83R5762 CLG/SMH-D

By: Hilderbran H.B. No. 3591

A BILL TO BE ENTITLED

AN ACT

relating to state funding to support economic development; providing for the imposition of a fee.

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

SECTION 1. Subtitle F, Title 4, Government Code, is amended by adding Chapter 483 to read as follows:

CHAPTER 483. TEXAS ECONOMIC DEVELOPMENT FUND

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 483.001. DEFINITIONS. In this chapter:

(1) "Office" means the Texas Economic Development and Tourism Office within the office of the governor.

(2) "Qualified investment" means:

(A) tangible personal property that is first placed in service in this state during the applicable qualifying time period that begins on or after January 1, 2014, without regard to whether the property is affixed to or incorporated into real property, and that is described as Section 1245 property by Section 1245(a), Internal Revenue Code of 1986;

(B) tangible personal property that is first placed in service in this state during the applicable qualifying time period that begins on or after January 1, 2014, without regard to whether the property is affixed to or incorporated into real property, and that is used in connection with the manufacturing, processing, or fabrication in a cleanroom environment of a semiconductor product, without regard to whether the property is actually located in the cleanroom environment, including:

(i) integrated systems, fixtures, and piping;

(ii) all property necessary or adapted to reduce contamination or to control airflow, temperature, humidity, chemical purity, or other environmental conditions or manufacturing tolerances; and

(iii) production equipment and machinery, moveable cleanroom partitions, and cleanroom lighting;

(C) tangible personal property that is first placed in service in this state during the applicable qualifying time period that begins on or after January 1, 2014, without regard to whether the property is affixed to or incorporated into real property, and that is used in connection with the operation of a nuclear electric power generation facility, including:

(i) property, including pressure vessels, pumps, turbines, generators, and condensers, used to produce nuclear electric power; and

(ii) property and systems necessary to control radioactive contamination;

(D) tangible personal property that is first placed in service in this state during the applicable qualifying time period that begins on or after January 1, 2014, without regard to whether the property is affixed to or incorporated into real property, and that is used in connection with operating an integrated gasification combined cycle electric generation facility, including:

(i) property used to produce electric power by means of a combined combustion turbine and steam turbine application using synthetic gas or another product produced by the gasification of coal or another carbon-based feedstock; or

(ii) property used in handling materials to be used as feedstock for gasification or used in the gasification process to produce synthetic gas or another carbon-based feedstock for use in the production of electric power in the manner described by Subparagraph (i);

(E) tangible personal property that is first placed in service in this state during the applicable qualifying time period that begins on or after January 1, 2014, without regard to whether the property is affixed to or incorporated into real property, and that is used in connection with operating an advanced clean energy project, as defined by Section 382.003, Health and Safety Code; or

(F) a building or a permanent, nonremovable component of a building that is built or constructed during the applicable qualifying time period that begins on or after January 1, 2014, and that houses tangible personal property described by Paragraph (A), (B), (C), (D), or (E).

(3) "Qualified property" means:

(A) land:

(i) that is located in an area designated as a reinvestment zone under Chapter 311 or 312, Tax Code, or as an enterprise zone under Chapter 2303, Government Code;

(ii) on which a person proposes to construct a new building or erect or affix a new improvement that does not exist before the date the person applies for a rebate payment under this chapter;

(iii) that is not subject to a tax abatement agreement entered into by a school district under Chapter 312, Tax Code; and

(iv) on which, in connection with the new building or new improvement described by Subparagraph (ii), the owner or lessee of, or the holder of another possessory interest in, the land proposes to:

(a) make a qualified investment in an amount equal to at least $50 million; and

(b) create at least 25 new jobs;

(B) the new building or other new improvement described by Paragraph (A)(ii); and

(C) tangible personal property that:

(i) is not subject to a tax abatement agreement entered into by a school district under Chapter 312, Tax Code; and

(ii) except for new equipment described in Section 151.318(q) or (q-1), Tax Code, is first placed in service in the new building or in or on the new improvement described by Paragraph (A)(ii), or on the land on which that new building or new improvement is located, if the personal property is ancillary and necessary to the business conducted in that new building or in or on that new improvement.

(4) "Qualifying job" means a permanent full-time job that:

(A) requires at least 1,600 hours of work a year;

(B) is not transferred from one area in this state to another area in this state;

(C) is not created to replace a previous employee;

(D) is covered by a group health benefit plan for which the business offers to pay at least 80 percent of the premiums or other charges assessed for employee-only coverage under the plan, regardless of whether an employee may voluntarily waive the coverage; and

(E) pays at least 110 percent of:

(i) the county average weekly wage for manufacturing jobs in the county where the job is located; or

(ii) the county average weekly wage for all jobs in the county where the job is located, if the property owner creates more than 1,000 jobs in that county.

