81R5301 SMH-D

By: Darby H.B. No. 1853

A BILL TO BE ENTITLED

AN ACT

relating to the authorization of school district ad valorem tax incentives for historic redevelopment and economic development.

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

SECTION 1. Subtitle B, Title 3, Tax Code, is amended by adding Chapter 314 to read as follows:

CHAPTER 314. HISTORIC REDEVELOPMENT AND ECONOMIC DEVELOPMENT ACT

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 314.001. SHORT TITLE. This chapter may be cited as the Historic Redevelopment and Economic Development Act.

Sec. 314.002. FINDINGS. The legislature finds that:

(1) the various economic development programs allowed by the State of Texas stimulate community growth and revitalization;

(2) the State of Texas supports sustainable development practices that encourage reinvestment in historic or blighted downtowns, commercial corridors, and neighborhoods that are identified in a municipality's comprehensive plan;

(3) historic rehabilitation and other revitalization projects often require overinvestment as compared to the development of raw land, and it is in the interest of all taxing units to facilitate redevelopment rather than sprawl;

(4) municipalities and counties are willing to forgo marginal gains to their ad valorem tax collections, but it is imperative that school districts have the opportunity to participate in the revitalization of their communities because school district ad valorem taxes sometimes constitute the majority of the ad valorem taxes imposed on property;

(5) a school district's participation in the revitalization of the district's community must not adversely affect the district's annual funding from the State of Texas; and

(6) the short-term exemption of property from ad valorem taxation under this chapter is more than offset by the long-term increase in ad valorem taxes generated from the redevelopment and economic development activities encouraged by this chapter.

Sec. 314.003. PURPOSES. The purposes of this chapter are to:

(1) encourage capital investment in historic and blighted areas of a community that are traditionally neglected due to the overinvestment that is required to use existing structures;

(2) assist local governments in diversifying the economic opportunities in their communities;

(3) prevent the continued deterioration of blighted areas of a community that will ultimately reduce the valuation of property in the community for ad valorem tax purposes;

(4) enable local government officials and economic development professionals to reduce the increased costs associated with urban sprawl by authorizing redevelopment and economic development incentives that will encourage reinvestment in the traditional core of a municipality so as to allow all government entities to use existing infrastructure;

(5) strengthen and improve the overall performance of municipalities, counties, and school districts by allowing them to promote capital investments in all sectors of their community;

(6) expand and enlarge the ad valorem property tax base of this state; and

(7) enhance the redevelopment and economic development efforts of this state and local governments by providing school districts with an effective local redevelopment and economic development option.

Sec. 314.004. LEGISLATIVE INTENT. It is the intent of the legislature in enacting this chapter that:

(1) redevelopment and economic development decisions should occur at the local level and be consistent with identifiable community and statewide redevelopment and economic development goals;

(2) this chapter should not be construed or interpreted to allow:

(A) property owners to pool investments to create sufficiently large investments to qualify for an ad valorem tax benefit or financial benefit provided by this chapter; or

(B) an applicant for an ad valorem tax benefit or financial benefit provided by this chapter to assert that jobs will be eliminated or historic properties will be destroyed if certain investments are not made if the assertion is not true; and

(3) in implementing this chapter, school districts should:

(A) strictly interpret the criteria and selection guidelines provided by this chapter; and

(B) approve only those applications for an ad valorem tax benefit or financial benefit provided by this chapter that:

(i) enhance the local community;

(ii) improve the local public education system;

(iii) create reinvestment in areas that have traditionally been neglected;

(iv) encourage the use of existing infrastructure and reduce the need for the creation of new infrastructure;

(v) assist in creating opportunities in areas of a community that are identified as historic or blighted and that traditionally are populated by the less advantaged population of the community; and

(vi) advance the redevelopment and economic development goals of the State of Texas or a municipality's comprehensive plan.

Sec. 314.005. DEFINITIONS. Unless this chapter defines a word or phrase used in this chapter, Section 1.04 or any other section of Title 1 or this title that defines the word or phrase or ascribes a meaning to the word or phrase applies to the word or phrase used in this chapter.

Sec. 314.006. IMPOSITION OF IMPACT FEE. (a) In this section, "impact fee" means a charge or assessment imposed against a qualified property, as defined by Section 314.051, in order to generate revenue for funding or recouping the costs of capital improvements or facility expansions for water, wastewater, or storm water services or for roads necessitated by or attributable to property that receives an exemption from taxation under this chapter.

(b) Notwithstanding any other law, including Chapter 395, Local Government Code, a municipality or county may impose and collect from the owner of a qualified property a reasonable impact fee under this section to pay for the cost of providing improvements associated with or attributable to property that receives an exemption from taxation under this chapter.

[Sections 314.007-314.050 reserved for expansion]

SUBCHAPTER B. EXEMPTION FROM TAXATION OF CERTAIN PROPERTY USED FOR

HISTORIC REVITALIZATION OR ECONOMIC DEVELOPMENT

Sec. 314.051. DEFINITIONS. In this subchapter:

(1) "Qualified investment" means tangible personal property that is located in an area in a municipality that is defined as a historic or blighted downtown, commercial corridor, or neighborhood by a municipality's comprehensive plan.

