By: Parker, et al. (Senate Sponsor - Ellis) H.B. No. 4525

(In the Senate - Received from the House May 8, 2009; May 8, 2009, read first time and referred to Committee on Economic Development; May 26, 2009, reported adversely, with favorable Committee Substitute by the following vote: Yeas 4, Nays 1; May 26, 2009, sent to printer.)

COMMITTEE SUBSTITUTE FOR H.B. No. 4525 By: Eltife

A BILL TO BE ENTITLED

AN ACT

relating to qualified manufacturing project zones.

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

SECTION 1. The Legislature of the State of Texas finds that a qualified manufacturing project, as defined in this Act, and the enhancement of manufacturing workforce development serve the public purposes of development and diversification of the employment of this state, elimination of unemployment or underemployment in this state, and development or expansion of commerce in this state.

SECTION 2. Subtitle C, Title 12, Local Government Code, is amended by adding Chapter 399 to read as follows:

CHAPTER 399. QUALIFIED MANUFACTURING PROJECT ZONES

Sec. 399.001. DEFINITIONS. In this chapter:

(1) "Qualified manufacturing project":

(A) means a proposed new or expanded facility that, on the date of qualification under Section 399.002:

(i) is not subject to either an agreement with a county or other taxing unit under Chapter 312, Tax Code, or with a school district under Chapter 313, Tax Code, entered into on or before the effective date of this Act; and

(ii) is subject to an agreement entered into after the effective date of this Act, but before September 1, 2013, with a county or other taxing unit under Chapter 312, Tax Code, or with a school district under Chapter 313, Tax Code, under which the investment in the facility:

(a) is at least $200 million; or

(b) is at least $100 million if the facility is related to:

(1) renewable energy generation, including solar, wind, biomass, geothermal, tidal, or small hydroelectric generation;

(2) advanced battery technology or other advanced energy storage technology; or

(3) waste recycling;

(iii) will be engaged in manufacturing, as that term is defined by Section 151.318, Tax Code, the construction of which begins on or after September 1, 2009;

(iv) is forecasted to create at least 300 full-time equivalent employment positions; and

(v) the owner of which is:

(a) considering at least one alternative site for the facility that is not located in this state; or

(b) competing against similar projects located outside this state for federal funds or financial support, including loan guarantees, that would benefit the project; and

(B) does not include a proposed new or expanded facility that produces a stream of carbon dioxide if the facility involves the generation of electricity or the creation of liquid fuels outside of the existing fuel production infrastructure while co-generating electricity, other than a facility that generates electricity from biomass or biofuels, unless the facility captures and sequesters, by geologic storage or other means, not less than 60 percent of the carbon dioxide from the facility's emissions stream.

(2) "Waste recycling" means the process of extracting resources or value from waste by recovering or reusing the materials, including the collection and reuse of everyday waste materials.

Sec. 399.002. DATE OF QUALIFICATION. A proposed facility becomes a qualified manufacturing project on the date the owner of the facility files an election to become a qualified manufacturing project with the comptroller.

Sec. 399.003. ECONOMIC IMPACT STUDY. (a) The owner of a qualified manufacturing project must conduct an economic impact study of the county in which the qualified manufacturing project is located and submit the study to the comptroller for certification not later than the 120th day after the date the owner files an election for that designation under Section 399.002.

(b) The economic impact study must provide an estimate of:

(1) the general economic impact likely to occur in the county as a result of the qualified manufacturing project;

(2) the anticipated amount of increase in the tax receipts to this state from the taxes imposed under Chapter 151, Tax Code, that:

(A) will occur in the county during the period that the qualified manufacturing project zone is designated; and

(B) is directly attributable to the economic impact from the design, construction, or operation of the qualified manufacturing project;

(3) the projected number of full-time equivalent employment positions likely to be available at the qualified manufacturing project; and

(4) the investment projected to be made at the qualified manufacturing project.

