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.