BILL ANALYSIS

C.S.S.B. 1458

By: Seliger

Ways & Means

Committee Report (Substituted)

BACKGROUND AND PURPOSE

In January 2008, Texas Attorney General Greg Abbott issued opinion GA-0600 in response to a question regarding whether a county commissioners court is prohibited from executing a tax abatement agreement with a wind turbine company for its fixtures and improvements located on a commissioner's real property.  In addressing that issue, the opinion raised issues requiring clarification regarding the authority of a commissioners court to grant county tax abatements for fixtures and improvements owned by a lessee and located on taxable real property. 

C.S.S.B. 1458 clarifies issues raised in GA-0600 regarding the eligibility of property owned by a lessee for abatement.  The bill expressly grants county commissioners courts the authority to grant abatements for tangible personal property and clarifies existing law regarding the duration of an abatement granted under the Property Redevelopment and Tax Abatement Act.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.

ANALYSIS

C.S.S.B. 1458 amends Section 312.006, Tax Code, as amended by Chapters 1029 (H.B. 1449) and 1505 (H.B. 1200), Acts of the 77th Legislature, Regular Session, 2001, to extend the expiration date of the Property Redevelopment and Tax Abatement Act from September 1, 2009 to September 1, 2019. 

C.S.S.B. 1458 amends the act to authorize the governing body of a taxing unit granting an abatement and the owner of the property that is the subject of the abatement agreement to agree to defer the commencement of the abatement period until a date that is subsequent to the date the agreement is entered into, but prohibits the duration of an abatement period from exceeding 10 years.  The bill defines "abatement period."  The bill establishes that these provisions deferring the commencement of an abatement period are intended to clarify rather than to change existing law. 

C.S.S.B. 1458 authorizes a county commissioners court to execute a tax abatement agreement with the owner of tangible personal property located on real property in a reinvestment zone to exempt from taxation all or a portion of the value of the real property, all or a portion of the value of the tangible personal property located on the real property, or all or a portion of the value of both.  The bill revises and partially replaces provisions relating to a commissioners court's execution of a tax abatement agreement with the owner of a leasehold interest in tax-exempt real property or leasehold interests or improvements on tax-exempt real property.  The bill, under the new provisions, establishes that the commissioners court is authorized to execute a tax abatement agreement with the owner of a leasehold interest in tax-exempt real property located in a county reinvestment zone to exempt all or a portion of the value of the leasehold interest in the real property.  The bill authorizes the court to execute a tax abatement agreement with the owner of tangible personal property or an improvement located on tax-exempt real property that is located in a designated reinvestment zone to exempt all or a portion of the value of the tangible personal property or improvement located on the real property.  The bill authorizes the commissioners court to execute a tax abatement agreement with a lessee of taxable real property located in a county reinvestment zone to exempt from taxation all or a portion of the value of the fixtures, improvements, or other real property owned by the lessee and located on the property that is subject to the lease, all or a portion of the value of tangible personal property owned by the lessee and located on the real property that is the subject of the lease, or all or a portion of the value of both the fixtures, improvements, or other real property and the tangible personal property.

C.S.S.B. 1458 establishes that a property tax abatement agreement that was executed before the effective date of this bill by the commissioners court of a county and an owner of taxable real property or tangible personal property or an owner of a leasehold interest in tax-exempt real property, under provisions relating to a county tax abatement agreement as those provisions existed before the effective date of this bill, that provides for an exemption from taxation of all or a portion of the value of real property, tangible personal property, or both, or of all or a portion of the value of a leasehold interest in tax-exempt real property, that is not invalid for a reason other than an inconsistency with such provisions as they existed before the effective date of the bill, and that is consistent with the same provisions as amended by the bill, is ratified and validated as of the date the agreement was executed.

EFFECTIVE DATE

On passage, or, if the act does not receive the necessary vote, the act takes effect September 1, 2009.

COMPARISON OF ORIGINAL AND SUBSTITUTE

C.S.S.B. 1458 adds a provision not included in the original extending the expiration date of the Property Redevelopment and Tax Abatement Act from September 1, 2009 to September 1, 2019. 

C.S.S.B. 1458 differs from the original by authorizing the governing body of a taxing unit granting an abatement, and the owner of the property that is the subject of the abatement agreement, to agree to defer the commencement of the abatement period until a date that is subsequent to the date the agreement is entered into, and defining "abatement period," but limiting the duration of an abatement period to not more than 10 years.  The substitute adds a provision not in the original establishing that these provisions deferring the commencement of an abatement period and setting a 10-year duration limit are intended to clarify rather than change existing law.  The substitute removes a similar commencement deferral and 10-year limitation provision in the original that applies to tax abatements in a county reinvestment zone rather than to the entire Property Redevelopment and Tax Abatement Act as in the substitute.

C.S.S.B. 1458 differs from the original, in the provisions ratifying and validating certain tax abatement agreements, by applying the ratification and validation to an agreement involving an owner in a leasehold interest in tax-exempt real property, rather than a lessee of taxable real property as in the original, and making a conforming change.

C.S.S.B. 1458 differs from the original in nonsubstantive ways by making conforming and technical changes and using language reflective of certain bill drafting conventions.