Bill Text: TX HB5 | 2023-2024 | 88th Legislature | Enrolled

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Bill Title: Relating to agreements authorizing a limitation on taxable value of certain property to provide for the creation of jobs and the generation of state and local tax revenue; authorizing fees; authorizing penalties.

Spectrum: Slight Partisan Bill (Republican 54-32)

Status: (Enrolled - Dead) 2023-05-30 - Sent to the Governor [HB5 Detail]

Download: Texas-2023-HB5-Enrolled.html

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H.B. No. 5

AN ACT
relating to agreements authorizing a limitation on taxable value of
certain property to provide for the creation of jobs and the
generation of state and local tax revenue; authorizing fees;
authorizing penalties.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 403, Government Code, is amended by
adding Subchapter T to read as follows:
SUBCHAPTER T. TEXAS JOBS, ENERGY, TECHNOLOGY, AND INNOVATION ACT
Sec. 403.601. PURPOSES. The purposes of this subchapter
are to:
(1) create new, high-paying permanent jobs and
construction jobs in this state;
(2) encourage financially positive economic
development in this state;
(3) provide a temporary competitive economic
incentive for attracting certain large-scale economic development
projects to this state that, in the absence of this subchapter,
would likely locate in another state or nation;
(4) encourage energy and water infrastructure
development, including new and expanded dispatchable electric
generation facilities;
(5) make this state a national and international
leader in new and innovative technologies;
(6) encourage the establishment of certain advanced
manufacturing industry sectors critical to national defense and
health care;
(7) create new wealth, raise personal income, and
foster long-term expansion of state and local tax bases;
(8) provide growing and sustainable economic
opportunity for the residents of this state; and
(9) incentivize the preceding objectives in a
balanced, transparent, and accountable manner.
Sec. 403.602. DEFINITIONS. In this subchapter:
(1) "Additional job" means a full-time job in
connection with an eligible project that is not a required job for
the same project.
(2) "Agreement" means an agreement entered into under
Section 403.612.
(3) "Applicant" means a person that applies for, or
enters into an agreement providing for, a limitation on the taxable
value of eligible property used as part of an eligible project,
including the person's assignees or successors-in-interest.
(4) "Appraised value," "tax year," and "taxing unit"
have the meanings assigned by Section 1.04, Tax Code.
(5) "Construction completion date" means the date on
which an eligible project is first capable of being used for the
purposes for which it is constructed.
(6) "Construction job" means an otherwise full-time
job that is temporary in nature and is performed before the start of
the incentive period applicable to an eligible project to perform
construction, maintenance, remodeling, or repair work for an
applicant in connection with the project.
(7) "Construction period" means the period prescribed
by an agreement as the construction period of the eligible project
that is the subject of the agreement.
(8) "Eligible project":
(A) means a project:
(i) to construct or expand a new or existing
facility that is:
(a) a manufacturing facility;
(b) a facility related to the
provision of utility services, including an electric generation
facility that is considered to be dispatchable because the
facility's output can be controlled primarily by forces under human
control;
(c) a facility related to the
development of natural resources; or
(d) a facility engaged in the
research, development, or manufacture of high-tech equipment or
technology; or
(ii) to construct or expand critical
infrastructure; and
(B) does not include a project to construct or
expand a new or existing:
(i) nondispatchable electric generation
facility; or
(ii) electric energy storage facility.
(9) "Eligible property" means property that is used as
part of an eligible project that is wholly owned by an applicant or
leased by an applicant under a capitalized lease and consists of:
(A) a new building or expansion of an existing
building, including a permanent, nonremovable component of a
building, that is:
(i) constructed after the date the
agreement pertaining to the project is entered into; and
(ii) located in an area designated as a
reinvestment zone under Chapter 311 or 312, Tax Code, or as an
enterprise zone under Chapter 2303 of this code, at the time the
agreement pertaining to the project is entered into; or
(B) tangible personal property, other than
inventory, first located in the zone described by Paragraph (A)(ii)
after the date the agreement pertaining to the project is entered
into.
(10) "Full-time job" means a permanent full-time job
that requires a total of at least 1,600 hours of work a year in
connection with an eligible project. The term does not include a
construction job.
(11) "Incentive period" for an eligible project means
the period prescribed by the agreement pertaining to the project
during which the eligible property used as part of the project is
subject to a limitation on taxable value.
(12) "Independent contractor" has the meaning
assigned by Section 406.121, Labor Code.
(13) "Investment" means the costs incurred by an
applicant to acquire or construct eligible property composing an
eligible project, other than the cost of land or inventory.
(14) "Oversight committee" means the Jobs, Energy,
Technology, and Innovation Act Oversight Committee established
under Section 403.618.
(15) "Qualified opportunity zone" means an area
designated as such by the secretary of the United States Treasury.
(16) "Required job" means a job that an applicant
commits to create or demonstrate in connection with an eligible
project as prescribed by Section 403.604.
(17) "Total jobs" means the sum of required jobs and
additional jobs in connection with an eligible project.
Sec. 403.603. EXPIRATION. This subchapter expires December
31, 2033.
Sec. 403.604. REQUIRED JOBS AND INVESTMENT. (a) A jobs
requirement prescribed by this section does not apply to an
eligible project that is an electric generation facility described
by Section 403.602(8)(A)(i)(b).
