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Title 3. Local Taxation
Subtitle B. Special Property Tax Provisions

Chapter 313. Texas Economic Development Act

Subchapter B. Limitation on Appraised Value of Certain Property Used to Create Jobs.

Sec. 313.021. Definitions.
Sec. 313.022. Applicability, Categorization of School Districts.
Sec. 313.023. Minimum Amounts of Qualified Investment.
Sec. 313.024. Eligible Property.
Sec. 313.025. Application, Action on Application.
Sec. 313.026. Economic Impact Evaluation.
Sec. 313.027. Limitation on Appraised Value, Agreement.
Sec. 313.028. Certain Business Information Confidential.
Sec. 313.029. Tax Rate Limitation.
Sec. 313.030. Property Not Eligible for Tax Abatement.
Sec. 313.031. Rules and Forms; Fees.

[Sections 313.032-313.050 reserved for expansion]

Sec. 313.021. Definitions.

In this subchapter:

(1) "Qualified investment" means:

(A) tangible personal property that is first placed in service in this state during the applicable qualifying time period that begins on or after January 1, 2002, and is described as Section 1245 property by Section 1245(a), Internal Revenue Code of 1986;

(B) tangible personal property that is first placed in service in this state during the applicable qualifying time period that begins on or after January 1, 2002, without regard to whether the property is affixed to or incorporated into real property, and that is used in connection with the manufacturing, processing, or fabrication in a cleanroom environment of a semiconductor product, without regard to whether the property is actually located in the cleanroom environment, including:

(i) integrated systems, fixtures, and piping;

(ii) all property necessary or adapted to reduce contamination or to control airflow, temperature, humidity, chemical purity, or other environmental conditions or manufacturing tolerances; and

(iii) production equipment and machinery, moveable cleanroom partitions, and cleanroom lighting; or

(C) a building or a permanent, nonremovable component of a building that is built or constructed during the applicable qualifying time period that begins on or after January 1, 2002, and that houses tangible personal property described by Paragraph (A) or (B).

(2) "Qualified property" means:

(A) land:

(i) that is located in an area designated as a reinvestment zone under Chapter 311 or 312 or as an enterprise zone under Chapter 2303, Government Code;

(ii) on which a person proposes to construct a new building or erect or affix a new improvement that does not exist before the date the owner applies for a limitation on appraised value under this subchapter;

(iii) that is not subject to a tax abatement agreement entered into by a school district under Chapter 312; and

(iv) on which, in connection with the new building or new improvement described by Subparagraph (ii), the owner of the land proposes to:

(a) make a qualified investment in an amount equal to at least the minimum amount required by Section 313.023; and

(b) create at least 25 new jobs;

(B) the new building or other new improvement described by Paragraph (A)(ii); and

(C) tangible personal property that:

(i) is not subject to a tax abatement agreement entered into by a school district under Chapter 312; and

(ii) except for new equipment described in Section 151.318(q) or (q-1), is first placed in service in the new building or in or on the new improvement described by Paragraph (A)(ii), or on the land on which that new building or new improvement is located, if the personal property is ancillary and necessary to the business conducted in that new building or in or on that new improvement.

(3) "Qualifying job" means a permanent full-time job that:

(A) requires at least 1,600 hours of work a year;

(B) is not transferred from one area in this state to another area in this state;

(C) is not created to replace a previous employee;

(D) is covered by a group health benefit plan, as defined by Section 481.151, Government Code, for which the business offers to pay at least 80 percent of the premiums or other charges assessed for employee-only coverage under the plan, regardless of whether an employee may voluntarily waive the coverage; and

(E) pays at least 110 percent of the county average weekly wage for manufacturing jobs in the county where the job is located.

(4) "Qualifying time period" means the first two tax years that begin on or after the date a person's application for a limitation on appraised value under this subchapter is approved.

(5) "County average weekly wage for manufacturing jobs" means the average weekly wage in a county for manufacturing jobs as computed by the Texas Workforce Commission.

Added by 2001 Tex. Laws, p. 5061, ch. 1505, Sec. 1; amended by HB 2425, 78th Tex. Leg., 2003, effective June 20, 2003.

Sec. 313.022. Applicability, Categorization of School Districts.

(a) This subchapter applies to each school district in this state other than a school district to which Subchapter C applies.

(b) For purposes of determining the required minimum amount of a qualified investment under Section 313.021(2)(A)(iv)(a), and the minimum amount of a limitation on appraised value under Section 313.027(b), school districts to which this subchapter applies are categorized according to the taxable value of property in the district for the preceding tax year determined under Subchapter M, Chapter 403, Government Code, as follows:

313.022

Added by 2001 Tex. Laws, p. 5061, ch. 1505, Sec. 1.

Sec. 313.023. Minimum Amounts of Qualified Investment.

For each category of school district established by Section 313.022, the minimum amount of a qualified investment under Section 313.021(2)(A)(iv)(a) is as follows:

313.023

Added by 2001 Tex. Laws, p. 5061, ch. 1505, Sec. 1.

