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  H.B. No. 3694
 
 
 
 
AN ACT
  relating to the enterprise zone program.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Sections 2303.003(5-a) and (7), Government Code,
  are amended to read as follows:
               (5-a)  "Office" means the Texas Economic Development
  and Tourism Office within the office of the governor.
               (7)  "Qualified employee" means a person who:
                     (A)  works for a qualified business; and
                     (B)  performs at least 50 percent of the person's
  service for the business at the qualified business site [in the
  enterprise zone].
         SECTION 2.  Section 2303.004, Government Code, is amended to
  read as follows:
         Sec. 2303.004.  JURISDICTION OF MUNICIPALITY.  (a)  For the
  purposes of this chapter, territory in the municipal boundaries and
  in the extraterritorial jurisdiction of a municipality is
  considered to be in the jurisdiction of the municipality.
         (b)  Notwithstanding Subsection (a), the governing body of a
  county with a population of 750,000 or more may nominate for
  designation as an enterprise project a project or activity of a
  qualified business that is located within the jurisdiction of a
  municipality located in the county. For purposes of this
  subsection, a county during any biennium may not use in any one
  municipality more than three of the maximum number of designations
  the county is permitted under Section 2303.406(d)(2).
         SECTION 3.  Section 2303.052, Government Code, is amended to
  read as follows:
         Sec. 2303.052.  BANK [EVALUATION;] REPORT REGARDING
  PROGRAM.  [(a)]  The bank must include the following information
  regarding the enterprise zone program in the report required by
  Section 489.107 [shall conduct a continuing evaluation of the
  enterprise zone program.
         [(b)     The bank shall develop data from available information
  demonstrating the relationship between the incentives provided
  under this chapter and the economy.
         [(c)  The bank biennially shall review local incentives.
         [(d)     On or before January 1 of each year the bank shall
  submit to the governor, the legislature, and the Legislative Budget
  Board a report that]:
               (1)  an evaluation of [evaluates] the effectiveness of
  the [enterprise zone] program;
               (2)  a description of [describes] the use of state and
  local incentives under this chapter and their effect on revenue;
  and
               (3)  suggestions for [suggests] legislation with
  regard to the program.
         SECTION 4.  Section 2303.401, Government Code, is amended to
  read as follows:
         Sec. 2303.401.  DEFINITIONS.  In this subchapter:
               (1)  "New permanent job" means a new employment
  position that:
                     (A)  is created by a qualified business as
  described by Section 2303.402 at the qualified business site not
  earlier than the 90th day before the date the business's project or
  activity is designated as an enterprise project under this chapter;
                     (B)  will provide or has provided for the duration
  of the project's designation period [that:
                     [(A)  has provided] at least 1,820 hours of
  employment a year to a qualified employee; and
                     (C)  will [(B) is intended to] exist or has
  existed at the qualified business site for the longer of:
                           (i)  the duration of the project's
  designation period; or
                           (ii)  [at least] three years after the date
  on which a state benefit is received as authorized by this chapter.
               (2)  "Retained job" means a job that:
                     (A)  existed with a qualified business on the 91st
  day before the date [designation of] the business's project or
  activity is designated as an enterprise project;
                     (B)  [that:
                     [(A)]  has provided and will continue to provide
  employment to a qualified employee of at least 1,820 hours
  annually; and
                     (C)  will [(B) is intended to] be or has been an
  employment position for the longer of:
                           (i)  the duration of the project's
  designation period; or
                           (ii)  [at least] three years after the
  expiration date of the claim period for receipt of [date on which] a
  state benefit [is received as] authorized by this chapter.
         SECTION 5.  Section 2303.402(c), Government Code, is amended
  to read as follows:
         (c)  For the purposes of this section, an economically
  disadvantaged individual is an individual who:
               (1)  was unemployed for at least three months before
  obtaining employment with the qualified business;
               (2)  receives public assistance benefits, including
  welfare payments or food stamps, based on need and intended to
  alleviate poverty;
               (3)  is a low-income [an economically disadvantaged]
  individual, as defined by Section 101, Workforce Investment Act of
  1998 (29 U.S.C. Section 2801(25)) [4(8), Job Training Partnership
  Act (29 U.S.C. Section 1503(8))];
               (4)  is an individual with a disability [handicaps], as
  defined by 29 U.S.C. Section 705(20)(A) [706(8)];
               (5)  is an inmate, as defined by Section 498.001;
               (6)  is entering the workplace after being confined in
  a facility operated by the institutional division of the Texas
  Department of Criminal Justice or under contract with the Texas
  Department of Criminal Justice;
               (7)  has been released by the Texas Youth Commission
  and is on parole, if state law provides for such a person to be on
  parole; or
               (8)  meets the current low income or moderate income
  limits developed under Section 8, United States Housing Act of 1937
  (42 U.S.C. Section 1437f et seq.).