(b) To be eligible to enter into an agreement, an applicant
for a limitation on taxable value of eligible property to be used
for a proposed eligible project must agree to:
(1) if the project is to be located in a county with a
population of at least 750,000:
(A) create at least 75 required jobs by the end of
the first tax year of the incentive period prescribed by the
agreement and demonstrate an average of at least that number of jobs
during each following tax year until the date the agreement
expires; and
(B) make an investment in the project in an
amount of at least $200 million by the end of the first tax year of
the incentive period prescribed by the agreement;
(2) if the project is to be located in a county with a
population of at least 250,000 but less than 750,000:
(A) create at least 50 required jobs by the end of
the first tax year of the incentive period prescribed by the
agreement and demonstrate an average of at least that number of jobs
during each following tax year until the date the agreement
expires; and
(B) make an investment in the project in an
amount of at least $100 million by the end of the first tax year of
the incentive period prescribed by the agreement;
(3) if the project is to be located in a county with a
population of at least 100,000 but less than 250,000:
(A) create at least 35 required jobs by the end of
the first tax year of the incentive period prescribed by the
agreement and demonstrate an average of at least that number of jobs
during each following tax year until the date the agreement
expires; and
(B) make an investment in the project in an
amount of at least $50 million by the end of the first tax year of
the incentive period prescribed by the agreement; or
(4) if the project is to be located in a county with a
population of less than 100,000:
(A) create at least 10 required jobs by the end of
the first tax year of the incentive period prescribed by the
agreement and demonstrate an average of at least that number of jobs
during each following tax year until the date the agreement
expires; and
(B) make an investment in the project in an
amount of at least $20 million by the end of the first tax year of
the incentive period prescribed by the agreement.
(c) For purposes of Subsection (b), each required job
created in connection with an eligible project:
(1) must be a new full-time job in this state:
(A) maintained in the usual course and scope of
the applicant's business, which may be performed by an individual
who is a trainee under the Texans Work program established under
Chapter 308, Labor Code; or
(B) performed by an independent contractor and
the independent contractor's employees at the site of the project;
and
(2) may not be transferred by the applicant from an
existing facility or location in this state or otherwise created to
replace an existing job, unless the applicant fills the vacancy
caused by the transfer.
(d) For purposes of Subsection (b), an applicant may
demonstrate that the applicant has met the applicable minimum
investment requirement by any reasonable means. The applicant is
considered to have met the applicable minimum investment
requirement if the most recent appraisal roll for the county used to
determine the minimum investment requirement under this section
indicates that the appraised value of the eligible property
composing the project as of January 1 of the second tax year of the
incentive period prescribed by the agreement is equal to or greater
than the minimum investment requirement applicable to the project.
(e) If an eligible project is located in more than one
county, the jobs and investment requirement applicable to the
project is determined using the jobs and investment requirement
applicable to the county with the smallest population in which any
part of the project is located.
(f) The comptroller may adopt rules necessary to interpret
and administer this section, including rules regarding:
(1) the manner for determining:
(A) which jobs and investment requirements
prescribed by Subsection (b) apply to an eligible project; and
(B) the circumstances under which a trainee under
the Texans Work program established under Chapter 308, Labor Code,
may be considered a full-time employee for purposes of this
section; and
(2) the method by which an applicant must demonstrate
an average of at least the number of required jobs for purposes of
satisfying the jobs requirement prescribed by Subsection (b).
Sec. 403.605. TAXABLE VALUE OF ELIGIBLE PROPERTY. (a) The
taxable value for school district maintenance and operations ad
valorem tax purposes of eligible property subject to an agreement
for each tax year of the incentive period prescribed by the
agreement is equal to:
(1) 50 percent of the market value of the property for
that tax year; or
(2) if the property is located in a qualified
opportunity zone, 25 percent of the market value of the property for
that tax year.
(b) The taxable value of eligible property for school
district maintenance and operations ad valorem tax purposes is zero
for each tax year beginning with the tax year following the year in
which the agreement pertaining to the property is entered into and
ending December 31 of the tax year that includes the construction
completion date for the applicable eligible project.
(c) The chief appraiser for the appraisal district in which
eligible property is located shall determine the market value and
appraised value of the property and include the market value,
appraised value, and taxable value of the property as determined
under this section in the appraisal records for the appraisal
district.
(d) The chief appraiser for the appraisal district in which
eligible property subject to an agreement is located may not use an
estimated value included in the application to which the agreement
pertains to determine the market value of the property.
Sec. 403.606. CERTAIN PERSONS INELIGIBLE. A person is not
eligible to submit an application to the comptroller or enter into
an agreement under this subchapter if the person is a company that
is listed as ineligible to receive a state contract or investment
under Chapter 808, 809, 2270, 2271, or 2274, as added by Chapters
529 (S.B. 13), 530 (S.B. 19), and 975 (S.B. 2116), Acts of the 87th
Legislature, Regular Session, 2021.
Sec. 403.607. APPLICATION. (a) A person who proposes to
construct an eligible project in a school district for which the
person seeks a limitation on the taxable value for maintenance and
operations ad valorem tax purposes of the district of the eligible
property used as part of the proposed project must submit an
application to the comptroller.