(5) "Qualifying time period" means:

(A) the period that begins on the date that a person's application for a rebate payment is approved by the office and ends on December 31 of the second tax year that begins after that date, except as provided by Paragraph (B) or (C) of this subdivision;

(B) in connection with a nuclear electric power generation facility, the first seven tax years that begin on or after the third anniversary of the date the office approves the property owner's application for a rebate under this chapter, unless a shorter time period is agreed to by the office and the property owner; or

(C) in connection with an advanced clean energy project, as defined by Section 382.003, Health and Safety Code, the first five tax years that begin on or after the third anniversary of the date the office approves the property owner's application for a rebate under this chapter, unless a shorter time period is agreed to by the office and the property owner.

(6) "County average weekly wage for manufacturing jobs" means:

(A) the average weekly wage in a county for manufacturing jobs during the most recent four quarterly periods for which data is available at the time a person submits an application for a rebate payment under this chapter, as computed by the Texas Workforce Commission; or

(B) the average weekly wage for manufacturing jobs in the region designated for the regional planning commission, council of governments, or similar regional planning agency created under Chapter 391, Local Government Code, in which the county is located during the most recent four quarterly periods for which data is available at the time a person submits an application for a rebate payment under this chapter, as computed by the Texas Workforce Commission.

Sec. 483.002. PURPOSES. The purposes of this chapter are to:

(1) encourage large-scale capital investments in this state, especially in school districts that have an ad valorem tax base that is less than the statewide average ad valorem tax base of school districts in this state;

(2) create new, high-paying jobs in this state;

(3) attract to this state new, large-scale businesses that are exploring opportunities to locate in other states or other countries;

(4) enable this state to compete with other states by authorizing economic development incentives that meet or exceed incentives being offered to prospective employers by other states and to provide this state with an effective means to attract large-scale investment;

(5) strengthen and improve the overall performance of the economy of this state;

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

(7) enhance this state's economic development efforts by providing this state with an effective economic development option.

Sec. 483.003. EXPIRATION OF PROGRAM AND CHAPTER. (a) The rebate program established under this chapter terminates December 31, 2020.

(b) This chapter expires January 1, 2021.

SUBCHAPTER B. TEXAS ECONOMIC DEVELOPMENT FUND

Sec. 483.051. TEXAS ECONOMIC DEVELOPMENT FUND. (a) The Texas Economic Development Fund is a dedicated account in the general revenue fund.

(b) The following amounts shall be deposited in the fund:

(1) any amounts appropriated by the legislature for the fund for the purposes of this chapter;

(2) any rebate payments that are returned as provided by Subchapter D;

(3) interest earned on the investment of money in the fund; and

(4) gifts, grants, and other donations received for the fund.

(c) Except as provided by Subsection (d), money in the fund may be used only for the purposes of this chapter.

(d) The fund may be temporarily used by the comptroller for cash management purposes.

(e) The administration of the fund is considered to be a trusteed program within the office.

SUBCHAPTER C. ELIGIBLE PROPERTY

Sec. 483.101. ELIGIBLE PROPERTY. (a) In this section:

(1) "Computer center" means an establishment primarily engaged in providing electronic data processing and information storage.

(2) "Integrated gasification combined cycle technology" means technology used to produce electricity in a combined combustion turbine and steam turbine application using synthetic gas or another product produced from the gasification of coal or another carbon-based feedstock, including related activities such as materials-handling and gasification of coal or another carbon-based feedstock.

(3) "Manufacturing" means an establishment primarily engaged in activities described in sectors 31-33 of the 2007 North American Industry Classification System.

(4) "Nuclear electric power generation" means activities described in category 221113 of the 2002 North American Industry Classification System.

(5) "Renewable energy electric generation" means an establishment primarily engaged in activities described in category 221119 of the 1997 North American Industry Classification System.

(6) "Research and development" means an establishment primarily engaged in activities described in category 541710 of the 2002 North American Industry Classification System.

(b) This chapter applies only to property owned by an entity to which Chapter 171, Tax Code, applies.

(c) To be eligible for a rebate payment under this chapter, the entity must use the property in connection with:

(1) manufacturing;

(2) research and development;

(3) a clean coal project, as defined by Section 5.001, Water Code;

(4) an advanced clean energy project, as defined by Section 382.003, Health and Safety Code;

(5) renewable energy electric generation;

(6) electric power generation using integrated gasification combined cycle technology;

(7) nuclear electric power generation; or

(8) a computer center primarily used in connection with one or more activities described by Subdivisions (1) through (7) conducted by the entity.

(d) For purposes of determining an applicant's eligibility for a rebate payment under this chapter:

(1) the land on which a building or component of a building described by Section 483.001(2)(E) is located is not considered a qualified investment;

(2) property that is leased under a capitalized lease may be considered a qualified investment;

(3) property that is leased under an operating lease may not be considered a qualified investment; and

(4) property that is owned by a person other than the applicant and that is pooled or proposed to be pooled with property owned by the applicant may not be included in determining the amount of the applicant's qualifying investment.

