10 TAC §§176.1-176.4, 176.7, 176.8, 176.10, 176.11
The Texas Department of Economic Development (department)
proposes amendments to §§176.1-176.4, 176.7, 176.8, 176.10,
and 176.11, relating to the Texas Enterprise Zone Program.
The proposed amendments to §176.1 change the name of the department
to reflect the abolishment of the Texas Department of Commerce by Senate Bill
932 of the 75th Legislature, the transfer of that agency's functions to the
department, effective September 1, 1997, and the replacement of the Texas
Department of Commerce Policy Board with the governing board of the department.
The proposed amendments further change legal citations to reference the correct
sections of the Government Code and the Texas Administrative Code and change
the name of the division that administers the program within the department.
The proposed amendments to §176.2 change legal citations to correctly
reference sections of the Texas Administrative Code. Section 176.2(b)(5),
concerning a qualified hotel project, is being amended to define the application
requirements for hotel projects and to conform the rule to the Enterprise
Zone Act, §2303.003 and §2303.5055. Section 176.2(b)(6)(A)(i), relating
to enterprise project certifications, is being amended to eliminate contradictory
language and to add clarification. Section 176.2(d) is being amended to further
define the fee structure for a name change and assumption of an enterprise
project. This section is also being amended to include a nonrefundable fee
to recover the department's cost of providing direct technical assistance
to enterprise projects relating to the adjustment of the total number of jobs
allocated in their original project application.
The proposed amendments to §176.3(e) allow the inclusion of an industrial
park in an enterprise zone without including unemployment and poverty data
for the block groups included in the park if no other area of the block group
outside the industrial park is included. This would benefit the communities
in that the Enterprise Zone program could be used as an incentive to attract
businesses in the industrial park, and thereby providing employment opportunities
for enterprise zone residents. The proposed amendments to §176.3(f)(2),
establish guidelines for applicants to submit their application after the
nominating ordinance or order is passed. This language is being added to define
the time frame in which nominating ordinances or orders are submitted.
The proposed amendments to §176.4 clarify the information needed in
a nominating ordinance or order when applying for an enterprise zone designation.
The proposed amendments to §176.4(a)(2)(B), clarify the identification
of the designated representative and liaison to communicate and negotiate
with the department. The proposed amendments to §176.4(a)(5)(A), add
identification of industrial parks, when applicable, as a requirement when
mapping out the proposed area of an enterprise zone. The proposed amendment
to §176.4(a)(6)(B) adds the effective date on which the term of reinvestment
zones became the same as state enterprise zone designations.
The proposed amendments to §176.7 add language setting forth job creation
and job retention requirements in order to clarify existing program policies
used to determine whether or not a project qualifies as a retention project.
The proposed amendments to §176.8(c)(2), correct the legal citation
to the Texas Enterprise Zone Act. The proposed amendments to §176.8(d),
add language allowing enterprise projects to adjust the total number of jobs
allocated as a result of their original project application. This process
would benefit the related community and enterprise project because it may
be used as an incentive for businesses to continue to create additional jobs
and to further expand, it would reward successful companies, and it may prevent
the community from using one of the limited 65 project designations on a project
that is already approved.
The proposed amendments to §176.10(b)(1) clarify enterprise project
application deadlines. The proposed amendments to §176.10(b)(2)(A) allow
communities to have no more than three projects designated and the ability
to gain three bonus projects for a total allocation of six. The proposed change
will encourage the communities to nominate strong projects in order to score
well and earn a bonus project. The proposed amendments to §176.10(b)(2)(B)
clarify the circumstances under which a governing body may receive a bonus
enterprise project and to further clarify where bonus projects can be used.
This section has also been amended to reflect the availability of regular
and bonus designations.
The proposed amendments to §176.11 reflect the repeal of the bi-annual
cost-benefit analysis reporting requirement by House Bill 2906 of the 75th
Legislature.
