HBA-EDN C.S.H.B. 1200 77(R)BILL ANALYSIS
Office of House Bill AnalysisC.S.H.B. 1200
By: Brimer
Ways & Means
4/23/2001
Committee Report (Substituted)
BACKGROUND AND PURPOSE
The property tax system in Texas may place a disproportionate burden on
capital-intensive industries compared to other entities. This burden
provides a significant financial disincentive to businesses who desire to
invest large amounts of money in Texas, exacerbated by the fact that other
states have restructured their tax laws in an effort to attract projects
and high-paying jobs. Texas needs to level the tax burden on
capital-intensive companies to encourage large-scale capital investments in
the state to create new jobs, and to enable local government officials to
compete with the economic incentives being offered by other states.
C.S.H.B. 1200 creates a local option economic development tool that allows
the state to compete for jobs and large projects.
RULEMAKING AUTHORITY
It is the opinion of the Office of House Bill Analysis that rulemaking
authority is expressly delegated to the comptroller of public accounts in
SECTION 1 (Section 313.031, Tax Code) and the commissioner of education in
SECTION 6 (Section 42.2515, Education Code) of this bill.
ANALYSIS
C.S.H.B. 1200 amends the Tax, Education, and Government codes. The bill
amends the Tax Code to provide the categorization of school districts,
including certain rural school districts, for purposes of determining the
required minimum amount of a qualified investment and the minimum amount of
a limitation on appraised value. The bill authorizes an owner of qualified
property to apply to the governing body of a school district (district) in
which the property is located for a limitation on the appraised value for
district ad valorem tax purposes of the person's qualified property
(limitation). A municipality or county is authorized to impose and collect
a reasonable impact fee to pay for the cost of providing improvements
associated with or attributable to property that is subject to a limitation
on appraised value. The bill sets forth provisions relating to an
application and the form used for such a limitation. The bill provides
that the governing body of a district is not required to consider an
application for a limitation, but requires the governing body of a district
if it elects to consider an application to engage a third person to conduct
an economic impact evaluation to determine whether to approve or disapprove
such an application. The bill sets forth the factors that must be included
in the economic impact evaluation. The bill also sets forth provisions
relating to the determination of the applicant's eligibility for a
limitation and the amount of a limitation. The bill requires the governing
body of a school district and a property owner to enter into a written
agreement for the implementation of the limitation on appraised value on
the owner's qualified property and sets forth provisions regarding such an
agreement. The bill sets forth provisions relating to public disclosure of
certain business information provided to a district with an application for
a limitation. The bill prohibits the district, if a limitation is approved,
from adopting a tax rate that exceeds the district's rollback tax rate for
each of the first two tax years that begins after the date the application
is approved. The bill provides that property subject to a limitation in a
tax year is not eligible for tax abatement by a district in that tax year.
(Secs. 313.006, 313.022-313.030, 313.051- 313.054).
The bill provides that a person is also entitled to a tax credit from the
district that approved the limitation in an amount equal to the amount of
ad valorem taxes paid to that district that were imposed on the portion of
the appraised value that exceeds the amount of the limitation in each year
in the applicable qualifying time period. The bill sets forth provisions
relating to an application for a tax credit, a determination of a person's
eligibility for such a credit, and the amount of credit received and the
implementation of procedures for a tax credit (Secs. 313.102-313.104). The
bill sets forth provisions regarding remedy for erroneous credit that is
determined by the comptroller and the governing body of a school district
(Sec. 313.105).
The bill requires the comptroller of public accounts (comptroller) to adopt
rules and forms necessary for the implementation and administration of the
above provisions until their expiration on December 31, 2007, but provides
that a limitation approved before the expiration date continues in effect
and a property owner's tax credit is not affected by the expiration of
these provisions (Secs. 313.031, and 313.171).
