Louderback Bill Bars Security-Risk Countries From School Tax Breaks

The text as introduced · 1,777 words

By: Louderback
H.B. No. 1623

A BILL TO BE ENTITLED

AN ACT

relating to the eligibility of certain foreign individuals or

entities for a limitation on the taxable value of property for

school district maintenance and operations ad valorem tax purposes

under the Texas Jobs, Energy, Technology, and Innovation Act.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 403.602, Government Code, as added by

Chapter 377 (H.B. 5), Acts of the 88th Legislature, Regular

Session, 2023, is amended by adding Subdivisions (7-a) and (10-a)

to read as follows:

(7-a) "Designated country" means a country identified

by the United States Director of National Intelligence as a country

that poses a risk to the national security of the United States in

each of the three most recent Annual Threat Assessments of the U.S.

Intelligence Community issued pursuant to Section 108B, National

Security Act of 1947 (50 U.S.C. Section 3043b).

(10-a) "Governing authority," "governing person," and

"organization" have the meanings assigned by Section 1.002,

Business Organizations Code.

SECTION 2. Section 403.606, Government Code, as added by

Chapter 377 (H.B. 5), Acts of the 88th Legislature, Regular

Session, 2023, is amended to read as follows:

Sec. 403.606. CERTAIN PERSONS INELIGIBLE. (a) For

purposes of this section, an organization is under the control of an

individual or another organization if the controlling individual or

organization owns at least 50 percent of the voting ownership

interest of the controlled organization necessary to elect a

governing person or governing authority of that organization.

(b) A person is not eligible to submit an application to the

comptroller or enter into an agreement under this subchapter if :

(1) 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, 2275, or 2276; or

(2) the person is:

(A) a governmental entity of a designated

country;

(B) an organization that is:

(i) headquartered in a designated country;

(ii) directly or indirectly under the

control of the government of a designated country; or

(iii) owned by or under the control of one

or more individuals who are citizens of a designated country;

(C) an organization that is owned by or under the

control of an organization described by Paragraph (B); or

(D) an individual who is a citizen of a

designated country [ 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 ].

SECTION 3. Section 403.607(e), Government Code, as added by

Chapter 377 (H.B. 5), Acts of the 88th Legislature, Regular

Session, 2023, is amended to read as follows:

(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 , including information necessary to determine whether

the applicant is eligible under Section 403.606 to submit 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.

SECTION 4. Section 403.609(b), Government Code, as added by

Chapter 377 (H.B. 5), Acts of the 88th Legislature, Regular

Session, 2023, is amended to read as follows:

(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 ; and

(5) the content of the sworn affidavit submitted by

the applicant with the application under Section 403.607(d)(5) is

true and correct and the applicant is eligible under Section

403.606 to submit the application .

SECTION 5. Section 403.612, Government Code, as added by

Chapter 377 (H.B. 5), Acts of the 88th Legislature, Regular

Session, 2023, is amended by amending Subsections (b) and (e) and

adding Subsection (d-1) to read as follows:

(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;

(9-a) require the applicant to agree that, during the

term of the agreement, the applicant will not:

(A) be acquired by or transfer an ownership

interest in the applicant to a person ineligible under Section

403.606(b)(2) to submit an application or enter into an agreement;

or

(B) transfer an ownership interest in the

eligible project that is the subject of the agreement to a person

ineligible under Section 403.606(b)(2) to submit an application or

enter into an agreement;

(10) authorize the governor or the district to

terminate the agreement as provided by Subsection (d);

(10-a) authorize the attorney general to bring an

action to terminate the agreement as provided by Subsection (d-1);

and

(11) incorporate each relevant provision of this

subchapter.

(d-1) This subsection applies to a term described by

Subsection (b)(10-a). The agreement must provide that, if the

attorney general is made aware or independently learns of a

violation of Subsection (b)(9-a) by an applicant, the attorney

general may bring an action to terminate the agreement. The

attorney general may bring an action under this subsection in a

district court in Travis County or a district court in the county in

which a majority of the eligible project that is the subject of the

agreement is located. The comptroller shall promptly notify the

attorney general if the comptroller is made aware or independently

learns of a violation of Subsection (b)(9-a) by an applicant.

(e) An agreement terminated under Subsection (d) or (d-1) is

void, and all remaining obligations and benefits under the

agreement and this subchapter terminate on the date the agreement

is terminated.

SECTION 6. Section 403.615(a), Government Code, as added by

Chapter 377 (H.B. 5), Acts of the 88th Legislature, Regular

Session, 2023, is amended to read as follows:

(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 , including Section

403.606 .

SECTION 7. Section 403.617, Government Code, as added by

Chapter 377 (H.B. 5), Acts of the 88th Legislature, Regular

Session, 2023, is amended by adding Subsection (b-1) to read as

follows:

(b-1) In addition to the information required under

Subsection (b), the comptroller must include the following

information in the report, if applicable:

(1) the number of agreements entered into under this

subchapter pursuant to applications submitted before September 1,

2025, and in effect during the period covered by the report to which

a person described by Section 403.606(b)(2) is a party;

(2) the number of applications submitted to the

comptroller under Section 403.607 during the period covered by the

report that the comptroller determined were submitted by a person

described by Section 403.606(b)(2); and

(3) the number of agreements terminated during the

period covered by the report as a result of an action brought by the

attorney general under Section 403.612(d-1).

SECTION 8. The changes in law made by this Act to Subchapter

T, Chapter 403, Government Code, as added by Chapter 377 (H.B. 5),

Acts of the 88th Legislature, Regular Session, 2023, apply only to

an agreement entered into under that subchapter pursuant to an

application submitted under that subchapter on or after the

effective date of this Act. An agreement entered into under that

subchapter pursuant to an application submitted before the

effective date of this Act is governed by the law in effect on the

date the application was submitted, and the former law is continued

in effect for that purpose.

SECTION 9. To the extent of any conflict, this Act prevails

over another Act of the 89th Legislature, Regular Session, 2025,

relating to nonsubstantive additions to and corrections in enacted

codes.

SECTION 10. This Act takes effect September 1, 2025.