James Albright, Director of Finance, has determined that for each year
of the first five years that the amendments will be in effect there will be
no additional cost, no reduction in costs, and no loss or increase in revenue
to the state or to local governments as a result of enforcing or administering
the amendments. The probable economic cost to persons required to comply with
the amendments is any cost incurred by businesses in preparing and submitting
applications. Costs to businesses receiving enterprise project designation
will be significantly offset by the benefits of the program.
Mr. Albright also has further determined that the public benefit that can
be expected for each year of the first five years that the amendments are
in effect is that local communities participating in the Enterprise Zone Program
may realize the creation and retention of jobs and capital investment by businesses
within the community.
Written comments on the proposed amendments may be mailed to Robin Abbott,
General Counsel, Texas Department of Economic Development, P.O. Box 12728,
Austin, Texas 78711-2728; delivered to 1700 Congress Avenue, Suite
136, Austin, Texas 78701; or faxed to (512) 936-0415. Comments received more
than 30 days after publication of the proposed amendments will not be considered
by the department.
The amendments are proposed pursuant to Government Code, §481.0044(a),
authorizing the governing board of the department to adopt rules for the administration
of department programs, Government Code, §2303.051(c) directing the department
to adopt rules to carry out the Enterprise Zone Program, and Government Code,
Chapter 2001, Subchapter B, setting forth the agency rulemaking process.
Government Code, Chapter 2303, is affected by these amendments.
§176.1.General Provisions.
(a)
Introduction. Pursuant to the authority granted by the
Texas Enterprise Zone Act, Texas Government Code, Chapter 2303, as amended,
and the Administrative Procedure Act, Chapter 2001, Subchapter B, Rulemaking,
Texas Government Code, as amended, the Texas Department of
Economic Development
[
Commerce
] prescribes the following sections regarding practice
and procedure before the department in the administration and implementation
of the Enterprise Zone Program.
(b)
(No change.)
(c)
Definition of terms. The following words and terms, when
used in this chapter, shall have the following meanings, unless the context
clearly indicates otherwise.
(1)-(5)
(No change.)
(6)
Board--The
Governing
[
Policy
]
Board of the Texas Department of
Economic Development
[
Commerce
].
(7)
(No change.)
(8)
Department--The Texas Department of
Economic
Development
[
Commerce
].
(9)-(20)
(No change.)
(21)
Qualified business--A person, including a corporation
or other entity that the department, for purposes of state benefits under
the Act, and a governing body, for purposes of local benefits, certifies to
have met the following criteria:
(A)-(C)
(No change.)
(D)
as a builder that has demonstrated proficiency in residential
construction, financial stability, and participation in a 10-year insured
warranty program in accordance with the Act and §176.10 (f) of this title
(relating to
Approval Standards for Certification of a Builder as a Qualified
Business
[
Certification of Qualified Business
]); or
(E)
(No change.)
(22)-(27)
(No change.)
(d)-(e)
(No change.)
(f)
Examination of records. Any party requesting the examination
of records pursuant to the Texas
Public Information
[
Open
Records
] Act, Texas Government Code, Chapter 552, shall indicate in
writing the specific nature of the documents to be viewed, and if photocopying
is desired, the prevailing standard fee of the department will be charged
to cover the cost of the request.
(g)
Written communication with the department. Applications
and other written communications to the department should be addressed to
the attention of the Texas Enterprise Zone Program, Business
Services
Division
[
Development Division
], Texas Department of
Economic Development
[
Commerce
], P. O. Box 12728, Austin,
Texas 78711-2728.
§176.2.Fling Requirements for Applications and Claims.
(a)
(No change.)
(b)
Filing.
(1)-(3)
(No change.)
(4)
Enterprise projects. Applications for enterprise
project designation may be filed on or before, but no later than, quarterly
deadlines published by the department in §176.10 (b) (1) of this title,
(relating to
Approval Standards
[
Application Contents for
an Enterprise Project
]) for consideration. Applications received after
a published deadline will not be reviewed and considered for designation until
after the next published deadline. The applicant shall file with the department
an original of an application for designation as an enterprise project.