(b) A person submitting an application under Subsection (a)
must use the form prescribed by the comptroller. The form must
contain the following information:
(1) the applicant's name, address, and Texas taxpayer
identification number and the contact information for the
applicant's authorized representative;
(2) the applicant's form of business and, if
applicable, the name, address, and Texas taxpayer identification
number of the applicant's parent entity;
(3) the applicable school district's name and address
and the contact information for the district's authorized
representative;
(4) the legal description of the property on which the
project is proposed to be located and, if applicable, the address of
the proposed project;
(5) each county in which the project is proposed to be
located and the population of each of those counties;
(6) the applicable number of required jobs prescribed
by Section 403.604 for the proposed project;
(7) a list of each taxing unit in which the project is
proposed to be located;
(8) a brief description of the proposed project;
(9) any grant or loan of public money or other tax
incentive, if applicable, that the applicant is receiving or
expects to receive for the project;
(10) a brief description of the eligible property to
be used as part of the proposed project;
(11) a projected timeline for construction and
completion of the proposed project, including the projected dates
on which construction will begin, construction will be completed,
and commercial operations will start;
(12) the proposed incentive period;
(13) the name and location of the existing or proposed
reinvestment zone or enterprise zone in which the proposed project
will be located;
(14) whether the project is proposed to be located in a
qualified opportunity zone;
(15) a statement indicating whether the applicant
considered locating the proposed project in a qualified opportunity
zone;
(16) a brief summary of the projected economic
benefits of the proposed project; and
(17) the applicant's signature and certification of
the accuracy of the information included in the application.
(c) The form prescribed by Subsection (b) must allow the
applicant to segregate confidential information described by
Section 403.621(a) from other information in the application.
(d) An applicant must include with an application the
following:
(1) an application fee payable to the comptroller in
an amount determined by the comptroller not to exceed an amount
sufficient to cover the costs associated with the comptroller's
evaluation of the application;
(2) an application fee payable to the school district
in an amount determined by the comptroller not to exceed $30,000 to
cover the costs associated with the district's evaluation of the
application, including the cost of processing the application,
retaining professional services, and, if applicable, creating a
reinvestment zone or enterprise zone;
(3) a map showing the site of the proposed project;
(4) the economic benefit statement prepared under
Section 403.608 in connection with the proposed project; and
(5) a sworn affidavit stating that the applicant is
not ineligible under Section 403.606 to submit the application.
(e) The comptroller may request that an applicant provide
any additional information the comptroller reasonably determines
is necessary to complete the comptroller's evaluation of the
application. The comptroller may require an applicant to submit
the additional information by a certain date and may extend that
deadline on a showing of good cause. The comptroller is not
required to take any further action on an application until it is
complete.
(f) The comptroller shall notify an applicant and the
applicable school district when the applicant's application is
administratively complete.
Sec. 403.608. ECONOMIC BENEFIT STATEMENT. (a) An
applicant shall submit an economic benefit statement with the
applicant's application.
(b) An economic benefit statement must include the
following information for each year of the period that begins on the
date the applicant projects construction of the proposed project
that is the subject of the application will begin and ends on the
25th anniversary of the date the incentive period ends:
(1) an estimate of the number of total jobs that will
be created by the project;
(2) an estimate of the total amount of capital
investment that will be created by the project;
(3) an estimate of the increase in appraised value of
property that will be attributable to the project;
(4) an estimate of the amount of ad valorem taxes that
will be imposed by each taxing unit, including the applicable
school district, on the property used as part of the project;
(5) an estimate of the amount of state taxes that will
be paid in connection with the project; and
(6) an estimate of the associated economic benefits
that may reasonably be attributed to the project, including:
(A) the impact on the gross revenues and
employment levels of local businesses that provide goods or
services in connection with the project or to the applicant's
employees;
(B) the amount of state and local taxes that will
be generated as a result of the indirect economic impact of the
project, including all ad valorem taxes not otherwise estimated in
Subdivision (4) that will be imposed on property placed into
service as a result of the project;
(C) the development of complementary businesses
or industries that locate in this state as a direct consequence of
the project;
(D) the total impact of the project on the gross
domestic product of this state;
(E) the total impact of the project on personal
income in this state; and
(F) the total impact of the project on state and
local taxes.
(c) An applicant may use standard economic estimation
techniques, including economic multipliers, to create an economic
benefit statement. An applicant must base each estimate required
by Subsection (b) on reasonable projections of the economic and
labor conditions of this state for the period for which the estimate
is made.
(d) The comptroller shall establish criteria for the
methodology to be used by an applicant to create an economic benefit
statement.
(e) The comptroller may require an applicant to supplement
or modify an economic benefit statement to ensure the accuracy of
the estimates required to be included in the statement under
Subsection (b).
Sec. 403.609. COMPTROLLER ACTION ON APPLICATION. (a) The
comptroller shall determine whether to recommend or not recommend
for approval an application submitted to the comptroller under
Section 403.607. The comptroller shall recommend an application
for approval if the comptroller makes the findings prescribed by
Subsection (b). The comptroller may not recommend an application
for approval if the comptroller is unable to make the findings
prescribed by that subsection.
(b) The comptroller may not recommend an application for
approval unless the comptroller finds that:
(1) the proposed project that is the subject of the
application is an eligible project;
(2) the proposed project is reasonably likely to
generate, before the 20th anniversary of the first day of the
construction period, state or local tax revenue, including ad
valorem tax revenue attributable to the effect of the project on the
economy of this state, in an amount sufficient to offset the school
district maintenance and operations ad valorem tax revenue lost as
a result of the agreement;
(3) the agreement is a compelling factor in a
competitive site selection determination and that, in the absence
of the agreement, the applicant would not make the proposed
investment in this state; and
(4) if the application indicates that the eligible
project is proposed to be located in a qualified opportunity zone,
the project is located in the zone.
(c) In making the finding required by Subsection (b)(3), the
comptroller shall consider factors related to the selection of the
proposed site for the project, including the workforce, the
regulatory environment, infrastructure, transportation, market
conditions, investment alternatives, and any specific incentive
information provided by the applicant related to other potential
sites.
(d) Not later than the 60th day after the date the
comptroller determines that an application is complete, the
comptroller shall take the action required by Subsection (a)
regarding the application and provide written notice of the action
to the governor, the school district in which the project is
proposed to be located, and the applicant.