         SECTION 6.  Section 2303.403, Government Code, is amended to
  read as follows:
         Sec. 2303.403.  PROHIBITION ON QUALIFIED BUSINESS
  CERTIFICATION; LIMIT ON ENTERPRISE PROJECT DESIGNATIONS.  If the
  bank determines that the governing body eligible to nominate an
  enterprise project is not complying with this chapter, the bank
  shall prohibit the certification of a qualified business until the
  bank determines that the governing body is complying with this
  chapter. The bank may not designate more than 105 [85] enterprise
  projects during any biennium. Any designations remaining at the
  end of a biennium may be carried forward to the next biennium.
         SECTION 7.  Section 2303.404(c), Government Code, is amended
  to read as follows:
         (c)  The designation period for an enterprise project may not
  be for less than one year or more than [exceed] five years from the
  date on which the designation is made.
         SECTION 8.  Sections 2303.405(a) and (b), Government Code,
  are amended to read as follows:
         (a)  If the governing body approves a request made under
  Section 2303.404, the governing body may apply to the bank for the
  designation of the project or activity of a qualified business as an
  enterprise project only after it submits to the bank the order or
  ordinance and other information that complies with the requirements
  of Sections 2303.4051 and 2303.4052.
         (b)  An application must contain an economic analysis of the
  plans of the qualified business for expansion, revitalization, or
  other activity with regard to the enterprise project, including:
               (1)  the number of employment positions in existence at
  the qualified business site on the 91st day before the application
  deadline;
               (1-a)  the number of [anticipated] new permanent jobs
  the enterprise project commits to [will] create during the
  designation period presented in the form of a tabular listing of:
                     (A)  the classification titles of those jobs; and
                     (B)  the number of jobs and salary range for each
  classification title;
               (2)  the [anticipated] number of permanent jobs the
  enterprise project commits to [will] retain during the designation
  period presented in the form of a tabular listing of:
                     (A)  the classification titles of the retained
  jobs; and
                     (B)  the number of retained jobs and salary range
  for each classification title;
               (3)  the amount of investment to be made by the
  enterprise project;
               (4)  a complete description of the projected schedule
  for completion of the specific activity described by Section
  2303.404(b) to be undertaken by the enterprise project;
               (5)  other information the bank requires;
               (6)  a description of the local effort made by the
  nominating body, the qualified business, and other affected
  entities to develop and revitalize the jurisdiction of the
  governmental entity nominating the project or activity; and
               (7)  if the nominating body is applying for a double or
  triple jumbo enterprise project, as defined by Section 2303.407, an
  indication of which level [of those types] of designation
  [designations] is being sought.
         SECTION 9.  Sections 2303.4051(a), (b), (e), (f), and (g),
  Government Code, are amended to read as follows:
         (a)  In this section, "local incentive" means each tax
  incentive, grant, other financial incentive or benefit, or program
  to be provided by the governing body to qualified businesses
  participating in the enterprise zone program [business enterprises
  in the block group] and any other local incentive listed in Section
  2303.511.
         (b)  Before nominating the project or activity of a qualified
  business for designation as an enterprise project, the governing
  body of the municipality or county in which the business is located,
  by ordinance or order, as appropriate, must identify and summarize
  briefly any local incentives available[:
               [(1)     in each of the block groups or other areas within
  its jurisdiction that qualify as an enterprise zone under Section
  2303.101, if any; and
               [(2)     in any area within its jurisdiction that does not
  qualify as an enterprise zone].
         (e)  An [Unless the nominating body holds a public hearing
  before adopting an ordinance or order under this section, the]
  ordinance or order adopted under this section is not valid unless
  the nominating body holds a public hearing before adopting the
  ordinance or order. Notice of the hearing must be published in a
  newspaper having general circulation in the municipality not later
  than the seventh calendar day before the date of the hearing. The
  notice must contain:
               (1)  the date, time, and location of the hearing;
               (2)  the provisions for any tax or other incentives
  applicable to the enterprise zone program;
               (3)  the name of the qualified business whose project
  or activity is being nominated for enterprise project designation;
  and
               (4)  the location of the qualified business site.