(e) To be eligible for a rebate payment under this chapter, at least 80 percent of all the new jobs created by the property owner must be qualifying jobs as defined by Section 483.001.

SUBCHAPTER D. REBATE PAYMENT PROGRAM

Sec. 483.151. REBATE PAYMENT PROGRAM. The office shall establish and administer a program to make rebate payments from money appropriated from the Texas Economic Development Fund under Section 483.051 to a person who:

(1) owns qualified property that meets the eligibility requirements of this chapter;

(2) makes the minimum amount of qualified investment on or in connection with the person's qualified property during the qualifying time period; and

(3) creates the required number of qualifying jobs during each year of the agreement.

Sec. 483.152. APPLICATION FOR REBATE PAYMENTS. (a) The owner or lessee of, or the holder of another possessory interest in, any qualified property described by Section 483.001(3)(A), (B), or (C) may apply to the office to receive rebate payments under this chapter.

(b) An application must be made on the form prescribed by the office and include the information required by the office, and it must be accompanied by:

(1) an application fee established by the office;

(2) information sufficient to show that the real and personal property identified in the application as qualified property meets the applicable criteria established by Section 483.001(3); and

(3) information necessary to allow the comptroller to make the determination required by Section 483.153.

(c) Not later than the 10th day after the date the office receives an application under this section, the office shall submit a copy of the application and the proposed agreement between the applicant and the governor to the comptroller.

Sec. 483.153. DETERMINATION BY COMPTROLLER. (a) Not later than the 91st day after the date the comptroller receives the copy of the application and the proposed agreement, the comptroller shall:

(1) determine whether the fiscal benefit to the state of the proposed qualified investment exceeds the comptroller's estimate of rebate payments to be made under the proposed agreement by more than five percent; and

(2) certify that determination to the office.

(b) In making the determination under this section, the comptroller shall use accepted revenue estimating techniques, including dynamic modeling.

(c) For purposes of this section, the fiscal benefit to the state is the sum of the comptroller's estimate of:

(1) the additional state tax revenue that is directly attributable to the proposed qualified investment that will be generated during the term of the proposed agreement; and

(2) the amount of school district taxes for maintenance and operations that will be imposed on the increase in appraised value of the qualified property during the term of the proposed agreement that is attributable to the making of the proposed qualified investment.

Sec. 483.154. APPROVAL OF APPLICATION. The office shall approve an application for a rebate payment if:

(1) the office determines that the real and personal property identified in the application as qualified property meets the applicable criteria established by Section 483.001(3);

(2) the comptroller certifies to the office under Section 483.153 that the fiscal benefit to the state of the proposed qualified investment exceeds the comptroller's estimate of rebate payments to be made under the proposed agreement by more than five percent; and

(3) the office determines that granting approval of the application is in the best interest of this state.

Sec. 483.155. REBATE PAYMENT AGREEMENT. (a) If the office approves the application, the governor shall enter into a written agreement with the applicant that:

(1) describes with specificity the investment that the person will make on or in connection with the person's qualified property during the qualifying time period and the number of qualifying jobs that will be created during each year of the agreement;

(2) specifies the ad valorem tax years covered by the agreement;

(3) states that the office will annually monitor the person's compliance with the terms of the agreement, including the minimum investment requirements to be made by the person; and

(4) states that if the office finds that the person has not met the minimum investment or job creation requirements for the reporting year:

(A) the person may not receive a rebate for that year; or

(B) if the rebate has been paid for that year, the person shall repay the rebate and any related interest to the state at the agreed rate and on the agreed terms.

(b) The term of a rebate payment agreement may not exceed 10 years.

Sec. 483.156. PAYMENT OF REBATE. (a) The office shall pay a rebate under the program for an ad valorem tax year to a person who is eligible for the payment on the first anniversary of the date the person pays the taxes imposed by the applicable school district on the qualified property.

(b) The amount of the rebate is equal to the amount of school district taxes for maintenance and operations imposed in that ad valorem tax year on the increase in appraised value of the qualified property that is attributable to the making of the proposed qualified investment.

Sec. 483.157. MONITORING BY COMPTROLLER. (a) The comptroller shall monitor the fiscal benefit to the state of a qualified investment made by a rebate recipient each year under this chapter.

(b) If the comptroller determines that for any year the fiscal benefit to the state is less than the amount required to qualify for receipt of a rebate under this chapter, the comptroller shall certify that fact to the office and the recipient may not receive a rebate for that year. If the office has paid a rebate to the recipient before receiving the comptroller's certification under this subsection, the recipient must return the rebate payment for that year to the office.