The bill requires the chief appraiser to annually compile and send to the
Texas Department of Economic Development (department) a list of properties
in the appraisal district that have a market value of $100 million or more
in the tax year. The bill also requires the department to compile a list
of all properties reported and deliver it to each member of the
legislature. The bill authorizes the designation of reinvestment zones by
a district and sets forth provisions for a district to consider in making a
designation. Before designating an area as a reinvestment zone, the
governing body of a district is authorized to seek the recommendation of
the commissioners court of each county and the governing body of each
municipality that has territory in the district. The bill provides that
the Property Redevelopment and Tax Abatement Act expires September 1, 2007,
if not continued in effect (Secs. 23.03, 312.0025, and 312.006).
The bill amends the Education Code to provide that a district is entitled
to state aid each school year in an amount equal to the amount of all tax
credits credited against ad valorem taxes of the district in that year. The
bill authorizes the commissioner of education to adopt rules to implement
and administer this provision (Sec. 42.2515).
The bill amends the Government Code to require the governing board of the
department to include in its annual report to the governor and to the
legislature a listing of prospective projects identified by the business
development division of the department that proposed to invest at least
$100 million in the state, information identifying the other state or
country in which a prospective project is located and stating the primary
reason the prospective project did not locate in this state, and an
assessment as to the effectiveness of the incentives provided by the Texas
Economic Development Act, accompanied by certain information relating to
agreements made under that Act. The bill requires the comptroller to
assist with such an annual report. The bill also requires the attorney
general, the comptroller, the department, and the Council on Workforce and
Economic Competitiveness to conduct a survey of tax incentive and economic
development laws enacted in other states since 1990, and to annually
prepare a joint report of the survey results to be delivered to the
governor, the lieutenant governor, and the speaker of the house of
representatives with recommendations for legislative action. The bill
requires any state agency, on request, to assist in conducting the survey
or in preparing the joint report (Secs. 481.0044 and 481.168).
EFFECTIVE DATE
January 1, 2002. Provisions relating to the expiration date of the
Property Redevelopment and Tax Abatement Act take effect on September 1,
2001.
COMPARISON OF ORIGINAL TO SUBSTITUTE
C.S.H.B. 1200 modifies the original by providing the categorization of
certain rural school districts for purposes of determining the required
minimum amount of a qualified investment and the minimum amount of a
limitation on appraised value. The substitute defines qualified property
as land on which the owner of the land proposes to create at least 10
qualifying jobs in regard to determining a limitation on appraised value of
property in these rural school districts (Secs. 313.051-313.054).
The substitute provides that to be eligible for a limitation on appraised
value the corporation or limited liability company must use the property in
connection with manufacturing or research and development (Sec. 313.024).
The substitute requires the governing body of a school district, including
certain rural districts, and a property owner to enter into a written
agreement for the implementation of the limitation on appraised value on
the owner's qualified property (Sec. 313.027). The substitute does not
require a district to consider an application for a limitation on appraised
value, but requires a district to engage a third party to conduct an
economic evaluation if the district elects to consider the application.
The original required the district to conduct such an evaluation. The
substitute removes provisions regarding information that must accompany an
application for a limitation on the appraised value of qualified property
and a property owner's annual report on qualifying jobs. The substitute
deletes the role of the Legislative Budget Board in making recommendations
to the governing body of a district as to whether an application for a
limitation on appraised value should be approved or disapproved (Secs.
313.025 and 313.026).
The substitute authorizes a municipality or county to impose and collect a
reasonable impact fee to pay for the cost of providing improvements
associated with or attributable to property that is subject to a limitation
on appraised value (Sec. 313.006). The substitute increases, from seven
to eight, the number of years that a district is required to credit a
person who is entitled for taxes imposed on qualified property (Sec.
313.104). The substitute modifies the definition of "qualified property"
(Sec. 313.021).
The substitute also modifies provisions relating to legislative findings,
purposes, and intent and changes the expiration date from December 31, 2012
to December 31, 2007 for provisions of the Texas Economic Development Act
(Secs. 313.002-313.004 and 313.007).