(2) "Qualified property" means:

(A) land that is located in an area designated by the governing body of the municipality as a reinvestment zone under Chapter 311 or 312 or as an enterprise zone under Chapter 2303, Government Code, and:

(i) that is identified by a municipality's comprehensive plan as a historic or blighted downtown, commercial area, or corridor; or

(ii) on which a person proposes to construct a new building or erect or affix a new improvement that does not exist and is consistent with the historic character of the area; and

(B) a building or other improvement located on land described by Paragraph (A).

Sec. 314.052. APPLICABILITY. This subchapter applies to each school district in this state.

Sec. 314.053. MINIMUM AMOUNTS OF QUALIFIED INVESTMENT FOR CERTAIN EXEMPTION PERCENTAGES. (a) An agreement under this subchapter to exempt a portion of the value of qualified property from taxation may exempt the following percentages of the difference between the appraised value of the property for a tax year and the appraised value of the property for the tax year in which the agreement is entered into if the owner of the property makes a qualified investment in at least the following amount:

EXEMPTION PERCENTAGE MINIMUM QUALIFIED INVESTMENT

100 percent $1 million

85 percent $500,000

75 percent $250,000

50 percent $100,000

25 percent $25,000

(b) An owner of qualified property may not receive an exemption under this subchapter for the property for a period of more than 10 years.

Sec. 314.054. APPLICATION; ACTION ON APPLICATION. (a) The owner of qualified property may apply to the governing body of the school district in which the property is located for an exemption from taxation of a portion of the value of the person's qualified property for school district maintenance and operations ad valorem tax purposes. An application must be made on the form prescribed by the comptroller and include the information required by the comptroller, and it must be accompanied by:

(1) the application fee established by the governing body of the school district;

(2) information sufficient to show that the property identified in the application as qualified property meets the applicable criteria listed in Sections 314.004(3), 314.051, and 314.053 and this section; and

(3) information relating to each applicable criterion listed in Sections 314.004(3), 314.051, and 314.053 and this section.

(b) The governing body of a school district is not required to consider an application that is filed with the governing body under Subsection (a). If the governing body of the school district does elect to consider an application, the governing body shall work with the municipality in which the qualified property is located to evaluate the application and approve or disapprove the application before the 121st day after the date the application is filed, unless an extension is agreed to by the governing body and the applicant.

(c) In determining whether to grant an application, the governing body of a school district is entitled to request and receive assistance from:

(1) the comptroller;

(2) the Texas Economic Development and Tourism Office;

(3) the Texas Workforce Investment Council;

(4) the Texas Workforce Commission;

(5) the Texas Historical Commission; and

(6) any local board or commission that regulates or advises the regulating governing body of a specific area.

(d) Before approving or disapproving an application that the governing body of a school district elects to consider, the governing body must make a written finding as to each criterion listed in Sections 314.004(3), 314.051, and 314.053 and this section. The governing body shall deliver a copy of those findings to the applicant.

(e) The governing body of a school district may approve an application only if the governing body:

(1) finds that the information in the application is true and correct;

(2) finds that the applicant is eligible for an exemption from taxation under this subchapter; and

(3) determines that granting the application is in the best interest of the school district and this state.

Sec. 314.055. EXEMPTION FROM AD VALOREM TAXATION; AGREEMENT. If the governing body of a school district approves a person's application for an exemption from taxation under this subchapter, the governing body and the property owner shall enter into a written agreement for the implementation of the exemption.

Sec. 314.056. CERTAIN BUSINESS INFORMATION CONFIDENTIAL. Information provided to a school district in connection with an application for an exemption from taxation under this subchapter that describes the specific processes or business activities to be conducted or the specific tangible personal property to be located on real property covered by the application is confidential and not subject to public disclosure unless the governing body of the school district approves the application. Information in the custody of a school district if the governing body approves the application is not confidential under this section.

Sec. 314.057. RULES AND FORMS; FEES. (a) The comptroller shall:

(1) adopt rules and forms necessary for the implementation and administration of this chapter, including rules for determining whether a property owner's property qualifies as a qualified investment under Section 314.051(1); and

(2) provide without charge one copy of the rules and forms to any school district and to any person who states that the person intends to apply for an exemption from taxation under this subchapter.

(b) The governing body of a school district by official action shall establish reasonable nonrefundable application fees to be paid by property owners who apply to the district for an exemption from taxation under this subchapter. The amount of an application fee must be reasonable and may not exceed the estimated cost to the district of processing and acting on an application.

