HBA-RBT, NMO C.S.H.B. 3796 76(R)BILL ANALYSIS Office of House Bill AnalysisC.S.H.B. 3796 By: Hartnett Natural Resources 4/26/1999 Committee Report (Substituted) BACKGROUND AND PURPOSE Current law authorizes the Dallas County Utility and Reclamation District (district), located completely within the City of Irving, to enter into tax abatement agreements for up to thirty years. The district's tax abatement process may need amending for the purposes of standardization and the avoidance of inconsistency with future tax abatements. C.S.H.B. 3796 limits the abatement term to a maximum of 50 years and a minimum of 20 years, and sets the effective district tax rate at $0.50 for commercial property and $0.60 for residential property, among several other changes. 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 Section 4B(5), Chapter 628, Acts of the 68th Legislature, Regular Session, 1983, by amending Subdivisions (3) and (5)-(8), and adding Subdivisions (9)-(15), as follows: (3) Authorizes the governing body of the district to designate as a reinvestment zone for a period of 50 years or until the termination of all outstanding tax abatement agreements, whichever occurs last, an area within its boundaries. (5) Requires, rather than authorizes, the Dallas County Utility and Reclamation District (district) to enter into tax abatement agreements for single-family residential property, as defined by the district, for periods of 50 years, and for property other than single-family residential property for periods not to exceed a specified term schedule. (6) Requires that tax abatement agreements be subject to the rights of credit providers of the district, including holders of tax-supported bonds of the district, regardless of when the bonds were issued. (7) Requires that the tax abatement agreement provide that the portion of the taxable value of the property subject to the agreement that exceeds the taxable value of the property for the year in which notice for the project to which the agreement pertains is submitted is subject to an effective tax rate of sixty cents per hundred dollars of taxable value of property if the property is residential real property other than single-family residential property and 50 cents per hundred dollars of taxable value of property if the property is nonresidential real property and exempt from taxation if the property is single-family residential property. 8) Provides that this subdivision applies only to a tax abatement agreement pertaining to a project for which notice is submitted in 2001 or later, but does not apply to single-family residential property. Provides that the applicable effective tax rate under Subdivision (7) of this section is increased by the amount that the district's debt rate at the time the notice for the project to which the tax abatement agreement pertains is submitted exceeds 90 cents for each $100 of taxable value of property, but may not exceed 75 cents for each $100 of taxable property. (9) Authorizes the district to enter into tax abatement agreements with owners of real and personal property within the district for proposed projects. (10) Requires the district to adopt guidelines and criteria governing tax abatement agreements by the district. Provides that the guidelines and criteria must specify the criteria for an eligible project. Provides that the guidelines and criteria are effective until the termination of all outstanding tax abatement agreements. Authorizes the district to amend the guidelines and criteria by a vote of a majority of the members of the board of directors of the district. (11) Requires the district to adopt a form of tax abatement agreement to be used by the district. (12) Sets forth the provisions with which the tax abatement agreement must be consistent. (13) Provides that the tax abatement agreements may or may not contain the same terms as other agreements entered into with the same or other property by other taxing units or the district. (14) Redesignated from Subdivision (7). (15) Authorizes the district to tax at a reduced rate personal property located on property described in Subdivision (14) of this section. SECTION 2. Validates, ratifies, and confirms from this point the organization of the district and all elections held, all contracts executed, and all bonds and other obligations issued by the district; and the expenditure of funds in payment or satisfaction of bonds, all sales and donations of assets, tax rate reduction agreements, and all governmental and proprietary actions. Authorizes the issuance, levy, and collection of all bonds voted and all maintenance taxes authorized at elections held within the district by the board of directors of the district without the necessity of any further elections. SECTION 3. Provides legislative findings. SECTION 4. Effective date: September 1, 1999. SECTION 5. Emergency clause. COMPARISON OF ORIGINAL TO SUBSTITUTE C.S.H.B. 3796 modifies the original to conform to Legislative Council format. The substitute modifies the original in SECTION 1 by amending Subdivision (3) of Section 4B, Chapter 628, Acts of the 68th Legislature, Regular Session, 1983, to authorize the governing body of the district to designate as a reinvestment zone for a period of 50 years or until the termination of all outstanding tax abatement agreements, whichever occurs last, an area within its boundaries. The substitute modifies the original in SECTION 1 by amending the proposed changes to Subdivision (5) of Section 4B, Chapter 628, Acts of the 68th Legislature, Regular Session, 1983, to provide that single-family residential property must have tax abatement agreements for periods of 50 years, rather than the 25 years, as proposed in the original. Makes conforming and nonsubstantive changes. The substitute modifies the original in SECTION 2 by deleting proposed Subdivisions (8)-(11) of Section 4B, Chapter 628, Acts of the 68th Legislature, Regular Session, 1983, relating to policy guidelines and criteria, the designation of reinvestment zones, tax abatement agreements, and descriptions of property. The substitute modifies the original in SECTION 1 by amending Subdivisions (6)-(8) and adding Subdivisions (9)-(15) of Section 4B, Chapter 628, Acts of the 68th Legislature, Regular Session, 1983, as set out in the Section-by-Section Analysis of this document. The substitute differs from the original by redesignating SECTIONS 5 and 4 of the original as SECTIONS 2 and 3 of the substitute, respectively. The substitute adds a new SECTION 4 to make the effective date September 1, 1999. The substitute removes SECTION 6 (severability clause) of the original. The substitute differs from the original by redesignating SECTION 7 (emergency clause) of the original as SECTION 5.