         (f)  If the nominating body has previously nominated a
  project or activity for designation as an enterprise project, the
  nominating body, instead of issuing a new ordinance or order under
  this section for a nominated project or activity, may by resolution
  make a reference to a previously issued ordinance or order that met
  the requirements of this section if:
               (1)  the resolution nominates the project or activity
  for designation as an enterprise project and states:
                     (A)  whether the nominated project or activity is
  located in an area designated as an enterprise zone;
                     (B)  the level of enterprise project designation
  being sought; and
                     (C)  the ending date of the project's designation
  period;
               (2)  the local incentives described in the previously
  issued ordinance or order [for the areas described by Subsections
  (b)(1) and (2)] are [substantially] the same on the date the
  resolution is issued; and
               (3)  the local incentives to be made available to the
  nominated project or activity are the same as those made available
  to the project or activity that are the subject of the previously
  issued ordinance or order.
         (g)  This section does not prohibit a municipality or county
  from extending additional incentives, including tax incentives,
  for qualified businesses [business enterprises] in an enterprise
  zone by a separate order or ordinance.
         SECTION 10.  Section 2303.4052, Government Code, is amended
  to read as follows:
         Sec. 2303.4052.  REQUIRED INFORMATION FROM NOMINATING BODY.  
  Before nominating the project or activity of a qualified business
  for designation as an enterprise project, the nominating body must
  submit to the bank:
               (1)  a certified copy of the ordinance or order, as
  appropriate, or reference to an ordinance or order as required by
  Section 2303.4051;
               (2)  a transcript of all public hearings conducted with
  respect to local incentives available to qualified businesses
  [business enterprises] within the jurisdiction of the governmental
  entity nominating the project or activity, regardless of whether
  those businesses [business enterprises] are located in an
  enterprise zone;
               (3)  the name, title, address, telephone number, and
  electronic mail address of the nominating body's liaison designated
  under Section 2303.204; [and]
               (4)  if the business is seeking job retention benefits,
  documentation showing the number of employment positions at the
  qualified business site; and
               (5)  any additional information the bank may require.
         SECTION 11.  Section 2303.406, Government Code, is amended
  by amending Subsection (a) and adding Subsections (g) and (h) to
  read as follows:
         (a)  The bank may designate a project or activity of a
  business as an enterprise project only if the bank receives all of
  the information required by Section 2303.4052 and determines that:
               (1)  the business is a qualified business under Section
  2303.402 that is located in or has made a substantial commitment to
  locate in an enterprise zone or at a qualified business site;
               (2)  the nominating body making the application has
  demonstrated that a high level of cooperation exists among public,
  private, and neighborhood entities within the jurisdiction of the
  governmental entity nominating the project or activity;
               (3)  the designation will contribute significantly to
  the achievement of the plans of the nominating body making the
  application for development and revitalization of the area in which
  the enterprise project will be located; and
               (4)  if the business is seeking job retention benefits,
  the business has clearly demonstrated that:
                     (A)  the permanent employees of the business will
  be permanently laid off;
                     (B)  the business will close down permanently;
                     (C)  the business will relocate out-of-state;
                     (D)  the business is able to employ individuals in
  accordance with Section 2303.402 [a 10 percent increase in the
  production capacity of the business will occur]; or
                     (E)  [a 10 percent decrease in overall cost per
  unit produced will occur;
                     [(F)]  the business facility has been
  legitimately destroyed or substantially impaired because of fire,
  flood, tornado, hurricane, or any other natural disaster and that
  at least 60 percent of the capital investment is being spent to
  repair damages resulting from the disaster[; or
                     [(G)     the business facility is both adding a new
  business line or product and deleting or decreasing an existing
  business line or product, and the designation will prevent the
  facility's net production capacity from decreasing].
         (g)  The bank may lower the designation level of a proposed
  project or activity nominated for enterprise project designation:
               (1)  if there are fewer designations available than
  applications received; or
               (2)  to further the economic interests of the state.
         (h)  A state benefit may not be obtained under this chapter
  or Chapter 151, Tax Code, for jobs moved from one jurisdiction in
  this state to another jurisdiction in this state.