(e) The comptroller shall send to the governor and the
applicable school district with the notice required by Subsection
(d) regarding an application recommended by the comptroller under
Subsection (a) a copy of the application and each document and item
of information the comptroller relied on to recommend the
application.
Sec. 403.610. GOVERNOR ACTION ON APPLICATION. (a) The
governor shall, not later than the 30th day after the date the
governor receives an application sent to the governor by the
comptroller under Section 403.609, consider the application and by
official action determine whether the governor is agreeable to
entering into the agreement that is the subject of the application.
(b) The governor shall provide written notice of the
governor's determination under Subsection (a) to the comptroller,
the applicable school district, the oversight committee, and the
applicant not later than the seventh day after the date the governor
makes the determination under that subsection.
Sec. 403.611. SCHOOL DISTRICT ACTION ON APPLICATION. (a)
The governing body of a school district shall, not later than the
30th day after the date the district receives an application sent to
the district by the comptroller under Section 403.609, consider the
application and by official action determine whether the district
is agreeable to entering into the agreement that is the subject of
the application.
(b) The governing body of the school district shall hold a
public hearing on the application during the period described by
Subsection (a).
(c) The governing body of the school district must provide
notice of the public hearing in the manner required by Chapter 551,
except that the district must provide the notice not later than the
15th day before the date of the hearing. The notice must contain:
(1) the name of the applicant;
(2) the name and location of the existing or proposed
reinvestment zone or enterprise zone in which the eligible project
that is the subject of the application is proposed to be located;
(3) a general description of the proposed eligible
project; and
(4) the projected investment the applicant will make
in the project.
(d) The governing body of the school district shall provide
written notice of the district's determination under Subsection (a)
to the comptroller, the governor, and the applicant.
Sec. 403.612. AGREEMENT. (a) The governor, the governing
body of a school district, and an applicant may enter into an
agreement to limit the taxable value for maintenance and operations
ad valorem tax purposes of the district of the eligible property
used as part of an eligible project that is the subject of an
application for which both the governor and the governing body of
the district have made a favorable determination under Sections
403.610(a) and 403.611(a), respectively.
(b) An agreement entered into under this section between the
governor, a school district, and an applicant pertaining to an
eligible project shall:
(1) specify the project to which the agreement
applies;
(2) specify the term of the agreement, which must:
(A) begin on the date the agreement is entered
into; and
(B) end on December 31 of the third tax year
following the end of the incentive period;
(3) specify the construction and incentive periods for
the project;
(4) specify the manner for determining the taxable
value for school district maintenance and operations ad valorem tax
purposes during the incentive period under Section 403.605 for the
eligible property subject to the agreement;
(5) specify the applicable jobs and investment
requirements prescribed by Section 403.604 and require the
applicant to comply with those requirements;
(6) require that the average annual wage paid to all
persons employed by the applicant in connection with the project
used to calculate total jobs exceed 110 percent of the average
annual wage for all jobs in the applicable industry sector during
the most recent four quarters for which data is available, as
computed by the Texas Workforce Commission, with the applicant's
average annual wage being equal to the quotient of:
(A) the applicant's total wages paid, other than
wages paid for construction jobs, as reported under Section
403.616(c)(4); and
(B) the applicant's number of total jobs as
reported under Section 403.616(c)(3);
(7) require the applicant to pay a penalty prescribed
by Section 403.614 if the applicant fails to comply with an
applicable jobs or wage requirement;
(8) require the applicant to offer and contribute to a
group health benefit plan for each employee of the applicant who is
employed in a full-time job;
(9) require the applicant, at the time the applicant
executes the agreement, to execute a performance bond in an amount
the comptroller determines to be reasonable and necessary to
protect the interests of the state and the district and conditioned
on the applicant's compliance with the terms of the agreement;
(10) authorize the governor or the district to
terminate the agreement as provided by Subsection (d); and
(11) incorporate each relevant provision of this
subchapter.
(c) An agreement entered into under this section between the
governor, a school district, and an applicant pertaining to an
eligible project must include a provision that states that the
applicant is prohibited from making a payment to the district
related to the agreement.
(d) This subsection applies to a term described by
Subsection (b)(10). The agreement must provide that:
(1) the governor or the school district is authorized
to terminate the agreement if the applicant fails to comply with an
applicable jobs or wage requirement of the agreement;
(2) the governor or the district may not terminate the
agreement until the party provides written notice to the applicant
of the proposed termination;
(3) the governor or the district must provide the
applicant a 180-day period to cure and dispute the alleged failure,
including through judicial action; and
(4) in the event the agreement is terminated, the
state shall recover from the applicant a penalty in an amount equal
to all lost ad valorem tax revenue from the project and interest on
that amount calculated as provided by Section 111.060, Tax Code.
(e) An agreement terminated under Subsection (d) is void,
and all remaining obligations and benefits under the agreement and
this subchapter terminate on the date the agreement is terminated.
(f) The parties to an agreement may modify the terms of the
agreement that do not materially modify the jobs or investment
requirements prescribed by the agreement.
(g) An agreement must be submitted to the comptroller not
later than the seventh day after the date the agreement is entered
into. A copy of the economic benefit statement applicable to the
project that is the subject of the agreement must be attached to the
agreement.
(h) The comptroller shall deposit a penalty collected under
Subsection (d)(4) and any interest on the penalty to the credit of
the foundation school fund.
Sec. 403.613. INCENTIVE PERIOD. (a) An incentive period
pertaining to an eligible project is a period of 10 consecutive tax
years specified in the agreement pertaining to the project.