(5)
Qualified hotel project.
Applications for a
qualified hotel project designation may be filed on any day. The applicant
must file with the department a certified copy of a resolution nominating
the hotel project and a description or summary of the project detailing the
nature of the business, estimated number of new jobs to be created, and the
projected capital investment. To permit the department to designate the applicant
as a qualified hotel project, the project shall be deemed to have met all
qualifications under the Act, §2303.003 and §2303.5055. Furthermore,
the qualified hotel project designation
[
A hotel must apply to
the department in the form provided by the department to be designated a qualified
hotel project. However, a qualified hotel project that meets the conditions
under the Act, §2303.003 (8), shall be deemed to have met the employment,
income, and other criteria of a qualified business and an enterprise project
and the enterprise zone in which the qualified hotel project is located shall
be deemed to have met all qualifications of the Act to permit the department
to designate the qualified hotel project as an enterprise project. The enterprise
project designation or new permanent jobs created by a qualified hotel project
] shall not be considered in determining the number of enterprise projects
that the department may approve pursuant to the other provisions of this Act.
(6)
Certifications.
(A)
Enterprise projects.
(i)
[
Requests for job certifications for designated enterprise
projects may be filed on any day with the department annually or semiannually
at the discretion of the entity holding designated project status.
]
Requests for job certifications [
for enterprise projects
] may be
filed with the department on any day [
after the last day following the
state fiscal biennium in which the project was designated
].
A job
certification request may be made annually or semiannually.
(ii)-(iii)
(No change.)
(B)
Qualified business.
(i)-(ii)
(No change.)
(iii)
Through the applicable governing body or bodies to the
department, a residential builder may request certification as a qualified
business to construct single or multifamily housing in the governing body's
or bodies' enterprise zone even though the builder's principle office or headquarters
is located in the state of Texas outside the zone. The governing body or bodies
shall adopt criteria and guidelines to advance the Act and zone objectives
including establishing a minimum commitment of the number of housing units
that are to be constructed in an enterprise zone within its jurisdiction(s)
within a specific period of time by a builder or group of builders before
requesting state qualified business status. A builder or group of builders
that form a consortium for the purpose of constructing housing in an enterprise
zone that has met requirements established by the local governing body or
bodies may be nominated for enterprise project designation by the local governing
body or bodies. In considering such nominations the governing body or bodies
shall give preference to projects that address affordable housing as set forth
in the criteria established by the governing body or bodies. The application
for certification as a qualified business for state benefits may be submitted
to the department on any day in a form prescribed by the department. The applicable
governing body or bodies may certify a residential builder as a qualified
business to receive local benefits in connection with housing construction
activity in an enterprise zone within its or their jurisdiction without making
an application to the department to assure compliance with the Act,
§2303.402
[
§2303.401
].
(C)-(D)
(No change.)
(c)
(No change.)
(d)
Fees. A nonrefundable fee to recover the department's
cost of providing direct technical assistance relating to the enterprise zone
program must accompany an application to the department in the amount of:
(1)-(3)
(No change.)
(4)
$300 for application to change
name or
[
/
] assume enterprise project designation as defined in §176.8(b)
and §176.8 (c) of this title (relating to
Application Contents for
an Enterprise Project
[
Approval Standards
]);
(5)
$300 to adjust the total number of
new jobs as specified in the original application as defined in Texas Government
Code, §2303.405 (relating to Application Contents for an Enterprise Project);
(6)
[
(5)
] $300 for designation
as a recycling market development zone;
(7)
[
(6)
] $500 for residential
builder certification as a qualified business for a three-year period;
(8)
[
(7)
] $300 for certification
as a neighborhood enterprise association. The fee must be submitted in the
form of a cashiers check made payable to the Texas Department of
Economic
Development
[
Commerce
]/Texas Enterprise Zone Program.
(e)-(g)
(No change.)
§176.3. Eligibility Requirements for Designation of an Enterprise Zone.
(a)-(d)
(No change.)
