1-1 By: Brimer (Senate Sponsor - Ratliff) H.B. No. 788
1-2 (In the Senate - Received from the House May 1, 1995;
1-3 May 2, 1995, read first time and referred to Committee on Economic
1-4 Development; May 18, 1995, reported adversely, with favorable
1-5 Committee Substitute by the following vote: Yeas 6, Nays 0;
1-6 May 18, 1995, sent to printer.)
1-7 COMMITTEE SUBSTITUTE FOR H.B. No. 788 By: Shapiro
1-8 A BILL TO BE ENTITLED
1-9 AN ACT
1-10 relating to industrial development corporations created by certain
1-11 cities.
1-12 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-13 SECTION 1. Sections 4A and 4B, Development Corporation Act
1-14 of 1979 (Article 5190.6, Vernon's Texas Civil Statutes), are
1-15 amended to read as follows:
1-16 Sec. 4A. AUTHORIZATION TO LEVY SALES TAX FOR INDUSTRIAL
1-17 DEVELOPMENT. (a) ELIGIBLE CITY. In this section, "eligible city"
1-18 means a city that at the time it creates a corporation under this
1-19 section is not participating in an authority under:
1-20 (1) Chapter 141, Acts of the 63rd Legislature, Regular
1-21 Session, 1973 (Article 1118x, Vernon's Texas Civil Statutes);
1-22 (2) Chapter 683, Acts of the 66th Legislature, 1979
1-23 (Article 1118y, Vernon's Texas Civil Statutes); or
1-24 (3) Article 1118z, Revised Statutes.
1-25 (b)(1) CREATION OF CORPORATION. An eligible city may create
1-26 a corporation under this Act governed by this section. The
1-27 corporation has the powers and is subject to the limitations of a
1-28 corporation created under other provisions of this Act. To the
1-29 extent of a conflict between this section and another provision of
1-30 this Act, this section prevails. The articles of incorporation of
1-31 a corporation under this section must state that the corporation is
1-32 governed by this section and may include within its name any words
1-33 and phrases specified by the city.
1-34 (2) Spending for Promotion. A corporation created
1-35 under this section may spend no more than 10 percent of its
1-36 revenues for promotional purposes and may contract with other
1-37 existing private corporations to carry out industrial development
1-38 programs consistent with the purposes and duties provided by this
1-39 Act.
1-40 (3) Transfer of Assets from Corporation Created Under
1-41 this Act. On approval of the governing body of each unit and
1-42 corporation involved, a corporation created under this Act that is
1-43 not created under this section may transfer all of its assets to a
1-44 corporation governed by this section and dissolve as provided by
1-45 this Act.
1-46 (c) Board of Directors and Governance. The board of
1-47 directors of a corporation under this section consists of seven
1-48 directors who are appointed by the governing body of the city for
1-49 two-year terms of office. A director may be removed by the
1-50 governing body of the city at any time without cause. Each
1-51 director must be a resident of or own real property located in the
1-52 city. At least three directors shall be persons who are not
1-53 employees, officers, or members of the governing body of the city.
1-54 A majority of the entire membership of the board is a quorum. The
1-55 board shall conduct all meetings within the boundaries of the city.
1-56 The board shall appoint a president, a secretary, and other
1-57 officers of the corporation that the governing body of the city
1-58 considers necessary. The corporation's registered agent must be an
1-59 individual resident of the state, and the corporation's registered
1-60 office must be within the boundaries of the city. A corporation
1-61 created before September 1, 1995, that has a board of directors
1-62 consisting of five directors continues to have a five-member board
1-63 unless the governing body of the city establishes a seven-member
1-64 board.
1-65 (d)(1) Authority to Levy Sales Tax. The governing body of
1-66 the city by ordinance may levy a sales and use tax for the benefit
1-67 of the corporation under this section if the tax is authorized by a
1-68 majority of the qualified voters of the city voting at an election
2-1 called and held for that purpose in accordance with Chapter 321,
2-2 Tax Code. This election requirement is satisfied and another
2-3 election is not required if the voters of the city approved the
2-4 levy and collection of an additional one-half cent sales and use
2-5 tax at an election held before the effective date of this section.
2-6 (2) Imposition and Rate of Sales Tax. If the city
2-7 adopts the tax, a tax is imposed on the receipts from the sale at
2-8 retail of taxable items within the city at the rate approved at the
2-9 election. The rate of a tax adopted under this section must be
2-10 one-eighth, one-fourth, three-eighths, or one-half of one percent.
2-11 The rate adopted may not result in a combined rate of all sales and
2-12 use taxes, including the tax under this section, imposed by the
2-13 city and other political subdivisions of this state having
2-14 territory in the city that exceeds two percent. An election
2-15 adopting a rate that exceeds the limit on the combined rate has no
2-16 effect. There is also imposed an excise tax on the use, storage,
2-17 or other consumption within the city of taxable items purchased,
2-18 leased, or rented from a retailer during the period that the tax is
2-19 effective within the city. The rate of the excise tax is the same
2-20 as the rate of the sales tax portion of the tax and is applied to
2-21 the sales price of the taxable items.
