BILL ANALYSIS



C.S.H.B. 2887
By: De La Garza
April 21, 1995
Committee Report (Substituted)


BACKGROUND

When legislation was passed in 1989 to create certain industrial
development corporations, the intent was to provide smaller
communities the tools to compete with larger communities in the
attraction of capital investment and jobs. While this legislation
was a step in the right direction, smaller communities also
required substantial investments in infrastructure and facilities
to effectively compete with larger metropolitan areas. As a result,
4B legislation was created, expanding the use of funds, but
restricting 4A cities from a more flexible use of their funds. In
effect, these changes resulted in reducing the competitiveness of
4A cities and forced another election to adopt 4B or a combination
of both.

In past legislative sessions, as well the current session, bills
have been introduced to change the type of projects in which a 4A
corporation can invest.  Because voters approved 4A corporations
with specific investment opportunities, the Legislature has been
reluctant to change the scope of those investments without the
voters consent.

PURPOSE

To allow 4A cities to call and hold an election on whether to
convert to a 4B.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly
grant any additional rulemaking authority to a state officer,
department, agency, or institution.

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends the Development Corporation Act of 1979, by
adding Section 4C as follows:

     Sec. 4C. CONVERSION OF CERTAIN CORPORATIONS. (a) A city that
     has created a corporation under Section 4A may, with the
     approval of the corporation, call and hold an election on
     whether to convert the corporation to a corporation governed
     by Section 4B.  On receipt by the city of a petition from more
     than 10 percent of the registered voters of the city
     requesting an election, the commission and the corporation
     shall formally consider whether to hold the election.

           (b) Before holding the election, the city and
           corporation must hold at least three public hearings on
           the issue.

           (c) City funds, taxes imposed under this Act, and
           interest on those taxes may not be used to finance a
           campaign for or against the conversion.  An election
           approving the conversion is void if this subsection is
           violated.

           (d) Taxes imposed under this Act and interest on those
           taxes may not be used to do a feasibility study of or
           plan a project with the undertaking is contingent on the
           conversion.

           (e) An employee of the city or corporation may not
           campaign for or against the conversion during the
           employee's hours of employment.

           (f) If a majority of voters vote in favor of the
           conversion in the election, the corporation and city
           have all the powers and duties of a corporation and
           creating city under 4B.  No later than the 90th day
           after the election, the articles of incorporation of the
           corporation must be amended to the state that the
           corporation is governed by 4B and the board of directors
           of the corporation shall be conformed to the
           requirements under the 4B.

           (g) If a majority of voters vote against the conversion,
           the corporation will continue to exist under 4A.

           (h) A city may not hold more than one election under
           this section.

           (i) This section expires January 1, 1997.

SECTION 2.  Emergency Clause.

COMPARISON OF ORIGINAL TO SUBSTITUTE

The original bill added to Section 4A what a corporation may
undertake as a project with the primary purpose to provide land,
buildings, equipment, facilities, and improvements found by the
board of directors to be required or suitable for use for projects
which are regional in scope such as, special events centers, themed
entertainment centers, amphitheaters, learning centers, museums,
medical centers, convention center, and other related improvements
that enhance any of these items.  The original bill also added that
a corporation in existence under Section 4A may consider projects
under Section 4B, if the project provided for a public hearing, by
the unit of government from which the corporation was created, to
allow for public comment and reduce the cost for a new election. 
The substitute does not amend Section 4A therefore the current
language remains the same.

The substitute adds to the Development Corporation Act of 1979
Section 4C which addresses the conversion of certain corporations
from a 4A to a 4B if approved by the majority of the voters in an
election.  The substitute provides for specifications for the
election, the transfer from a 4A to a 4B, and the expiration date.

SUMMARY OF COMMITTEE ACTION

H.B. 2887 was considered by the committee in a public hearing on
April 18, 1995.  The committee considered a complete substitute for
H.B. 2887.  The substitute was adopted without objection.  H.B.
2887 was reported favorably as substituted, with the recommendation
that it do pass and be printed, by a record vote of 7 ayes, 0 nays,
0 pnv, 2 absent.