Sec. 313.024. Eligible Property.

(a) This subchapter and Subchapters C and D apply only to property owned by a corporation or limited liability company to which Section 171.001 applies.

(b) To be eligible for a limitation on appraised value under this subchapter, the corporation or limited liability company must use the property in connection with:

(1) manufacturing;

(2) research and development; or

(3) renewable energy electric generation.

(c) For purposes of determining an applicant's eligibility for a limitation under this subchapter:

(1) the land on which a building or component of a building described by Section 313.021(1)(C) is located is not considered a qualified investment;

(2) property that is leased under a capitalized lease may be considered a qualified investment;

(3) property that is leased under an operating lease may not be considered a qualified investment; and

(4) property that is owned by a person other than the applicant and that is pooled or proposed to be pooled with property owned by the applicant may not be included in determining the amount of the applicant's qualifying investment.

(d) To be eligible for a limitation on appraised value under this subchapter, at least 80 percent of all the new jobs created by the property owner must be qualifying jobs as defined by Section 313.021(3).(e) In this section:

(1) "Manufacturing" and "research and development" have the meanings assigned by Section 171.751.

(2) "Renewable energy electric generation" means an establishment primarily engaged in activities described in category 221119 of the 1997 North American Industry Classification System.

Added by 2001 Tex. Laws, p. 5061, ch. 1505, Sec. 1.

Sec. 313.025. Application, Action on Application.

(a) The owner of qualified property may apply to the governing body of the school district in which the property is located for a limitation on the appraised value for school district maintenance and operations ad valorem tax purposes of the person's qualified property. An application must be made on the form prescribed by the comptroller and include the information required by the comptroller, and it must be accompanied by:

(1) the application fee established by the governing body of the school district;

(2) information sufficient to show that the real and personal property identified in the application as qualified property meets the applicable criteria established by Section 313.021(2); and

(3) information relating to each applicable criterion listed in Section 313.026.

(b) The governing body of a school district is not required to consider an application for a limitation on appraised value that is filed with the governing body under Subsection (a). If the governing body of the school district does elect to consider an application, the governing body shall engage a third person to conduct an economic impact evaluation of the application on behalf of the school district and approve or disapprove an application before the 121st day after the date the application is filed, unless an extension is agreed to by the governing body and the applicant.

(c) In determining whether to grant an application, the governing body of the school district is entitled to request and receive assistance from:

(1) the comptroller;

(2) the Texas Department of Economic Development;

(3) the Council on Workforce and Economic Competitiveness; and

(4) the Texas Workforce Commission.

(d) On receipt of an application under this section that the governing body elects to consider, the school district shall deliver one copy of the application to the comptroller. Before the 61st day after the date the copy of the application is received, the comptroller, using the criteria listed in Section 313.026, shall submit a recommendation to the governing body of the school district as to whether the application should be approved or disapproved.

(e) Before approving or disapproving an application under this subchapter that the governing body elects to consider, the governing body of the school district must make a written finding as to each criterion listed in Section 313.026. The governing body shall deliver a copy of those findings to the applicant.

(f) The governing body may approve an application only if the governing body finds that the information in the application is true and correct, finds that the applicant is eligible for the limitation on the appraised value of the person's qualified property, and determines that granting the application is in the best interest of the school district and this state.

(g) The Texas Department of Economic Development or its successor may recommend that a school district grant a person a limitation on appraised value under this chapter. In determining whether to grant an application, the governing body of the school district shall consider any recommendation made by the Texas Department of Economic Development or its successor.

Added by 2001 Tex. Laws, p. 5064, ch. 1505, Sec. 1; amended by SB 1771, 78th Tex. Leg., 2003, effective September 1, 2003.

Cross Reference:

Comptroller rule and forms, see Rule Sec. 9.107

Sec. 313.026. Economic Impact Evaluation.

The economic impact evaluation of the application must include the following:

(1) the recommendations of the comptroller;

(2) the relationship between the applicant's industry and the types of qualifying jobs to be created by the applicant to the long-term economic growth plans of this state as described in the strategic plan for economic development submitted by the Texas Strategic Economic Development Planning Commission under Section 481.033, Government Code, as that section existed before February 1, 1999;

(3) the relative level of the applicant's investment per qualifying job to be created by the applicant;

(4) the wages, salaries, and benefits to be offered by the applicant to qualifying job holders;

(5) the ability of the applicant to locate or relocate in another state or another region of this state;

(6) the impact the added infrastructure will have on the region, including:

(A) revenue gains that would be realized by the school district; and

(B) subsequent economic effects on the local and regional tax bases;

(7) the economic condition of the region of the state at the time the person's application is being considered;

(8) the number of new facilities built or expanded in the region during the two years preceding the date of the application that were eligible to apply for a limitation on appraised value under this subchapter; and

(9) the effect of the applicant's proposal, if approved, on the number or size of the school district's instructional facilities, as defined by Section 46.001, Education Code.