Sec. 399.004. COMPTROLLER CERTIFICATION OF ECONOMIC IMPACT STUDY. (a) Not later than the 30th day after receiving the economic impact study from an owner of a qualified manufacturing project, the comptroller shall certify the study if the comptroller determines that:

(1) the study accurately estimates the information required by Sections 399.003(b)(2)-(4); or

(2) the study:

(A) was conducted by an independent third party;

(B) was conducted using generally accepted economic impact forecasting methods to estimate the information required by Section 399.003(b); and

(C) contains the information required by Section 399.003(b).

(b) If the comptroller determines that the economic impact study submitted by the owner of the qualified manufacturing project does not meet the requirements of Subsection (a)(1) or (2), as applicable, the comptroller, not later than the 30th day after the date of receiving the study, shall:

(1) submit a preliminary determination to the owner of the qualified manufacturing project; and

(2) provide the owner of the qualified manufacturing project with an opportunity to respond or submit a new or amended economic impact study to the comptroller.

Sec. 399.005. QUALIFIED MANUFACTURING PROJECT ZONE. (a) The owner of a qualified manufacturing project for which the comptroller has certified an economic impact study in accordance with Section 399.004 may apply to the comptroller for designation of the county in which the project is located as a qualified manufacturing project zone. Subject to Subsections (b) and (c), the comptroller shall approve the application on a determination that the qualified manufacturing project is the first facility in the county to apply for the designation. The designation takes effect on September 1 after the date of approval of an application for designation of the county as a qualified manufacturing project zone for the project.

(b) Only one qualified manufacturing project that is in a qualified manufacturing project zone may qualify for benefits under this chapter at any one time.

(c) If more than one qualified manufacturing project applies for zone designation from a single county within a calendar month, the comptroller shall approve the qualified application with the most investment in the proposed new or expanded facility, as determined by the economic impact study certified under Section 399.004.

(d) A qualified manufacturing project zone designation for a qualified manufacturing project remains in effect until the expiration of any tax limitations, credits, abatements, or other benefits under an agreement entered into under Chapter 312 or 313, Tax Code, for the qualified manufacturing project.

Sec. 399.006. ANNUAL CERTIFICATION. (a) To receive state benefits under this chapter, the owner of a qualified manufacturing project in a qualified manufacturing project zone must submit the report required by Subsection (b) and make the following applicable annual certification to the comptroller, as of the last day of the state fiscal year for each year of the zone's designation:

(1) if the qualified manufacturing project zone designation has been in effect for three years or less and the qualified manufacturing project has not commenced commercial operation, the owner must certify the forecast of at least 300 full-time equivalent employment positions for the year that the facility will begin commercial operation;

(2) if the qualified manufacturing project zone designation has been in effect for more than three years and the qualified manufacturing project has not started commercial operation, the owner must certify:

(A) the creation of at least 300 full-time equivalent employment positions; or

(B) all of the following:

(i) the expenditure of at least $1 billion on the new or expanded facility has occurred;

(ii) the year in which the facility will begin commercial operation; and

(iii) the forecast of at least 300 full-time equivalent employment positions that will be created not later than the eighth anniversary of the date of the zone's designation; or

(3) if the qualified manufacturing project has started commercial operation, the owner must certify the creation of at least 300 full-time equivalent employment positions at the facility.

(b) At the time the applicable certification required under Subsection (a) is submitted, the owner of a qualified manufacturing project shall also submit an annual report to the comptroller that contains a summary of wages, salaries, and health care benefits associated with the jobs created by the qualified manufacturing project.

(c) If the owner of a qualified manufacturing project fails to make the applicable certification required under Subsection (a) and submit the report required by Subsection (b), the owner forfeits the right to receive future state benefits under this chapter and shall pay to the comptroller, not later than the 60th calendar day after the date the certification is due, the entire amount of all refunds previously received as provided by this chapter.

(d) For purposes of this section, "commercial operation," with respect to a facility, means that the facility has begun to operate for the facility's intended purpose.