2-22 (3) Application of Chapter 321, Tax Code. Chapter
2-23 321, Tax Code (Municipal Sales and Use Tax Act), governs an
2-24 election to authorize the imposition of the sales and use tax under
2-25 this section and governs the imposition, computation,
2-26 administration, governance, abolition, and use of the tax except as
2-27 inconsistent with this section. If an election is held under this
2-28 section at the same time an election is held to impose or change
2-29 the rate of the additional municipal sales and use tax, the tax
2-30 under this section takes effect, at the option of the city, as
2-31 provided by Section 321.102(a) or (b), Tax Code, and the imposition
2-32 or change in rate of the additional municipal sales and use tax
2-33 takes effect as provided by Section 321.102(b), Tax Code. After
2-34 the effective date of the taxes imposed under this section, the
2-35 adoption of a sales and use tax or the attempted adoption of a
2-36 sales and use tax by the city or any other taxing jurisdiction
2-37 having territory in the city does not impair the taxes imposed
2-38 under this section.
2-39 (e)(1) Ballot Proposition--General. In an election to adopt
2-40 the tax under this section, the ballot shall be printed to provide
2-41 for voting for or against the proposition: "The adoption of a sales
2-42 and use tax for the promotion and development of new and expanded
2-43 business enterprises at the rate of _______ of one percent"
2-44 (one-eighth, one-fourth, three-eighths, or one-half to be inserted
2-45 as appropriate).
2-46 (2) Ballot Proposition--Time Limit. At an election
2-47 called and held under Subsection (d) of this section, the city may
2-48 also allow the voters to vote on a ballot proposition that limits
2-49 the length of time that a sales and use tax may be imposed. If a
2-50 city elects to limit the period the sales and use tax may be
2-51 imposed, there shall be added to the end of the ballot proposition
2-52 prescribed by Subdivision (1) of this subsection: "to be imposed
2-53 for _____ years" (the number of years to be inserted as
2-54 appropriate). The governing body of the city shall set the
2-55 expiration date of the proposed tax to occur on the appropriate
2-56 anniversary of the effective date of the tax. A sales and use tax
2-57 imposed for a limited period under this subsection expires on the
2-58 date set by the governing body under this section or on an earlier
2-59 date if the tax is repealed by a majority of the voters voting in
2-60 an election held in the city. If an earlier abolition election is
2-61 held, Sections 321.102(a) and 321.402(b), Tax Code, apply to the
2-62 date of repeal. A tax that is approved without a limit on its
2-63 period of imposition is effective until repealed by election.
2-64 Before the 90th day before the date that a tax is to expire, the
2-65 governing body shall send a notice to the comptroller stating the
2-66 expiration date of the tax. Revenue collected after the expiration
2-67 of the tax from the imposition of the tax after its expiration date
2-68 shall be forwarded by the state to the governing body to be used to
2-69 pay current bonded indebtedness of the city. A city that has
2-70 imposed a tax under this section may not extend the period of the
3-1 tax's imposition and may not reimpose the tax after its expiration
3-2 date unless the reimposition of the tax is approved by a majority
3-3 of the qualified voters of the city voting at an election called
3-4 and held for that purpose in accordance with Chapter 321, Tax Code.
3-5 If a city reduces the rate of an additional sales and use tax under
3-6 Chapter 321, Tax Code, to impose a tax under this section for a
3-7 limited period as provided under this subsection, and does not have
3-8 an election to change the rate of the additional sales and use tax
3-9 before the expiration date of the tax under this section, on the
3-10 expiration date of the tax under this section the rate of the
3-11 additional sales and use tax under Section 321.101(b), Tax Code,
3-12 returns, without an election under Chapter 321, Tax Code, to its
3-13 previous rate in effect when the tax imposed under this section was
3-14 adopted.
3-15 (3) Ballot Proposition--Reduce or Increase Tax Rate.
3-16 A city in which a sales and use tax has been imposed under this
3-17 section may reduce or increase the tax by majority vote of the
3-18 qualified voters of the city voting at an election called and held
3-19 for the purpose in the same manner as an election to impose the
3-20 tax. The rate may be reduced in one or more increments of
3-21 one-eighth of one percent to a minimum of one-eighth of one percent
3-22 or increased in one or more increments of one-eighth of one percent
3-23 to a maximum of one-half of one percent. On petition of 10 percent
3-24 or more of the registered voters of the city requesting an election
3-25 on the increase or decrease of the tax under this section, the
3-26 governing body of the city shall order an election on the issue.
3-27 The ballot shall be printed in the same manner as the ballot under
3-28 Subdivision (1) of this subsection.