         SECTION 12.  Section 2303.406(e), Government Code, as added
  by Chapter 814, Acts of the 78th Legislature, Regular Session,
  2003, is amended to read as follows:
         (e)  The office may, during any biennium, designate multiple
  concurrent enterprise projects to a qualified business located in
  an enterprise zone [during any biennium].
         SECTION 13.  Section 2303.407, Government Code, is amended
  to read as follows:
         Sec. 2303.407.  ALLOCATION OF JOBS ELIGIBLE FOR TAX REFUND.  
  (a)  The bank shall allocate to an enterprise project the maximum
  number of new permanent jobs or retained jobs eligible based on the
  amount of capital investment made in the project, the project's
  designation level, and the refund per job with a maximum refund to
  be included in a computation of a tax refund for the project.
         (b)  A capital investment in a project of:
               (1)  $40,000 to $399,999 will result in a refund of up
  to $2,500 per job with a maximum refund of $25,000 for the creation
  or retention of 10 jobs;
               (2)  $400,000 to $999,999 will result in a refund of up
  to $2,500 per job with a maximum refund of $62,500 for the creation
  or retention of 25 jobs;
               (3)  $1,000,000 to $4,999,999 will result in a refund
  of up to $2,500 per job with a maximum refund of $312,500 for the
  creation or retention of 125 jobs;
               (4)  $5,000,000 to $149,999,999 will result in a refund
  of up to $2,500 per job with a maximum refund of $1,250,000 for the
  creation or retention of 500 jobs;
               (5)  $150,000,000 to $249,999,999 will result in a
  refund of up to $5,000 per job with a maximum refund of $2,500,000
  for the creation or retention of 500 jobs if the bank designates the
  project as a double jumbo enterprise project; or
               (6)  $250,000,000 or more will result in a refund of up
  to $7,500 per job with a maximum refund of $3,750,000 for the
  creation or retention of at least 500 jobs if the bank designates
  the project as a triple jumbo enterprise project.
         (c)  An enterprise project for which a commitment for a [A]
  capital investment in the range amount and the creation or
  retention of the number of jobs specified [described] by Subsection
  (b)(5) is made is considered a double jumbo enterprise project if
  the project is so designated by the bank.
         (d)  An enterprise project for which a commitment for a [A]
  capital investment in the range amount and the creation or
  retention of the number of jobs specified [described] by Subsection
  (b)(6) is made is considered a triple jumbo enterprise project if
  the project is so designated by the bank.
         SECTION 14.  Section 2303.4072, Government Code, is amended
  to read as follows:
         Sec. 2303.4072.  ENTERPRISE PROJECT CLAIM FOR STATE BENEFIT.  
  A person must make a claim to the comptroller for a state benefit as
  prescribed under this chapter and Chapter [Chapters] 151 [and 171],
  Tax Code, not later than 18 months after the date on which the term
  of the enterprise project designation expires as provided by
  Section 2303.404.
         SECTION 15.  Section 2303.502(c), Government Code, is
  amended to read as follows:
         (c)  The bank shall disseminate the reports to the governing
  bodies of the entities that nominated the enterprise projects
  [enterprise zones] and others as necessary to advance the purposes
  of this chapter.
         SECTION 16.  (a)  Section 2303.504, Government Code, is
  amended to read as follows:
         Sec. 2303.504.  STATE TAX REFUNDS AND CREDITS; REPORT. (a)  
  Subject to Section 2303.516, an enterprise project is entitled to:
               (1)  a refund of state taxes under Section 151.429, Tax
  Code; and
               (2)  a franchise tax credit under Subchapter Q-1,
  Chapter 171, Tax Code.
         (b)  At the time of receipt of any tax benefit available as a
  result of participating in the enterprise zone program, including a
  state sales and use tax refund or franchise tax credit, three
  percent of the amount of the tax benefit shall be transferred to the
  Texas economic development bank fund under Subchapter B, Chapter
  489, to defray the cost of administering this chapter.
         (c)  Not later than the 60th day after the last day of each
  fiscal year, the comptroller shall report to the bank the statewide
  total of actual jobs created, actual jobs retained, and the tax
  refunds and credits made under this section during that fiscal
  year.