SECTION 2. Section 312.0025(a), Tax Code, is amended to read as follows:

(a) Notwithstanding any other provision of this chapter to the contrary:

(1)[,] the governing body of a school district, in the manner required for official action and for purposes of Subchapter B or C, Chapter 313, may designate an area entirely within the territory of the school district as a reinvestment zone if the governing body finds that, as a result of the designation and the granting of a limitation on appraised value under Subchapter B or C, Chapter 313, for property located in the reinvestment zone, the designation is reasonably likely to:

(A) [(1)] contribute to the expansion of primary employment in the reinvestment zone; or

(B) [(2)] attract major investment in the reinvestment zone that would:

(i) [(A)] be a benefit to property in the reinvestment zone and to the school district; and

(ii) [(B)] contribute to the economic development of the region of this state in which the school district is located; and

(2) the governing body of a school district, in the manner required by law for official action and for purposes of Chapter 314, may designate an area entirely within the territory of the school district as a reinvestment zone if the governing body finds that, as a result of the designation and the granting of an exemption from taxation under Chapter 314 for property located in the reinvestment zone, the designation is reasonably like to serve the purposes provided by Section 314.003 in connection with the reinvestment zone.

SECTION 3. Section 403.302(d), Government Code, is amended to read as follows:

(d) For the purposes of this section, "taxable value" means the market value of all taxable property less:

(1) the total dollar amount of any residence homestead exemptions lawfully granted under Section 11.13(b) or (c), Tax Code, in the year that is the subject of the study for each school district;

(2) one-half of the total dollar amount of any residence homestead exemptions granted under Section 11.13(n), Tax Code, in the year that is the subject of the study for each school district;

(3) the total dollar amount of any exemptions granted before May 31, 1993, within a reinvestment zone under agreements authorized by Chapter 312, Tax Code;

(4) subject to Subsection (e), the total dollar amount of any captured appraised value of property that:

(A) is within a reinvestment zone created on or before May 31, 1999, or is proposed to be included within the boundaries of a reinvestment zone as the boundaries of the zone and the proposed portion of tax increment paid into the tax increment fund by a school district are described in a written notification provided by the municipality or the board of directors of the zone to the governing bodies of the other taxing units in the manner provided by Section 311.003(e), Tax Code, before May 31, 1999, and within the boundaries of the zone as those boundaries existed on September 1, 1999, including subsequent improvements to the property regardless of when made;

(B) generates taxes paid into a tax increment fund created under Chapter 311, Tax Code, under a reinvestment zone financing plan approved under Section 311.011(d), Tax Code, on or before September 1, 1999; and

(C) is eligible for tax increment financing under Chapter 311, Tax Code;

(5) for a school district for which a deduction from taxable value is made under Subdivision (4), an amount equal to the taxable value required to generate revenue when taxed at the school district's current tax rate in an amount that, when added to the taxes of the district paid into a tax increment fund as described by Subdivision (4)(B), is equal to the total amount of taxes the district would have paid into the tax increment fund if the district levied taxes at the rate the district levied in 2005;

(6) the total dollar amount of any captured appraised value of property that:

(A) is within a reinvestment zone:

(i) created on or before December 31, 2008, by a municipality with a population of less than 18,000; and

(ii) the project plan for which includes the alteration, remodeling, repair, or reconstruction of a structure that is included on the National Register of Historic Places and requires that a portion of the tax increment of the zone be used for the improvement or construction of related facilities or for affordable housing;

(B) generates school district taxes that are paid into a tax increment fund created under Chapter 311, Tax Code; and

(C) is eligible for tax increment financing under Chapter 311, Tax Code;

(7) the total dollar amount of any exemptions granted under Section 11.251 or 11.253, Tax Code;

(8) the difference between the comptroller's estimate of the market value and the productivity value of land that qualifies for appraisal on the basis of its productive capacity, except that the productivity value estimated by the comptroller may not exceed the fair market value of the land;

(9) the portion of the appraised value of residence homesteads of individuals who receive a tax limitation under Section 11.26, Tax Code, on which school district taxes are not imposed in the year that is the subject of the study, calculated as if the residence homesteads were appraised at the full value required by law;

(10) a portion of the market value of property not otherwise fully taxable by the district at market value because of:

(A) action required by statute or the constitution of this state that, if the tax rate adopted by the district is applied to it, produces an amount equal to the difference between the tax that the district would have imposed on the property if the property were fully taxable at market value and the tax that the district is actually authorized to impose on the property, if this subsection does not otherwise require that portion to be deducted; or

(B) action taken by the district under Subchapter B or C, Chapter 313, or Chapter 314, Tax Code;

(11) the market value of all tangible personal property, other than manufactured homes, owned by a family or individual and not held or used for the production of income;

(12) the appraised value of property the collection of delinquent taxes on which is deferred under Section 33.06, Tax Code;

(13) the portion of the appraised value of property the collection of delinquent taxes on which is deferred under Section 33.065, Tax Code; and

(14) the amount by which the market value of a residence homestead to which Section 23.23, Tax Code, applies exceeds the appraised value of that property as calculated under that section.

SECTION 4. Section 2303.507, Government Code, is amended to read as follows:

Sec. 2303.507. 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; and

(4) exemptions under Chapter 314, Tax Code.

SECTION 5. This Act takes effect January 1, 2010.