74(R) SB 1696 Senate Committee Report

BILL ANALYSIS

C.S.S.B. 1696
By: Bivins
Economic Development
05-10-95
Committee Report (Substituted)
BACKGROUND

The State of Texas has recognized the need for governmental
incentives to further the economic development of the state. In
1987, the legislature passed enabling legislation that would
authorize governmental activities designed to promote economic
development. In November of that year, the voters of Texas agreed
with the legislature's intent. Legislative efforts to develop and
diversify the economy have been largely directed at providing
cities with the authority to undertake economic development
activities. As the state continues its growth and urbanization,
economic development powers similar to the powers already granted
to cities are needed by counties to enhance opportunities for their
citizenry.

PURPOSE

As proposed, C.S.S.B. 1696 authorizes certain counties of the state
to designate certain political subdivisions as county development
districts with the power to use limited local sales and use taxes
and hotel occupancy taxes for economic development purposes.

RULEMAKING AUTHORITY

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

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Title 44, V.T.C.S., by adding Art. 2370d-11, as
follows:

Art. 2370d-11 COUNTY ECONOMIC DEVELOPMENT DISTRICTS

ARTICLE I. GENERAL PROVISIONS

Sec. 1.01. SHORT TITLE: County Economic Development District
Act.

Sec. 1.02. LEGISLATIVE INTENT. Sets forth the intent of the
legislature in relation to the creation of economic
development districts.

Sec. 1.03. LEGISLATIVE FINDINGS. Sets forth the findings of
the legislature in relation to the creation of economic
development districts.

Sec. 1.04. DEFINITIONS. Defines "board," "director,"
"commissioners court," "county," "project," "cost," and
"bonds."

Sec. 1.05. COUNTIES AUTHORIZED TO CREATE DISTRICTS. Authorizes
the commissioners court in a county with a population of not
more than 400,000, upon petition of the owners of land in a
proposed county, to commence the creation of a county
development district. Subjects the creation of the district to
a confirmation election held as provided by Article 2 of this
Act.

ARTICLE 2. CREATION OF DISTRICTS

Sec. 2.01. PETITION OF LANDOWNERS. Requires, to create a
district, a petition requesting creation to be filed with the
county commissioners court of the county in which all of the
land in the proposed district is located.

Sec. 2.02. CONTENTS OF PETITION. Sets forth the required
contents of the petition.

Sec. 2.03. HEARING ON PETITION. Requires the commissioners
court, no later than 60 days after a petition is received, to
fix a date, time, and place at which the petition shall be
heard and to issue notice of the hearing. Requires the notice
to inform all persons of their right to appear and present
evidence and testify for or against the creation of the
district.

Sec. 2.04. NOTICE OF HEARING. Requires notice of a hearing, at
least 30 days before the date set for the hearing, to be
mailed to the developer who signed the petition and the
landowner of all the land in the district and to be published
in a newspaper with general circulation in the county in which
the proposed district is located.

Sec. 2.05. HEARING. Requires the commissioners court, at the
hearing, to examine the petition to ascertain its sufficiency,
and any person interested may appear before the commission to
offer testimony on the sufficiency of the petition and whether
or not the district should be created.

Sec. 2.06. GRANTING OR REFUSING PETITION. (a) Requires the
commissioners court, if it is found that the petition conforms
to the requirements of Section 2.02 of this Act and that the
creation of the district and the proposed project is feasible
and necessary and would serve the public purpose of attracting
visitors and tourists to the county, to so find and enter an
order creating the district.

(b) Requires the commissioners court, if the commissioner
court finds that the petition does not conform to the
requirements of Section 2.02 of this Act or that the
creation of the district and the proposed project is not
feasible and necessary and would not serve the public
purpose of attracting visitors and tourists to the county,
to so find by its order and deny the petition.

Sec. 2.07. TEMPORARY DIRECTORS; VACANCY IN OFFICE. Requires
the commissioners court, if the commissioners court grants the
petition, to appoint to serve as temporary directors of the
district five persons who are qualified under this Act to
serve as directors. Requires a vacancy in the office of
temporary director to be filled by appointment by the
commissioners court.

Sec. 2.08. QUALIFICATION OF TEMPORARY DIRECTORS. Requires the
temporary director to execute a bond in accordance with the
provisions of Section 3.14 of this Act and to take an oath of
office, and the board shall meet and organize.