         (b)  Chapter 171, Tax Code, is amended by adding Subchapter
  Q-1 to read as follows:
  SUBCHAPTER Q-1. TAX CREDITS FOR ENTERPRISE PROJECTS FOR CERTAIN
  CAPITAL INVESTMENTS
         Sec. 171.815.  DEFINITIONS. In this subchapter:
               (1)  "Enterprise project" means:
                     (A)  a person designated by the Texas Department
  of Economic Development as an enterprise project under Chapter
  2303, Government Code, on or after September 1, 2001, but before
  September 1, 2003; and
                     (B)  a person designated by the Texas Economic
  Development Bank as an enterprise project under Chapter 2303,
  Government Code, on or after September 1, 2003, but before January
  1, 2005.
               (2)  "Enterprise zone" has the meaning assigned by
  Section 2303.003, Government Code.
               (3)  "Qualified business" means a person certified as a
  qualified business under Section 2303.402, Government Code.
               (4)  "Qualified capital investment" means tangible
  personal property that is first placed in service in an enterprise
  zone by a qualified business that has been designated as an
  enterprise project and that is described in Section 1245(a),
  Internal Revenue Code, such as engines, machinery, tools, and
  implements used in a trade or business or held for investment and
  subject to an allowance for depreciation, cost recovery under the
  accelerated cost recovery system, or amortization. The term does
  not include real property or buildings and their structural
  components. Property that is leased under a capitalized lease is
  considered a qualified capital investment, but property that is
  leased under an operating lease is not considered a qualified
  capital investment. Property expensed under Section 179, Internal
  Revenue Code, is not considered a qualified capital investment.
         Sec. 171.816.  TANGIBLE PERSONAL PROPERTY FIRST PLACED IN
  SERVICE IN AN ENTERPRISE ZONE. For purposes of determining whether
  an investment is a qualified capital investment under Section
  171.815, "tangible personal property first placed in service in an
  enterprise zone" includes tangible personal property:
               (1)  purchased by an enterprise project for placement
  in an improvement that was under active construction or other
  physical preparation;
               (2)  identified by a purchase order, invoice, billing,
  sales slip, or contract; and
               (3)  physically present at the enterprise project's
  qualified business site, as defined by Section 2303.003, Government
  Code, and in use by the enterprise project on the original due date
  of the report on which the credit is taken.
         Sec. 171.817.  ELIGIBILITY.  (a)  Subject to Subsection (b),
  an enterprise project is eligible for a credit against the tax
  imposed under this chapter in the amount and under the conditions
  and limitations provided by this subchapter if the enterprise
  project is a qualified business.
         (b)  An enterprise project is not eligible for a credit under
  this subchapter if the enterprise project claimed a credit under
  Subchapter Q before the repeal of that subchapter on January 1,
  2008.
         (c)  An enterprise project that is eligible for a credit
  under this subchapter may claim a credit or take a carryforward
  credit without regard to whether the enterprise zone in which it
  made the qualified capital investment subsequently loses its
  designation as an enterprise zone.
         (d)  A taxable entity, other than a combined group, may not
  claim the credit under this subchapter unless the taxable entity
  was, on May 1, 2006, subject to the tax imposed by this chapter as
  this chapter existed on that date. A taxable entity that is a
  combined group may claim the credit for each member entity that was,
  on May 1, 2006, subject to the tax imposed by this chapter as this
  chapter existed on that date and shall compute the amount of the
  credit for that member as provided by this subchapter.
         Sec. 171.818.  CALCULATION OF CREDIT. (a)  An enterprise
  project that is eligible for a credit under this subchapter may, on
  or after the later of January 1, 2008, or the date the project was
  designated, establish a credit equal to 7.5 percent of the
  qualified capital investment made on or after January 1, 2005, and
  before January 1, 2007.
         (b)  The enterprise project may claim the entire credit
  earned on a report originally due on or after January 1, 2008, and
  before January 1, 2009, subject to Section 171.819.
         Sec. 171.819.  LIMITATIONS. The total credit claimed under
  this subchapter for a report, including the amount of any
  carryforward credit under Section 171.820, may not exceed 50
  percent of the amount of franchise tax due for the report before any
  other applicable tax credits.
         Sec. 171.820.  CARRYFORWARD. If an enterprise project is
  eligible for a credit that exceeds the limitation under Section
  171.819, the enterprise project may carry the unused credit forward
  for not more than five consecutive reports.