(b) An incentive period may not begin:
(1) earlier than January 1 of the first tax year
following the construction completion date; or
(2) later than January 1 of the first tax year
following the 10th anniversary of the date the agreement is entered
into.
(c) Subject to Subsection (b), the beginning date of an
incentive period specified in an agreement pertaining to an
eligible project may be deferred if the applicant projects that the
applicant will not satisfy the minimum investment requirement
applicable to the project by the end of the first tax year of the
incentive period. The incentive period may be deferred until
January 1 of the second tax year following the construction
completion date. The deferral of an incentive period under this
subsection does not affect the date on which the incentive period
ends as prescribed by the agreement. An applicant that is a party
to an agreement for which the beginning date of the incentive period
is deferred as authorized by this subsection must provide notice of
the deferral to the comptroller. The notice must include the reason
for the deferral.
(d) Subject to Subsection (b), an applicant may propose to
modify the beginning and ending dates of the incentive period as
provided by this subsection. The applicant shall provide notice of
the proposed modification to the comptroller, the governor, and the
school district not later than the 90th day before the first day of
the incentive period specified in Section 403.612(b)(3) or as
proposed to be modified, whichever is earlier. The applicant shall
revise the most recent economic benefit statement as necessary to
reflect the proposed change to the incentive period. The applicant
must include the revised economic benefit statement with the notice
provided to the comptroller, the governor, and the district under
this subsection. The comptroller shall make the finding required
by Section 403.609(b)(2) regarding the project as proposed to be
modified or determine that the finding cannot be made. The
comptroller shall notify the governor, the district, and the
applicant of the comptroller's finding or determination not later
than the 60th day after the date the comptroller receives notice
from the applicant of the proposed modification. The incentive
period for the project may not be modified if the comptroller
determines that the finding required by Section 403.609(b)(2)
regarding the project as proposed to be modified cannot be made or
if the governor or the district objects to the proposed
modification.
Sec. 403.614. PENALTY FOR FAILURE TO COMPLY WITH JOBS OR
WAGE REQUIREMENT. (a) An applicant is liable to the state for a
penalty in the amount computed under this subsection if the
applicant fails to maintain at least the number of required jobs
prescribed by the agreement to which the applicant is a party during
the periods covered by two consecutive reports submitted by the
applicant under Section 403.616. The amount of the penalty is equal
to two times the product of:
(1) the difference between:
(A) the number of required jobs prescribed by the
agreement; and
(B) the number of required jobs actually created
as stated in the most recent report submitted by the applicant under
Section 403.616; and
(2) the average annual wage prescribed by the
agreement during the most recent four quarters for which data is
available, as computed by the Texas Workforce Commission.
(b) An applicant is liable to the state for a penalty in the
amount computed under this subsection if the applicant fails to
meet the average annual wage requirement prescribed by the
agreement to which the applicant is a party, if any, during the
periods covered by two consecutive reports submitted by the
applicant under Section 403.616. The amount of the penalty is equal
to two times the difference between:
(1) the product of:
(A) the actual average annual wage paid to all
persons employed by the applicant in connection with the project
that is the subject of the agreement as computed under Section
403.612(b)(6); and
(B) the number of required jobs prescribed by the
agreement; and
(2) the product of:
(A) the average annual wage prescribed by the
agreement; and
(B) the number of required jobs prescribed by the
agreement.
(c) Notwithstanding Subsections (a) and (b), the amount of a
penalty imposed on an applicant under this section may not exceed
the amount of the ad valorem tax benefit received by the applicant
under the agreement that is the subject of the penalty.
(d) An applicant on request of the comptroller shall provide
to the comptroller a schedule of required jobs created as of the
date of the request under an agreement to which the applicant is a
party.
(e) A determination by the comptroller that an applicant has
failed to meet the jobs or wage requirement prescribed by an
agreement to which the applicant is a party is a deficiency
determination under Section 111.008, Tax Code. A penalty imposed
under this section is an amount the comptroller is required to
collect, receive, administer, or enforce and is subject to the
payment and redetermination requirements of Sections 111.0081 and
111.009, Tax Code. A redetermination under Section 111.009, Tax
Code, of a determination under this section is a contested case as
defined by Section 2001.003 of this code.
(f) The comptroller shall deposit a penalty collected under
this section and any interest on the penalty to the credit of the
foundation school fund.
Sec. 403.615. AUDIT OF AGREEMENTS BY STATE AUDITOR. (a)
Each year the state auditor shall select and review at least 10
percent of the agreements in effect in that year to determine
whether:
(1) each agreement accomplishes the purposes of this
subchapter as expressed in Section 403.601; and
(2) the terms of each agreement were executed in
compliance with the terms of this subchapter.
(b) In determining which agreements to review under
Subsection (a), the state auditor may consider any risk of
noncompliance identified in the biennial compliance report
regarding an agreement submitted to the comptroller under Section
403.616.
(c) As part of the review, the state auditor shall make
recommendations relating to increasing the efficiency and
effectiveness of the administration of this subchapter. The state
auditor shall submit the recommendations to the governor,
comptroller, lieutenant governor, speaker of the house of
representatives, and oversight committee not later than December 15
of each year.
Sec. 403.616. BIENNIAL COMPLIANCE REPORT BY APPLICANT. (a)
An applicant that is a party to an agreement shall submit a report
to the comptroller as required by this section using the form
adopted by the comptroller.
(b) An applicant must submit a report required by this
section to the comptroller not later than June 1 of each
even-numbered year during the term of the agreement that is the
subject of the report.