(e)
Documentation. For the purpose of showing that an area
is qualified to be designated as an enterprise zone, the applicant must submit
documentation, including the source, methodology and certification of the
data. The authorized data source for population estimates is the State Data
Center. The authorized data source for labor force data is the Texas Workforce
Commission. Data will be considered current from the State Data Center and
the Texas Workforce Commission if they are the most recently published estimates
or if the enterprise zone application containing the data is received by the
department before the 61st day after the date revised estimates of that data
are published.
An industrial park may be included as part of the enterprise
zone without averaging in the unemployment and poverty data. However, data
will be required if part of the zone includes an area which is outside the
industrial park but within the same census area. The industrial park may not
exceed 25.0% of the proposed zone area. To show an area has been designated
as an industrial park the applicant must include documentation of official
action taken by the governing body.
(1)-(9)
(No change.)
(f)
Citizen participation. The department will not approve
the designation of an area as an enterprise zone unless:
(1)
(No change.)
(2)
notice of such hearing is given to the public by
publishing once in a newspaper of general circulation in the municipality
or county or combination of municipalities or counties and posting a copy
of the same at the city hall or county courthouse not later than seven days
prior to the date of the hearing. Such notice shall contain a description
of the area proposed by the municipality or county or combination of municipalities
or counties to be designated as an enterprise zone, and the date, time, and
location of such hearing. The description of the area should be worded so
that residents of the area and other interested parties may reasonably identify
the area to be discussed at the public hearing. The notice shall also encourage
all interested parties, including residents of the proposed zone to present
their views at the hearing. The hearing must include a presentation on the
proposed location of the zone and the provisions for any tax or other incentives
applicable to business enterprises in the zone. A municipality or county or
combination of municipalities or counties must adopt the enterprise zone nominating
ordinance or order within 180 calendar days of the date the last public hearing
was held.
Further, the application for zone designation must be received
by the department within 90 calendar days of the date of final approval of
the nominating ordinance or order, or a new public hearing must occur and
a new nominating ordinance or order must be enacted.
(g)
(No change.)
§176.4. Application Contents for Designation of Enterprise Zones.
(a)
Each application for designation of an enterprise zone,
application to amend the boundaries of a designated enterprise zone, or for
designation of a recycling market development zone must be typed directly
on the form provided by the department and must include all applicable attachments
as specified in the application.
(1)
(No change.)
(2)
The applicant. If a joint application is being submitted
by a municipality and county, or a combination of municipalities and/or counties,
the information must be provided for each entity. The application must contain
the following information and documentation concerning the applicant:
(A)
(No change.)
(B)
a certified copy of the ordinance or order as appropriate
of the governing body of the applicant nominating the area within its jurisdiction
as an enterprise zone under the Act, containing the information set forth
in the Act, §2303.104, and identifying by job title the liaison[
,
]
or
liaisons[
,
]
and
representative
or representatives in accordance with paragraph (1) of this subsection. The
ordinance or order must specify any incentives to be provided by the municipality
or county to business enterprises in the zone, including the conditions and
circumstances governing the sale of surplus public buildings or vacant public
lands at less than fair market value and the public purpose that will be achieved
by the sale. At least three incentives must be offered in the zone which are
not offered elsewhere throughout the jurisdiction. At least one incentive
must be financial in nature. The ordinance or order may nominate more than
one zone, but separate applications must be submitted for each zone;
(C)
(No change.)
(3)-(4)
(No change.)
(5)
The zone. The application must contain the following
information and documentation concerning the proposed zone:
(A)
a map of the proposed enterprise zone location which clearly
shows zone boundaries, including existing streets and highways, rail, [
and
] air facilities,
and industrial parks
;
(B)-(F)
(No change.)
(6)
The local business incentives.
(A)
(No change.)