         Sec. 171.821.  CERTIFICATION OF ELIGIBILITY. (a)  For the
  initial and each succeeding report in which a credit is claimed
  under this subchapter, the enterprise project shall file with its
  report, on a form provided by the comptroller, information that
  sufficiently demonstrates that the enterprise project is eligible
  for the credit.
         (b)  The burden of establishing entitlement to and the value
  of the credit is on the enterprise project.
         Sec. 171.822.  ASSIGNMENT PROHIBITED. An enterprise project
  may not convey, assign, or transfer the credit allowed under this
  subchapter to another entity unless all of the assets of the
  enterprise project are conveyed, assigned, or transferred in the
  same transaction.
         Sec. 171.823.  BIENNIAL REPORT BY COMPTROLLER. (a)  Before
  the beginning of each regular session of the legislature, the
  comptroller shall submit to the governor, the lieutenant governor,
  and the speaker of the house of representatives a report that
  states:
               (1)  the total amount of qualified capital investments
  made by enterprise projects that claim a credit under this
  subchapter and the average and median wages paid by those
  enterprise projects;
               (2)  the total amount of credits applied against the
  tax under this chapter and the amount of unused credits, including:
                     (A)  the total amount of franchise tax due by
  enterprise projects claiming a credit under this subchapter before
  and after the application of the credit;
                     (B)  the average percentage reduction in
  franchise tax due by enterprise projects claiming a credit under
  this subchapter;
                     (C)  the percentage of tax credits that were
  awarded to enterprise projects with fewer than 100 employees; and
                     (D)  the two-digit standard industrial
  classification of enterprise projects claiming a credit under this
  subchapter;
               (3)  the geographical distribution of the qualified
  capital investments on which tax credit claims are made under this
  subchapter; and
               (4)  the impact of the credit provided under this
  subchapter on employment, capital investment, personal income, and
  state tax revenues.
         (b)  The final report issued before the expiration of this
  subchapter must include historical information on the credit
  authorized under this subchapter.
         (c)  The comptroller may not include in the report
  information that is confidential by law.
         (d)  For purposes of this section, the comptroller may
  require an enterprise project that claims a credit under this
  subchapter to submit information, on a form provided by the
  comptroller, on the location of the enterprise project's capital
  investment in this state and any other information necessary to
  complete the report required under this section.
         (e)  The comptroller shall provide notice to the members of
  the legislature that the report required under this section is
  available on request.
         Sec. 171.824.  COMPTROLLER POWERS AND DUTIES. The
  comptroller shall adopt rules and forms necessary to implement this
  subchapter.
         Sec. 171.825.  EXPIRATION. (a)  This subchapter expires
  December 31, 2009.
         (b)  The expiration of this subchapter does not affect the
  carryforward of a credit under Section 171.820 or those credits for
  which an enterprise project is eligible before the date this
  subchapter expires.
         (c)  A taxable entity may claim a credit under Subchapter
  Q-1, Chapter 171, Tax Code, as added by this section, only:
               (1)  on a franchise tax report originally due on or
  after January 1, 2008; and
               (2)  notwithstanding any other law, for qualified
  capital investments made on or after January 1, 2005, and before
  January 1, 2007.
         (d)  The comptroller by rule shall prescribe the manner in
  which a taxable entity may claim a credit for qualified capital
  investments made on or after January 1, 2005, and before January 1,
  2007.
         (e)  Subchapter Q-1, Chapter 171, Tax Code, as added by this
  section, and Section 2303.504, Government Code, as amended by this
  section, do not affect taxes imposed before January 1, 2008, and the
  law in effect before that date is continued in effect for purposes
  of the liability for and collection of those taxes.
         (f)  Notwithstanding any other provision of this Act, this
  section takes effect January 1, 2008.
         SECTION 17.  Section 2303.505(a), Government Code, is
  amended to read as follows:
         (a)  To encourage the development of areas designated as
  enterprise zones, the governing body of a municipality through a
  program may refund its local sales and use taxes paid by a qualified
  business on all taxable items purchased for use at the qualified
  business site related to the project or activity[:
               [(1)     the purchase, lease, or rental of equipment or
  machinery for use in an enterprise zone;
               [(2)     the purchase of material for use in remodeling,
  rehabilitating, or constructing a structure in an enterprise zone;
               [(3)     labor for remodeling, rehabilitating, or
  constructing a structure in an enterprise zone; and
               [(4)     electricity and natural gas purchased and
  consumed in the normal course of business in the enterprise zone].
