HBA-NMO H.B. 399 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 399 By: Puente Ways & Means 3/2/1999 Introduced BACKGROUND AND PURPOSE Currently, various states and communities use public funds to either buy land with significant ecological value outright or buy easements and development rights to conserve land that remains privately owned. For example, the San Antonio Water System used a city land acquisition program to purchase land in the recharge zone over the Edwards Aquifer, the city's source of drinking water. Alternatively, North Carolina, rather than purchasing land outright, has enacted a program that combines income tax credits and conservation easements to encourage the donation of ecologically valuable land by private entities. H.B. 399 entitles a corporation to a credit on the franchise tax if the corporation donates land, all or a portion of which is located in a recharge zone over an aquifer, to a governmental entity of this state or a nonprofit environmental protection organization that operates in this state. This bill also provides that the amount of the credit is 25 percent of the market value of the portion of the land located in a recharge zone over an aquifer. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Subchapter A, Chapter 171, Tax Code, by adding Section 171.003, as follows: Sec. 171.003. CREDIT FOR DONATION OF CERTAIN ENVIRONMENTALLY SENSITIVE LAND. (a) Entitles a corporation to a credit on the franchise tax due under this chapter if the corporation donates land to a governmental entity of this state or a nonprofit organization that operates in this state whose primary purpose is the protection of the environment and if all or a portion of the land is located in a recharge zone over an aquifer. (b) Provides that the amount of the credit is 25 percent of the market value of the portion of donated land located in a recharge zone over an aquifer. (c) Provides that a corporation must apply for the credit on or with the tax report for the period for which the credit is claimed. Requires the comptroller to promulgate a form for an application for the credit. Provides that a corporation must use this form in applying for the credit. (d) Establishes that a corporation must provide the comptroller with any information required to determine the validity of a claim for credit. Establishes that the burden of entitlement to and value of the credit is on the corporation. (e) Provides that the credit applies only to the privilege period in which the land was donated except that a corporation is authorized to carry all or part of the credit forward for not more than five consecutive privilege periods. (f) Prohibits a corporation from claiming a credit in an amount that exceeds the amount of tax due for the privilege period. (g) Prohibits a corporation from conveying, assigning, or transferring the credit to another entity. SECTION 2. Makes application of this Act prospective. Provides that a credit may be claimed only on a franchise tax report due under Chapter 171, Tax Code, on or after January 1, 2000. SECTION 3. Emergency clause. Effective date: upon passage.