(B)
For the purposes of tax abatement under the Property Redevelopment
and Tax Abatement Act (Tax Code, Chapter 312), an enterprise zone designated
after August 28, 1989 is considered to be a reinvestment zone without further
designation and
effective September 1, 1995
the reinvestment zone
is effective for the term of the enterprise zone. In accordance with Chapter
312.204 and 312.206 of the Tax Code, property tax abatement agreements between
the governing body of each taxing unit and property owners in an enterprise
zone, may, but are not required to, contain terms that are identical to those
contained in the agreement with the municipality, county or both. The terms
of the agreement that may vary are the portion of the property that is to
be exempt from taxation under the agreement and the duration of the agreement.
(C)
(No change.)
(7)
(No change.)
(b)-(c)
(No change.)
§176.7. Requirements for Designation of Enterprise Projects.
(a)
The department may not designate a nominated qualified
business as an enterprise project unless it determines that:
(1)
the business meets the requirements set forth in the Act,
§2303.402
[
§2303.401
] and this chapter;
(2)-(5)
(No change.)
(b)
(No change.)
(c)
For job creation a business must be seeking
to create new jobs, or for an existing business seeking to expand and increase
their current level of employment in Texas. The program, however, does not
allow benefit for moving existing jobs from one Texas city to another within
the state.
(d)
For job retention a business must submit
documentation and receive prior approval of documentation in order to qualify
for using one of the following criteria:
(1)
that permanent employees will be permanently
laid off; or
(2)
the business will permanently close
down; or
(3)
the business will relocate out of
state; or
(4)
a 10% increase in production capacity
will occur; or
(5)
a 10% decrease in overall cost per
unit produced will occur.
(6)
In any case, for job retention, the
business must maintain the same level of employment that existed 90 days prior
to the date of application.
§176.8. Application Contents for Designation of an Enterprise Project.
(a)-(b)
(No change.)
(c)
A lessee or purchaser of a qualified business which has
been designated as an enterprise project may apply to the department to assume
the enterprise project designation of the business leased or purchased. The
request must be made through the appropriate enterprise zone governing body
or bodies which must take official action, in the form of a resolution, approving
of the assumption of the enterprise project designation by the lessee or purchaser.
The resolution should be submitted along with the following information to
the department:
(1)
(No change.)
(2)
a written certification from the lessee or purchaser
on a form to be provided by the department that the lessee or purchaser will
be a qualified business under the Act,
§2303.402
[
§2303.401
]; and
(3)-(4)
(No change.)
(d)
A designated enterprise project may apply
to the department for an adjustment to the total number of jobs allocated
in their original application, in accordance with the Act, §2303.407
(regarding Allocation of Jobs Eligible for Tax Refund). The enterprise project
may not make more than one adjustment to the job allocation during the five
year designation of the project. The request can be made any time during the
five year designation period. The adjustment of a project designation does
not extend the original designation period. To receive department approval
for an adjustment to the job allocation, the project must submit through the
applicant governing body or bodies:
(1)
a written request from the applicant governing
body or bodies to adjust the total number of jobs originally allocated to
the enterprise project operating in an enterprise zone within its jurisdiction;
(2)
a written explanation by the designee
of the reasons for the adjustment and any changes to the commitments made
by the business in the original enterprise project application, if applicable;
(3)
on a form provided by the Department,
the designee must provide a breakdown of the types of new jobs by classification
or title and the salary range or hourly-rate for each position for which benefit
is sought (Note: State sales and use tax paid on qualifying items and adjusted
jobs created within 90 working days prior to the date of application may be
considered for refund); and
(4)
designee must submit documentation
that original commitments i.e. the projected number of jobs and investment
have been met or will be met as specified in their original application.
§176.10.Approval Standards.
(a)
(No change.)
(b)
Approval standards for designation of enterprise projects.
The department shall designate qualified businesses as enterprise projects
on a competitive basis. Applications for designation of enterprise projects
will be accepted on a quarterly basis on or before the following application
deadlines:
(1)
[
During the state fiscal biennium beginning September
1, 1995, the
]
The
application deadline for receipt of enterprise
project applications by the department is 5:00 p.m., Austin, Texas time, on
the first business day of every third month beginning with September 1995.
