Honorable Gary Elkins, Chair, House Committee on Government Transparency & Operation
FROM:
Ursula Parks, Director, Legislative Budget Board
IN RE:
HB590 by Elkins (Relating to the creation of research technology corporations for the development and commercialization of technologies owned by institutions of higher education or by certain medical centers with members that are institutions of higher education; providing for tax exemptions; providing a penalty.), Committee Report 1st House, Substituted
Depending upon the number of special-purpose corporations that might be formed and the extent their business activities, there could be an indeterminate fiscal impact on the state and units of local government.
The bill would amend Subtitle H (research in higher education) of Title 3 of the Education Code to add new Chapter 157, regarding university research technology corporations.
The bill would allow certain specified persons to create a special-purpose corporation for the exclusive purpose of developing and commercializing one or more technologies owned wholly or partly by an institution of higher education. A person who was eligible as an "organizer" under Sec. 3.004 Business Organizations Code would be eligible to create such a special purpose corporation. A qualified "organizer" could also create a special purpose corporation for the exclusive purpose of developing and commercializing technology owned wholly or partly by a qualified medical center.
The bill would require that the principal offices of the special-purpose corporation be in Texas, and the majority of goods and services of the special purpose corporation must be produced or performed in Texas. In accordance with, and limited to the specifications of the bill, the special-purpose corporation would be exempt from the following: ad valorem taxes, sales and use taxes, and franchise taxes. The special-purpose corporation would be limited in duration to 15 years, after which time it could file a restated and amended certificate of formation to become a for-profit corporation.
A special-purpose corporation, including a corporation that files a restated and amended certificate of formation that ceased to comply with the Texas location requirements of the bill, would be liable to the state for a penalty equal to any taxes for which the corporation received an exemption under the bill for the four calendar years preceding the noncompliance. Penalty amounts received would be deposited to the General Revenue Fund.
This bill would take effect January 1, 2016, except that subsections 157.008(b) of the Education Code, Section 11.232, Tax Code, as added by the Act, and Sections 11.42(d) and 26.113, Tax Code, as amended by the act would take effect only if voters approved the related constitutional amendment. If voters do not approve the related constitutional amendment, those four subsections would have no effect.
Local Government Impact
No significant fiscal implication to units of local government is anticipated.
Source Agencies:
304 Comptroller of Public Accounts, 720 The University of Texas System Administration, 758 Texas State University System, 783 University of Houston System Administration, 710 Texas A&M University System Administrative and General Offices, 768 Texas Tech University System Administration, 769 University of North Texas System Administration, 781 Higher Education Coordinating Board