         SECTION 18.  Section 2303.516, Government Code, is amended
  to read as follows:
         Sec. 2303.516.  MONITORING QUALIFIED BUSINESS OR ENTERPRISE
  PROJECT COMMITMENTS.  (a)  The comptroller [bank] may monitor a
  qualified business or enterprise project to determine whether and
  to what extent the business or project has followed through on any
  commitments made by it or on its behalf under this chapter.
         (b)  The comptroller [bank] may determine that the business
  or project is not entitled to a refund or credit of state taxes
  under Section 2303.504 if the comptroller [bank] finds that:
               (1)  the business or project is not willing to
  cooperate with the comptroller [bank] in providing the comptroller
  [bank] with the information the comptroller [bank] needs to
  determine the state benefits [make the determination under
  Subsection (a)]; or
               (2)  the business or project has substantially failed
  to follow through on any commitments made by it or on its behalf
  under this chapter.
         (c)  [On the date on which a certificate of occupancy is
  issued with respect to an enterprise project or at the completion of
  the enterprise project designation period as indicated by the
  approved application, the nominating body shall monitor the
  qualified business to determine whether the business or project has
  followed through on any commitments or goals made by it or on its
  behalf in the designation application. On completion, the
  nominating body shall submit a report of its findings to the bank
  and comptroller.
         [(d)]  A qualified business may obtain a state benefit,
  earned through a specific enterprise project designation, on
  completion of an audit performed by the comptroller that will
  certify hiring commitments and eligible purchases made by or on
  behalf of a qualified business under this chapter.
         SECTION 19.  Section 2303.517, Government Code, is amended
  to read as follows:
         Sec. 2303.517.  REPORT.  (a)  Before obtaining a state
  benefit, the qualified business must submit to the comptroller
  [bank] a certified report of the actual number of jobs created or
  retained and the capital investment made at or committed to the
  qualified business site.
         (b)  Not later than the 30th day after the date the
  comptroller completes an enterprise project's close-out, the
  comptroller shall submit to the bank a report stating the actual
  amount of capital investment made and the actual number of jobs
  created or retained as a result of the enterprise project
  designation.
         SECTION 20.  Sections 151.429(a), (b), (c), and (e), Tax
  Code, are amended to read as follows:
         (a)  An enterprise project is eligible for a refund in the
  amount provided by this section of the taxes imposed by this chapter
  on purchases of all taxable items purchased for use at the qualified
  business site related to the project or activity [:
               [(1)     equipment or machinery sold to an enterprise
  project for use at the qualified business site;
               [(2)     building materials sold to an enterprise project
  for use in remodeling, rehabilitating, or constructing a structure
  at the qualified business site;
               [(3)     labor for remodeling, rehabilitating, or
  constructing a structure by an enterprise project at the qualified
  business site; and
               [(4)     electricity and natural gas purchased and
  consumed in the normal course of business at the qualified business
  site].
         (b)  Subject to the limitations provided by Subsection (c) of
  this section, an enterprise project qualifies for a refund of taxes
  under this section based on the amount of capital investment made at
  the qualified business site, the project's designation level, and
  the refund per job with a maximum refund to be included in a
  computation of a tax refund for the project. A capital investment
  at the qualified business site of:
               (1)  $40,000 to $399,999 will result in a refund of up
  to $2,500 per job with a maximum refund of $25,000 for the creation
  or retention of 10 jobs;
               (2)  $400,000 to $999,999 will result in a refund of up
  to $2,500 per job with a maximum refund of $62,500 for the creation
  or retention of 25 jobs;
               (3)  $1,000,000 to $4,999,999 will result in a refund
  of up to $2,500 per job with a maximum refund of $312,500 for the
  creation or retention of 125 jobs;
               (4)  $5,000,000 to $149,999,999 will result in a refund
  of up to $2,500 per job with a maximum refund of $1,250,000 for the
  creation or retention of 500 jobs;
               (5)  $150,000,000 to $249,999,999 will result in a
  refund of up to $5,000 per job with a maximum refund of $2,500,000
  for the creation or retention of 500 jobs if the Texas Economic
  Development Bank designates the project as a double jumbo
  enterprise project; or
               (6)  $250,000,000 or more will result in a refund of up
  to $7,500 per job with a maximum refund of $3,750,000 for the
  creation or retention of at least 500 jobs if the Texas Economic
  Development Bank designates the project as a triple jumbo
  enterprise project.