The department may designate no more than 65 enterprise projects during any
fiscal biennium, as specified by the Act, §2303.403.
(2)
The department will designate qualified businesses
as enterprise projects under the following conditions:
(A)
Each enterprise zone governing body may not have more
than
three
[
four
] qualified businesses designated as
enterprise projects in enterprise project eligible enterprise zones within
its jurisdiction during the state fiscal biennium beginning September 1, 1995.
The enterprise project designations will be granted by the department on a
first-come, first-served basis, subject to the limitations in this section
and based upon the availability of enterprise project designations. Although
enterprise project designations will be awarded on a first-come, first-served
basis, applications will be scored for the purpose of awarding bonus enterprise
project designations.
(B)
Each enterprise project application will be scored against
all other enterprise project applications
approved during a
[
received each
] quarterly deadline, as specified in §176.10 (b)
(1) of this chapter. If an enterprise project application scores within the
top quartile (25%) of all the other applications
approved in
[
submitted on
] a quarterly deadline, the nominating enterprise zone may
nominate a qualified business for a bonus enterprise project designation on
any subsequent quarterly deadline within the state fiscal biennium. Designations
will be awarded only if enterprise project designations are available. The
bonus enterprise project applications will be scored in the same manner as
all other enterprise project applications received on each quarterly deadline.
If a bonus project application scores within the top quartile (25%) of all
the bonus and regular applications received on a quarterly deadline, the nominating
enterprise zone may nominate an additional bonus enterprise project for designation
on any subsequent quarterly deadline within the same fiscal biennium. The
bonus enterprise project designations may only be located
in an enterprise
zone within the governing body's jurisdiction
[
in the enterprise
zone
] from which the bonus enterprise project designation was earned,
subject to enterprise project availability. Each application submitted to
the department will be evaluated on the commitments made by the community
and qualified business as specified under the Act, §2303.405. In no case
may an enterprise zone governing body have a combined total of more than six
enterprise project designations, including regular and bonus designations,
during the state fiscal biennium beginning September 1, 1995.
(C)
(No change.)
(3)
(No change.)
(c)-(i)
(No change.)
§176.11.Reporting Requirements.
(a)
Annual reports.
(1)
Each municipality, county, or combination of municipalities
and/or counties that authorized the creation of an enterprise zone shall submit
an annual report to the department on or before October 1 of each year. The
report must be in a form prescribed by the department and contain the information
listed in the Act, §2303.205 (c). The information in the report will
be used by the department to compile an annual report to the governor, legislature,
and the Legislative Budget Board by December 1 as required by the Act. [
The information will also be used to compile a bi-annual cost benefit analysis,
as required by the Act, §2303.0525.
] If such report is not received
by the deadline, the department may, following a public hearing, consider
termination of the designation of the enterprise zone.
(2)
(No change.)
(b)
Other reports or documents.
(1)
(No change.)
[
(2)
Bi-annual cost-benefit analysis
of program. Not later than December 1 of each even-numbered year, the department
shall prepare a cost-benefit analysis of the program and submit it to the
state auditor for review and comment on the methodology and conclusions of
the analysis. Before each regular legislative session convenes, the state
auditor shall submit the analysis and the state auditor's comments on the
analysis to the governor, the lieutenant governor, and the speaker of the
house of representatives.
]
(2)
[
(3)
] No later than September
1 of each year, a neighborhood enterprise association shall furnish an annual
statement to the applicable governing body or bodies on the programmatic and
financial status of any approved project and an audited financial statement
of the project. The governing body or bodies shall include information about
all reports filed by the neighborhood enterprise association in its annual
report on the applicable enterprise zone due the department by each October
1 during the zone designation period.
Filed with the Office of the Secretary of
State, on February 5, 1998.
TRD-9801762
W. Lane Lanford
Chief Administrative Officer
Texas Department of Economic Development
Earliest possible date of adoption: May 23, 1998
For further information, please call: (512) 936-0181