Sec. 2.09. CONFIRMATION AND SALES AND USE TAX ELECTION.
Requires the temporary board of directors to conduct an
election within the boundaries of the district to confirm the
creation of the district and authorize a sales and use tax in
conformity with this Act.

Sec. 2.10. ELECTION ORDER. Sets forth the required provisions
of an order calling an election under Section 2.09 of this
Act.

Sec. 2.11. NOTICE. Requires the temporary directors to give
notice of the confirmation and sales and use tax election by
publishing a substantial copy of the election order in a
newspaper with general circulation in the county in which the
proposed district is located once a week for two consecutive
weeks. Requires the first publication to appear at least 14
days before the date set for the election.

Sec. 2.12. CONDUCT OF ELECTION. (a) Requires the election to
be held in accordance with the provisions of the Election
Code, to the extent not inconsistent with this Act.

(b) Sets forth the required language of the proposition.

Sec. 2.13. RESULTS OF ELECTION. (a) Requires the presiding
judge, after the confirmation and sales and use tax election,
to make returns of the result to the temporary board of
directors. Requires the temporary board of directors to
canvass the returns and declare the results.

(b) Requires the temporary board, if a majority of the votes
cast in the election favor the creation of the district and
the adoption of the sales and use tax, to declare that the
district is created and to declare the amount of the local
sales and use tax adopted and enter the result on its
minutes. Requires the temporary board, if a majority of the
votes are against the creation of the district and the
adoption of the sales and use tax, to declare that the
proposition to create the district was defeated and enter
the result in its minutes.

(c) Requires a certified copy of the minute order declaring
that the district is created and the local sales and use tax
adopted and including the rate of the sales and use tax, or
declaring that the proposition to create the district was
defeated, to be sent to the commissioners court, the
comptroller, and any taxing entity by certified or
registered mail. Sets forth the information required to be
in such order.

ARTICLE 3. DISTRICT ADMINISTRATION

Sec. 3.01. BOARD OF DIRECTORS. (a) Provides that a district is
governed by a board of five directors (board) appointed by the
county commissioners of the county in which the district is
located. Requires the temporary directors appointed under
Section 2.07 of this Act to become permanent directors of the
district, provided that the creation of the district is
confirmed at the confirmation election.

(b) Provides that directors serve staggered four-year terms
that expire September 1. Requires the temporary directors,
following confirmation of the district at the election, to
draw lots to determine:

(1) the two directors to serve terms that expire on
September 1 of the second year following creation of the
district; and

(2) the three directors to serve terms that expire on
September 1 of the fourth year following creation of the
district.

Sec. 3.02. QUALIFICATIONS FOR DIRECTORS. Requires a person, to
be qualified to serve as a director, to be at least 21 years
old, a resident citizen of the state of Texas, and a qualified
voter within the county in which the district is located.

Sec. 3.03. PERSONS DISQUALIFIED FROM SERVING. Provides that
Section 50.026, Water Code, relating to disqualification of
directors, shall apply to directors of districts created under
this Act.

Sec. 3.04. VACANCIES ON THE BOARD. Requires a vacancy in the
office of director to be filled by appointment of the
commissioners court.

Sec. 3.05. REMOVAL OF DIRECTOR. Authorizes the governing body
of the commissioners court, after notice and hearing, to
remove a director for misconduct or failure to carry out the
director's duties on petition by a majority of the remaining
directors.

Sec. 3.06. ORGANIZATION OF BOARD. Requires the directors,
after each appointment of directors by the commissioners
court, and after they have qualified by taking the proper
oath, to organize by electing a president, vice president,
secretary, and other necessary officers.

Sec. 3.07. QUORUM; OFFICERS' DUTIES; MANAGEMENT OF DISTRICT.
Provides that Sections 54.107, 54.108, 54.111, 54.118, Water
Code, relating to quorum, officers' duties, and management of
district, shall govern the board of directors of a district
created under this Act.

Sec. 3.08. MEETINGS AND NOTICE. (a) Requires the board to
designate and establish a district office in the county.

(b) Authorizes the board to establish regular meetings to
conduct district business and to hold special meetings at
other times as the business of a district requires.

(c) Requires notice of the time, place, and purpose of any
meeting of the board to be given by posting at a place
convenient to the public within the district. Requires a
copy of the notice to be furnished to the clerks of the
county in which the district is located, who shall post them
on a bulletin board in the county courthouse used for such
purpose.

(d) Requires the provisions of Chapter 551, Government Code,
to be applicable to meetings of the board of directors.
Authorizes an interested person to attend any meeting of the
board.