(c) A report required by this section must include the
following documents and information applicable to the agreement
that is the subject of the report:
(1) a certification by the applicant that is a party to
the agreement that the applicant has met the jobs and investment
requirements prescribed by the agreement, which must include:
(A) a sworn affidavit stating:
(i) the number of required jobs prescribed
by the agreement; and
(ii) the number of required jobs actually
created under the agreement as of December 31 of the preceding two
years; and
(B) if applicable, payroll records maintained
for purposes of 40 T.A.C. Chapter 815;
(2) the number assigned to the application by the
comptroller for the agreement, name of the applicant, name of the
school district, and name of and contact information for the
applicant's representative;
(3) the number of total jobs created by the project in
each of the preceding two years;
(4) the total wages paid for total jobs, not including
wages paid for construction jobs, in each of the preceding two
years;
(5) the number of construction jobs created by the
project;
(6) the total amount of the applicant's investment,
including any additional amount invested by the applicant after the
incentive period begins;
(7) the appraised value of all property composing the
project for each previous tax year of the agreement;
(8) the taxable value of all property composing the
project for each previous tax year of the agreement;
(9) the amount of school district maintenance and
operations ad valorem taxes imposed on the property composing the
project and paid by the applicant for each previous tax year of the
agreement;
(10) the amount of school district interest and
sinking fund ad valorem taxes imposed on the property composing the
project and paid by the applicant for each previous tax year of the
agreement;
(11) the amount of school district ad valorem taxes
that would have been imposed on the property composing the project
and paid by the applicant in the absence of the agreement for each
previous tax year of the agreement; and
(12) the amount of ad valorem taxes imposed on the
property composing the project by each taxing unit other than the
school district and paid by the applicant for each previous tax year
of the agreement, stated by taxing unit.
(d) This subsection applies only to a report required to be
submitted under this section by an applicant for the period that
includes the first year of the incentive period as prescribed by the
agreement that is the subject of the report or as deferred. In
addition to the documents and information described by Subsection
(c), the applicant must include with the certification required by
Subsection (c)(1):
(1) a list of the property tax account numbers
assigned to the property composing the project;
(2) the current total appraised value of the property
composing the project; and
(3) if applicable, a statement that the incentive
period was deferred because the applicant did not meet the minimum
investment requirement prescribed by the agreement before the date
specified in the agreement.
Sec. 403.617. BIENNIAL REPORT TO LEGISLATURE. (a) The
comptroller shall submit to the lieutenant governor, the speaker of
the house of representatives, and each other member of the
legislature a report on the agreements entered into under this
subchapter. The comptroller must submit the report not later than
December 1 of each even-numbered year.
(b) The report must include:
(1) an assessment of the following with regard to the
agreements entered into under this subchapter, considered in the
aggregate:
(A) the total number of jobs created in this
state;
(B) the total effect on personal income in this
state;
(C) the total amount of investment in this state;
(D) the total taxable value of property on the
tax rolls in this state resulting from the agreements, including
property subject to an agreement that has expired;
(E) the total value of property subject to
agreements that have not expired; and
(F) the total fiscal effect resulting from the
agreements on this state and on local governments in this state; and
(2) an assessment of each agreement entered into under
this subchapter that states for each agreement:
(A) the number of required jobs prescribed by the
agreement;
(B) the number of jobs actually created under the
agreement, including:
(i) each job described by Section
403.604(c)(1)(A);
(ii) each job described by Section
403.604(c)(1)(B); and
(iii) any additional jobs created or
maintained in connection with the project that is the subject of the
agreement, if reported by the applicant;
(C) the number of total jobs created under the
agreement, if the term of the agreement has expired;
(D) the amount of the investment specified by the
agreement;
(E) the amount of the actual investment made for
the applicable project before the expiration of the agreement;
(F) the difference between the amount of ad
valorem taxes that would have been imposed on the property
composing the applicable project in the absence of the agreement
and the amount of ad valorem taxes actually imposed on that property
during the term of the agreement; and
(G) the total amount of state and local tax
revenue attributable to the applicable project during the term of
the agreement.
(c) The comptroller may not include in the report
information that is confidential under law.
(d) The comptroller may use standard economic estimation
techniques, including economic multipliers, to prepare the portion
of the report described by Subsection (b)(1).
(e) The comptroller may require an applicant to submit
information required to complete the report on a form prescribed by
the comptroller.
Sec. 403.618. JOBS, ENERGY, TECHNOLOGY, AND INNOVATION ACT
OVERSIGHT COMMITTEE; REPORT. (a) The Jobs, Energy, Technology,
and Innovation Act Oversight Committee is composed of the following
seven members:
(1) three members of the house of representatives
appointed by the speaker of the house of representatives;
(2) three members of the senate appointed by the
lieutenant governor; and
(3) one member who serves as the chair of the committee
and who:
(A) is a member of the house of representatives
appointed by the speaker of the house of representatives who serves
only in odd-numbered years; and
(B) is a member of the senate appointed by the
lieutenant governor who serves only in even-numbered years.
(b) At least one member appointed by the speaker of the
house of representatives and at least one member appointed by the
lieutenant governor under Subsection (a) must represent a district
that includes a county with a population of 100,000 or less.
(c) If a vacancy occurs in the membership of the oversight
committee, the appropriate appointing authority shall appoint a
person to fill the vacancy.
(d) A member of the oversight committee serves at the
pleasure of the appropriate appointing authority.
(e) The oversight committee may recommend in a written
report to the legislature those types of projects that the
committee determines by majority vote should be statutorily added
to or removed from the definition of "eligible project" provided by
Section 403.602.
Sec. 403.619. CONFLICT OF INTEREST. A person may not,
directly or indirectly, represent, advise, or provide a service to
both an applicant and a school district in connection with the same
application submitted or agreement entered into under this
subchapter.