Sec. 399.007. STATE BENEFITS. Subject to Section 399.006, the owner of a qualified manufacturing project in a qualified manufacturing project zone is eligible for a refund of state sales and use taxes as provided by Section 151.4292, Tax Code.

Sec. 399.008. COMPTROLLER DUTIES. The comptroller shall adopt rules and forms necessary to perform the comptroller's duties under this chapter.

SECTION 3. Subchapter I, Chapter 151, Tax Code, is amended by adding Section 151.4292 to read as follows:

Sec. 151.4292. TAX REFUNDS FOR QUALIFIED MANUFACTURING PROJECTS. (a) In this section:

(1) "Additional sales and use tax" means the total amount of sales and use taxes collected under this chapter on purchases of all taxable items purchased within a qualified manufacturing project zone for each state fiscal year for the duration of the qualified manufacturing project zone designation less the sales tax base, not otherwise due as a rebate or refund under any other applicable law.

(2) "Manufacturing workforce development" means, solely for purposes of this section, any expenditures incurred in the state by the owner, or a contractor or subcontractor of the owner, of a qualified manufacturing project for recruiting or training present, prospective, or potential employees for jobs in this state presently available or expected to be available for the planning, designing, construction, fabrication, or operation of a qualified manufacturing project, and the salaries, wages, and benefits of those employees through the first two years of commercial operation of the qualified manufacturing project. The term:

(A) does not include any expenditures incurred for recruiting or training, or the salaries, wages, and benefits of persons employed in a "bona fide executive, administrative, or professional capacity," as that phrase is used for purposes of establishing an exemption to the overtime provisions of the federal Fair Labor Standards Act of 1938 (29 U.S.C. Section 201 et seq.); and

(B) notwithstanding Paragraph (A), includes any expenditures incurred for recruiting or training, or the salaries, wages, and benefits of operating staff, maintenance staff, and engineering staff.

(3) "Qualified manufacturing project" has the meaning assigned that term by Section 399.001, Local Government Code.

(4) "Sales tax base" means the amount of the sales and use taxes collected under this chapter on purchases of all taxable items purchased within the boundaries of a qualified manufacturing project zone for the state fiscal year ending before the date the zone is designated.

(b) The owner of a qualified manufacturing project in a qualified manufacturing project zone is entitled to receive a payment of a refund of 50 percent of the additional sales and use tax for the preceding state fiscal year provided the owner has made the applicable employment certification to the comptroller required under Section 399.006, Local Government Code, and submits the report required under that section. A refund may not be made under this subsection for any sales and use taxes paid before the date an application for designation of a qualified manufacturing project zone is approved for the project. For the duration of a qualified manufacturing project zone designation for a qualified manufacturing project, but not to exceed 10 years, the comptroller shall pay the refund not later than the 60th day after the later of the date of receipt of the employment certification or the last day of the state fiscal year.

(c) The total amount of refunds that a qualified manufacturing project may receive over the course of the designation of the county in which it is located as a qualified manufacturing project zone may not exceed an amount equal to the lesser of $50 million or five percent of the qualified manufacturing project's investments in the facility under Chapter 399, Local Government Code.

(d) Subject to Subsection (f), a refund received under this section shall be used to pay for or to refund eligible expenses incurred before or after designation of the county in which the project is located as a qualified manufacturing project zone for manufacturing workforce development for the project.

(e) If the owner of a qualified manufacturing project fails to make the applicable certification and submit the report required by Section 399.006, Local Government Code, the owner forfeits the right to receive all future benefits under this section and shall pay to the comptroller, not later than the 60th calendar day after the date the certification is due, the entire amount of all refunds previously received under this section.

(f) At least 10 percent of the amount received as a refund under this section in each state fiscal year must be expended for job skills training programs that serve persons who are unemployed or whose incomes are at or below 200 percent of the federal poverty level.

SECTION 4. This Act takes effect immediately if it receives a vote of two-thirds of all the members elected to each house, as provided by Section 39, Article III, Texas Constitution. If this Act does not receive the vote necessary for immediate effect, this Act takes effect September 1, 2009.

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