Sec. 3.09. DIRECTOR'S COMPENSATION; BOND AND OATH OF OFFICE.
Provides that a director is not entitled to receive
compensation for service on the board. Provides that Sections
375.070, and 375.069, Local Government Code, shall apply to
directors of a district created under this Act.

Sec. 3.10. GOVERNMENTAL AGENCY; SUITS. (a) Authorizes a
district, when created and confirmed, to sue and be sued,
through its directors, in any and all courts of this state in
the name of the district. Authorizes service of process in any
suit to be had by serving any two directors.

(b) Provides that a district is a governmental agency, a
body politic and corporate, and a political subdivision of
the state. Provides that Section 357.004, Local Government
Code, shall apply to a district created under this Act.

ARTICLE 4. POWERS AND DUTIES

Sec. 4.01. POWERS. (a) Requires a district to have the power
to acquire and dispose of projects and to have all of the
other powers, authority, rights, and duties which will permit
accomplishment of the purposes for which the district was
created.

(b) Requires the district to have the power to provide for
general promotion and tourist advertising of the district
and its vicinity and to conduct a marketing program to
attract visitors, any of which may be conducted by the
district pursuant to contracts for professional services
with persons or organizations selected by district.

(c) Requires the district to have the powers of a municipal
management district created under Chapter 375, Local
Government Code, to the extent not inconsistent with this
Act.

Sec. 4.02. COMPETITIVE BIDDING; CONTRACT AWARD. Provides that
Sections 375.221 and 375.223, Local Government Code, shall
apply to a district created under this Act. Prohibits a
contract between the district and a governmental entity or
nonprofit corporation created under Article 5190.6, V.T.C.S.,
as amended, from being subject to the competitive bidding
requirement of this Act.

Sec. 4.03. EMINENT DOMAIN. Authorizes a district not located
within the corporate limits of a municipality to exercise the
power of eminent domain to acquire land or interests in land
within the district deemed necessary be the board of directors
of the district for the purpose of providing water and sewer
services to an authorized project. Requires the right of
eminent domain to be exercised in the manner provided in Title
52, V.T.C.S., as amended.

ARTICLE 5. GENERAL FISCAL PROVISIONS

Sec. 5.01. EXPENDITURES. Authorizes a district's money to be
disbursed only by check, draft, order, or other instrument
which shall be signed by at least three directors. Authorizes
the general manager, treasurer, other employee of the district
when authorized by resolution of the board to sign checks,
drafts, orders, or other instruments on any district operation
account and these need not be signed by anyone else.

Sec. 5.02. PURPOSES FOR BORROWING MONEY. Authorizes the
district to borrow money for any corporate purpose or
combination or corporate purposes.

Sec. 5.03. REPAYMENT OF ORGANIZATIONAL EXPENSES. Provides that
the district's directors are authorized to pay all costs and
expenses necessarily incurred in the creation and organization
of a district, the cost of investigation and making plans, the
cost of the engineer's report, project designer fees, legal
fees, and other incidental expenses, and to reimburse any
person for money advanced for these purposes. Authorizes these
payments to be made from money obtained from the issuance of
notes or the sale of bonds first issued by the district or out
of other revenues of the district.

ARTICLE 6. ISSUANCE OF BONDS

Sec. 6.01. ISSUANCE OF BONDS. Authorizes the district to issue
bonds for the purpose of defraying all or part of the cost of
any project as provided in this Act. Provides that Sections
375.201 through 375.208, Local Government Code, shall apply to
a district created under this Act to the extent not
inconsistent with this Act.

Sec. 6.02. MANNER OF REPAYMENT OF BONDS. Authorizes the board
to provide for the payment of principal of an interest and
redemption price on bonds from taxes; by pledging all or any
part of the designated revenues, license fees, or other
compensation from a project or any part thereof, including
revenues and receipts derived by the district from the lease
or sale of the project, or by pledging all or any part of any
grant, donation, revenues, or income received or to be
received from any public or private source; or a combination
of such sources.

Sec. 6.03. USE OF BOND PROCEEDS. Authorizes the district to
use bond proceeds to pay interest on the bonds during and
after the period of the acquisition or construction of a
project, to pay administrative and operating expenses, to
create a reserve fund for the payment of principal and
interest on the bonds, and to pay all expenses incurred and to
be incurred in the issuance, sale, and delivery of the bonds.