Sec. 403.620. CERTAIN BENEFITS RELATED TO AGREEMENTS
PROHIBITED; ATTORNEY GENERAL ENFORCEMENT. (a) An employee or
representative of a school district, a member of the governing body
of the district, or any other person may not intentionally or
knowingly solicit, accept, agree to accept, or require any payment
of money or transfer of property or other thing of value, directly
or indirectly, to the district, an employee or representative of
the district, a member of the governing body of the district, or any
other person in recognition of, anticipation of, or consideration
for approval of an agreement unless authorized by this subchapter.
(b) An applicant, an employee or representative of the
applicant, or any other person may not intentionally or knowingly
offer, confer, agree to confer, or make a payment of money or
transfer of property or other thing of value, directly or
indirectly, to the governor or the school district, an employee or
representative of the governor or the district, a member of the
governing body of the district, or any other person in recognition
of, anticipation of, or consideration for approval of an agreement
unless authorized by this subchapter.
(c) If the attorney general receives a written complaint
from a party to an agreement of a violation of this section, the
attorney general may bring an action to enforce this section to
restrain or enjoin a person from continuing or repeating the
violation. Venue for an action brought under this subsection is in
a district court in Travis County.
Sec. 403.621. CONFIDENTIALITY OF CERTAIN BUSINESS
INFORMATION. (a) Information provided to the comptroller, the
governor, or a school district by an applicant under this
subchapter that is a trade secret, as defined by Section 134A.002,
Civil Practice and Remedies Code, is confidential and not subject
to disclosure under Chapter 552.
(b) Payroll records reported under Section 403.616(c)(1)(A)
or (B) by an applicant to the comptroller are confidential and not
subject to disclosure under Chapter 552.
Sec. 403.622. INTERNET POSTING OF INFORMATION. (a)
Subject to Section 403.621, the comptroller shall post on the
comptroller's Internet website the following information received
by the comptroller:
(1) each application submitted under this subchapter;
(2) each map and economic benefit statement required
to be submitted with an application under this subchapter;
(3) each amendment to an application made under this
subchapter;
(4) each agreement entered into under this subchapter;
and
(5) each biennial compliance report submitted as
required under this subchapter.
(b) Except as provided by Subsection (c), the comptroller
shall post the information described by Subsection (a) as soon as
practicable after the date the comptroller receives the
information.
(c) The comptroller shall post the information described by
Subsections (a)(1), (2), and (3) not later than the 10th business
day after the date the comptroller receives the information.
(d) The comptroller shall continue to post the information
required by this section until the date the agreement to which the
information relates expires.
(e) The comptroller shall notify the governor and the
applicable school district of the comptroller's posting of the
information described by Subsection (a)(5) on the comptroller's
Internet website.
Sec. 403.623. RULES AND FORMS. (a) The comptroller shall
adopt rules necessary to implement and administer this subchapter,
including rules for:
(1) determining whether an applicant meets the jobs
and investment requirements prescribed by Section 403.604; and
(2) authorizing an applicant or school district to
submit any form or information required by this subchapter
electronically.
(b) The comptroller shall adopt forms necessary to
implement and administer this subchapter, including the forms to be
used by an applicant under Sections 403.607 and 403.616.
(c) The comptroller shall provide without charge one copy of
the rules and forms adopted under this section to any person that
states that the person intends to submit an application to the
comptroller under this subchapter to limit the taxable value of
eligible property used as part of an eligible project.
SECTION 2. Section 48.2551(a), Education Code, is amended
to read as follows:
(a) In this section:
(1) "DPV" is the taxable value of property in the
school district, as determined by the agency by rule, using locally
determined property values adjusted in accordance with Section
403.302(d), Government Code;
(2) "E" is the expiration of the exclusion of
appraised property value for the preceding tax year that is
recognized as taxable property value for the current tax year,
which is the sum of the following:
(A) property value that is no longer subject to a
limitation on appraised value under former Subchapter B or C,
Chapter 313, Tax Code, or a limitation on taxable value under
Subchapter T, Chapter 403, Government Code; and
(B) property value under Section 311.013(n), Tax
Code, that is no longer excluded from the calculation of "DPV" from
the preceding year because of refinancing or renewal after
September 1, 2019;
(3) "MCR" is the district's maximum compressed rate,
which is the tax rate for the current tax year per $100 of valuation
of taxable property at which the district must levy a maintenance
and operations tax to receive the full amount of the tier one
allotment to which the district is entitled under this chapter;
(4) "PYDPV" is the district's value of "DPV" for the
preceding tax year; and
(5) "PYMCR" is the district's value of "MCR" for the
preceding tax year.
SECTION 3. Section 48.256, Education Code, is amended by
amending Subsections (d) and (e) and adding Subsection (d-1) to
read as follows:
(d) This subsection applies to a school district in which
the board of trustees entered into a written agreement with a
property owner [under Section 313.027, Tax Code,] for the
implementation of a limitation on taxable [appraised] value under
Subchapter T, Chapter 403, Government [B or C, Chapter 313, Tax]
Code. For purposes of determining "DPV" under Subsection (a) for a
school district to which this subsection applies, the commissioner
shall exclude a portion of the market value of property not
otherwise fully taxable by the district under Subchapter T, Chapter
403, Government [B or C, Chapter 313, Tax] Code[, before the
expiration of the subchapter]. The comptroller shall provide
information to the agency necessary for this subsection.
