HBA-RBT H.B. 1973 76(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 1973
By: Oliveira
Ways & Means
3/11/1999
Introduced



BACKGROUND AND PURPOSE 

Currently, the Property Redevelopment and Tax Abatement Act authorizes
taxing units to grant residential and commercial-industry tax abatements.
The law requires that most tax abatement agreements executed by more than
one taxing unit contain identical terms (e.g. percentage and length of
abatement).  Additionally, taxing units are not required to perform a
cost-benefit analysis prior to granting a tax abatement.   

H.B. 1973 sets forth revised procedures for property tax increment
financing and property tax abatements, and transfers the administration of
the central registry of reinvestment zones and ad valorem tax abatement
agreements from the Department of Economic Development to the comptroller.
This bill authorizes different taxing units to grant different abatement
terms and requires the performance of a cost-benefit analysis prior to
granting a tax abatement.  Additionally, this bill revises procedures that
taxing units must follow when granting a tax abatement and transfers the
administration of the central registry of reinvestment zones and ad valorem
tax abatement agreements from the Department of Economic Development to the
comptroller.   
 
RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that rulemaking
authority is expressly delegated to the Property Tax Abatement Advisory
Committee in SECTION 7 (Section 312.007, Tax Code) of this bill. 
 
SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Section 11.43, Tax Code, by adding Subsection (1), as
follows: 

(1) Provides that an application for an exemption from city taxation
pursuant to an agreement made under the Property Redevelopment and Tax
Abatement Act must include a copy of the certification under that Act from
the governing body of the taxing unit issued for the tax year and any
notice under that Act that the agreement has been modified. 

SECTION 2.  Amends Section 11.45(c), Tax Code, to require the chief
appraiser to rely on a certification issued under Section 312.212(d) for
the accuracy of the facts stated in the certification. Makes nonsubstantive
changes. 

SECTION 3.  Amends Section 111.301(a), Tax Code, to exempt an eligible
person from ad valorem taxes if an agreement has been reached under
Sections 312.204 (Municipal Tax Abatement Agreement), 312.211 (Agreement by
Municipality Relating to Property Subject to Voluntary Cleanup Agreement),
or 312.402 (County Tax Abatement Agreement), Tax Code, rather than Chapter
312, Tax Code (Property Redevelopment and Tax Abatement Act).   

SECTION 4.  Amends Section 311.016(b), Tax Code, to require that a copy of
a report made under this section be sent to the comptroller rather than the
attorney general.  Authorizes the comptroller to require a municipality to
provide a summary of the report, together with any additional information
the comptroller determines necessary, on a form prescribed by the
comptroller. 

SECTION 5.  Amends Section 312.004(a), Tax Code, to authorize a
commissioners court that enters  into a tax abatement agreement for a
county to enter into a tax abatement agreement applicable to the same
property on behalf of a taxing unit other than the county under specified
conditions. Provides that the tax abatement agreements do not have to
contain the same terms.   

SECTION 6.  Amends Section 312.005, Tax Code, to delete existing text
regarding the content of a reinvestment zone report.  Sets forth the
requirements for the contents of the report which must be delivered to the
comptroller for each tax abatement agreement.  Prohibits a taxing unit that
executes a tax abatement agreement but does not comply with the reporting
requirements of this section from entering into another agreement until the
taxing unit complies with the reporting requirements. Authorizes the
comptroller and the Texas Department of Economic Development to provide
assistance to a taxing unit relating to the administration of this chapter.
Authorizes the Texas Department of Economic Development, rather than the
Texas Department of Commerce, to provide technical assistance to local
governing bodies.  Requires the comptroller, on or before November 1 of
each even-numbered year, to prepare a comprehensive report on the use of
tax abatements encouraging economic development in this state and deliver a
copy of the report to the governor, lieutenant governor, and speaker of the
house of representatives, and a taxing unit if requested. 

SECTION 7.  Amends Subchapter A, Chapter 312, Tax Code, by adding Section
312.007, as follows: 

Sec.  312.007.  PROPERTY TAX ABATEMENT ADVISORY COMMITTEE.  (a) Creates the
Property Tax Abatement Advisory Committee.   

(b) Provides that the committee is composed of five members who are
designated by the executive director of the Texas Department of Economic
Development (department) and reflect the diverse population of the state.
Provides that two members must be municipal or county officials, and the
three other members must have economic development experience.   

(c) Requires the committee to elect a presiding officer from among its
members. 

(d) Requires the committee to meet at least twice a year and authorizes the
committee to meet at other times at the call of the presiding officer.   

(e) Authorizes the committee to adopt rules for the committee's internal
procedures. 

(f) Provides that members are not entitled to compensation for service on
the committee. 

(g) Requires the department to provide staff support for the committee.