ARTICLE 7. TAXES

Sec. 7.01. SALES AND USE TAX. Authorizes a district to levy a
sales and use tax for the benefit of the district if
authorized by a majority of the qualified voters of the
district voting at an election called and held for that
purpose. Provides that the sales and use tax, if adopted, does
not count toward the limitation imposed by Chapter 323, Tax
Code (County Sales and Use Tax Act) on any sales and use tax
that has been levied by the county.

(b) Provides that if a district adopts the tax, there is
imposed a tax on the receipts from the sale at retail of
taxable items within the district at a rate of up to one-half of one percent. Defines "taxable items." Provides that
there is also imposed an excise tax on the use, storage, or
other consumption within the district of taxable items
purchased, leased, or rented from a retailer during the
period that the tax is effective within the district.
Provides that the rate of the excise tax is the same as the
rate of the sales tax portion of the tax applied to the
sales price of the taxable items and is included in the
sales tax.

(c) Provides that Chapter 323, Tax Code, to the extent not
inconsistent with this Act, governs the imposition,
computation, administration, and governance, of the tax
under this section, except that Sections 323.101(b), (e),
323.209, 323.401-406, and 323.505, do not apply. Provides
that Chapter 323, Tax Code, does not apply to the use and
allocation of revenues under this Act. Requires the
district's name, in applying the procedures under Chapter
323, Tax Code, to be substituted for "the county" and "board
of directors" is substituted for "commissioners court."

(d) Provides that the permissible rates for local sales and
use tax levied under this Act are one-fourth of one percent;
three-eights of one percent; and one-half of one percent.

(e) Authorizes the board by order to decrease or abolish the
local sales and use tax rate or to call an election to
increase, decrease, or abolish the local sales and use tax
rate.

(f) Sets forth the language of the proposition. Provides
that the increase or decrease in the tax rate is effective
if it is approved by a majority of the votes cast. Requires
the board, in calling and holding the election, to use the
procedures for the confirmation and tax election set forth
in Article 2 of this Act.

(g) Authorizes taxes collected under this section to be used
only for the purposes for which the district was created,
and the district may pledge the revenue derived from the
taxes imposed under this section to the payment of bonds
issued by the district.

ARTICLE 8. ADDING AND EXCLUDING TERRITORY; CONSOLIDATING
AND DISSOLVING DISTRICTS

Sec. 8.01. ADDING AND EXCLUDING LAND FROM THE DISTRICT. (a)
Authorizes the board, before issuing bonds, upon its own
motion or upon request of a landowner in the district, to
petition the county commissioner for the addition of land to
or exclusion of land from the district.

(b) Requires the commissioners court, if the commissioners
court unanimously determines from the evidence that the best
interests of the persons and property in the district will
be served by adding or excluding land, to enter the
appropriate findings and order in its record adding or
excluding land.

Sec. 8.02. DISSOLUTION OF DISTRICT. (a) Authorizes a district
to be dissolved only as provided by this section.

(b) Sets forth findings under which the board of directors
may petition the commissioners court to dissolve the
district.

(c) Requires the commissioners court, upon receipt of a
petition from the board for dissolution of the district, to
hold a hearing as provided in Article 2 of this Act.

(d) Requires the commissioners court, if the commissioners
court unanimously determines from the evidence that the best
interests of the county and the owners of property and
interests in property within the district will be served by
dissolving the district, to enter the appropriate findings
and order in its records dissolving the district. Requires
the commissioners court, otherwise, to enter its order
providing that the district has not been dissolved. Requires
funds and property of the district, upon dissolution of the
district, to be transferred to the commissioners court.

SECTION 2. Amends Chapter 352, Tax Code, by adding Section 352.107,
as follows:

Sec. 352.107. HOTEL TAX AUTHORIZED FOR COUNTY DEVELOPMENT
DISTRICTS. Authorizes a commissioners court of a county with
a population of less than 400,000 to impose a hotel occupancy
tax not to exceed seven percent on a person who pays for the
use or possession of a room in a hotel ordinarily used for
sleeping that is located within the boundaries of the county
development district created under Article 2370d-11, V.T.C.S.,
and that is not located within the corporate limits of a
municipality, subject to the limitations set forth in Sections
352.002(b) and (c), Tax Code. Provides that taxes collected by
a county under this section shall be remitted to the county
development district no later than 10 days after the county
receives such funds and may be used by the district for the
purposes for which sales and use tax proceeds may be used by
the district.
SECTION 3. Emergency clause.
Effective date: upon passage.