created or retained one or more certified jobs for qualified employees.

(c-1) To the same extent and in the same manner as provided by Subsection (c) for an enterprise project, a double jumbo enterprise project is eligible for a maximum refund of $500,000 and a triple jumbo enterprise project is eligible for a maximum refund of $750,000 in each state fiscal year.

(c-2) Cumulative tax refunds based on two or more prior years may be applied for and refunded in any one year, subject to the limitation for that year provided by Subsection (c) for an enterprise project or by Subsection (c-1) for a double jumbo enterprise project or triple jumbo enterprise project.

(e) In this section:

(1) "Enterprise project" means a person designated by the Texas Economic Development Bank as an enterprise project under Chapter 2303, Government Code.

(2) "Enterprise zone," "qualified employee," and "qualified hotel project" have the meanings assigned to those terms by Section 2303.003, Government Code.

(3) "New [permanent] job" has the meaning assigned by Section 2303.401, Government Code [means a new employment position created by a qualified business as described by Section 2303.402, Government Code, that:

[(A) has provided at least 1,820 hours of employment a year to a qualified employee; and

[(B) is intended to exist for at least three years after a state benefit is received under Chapter 2303, Government Code].

(4) "Retained job" has the meaning assigned by Section 2303.401, Government Code.

(4-a) "Certified job" has the meaning assigned by Section 2303.401, Government Code.

(5) "Double jumbo enterprise project" and "triple jumbo enterprise project" have the meanings assigned by Section 2303.407, Government Code.

(g) The refund provided by this section is conditioned on the enterprise project maintaining for a three-year period at least the same number [level] of certified jobs [employment of qualified employees] as existed on the date the comptroller initially certified the hiring commitments for the project under Section 2303.516(d)(1), Government Code [at the time it qualified for a refund for a period of three years from that date]. The comptroller shall annually certify whether that number [level] of certified jobs [employment of qualified employees] has been maintained. On certifying that such a number [level] has not been maintained, the comptroller shall assess that portion of the refund attributable to any such decrease in certified jobs [employment], including penalty and interest from the date of the refund.

SECTION 8. Section 151.429(i), Tax Code, is repealed.

SECTION 9. The changes in law made by this Act to Chapter 2303, Government Code, apply only to an application for a designation under the enterprise zone program under Chapter 2303, Government Code, as amended by this Act, that is filed on or after the effective date of this Act. An application for designation under the enterprise zone program that is filed before the effective date of this Act is governed by the law in effect on the date the application was filed, and the former law is continued in effect for that purpose.

SECTION 10. The changes in law made by this Act to Section 151.429, Tax Code, apply only to an application for a tax refund made on or after the effective date of this Act. An application for a tax refund made before the effective date of this Act is governed by the law in effect on the date the application was made, and the former law is continued in effect for that purpose.

SECTION 11. This Act takes effect September 1, 2007.