Sec. 483.158. REPORT ON COMPLIANCE WITH AGREEMENTS. (a) Before the beginning of each regular session of the legislature, the office shall submit to the lieutenant governor, the speaker of the house of representatives, and each other member of the legislature a report assessing the progress of each agreement made under this chapter. The report must be based on data certified to the office by each recipient of a rebate payment under this chapter and state for each agreement:

(1) the number of qualifying jobs each recipient of a rebate payment committed to create;

(2) the number of qualifying jobs each recipient created;

(3) the median wage of the new jobs each recipient created;

(4) the amount of the qualified investment each recipient committed to spend or allocate for each project;

(5) the amount of the qualified investment each recipient spent or allocated for each project;

(6) the amount of the rebate payment received per year by each recipient;

(7) the number of new jobs created by each recipient in each sector of the North American Industry Classification System; and

(8) of the number of new jobs each recipient created, the number of jobs created that provide health benefits for employees.

(b) The report may not include information that is confidential by law.

(c) The office may require a recipient to submit, on a form the comptroller provides, information required to complete the report.

Sec. 483.159. RULES AND FORMS. The office shall adopt rules and forms necessary for the implementation and administration of this chapter.

SECTION 2. The heading to Section 42.2515, Education Code, is amended to read as follows:

Sec. 42.2515. ADDITIONAL STATE AID FOR AD VALOREM TAX CREDITS UNDER FORMER TEXAS ECONOMIC DEVELOPMENT ACT.

SECTION 3. Section 42.2515(a), Education Code, is amended to read as follows:

(a) For each school year, a school district, including a school district that is otherwise ineligible for state aid under this chapter, is entitled to state aid in an amount equal to the amount of all tax credits credited against ad valorem taxes of the district in that year under former Subchapter D, Chapter 313, Tax Code.

SECTION 4. Section 42.302(e), Education Code, is amended to read as follows:

(e) For purposes of this section, school district taxes for which credit is granted under former Subchapter D, Chapter 313, Tax Code, are considered taxes collected by the school district as if the taxes were paid when the credit for the taxes was granted.

SECTION 5. Sections 403.302(d) and (m), Government Code, are 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 former 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) 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;

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

(7) 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;

(8) 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;

(9) 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, Tax Code, before the repeal [expiration] of that chapter [the subchapter];

(10) 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;

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

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

(13) 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.

(m) Subsection (d)(9) does not apply to property that was the subject of an application under former Subchapter B or C, Chapter 313, Tax Code, made after May 1, 2009, that the comptroller recommended should be disapproved.

SECTION 6. 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; and

(2) tax abatement under Chapter 312, Tax Code[; and

[(3) limitations on appraised value under Chapter 313, Tax Code].

SECTION 7. Section 23.03, Tax Code, is amended to read as follows:

Sec. 23.03. COMPILATION OF LARGE PROPERTIES AND PROPERTIES SUBJECT TO LIMITATION ON APPRAISED VALUE. Each year the chief appraiser shall compile and send to the Texas [Department of] Economic Development and Tourism Office a list of properties in the appraisal district that in that tax year:

(1) have a market value of $100 million or more; or

(2) are subject to a limitation on appraised value under former Chapter 313.

SECTION 8. Section 26.012(6), Tax Code, is amended to read as follows:

(6) "Current total value" means the total taxable value of property listed on the appraisal roll for the current year, including all appraisal roll supplements and corrections as of the date of the calculation, less the taxable value of property exempted for the current tax year for the first time under Section 11.31, except that:

(A) the current total value for a school district excludes:

(i) the total value of homesteads that qualify for a tax limitation as provided by Section 11.26; and

(ii) new property value of property that is subject to an agreement entered into under former Chapter 313; and

(B) the current total value for a county, municipality, or junior college district excludes the total value of homesteads that qualify for a tax limitation provided by Section 11.261.

SECTION 9. Section 312.403(a), Tax Code, is amended to read as follows:

(a) In this section, "nuclear electric power generation" means activities described in category 221113 of the 2002 North American Industry Classification System [has the meaning assigned by Section 313.024(e)].

SECTION 10. Chapter 320, Tax Code, is amended by adding Section 320.002 to read as follows:

Sec. 320.002. SAVING PROVISIONS AFTER REPEAL OF CHAPTER 313. (a) A limitation on appraised value approved under Subchapter B or C, Chapter 313, before the repeal of that subchapter continues in effect according to that subchapter as that subchapter existed immediately before its repeal, and that law is continued in effect for purposes of the limitation on appraised value.

(b) The repeal of Subchapter D, Chapter 313, does not affect a property owner's entitlement to a tax credit granted under that subchapter if the property owner qualified for the tax credit before the repeal of that subchapter.

SECTION 11. The following provisions of the Tax Code are repealed:

(1) Section 312.0025; and

(2) Chapter 313.

SECTION 12. This Act takes effect January 1, 2014.