         (c)  The total amount of tax refund that an enterprise
  project may apply for in a state fiscal year may not exceed
  $250,000, at not more than $2,500 per job. The total amount of tax
  refund that a double jumbo enterprise project may apply for in a
  state fiscal year may not exceed $500,000, at not more than $5,000
  per job. The total amount of tax refund that a triple jumbo
  enterprise project may apply for in a state fiscal year may not
  exceed $750,000, at not more than $7,500 per job. If an enterprise
  project, double jumbo enterprise project, or triple jumbo
  enterprise project qualifies in a state fiscal year for a refund of
  taxes in an amount in excess of the applicable limitation provided
  by this subsection, it may apply for a refund of those taxes in a
  subsequent year, subject to the applicable [$250,000] limitation
  for each year. The total amount that may be refunded to:
               (1)  an enterprise project under this section may not
  exceed the amount determined by multiplying $250,000 by the number
  of state fiscal years during which the enterprise project created
  or retained one or more jobs for qualified employees;
               (2)  a double jumbo enterprise project under this
  section may not exceed the amount determined by multiplying
  $500,000 by the number of state fiscal years during which the double
  jumbo enterprise project created or retained one or more jobs for
  qualified employees; or
               (3)  a triple jumbo enterprise project under this
  section may not exceed the amount determined by multiplying
  $750,000 by the number of state fiscal years during which the triple
  jumbo enterprise project created or retained one or more jobs for
  qualified employees.
         (e)  In this section:
               (1)  "Enterprise project" means a project or activity
  [person] designated by the Texas Economic Development Bank as an
  enterprise project under Chapter 2303, Government Code.
               (2)  "Qualified employee" ["Enterprise zone,"
  "qualified employee,"] and "qualified hotel project" have the
  meanings assigned to those terms by Section 2303.003, Government
  Code.
               (3)  "New permanent job" has the meaning assigned by
  [means a new employment position created by a qualified business as
  described by] Section 2303.401 [2303.402], Government Code[, that:
                     [(A)     has provided at least 1,820 hours of
  employment a year to a qualified employee; and
                     [(B)     is intended to exist for at least three
  years after a state benefit is received under Chapter 2303,
  Government Code].
               (4)  "Retained job" has the meaning assigned by Section
  2303.401, Government Code.
               (5)  "Double jumbo enterprise project" and "triple
  jumbo enterprise project" have the meanings assigned by Section
  2303.407, Government Code.
         SECTION 21.  The following provisions are repealed:
               (1)  Section 2303.4051(d), Government Code; and
               (2)  Section 2303.406(e), Government Code, as added by
  Chapter 209, Acts of the 78th Legislature, Regular Session, 2003.
         SECTION 22.  The changes in law made by this Act to Chapter
  2303, Government Code, apply only to an application for a
  designation under the enterprise zone program under Chapter 2303,
  Government Code, as amended by this Act, that is filed on or after
  the effective date of this Act. An application for designation
  under the enterprise zone program that is filed before the
  effective date of this Act is governed by the law in effect on the
  date the application was filed, and the former law is continued in
  effect for that purpose.
         SECTION 23.  The changes in law made by this Act to Section
  151.429, Tax Code, apply only to an application for a tax refund
  made on or after the effective date of this Act. An application for
  a tax refund made before the effective date of this Act is governed
  by the law in effect on the date the application was made, and the
  former law is continued in effect for that purpose.
         SECTION 24.  This Act takes effect immediately if it
  receives a vote of two-thirds of all the members elected to each
  house, as provided by Section 39, Article III, Texas Constitution.  
  If this Act does not receive the vote necessary for immediate
  effect, this Act takes effect September 1, 2007.
 
 
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
 
 
         I certify that H.B. No. 3694 was passed by the House on April
  26, 2007, by the following vote:  Yeas 137, Nays 1, 1 present, not
  voting; and that the House concurred in Senate amendments to H.B.
  No. 3694 on May 26, 2007, by the following vote:  Yeas 143, Nays 0,
  2 present, not voting.
 
  ______________________________
  Chief Clerk of the House   
 
         I certify that H.B. No. 3694 was passed by the Senate, with
  amendments, on May 23, 2007, by the following vote:  Yeas 31, Nays
  0.
 
  ______________________________
  Secretary of the Senate   
  APPROVED: __________________
                  Date       
   
           __________________
                Governor