(d-1) Subsection (d) applies to an agreement for the
implementation of a limitation on appraised value under former
Subchapter B or C, Chapter 313, Tax Code, that was in effect on
January 1, 2023, in the same manner as that subsection applies to an
agreement described by that subsection. If the agreement for the
limitation on appraised value requires a [A] revenue protection
payment to the school district, the payment [required as part of an
agreement for a limitation on appraised value] shall be based on the
district's taxable value of property for the preceding tax year.
(e) Subsection (d-1) [(d)] does not apply to property that
was the subject of an application under former Subchapter B or C,
Chapter 313, Tax Code, made after May 1, 2009, that the comptroller
recommended should be disapproved.
SECTION 4. Section 2303.507, Government Code, is amended to
read as follows:
Sec. 2303.507. TAX INCREMENT FINANCING AND
ABATEMENT; LIMITATIONS ON APPRAISED AND TAXABLE
VALUE. Designation of an area as an enterprise zone is also
designation of the area as a reinvestment zone for:
(1) tax increment financing under Chapter 311, Tax
Code;
(2) tax abatement under Chapter 312, Tax Code; [and]
(3) limitations on appraised value under former
Subchapter B or C, Chapter 313, Tax Code; and
(4) limitations on taxable value under Subchapter T,
Chapter 403, of this code.
SECTION 5. Section 23.03, Tax Code, is amended to read as
follows:
Sec. 23.03. COMPILATION OF LARGE PROPERTIES AND PROPERTIES
SUBJECT TO LIMITATION ON APPRAISED OR TAXABLE VALUE. Each year the
chief appraiser shall compile and send to the Texas [Department of]
Economic Development and Tourism Office a list of properties in the
appraisal district that in that tax year:
(1) have a market value of $100 million or more; [or]
(2) are subject to a limitation on appraised value
under former Subchapter B or C, Chapter 313; or
(3) are subject to a limitation on taxable value under
Subchapter T, Chapter 403, Government Code.
SECTION 6. Section 26.012(6), Tax Code, is amended to read
as follows:
(6) "Current total value" means the total taxable
value of property listed on the appraisal roll for the current year,
including all appraisal roll supplements and corrections as of the
date of the calculation, less the taxable value of property
exempted for the current tax year for the first time under Section
11.31 or 11.315, except that:
(A) the current total value for a school district
excludes:
(i) the total value of homesteads that
qualify for a tax limitation as provided by Section 11.26; [and]
(ii) new property value of property that is
subject to an agreement entered into under former Subchapter B or C,
Chapter 313; and
(iii) new property value of property that
is subject to an agreement entered into under Subchapter T, Chapter
403, Government Code; and
(B) the current total value for a county,
municipality, or junior college district excludes the total value
of homesteads that qualify for a tax limitation provided by Section
11.261.
SECTION 7. Section 171.602(f), Tax Code, is amended to read
as follows:
(f) The comptroller may not issue a credit under this
section before the later of:
(1) [September 1, 2018; or
[(2)] the expiration of an agreement under former
Subchapter B or C, Chapter 313, regarding the clean energy project
for which the credit is issued; or
(2) the expiration of an agreement under Subchapter T,
Chapter 403, Government Code, regarding the clean energy project
for which the credit is issued.
SECTION 8. Section 312.0025(a), Tax Code, is amended to
read as follows:
(a) Notwithstanding any other provision of this chapter to
the contrary, the governing body of a school district, in the manner
required for official action and for purposes of former Subchapter
B or C, Chapter 313, of this code or Subchapter T, Chapter 403,
Government Code, may designate an area entirely within the
territory of the school district as a reinvestment zone if the
governing body finds that, as a result of the designation and the
granting of a limitation on appraised value under former Subchapter
B or C, Chapter 313, of this code or the granting of a limitation on
taxable value under Subchapter T, Chapter 403, Government Code, for
property located in the reinvestment zone, the designation is
reasonably likely to:
(1) contribute to the expansion of primary employment
in the reinvestment zone; or
(2) attract major investment in the reinvestment zone
that would:
(A) be a benefit to property in the reinvestment
zone and to the school district; and
(B) contribute to the economic development of the
region of this state in which the school district is located.
SECTION 9. The lieutenant governor and the speaker of the
house of representatives shall appoint the initial members of the
Jobs, Energy, Technology, and Innovation Act Oversight Committee
under Sections 403.618(a)(1), (2), and (3)(B), Government Code, as
added by this Act, as soon as practicable after the effective date
of this Act.
SECTION 10. The comptroller of public accounts shall adopt
rules and develop and make available the forms and materials as
required under Section 403.623, Government Code, as added by this
Act, as soon as practicable after the effective date of this
section.
SECTION 11. (a) Except as provided by Subsection (b) of
this section, this Act takes effect January 1, 2024.
(b) Section 10 of this Act takes effect September 1, 2023.
______________________________ ______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 5 was passed by the House on May 5,
2023, by the following vote: Yeas 120, Nays 24, 1 present, not
voting; that the House refused to concur in Senate amendments to
H.B. No. 5 on May 26, 2023, and requested the appointment of a
conference committee to consider the differences between the two
houses; and that the House adopted the conference committee report
on H.B. No. 5 on May 28, 2023, by the following vote: Yeas 100,
Nays 36, 1 present, not voting.
______________________________
Chief Clerk of the House
I certify that H.B. No. 5 was passed by the Senate, with
amendments, on May 24, 2023, by the following vote: Yeas 27, Nays
4; at the request of the House, the Senate appointed a conference
committee to consider the differences between the two houses; and
that the Senate adopted the conference committee report on H.B. No.
5 on May 28, 2023, by the following vote: Yeas 26, Nays 5.
______________________________
Secretary of the Senate
APPROVED: __________________
Date
__________________
Governor