(h) Requires the committee to deliver to the governor, lieutenant governor,
speaker of the house of representatives, executive director of the
department, and comptroller a report containing specified information by
September 1, 2000. 

(i) Requires the committee to consider the diverse characteristics and
economic development goals of communities throughout the state in preparing
the report required by Subsection (h). 

(j) Requires the department to furnish to a taxing unit a copy of the
report if requested. 

(j) Provides that this section expires and the committee is abolished
September 1, 2000. 

SECTION 8.  Amends Subchapter B, Chapter 312, Tax Code, by adding Sections
312.2035 and 312.2045, as follows: 

Sec.  312.2035.  ANALYSIS OF COSTS AND BENEFITS.  Provides that a
municipality must perform an analysis of the costs and benefits of a
proposed tax abatement agreement before the municipality is authorized to
enter into the agreement.  Sets forth a list of costs and benefits which
must be considered.  Prohibits a municipality from entering into a tax
abatement agreement for which the analysis shows that the costs exceed the
benefits. 

Sec.  312.2045.  NOTICE OF TAX ABATEMENT AGREEMENT.  Requires a
municipality that enters into a tax abatement agreement to either, at the
option of the municipality, publish notice of the agreement in a local
daily newspaper or post notice of the agreement at each place the governing
body of a municipality is required to post notice of its meetings within
seven days of entering into the agreement.  Sets forth the required
contents of the notice. 

SECTION 9.  Amends Section 312.205, Tax Code, to list terms that must be
contained in a rebate agreement.  Provides that the property owner must
certify before February 1 of each year to the governing body of each taxing
unit whether the owner is in compliance with each applicable term of the
agreement and, if not, state the reason for the noncompliance.  Provides
that the agreement must state any circumstances under which the property
owner may be excused by the governing body of the municipality for failing
to comply with the agreement.  Sets forth authorized provisions for the
agreement.  Deletes existing text regarding economic feasibility studies.
Makes nonsubstantive changes. 

SECTION 10.  Amends Section 312.206(a), Tax Code, to provide that a tax
abatement agreement is not required to contain identical terms to those
contained in the agreement with the municipality, rather than must contain
identical terms.  Provides that Sections 312.2035, 312.2045, and 312.205,
Tax Code, apply to a taxing unit that enters into a tax abatement agreement
under this section. Deletes existing text.  Makes nonsubstantive changes. 

SECTION 11.  Amends Subchapter B, Chapter 312, Tax Code, by adding Sections
312.212, and 312.213, as follows: 

Sec.  312.212.  CERTIFICATION OF COMPLIANCE.  Requires the governing body
of a taxing unit that is a party to a tax abatement agreement to, before
March 1 of each year, determine in the manner provided by law for official
action of the governing body whether each property owner receiving a tax
abatement under the agreement is in compliance with each term of the
agreement and, if not, whether the compliance is excused.  Requires the
governing body to consider any certification furnished by the property
owner.  Authorizes the governing body to require the property owner to
present additional evidence the governing body considers necessary to make
the determination.  Provides that the property owner has the burden of
proof to show compliance with the agreement.  Entitles each property owner
who is a party to the tax abatement agreement to a hearing and to present
evidence before the governing body of the taxing unit in person or by a
representative on the issue of compliance with the terms of the agreement.
Requires the governing body to certify in writing to the property owner
whether the owner is in compliance with each term of the tax abatement
agreement and, if not, whether the noncompliance is excused. 

Sec.  312.213.  ACTION BY TAXING UNIT ON NONCOMPLIANCE.  Authorizes the
governing body of the taxing unit to excuse the property owner's failure to
comply with the agreement under a circumstance stated in the tax abatement
agreement.  Requires the governing body of a taxing unit to recapture all
or part of the property tax revenue lost as a result of the agreement and
cancel or modify the agreement and give written notice of the cancellation
or modification if a property owner fails to comply with a tax abatement
agreement and the failure is not excused. 

SECTION 12.  Amends Sections 312.402(a), (c), and (e), to provide that
Sections 312.2035-312.205, Tax Code, apply to tax abatement agreements made
by a county under this section in the same manner as those sections apply
to an agreement made by a municipality.  Makes conforming and
nonsubstantive changes. 

SECTION 13.  Requires the attorney general to transfer to the comptroller
the copies of the reports by governing bodies of municipalities on the
status of reinvestment zones consistent with this Act as soon as
practicable after the effective date of this Act. 

SECTION 14.  Requires the executive director of the Texas Department of
Economic Development  to designate the members of the Property Tax
Abatement Advisory Committee as soon as practicable on or after the
effective date of this Act. 

SECTION 15.  Makes application of this Act prospective.  Provides that this
Act applies only to ad valorem taxes imposed on or after January 1, 2000. 

SECTION 16.  Effective date: September 1, 1999.

SECTION 17.  Emergency clause.