Added by 2001 Tex. Laws, p. 5065, ch. 1505, Sec. 1.

Sec. 313.027. Limitation on Appraised Value, Agreement.

(a) If the person's application is approved by the governing body of the school district, for each of the first eight tax years that begin after the applicable qualifying time period, the appraised value for school district maintenance and operations ad valorem tax purposes of the person's qualified property as described in the agreement between the person and the district entered into under this section in the school district may not exceed the lesser of:

(1) the market value of the property; or

(2) subject to Subsection (b), the amount agreed to by the governing body of the school district.

(b) The amount agreed to by the governing body of a school district under Subsection (a)(2) must be an amount in accordance with the following, according to the category established by Section 313.022 to which the school district belongs:

313.027

(c) The limitation amounts listed in Subsection (b) are minimum amounts. A school district, regardless of category, may agree to a greater amount than those amounts.

(d) The governing body of the school district and the property owner shall enter into a written agreement for the implementation of the limitation on appraised value under this subchapter on the owner's qualified property.

(e) The agreement must describe with specificity the qualified investment that the person will make on or in connection with the person's qualified property that is subject to the limitation on appraised value under this subchapter. Other property of the person that is not specifically described in the agreement is not subject to the limitation unless the governing body of the school district, by official action, provides that the other property is subject to the limitation.

(f) In addition, the agreement:

(1) must incorporate each relevant provision of this subchapter and, to the extent necessary, include provisions for the protection of future school district revenues through the adjustment of the minimum valuations, the payment of revenue offsets, and other mechanisms agreed to by the property owner and the school district;

(2) must require the property owner to maintain a viable presence in the school district for at least three years after the date the limitation on appraised value of the owner's property expires;

(3) must provide for the termination of the agreement, the recapture of ad valorem tax revenue lost as a result of the agreement if the owner of the property fails to comply with the terms of the agreement, and payment of a penalty or interest, or both, on that recaptured ad valorem tax revenue;

(4) may specify any conditions the occurrence of which will require the district and the property owner to renegotiate all or any part of the agreement; and

(5) must specify the ad valorem tax years covered by the agreement.

(g) When appraising a person's qualified property subject to a limitation on appraised value under this section, the chief appraiser shall determine the market value of the property and include both the market value and the appropriate value under Subsection (a) in the appraisal records.

Added by 2001 Tex. Laws, p. 5065, ch. 1505, Sec. 1.

Sec. 313.028. Certain Business Information Confidential.

Information provided to a school district in connection with an application for a limitation on appraised value under this subchapter that describes the specific processes or business activities to be conducted or the specific tangible personal property to be located on real property covered by the application is confidential and not subject to public disclosure unless the governing body of the school district approves the application. Information in the custody of a school district if the governing body approves the application is not confidential under this section.

Added by 2001 Tex. Laws, p. 5066, ch. 1505, Sec. 1.

Sec. 313.029. Tax Rate Limitation.

If the governing body of a school district grants an application for a limitation on appraised value under this subchapter, for each of the first two tax years that begins after the date the application is approved, the governing body of the school district may not adopt a tax rate that exceeds the school district's rollback tax rate under Section 26.08 for that year. If, in any tax year in which a restriction on the school district's tax rate under this section is in effect, the governing body approves a subsequent application for a limitation on appraised value under this section, the restriction on the school district's tax rate is extended until the first tax year that begins after the second anniversary of the date the subsequent application is approved.

Added by 2001 Tex. Laws, p. 5066, ch. 1505, Sec. 1.

Sec. 313.030. Property Not Eligible for Tax Abatement.

Property subject to a limitation on appraised value in a tax year under this subchapter is not eligible for tax abatement by a school district under Chapter 312 in that tax year.

Added by 2001 Tex. Laws, p. 5066, ch. 1505, Sec. 1.

Sec. 313.031. Rules and Forms; Fees.

(a) The comptroller shall:

(1) adopt rules and forms necessary for the implementation and administration of this chapter, including rules for determining whether a property owner's property qualifies as a qualified investment under Section 313.021(1); and

(2) provide without charge one copy of the rules and forms to any school district and to any person who states that the person intends to apply for a limitation on appraised value under this subchapter or a tax credit under Subchapter D.

(b) The governing body of a school district by official action shall establish reasonable nonrefundable application fees to be paid by property owners who apply to the district for a limitation on the appraised value of the person's property under this subchapter. The amount of an application fee must be reasonable and may not exceed the estimated cost to the district of processing and acting on an application, including the cost of the economic impact evaluation required by Sections 313.025 and 313.026.

Added by 2001 Tex. Laws, p. 5066, ch. 1505, Sec. 1.

Cross Reference:

Comptroller rule and forms, see Rule Sec. 9.107

[Sections 313.032-313.050 reserved for expansion]