(a) Introduction. Pursuant to the authority granted
by the Defense Economic Readjustment Zone Act, Texas Government Code,
Chapter 2310, and the Administrative Procedure Act, Texas Government
Code, Chapter 2001, Subchapter B, as amended, the Economic Development
and Tourism Office in the Office of the Governor (Office) prescribes
the following sections regarding practice and procedure before the
Office in the administration and implementation of the Readjustment
Zone Program.
(b) Purpose. It is the purpose of the Defense Economic
Readjustment Zone Act to establish a process to identify areas impacted
by defense base closure, downsizing, or realignment and to provide
local and state regulatory and tax incentives to encourage businesses
to locate or expand in these areas. The purpose of these sections
is to provide standards of eligibility and procedures for applications
for designating qualified areas as readjustment zones and for designating
qualified businesses as readjustment projects.
(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) Act--The Defense Economic Readjustment Zone Act,
Texas Government Code, Chapter 2310.
(2) Administrative authority--An administrative body
that may be delegated responsibilities by the readjustment zone governing
body. The administrative authority must:
(A) be composed of 3, 5, 7, 9, 11, or 15 members;
(B) be a viable and responsive body generally representative
of all public or private entities that have a stake in the development
of the zone; and
(C) if the readjustment zone includes private residences,
include:
(i) an elected official representing readjustment zone
residents and businesses; or
(ii) at least two readjustment zone residents.
(3) Adversely affected defense dependent community--A
municipality or county is an adversely affected defense-dependent
community if the Office determines that:
(A) the municipality or county requires assistance
because of:
(i) the proposed or actual establishment, realignment,
or closure of a defense facility;
(ii) the cancellation or termination of a United States
Department of Defense contract or the failure of the Department of
Defense to proceed with an approved major weapon system program;
(iii) a publicly announced planned major reduction
in Department of Defense spending that would directly and adversely
affect the municipality or county; or
(iv) the closure or a significant reduction of the
operations of a defense facility as the result of a merger, acquisition,
or consolidation of a defense contractor operating the facility; and
(B) the municipality or county is expected to experience,
during the period between the beginning of the federal fiscal year
during which an event described by subparagraph (A) of this paragraph
is finally approved and the date that the event is to be substantially
completed, a direct loss of:
(i) 2,500 or more defense worker jobs in any area of
the municipality or county that is located in an urbanized area of
a metropolitan statistical area;
(ii) 1,000 or more defense worker jobs in any area
of the municipality or county that is not located in an urbanized
area of a metropolitan statistical area; or
(iii) 1.0% of the civilian jobs in the municipality
or county.
(4) Applicant--The municipality, county or combination
of municipalities or counties filing an application with the Office
for designation of a readjustment zone or nominating a business for
designation as a readjustment project or a business filing for certification
as a qualified business.
(5) Application--An application, including supporting
and supplemental instruments and documentation, for designation of
a readjustment zone or readjustment project or for certification by
the Office or local governing body as a qualified business under the
Act and this chapter.
(6) Day--The period of time between 8:00 a.m. and 5:00
p.m. Central Standard Time on any day other than a Saturday, Sunday,
or state or federal holiday.
(7) Defense worker--
(A) an employee of the United States Department of
Defense, including a member of the armed forces and a government civilian
worker;
(B) an employee of a government agency or private business,
or an entity providing a department of defense related function, who
is employed on a defense facility;
(C) an employee of a business that provides direct
services or products to the Department of Defense and whose job is
directly dependent on defense expenditures; or
(D) an employee or private contractor employed by the
United States Department of Energy working on a defense or Department
of Energy facility in support of a Department of Defense related project.
(8) Defense worker job--A Department of Defense authorized
permanent position or a position held or occupied by one or more defense
workers for more than 12 months.
(9) Extraterritorial jurisdiction--Territory in the
extraterritorial jurisdiction of a municipality that is considered
to be in the jurisdiction of the municipality as defined by Local
Government Code, Chapter 42.
(10) Governing body--The governing body of a municipality
or county that has applied to have an area within its jurisdiction
designated as a readjustment zone.
(11) New permanent job--A new employment position created
by a qualified business as described by Texas Government Code, §2310.302,
that:
(A) has provided at least 1,820 hours of employment
a year to a qualified employee; and
(B) is intended to exist during the period that the
qualified business is designated as a defense readjustment project
under Texas Government Code, §2310.306.
(12) Nominating body--The governing body of a municipality
or county, or a combination of the governing bodies of municipalities
or counties, that nominates and applies for designation of an area
as a readjustment zone.
(13) Office--The Economic Development and Tourism Office
in the Office of the Governor.
(14) Qualified business--A person is a qualified business
if the Office, for the purpose of state benefits under this chapter,
or the governing body of a readjustment zone, for the purpose of local
benefits, certifies that:
(A) the person is engaged in or has provided substantial
commitment to initiate the active conduct of a trade or business in
the readjustment zone; and
(B) at least 25% of the person's new employees in the
readjustment zone are:
(i) residents of the governing jurisdiction;
(ii) economically disadvantaged individuals, as defined
by Government Code, §2310.402(c); or
(iii) dislocated defense workers.
(15) Qualified employee--A person who:
(A) works for a qualified business; and
(B) performs at least 50% of the person's service for
the business in the readjustment zone.
(16) Qualified property--Any one or more of the following:
(A) tangible personal property located in the zone
that was acquired by the taxpayer not earlier than the 90th day before
the date of designation of the area as a readjustment zone or readjustment
project, as applicable, and was or will be used predominantly by the
taxpayer in the active conduct of a trade or business;
(B) real property located in a zone that:
(i) was acquired by the taxpayer no earlier than the
90th day before the date of designation of the readjustment zone or
readjustment project, as applicable, and used predominantly by the
taxpayer in the active conduct of a trade or business; or
(ii) was the principal residence of the taxpayer on
the date of the sale or exchange; or
(C) interest in a corporation, partnership, or other
entity if, for the most recent taxable year of the entity ending before
the date or sale or exchange the entity was a qualified business.
(17) Readjustment project--A person designated by the
Office as a readjustment project under Texas Government Code, Chapter
2310.
(18) Readjustment zone--An area designated as a readjustment
zone under Government Code, Chapter 2310.
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