3-29 (4) Ballot Proposition--Combine with Reduction in
3-30 Property Tax. A city that is authorized by this section to impose,
3-31 reduce, increase, or abolish the tax under this section may, at the
3-32 same time and on the same ballot, impose, reduce, increase, or
3-33 abolish the additional sales and use tax imposed under Section
3-34 321.101(b), Tax Code, if the city is authorized by Chapter 321, Tax
3-35 Code, to impose, reduce, increase, or abolish the additional sales
3-36 and use tax. To do so, the city must follow the procedures of
3-37 Chapter 321, Tax Code, except that in an election to impose,
3-38 reduce, increase, or abolish the tax under this section and the
3-39 additional sales and use tax the ballot shall be printed to provide
3-40 for voting for or against the proposition: "The adoption of a sales
3-41 and use tax within the city for the promotion and development of
3-42 new and expanded business enterprises at the rate of _____ of one
3-43 percent (one-eighth, one-fourth, three-eighths, or one-half to be
3-44 inserted as appropriate) and the adoption of an additional sales
3-45 and use tax within the city at the rate of _____ of one percent to
3-46 be used to reduce the property tax rate" (one-eighth, one-fourth,
3-47 three-eighths, or one-half to be inserted as appropriate).
3-48 (f)(1) Dissolution of Corporation. By order of the
3-49 city's governing body, or on petition of 10 percent or more of the
3-50 registered voters of the city requesting an election on the
3-51 dissolution of the corporation, the governing body shall order an
3-52 election on the dissolution of the corporation at the next
3-53 available uniform election date that is not less than 45 days after
3-54 the date that the order is issued or the petition is filed. The
3-55 election must be conducted according to the applicable provisions
3-56 of the Election Code.
3-57 (2) Ballot Proposition for Dissolution Election. The
3-58 ballot for the election shall be printed to provide for voting for
3-59 or against the proposition: "Dissolution of the _______ (name of
3-60 the corporation)." If a majority of voters voting on the issue
3-61 approve the dissolution, the corporation shall continue operations
3-62 only as necessary to pay the principal of and interest on its bonds
3-63 and to meet obligations incurred before the date of the election
3-64 and, to the extent practicable, shall dispose of its assets and
3-65 apply the proceeds to satisfy those obligations. When the last of
3-66 the obligations is satisfied, any remaining assets of the
3-67 corporation shall be transferred to the city, and the corporation
3-68 is dissolved. A tax imposed under this section may not be
3-69 collected after the last day of the first calendar quarter
3-70 beginning after notification to the comptroller by the corporation
4-1 that the last of its obligations is satisfied.
4-2 (g)(1) Authorized Use of Sales Tax Proceeds. On receipt of
4-3 the proceeds of the sales and use tax imposed under this section
4-4 from the comptroller, the city shall deliver the proceeds to the
4-5 corporation. Tax proceeds may be used to pay the costs of a
4-6 project authorized by this section and administrative costs of the
4-7 corporation.
4-8 (2) Definition of Authorized Project. In this
4-9 section, "project" means the land, buildings, equipment,
4-10 facilities, and improvements found by the board of directors to be
4-11 required or suitable for the development and expansion of
4-12 manufacturing facilities, industrial facilities, warehouse
4-13 facilities, distribution centers, recycling facilities, general
4-14 aviation business service airports that are an integral part of an
4-15 industrial park, and port-related facilities to support waterborne
4-16 commerce.
4-17 (3) Improvements Ancillary to Project. A project
4-18 includes the cost of transportation facilities, water supply
4-19 facilities, sewage or solid waste disposal facilities, air or water
4-20 pollution control facilities, and other improvements ancillary and
4-21 directly beneficial to a project. Except as provided by Section
4-22 4B of this Act, a corporation may not use revenues from the sales
4-23 tax authorized under this section for a project the primary purpose
4-24 of which is to provide transportation facilities, water supply
4-25 facilities, air or water pollution control facilities, or other
4-26 municipal facilities for the benefit of the general public.
4-27 (4) Project Debt Service Costs. A project includes
4-28 any payments toward the principal of, interest on, and other costs
4-29 relating to bonds or other obligations issued by the corporation to
4-30 pay the costs of a project or to refund bonds or other obligations
4-31 issued to pay the cost of a project. The bonds or any instrument
4-32 related to the bonds may not give a bondholder a right to demand
4-33 payment from tax proceeds in excess of those collected from the tax
4-34 imposed by this section.
4-35 (5) Authorization Limited to Specific Project. At an
4-36 election called or held under Subsection (d) of this section, the
4-37 city may also allow the voters to vote on a ballot proposition that
4-38 limits the use of the sales and use tax to a specific project
4-39 authorized by this subsection. If a city elects to limit the use
4-40 to a specific project, in the ballot proposition prescribed by
4-41 Subsection (e) of this section a description of the project shall
4-42 be substituted in place of the words "new and expanded business
4-43 enterprises." When the last of its obligations for the specific
4-44 project have been satisfied, the corporation shall send a notice to
4-45 the comptroller stating that the sales and use tax imposed for the
4-46 specific project may not be collected after the last day of the
4-47 first calendar quarter beginning after the date of notification. A
4-48 sales and use tax imposed for a specific project under this
4-49 subsection may not be collected after the last day of the first
4-50 calendar quarter beginning after the date of the notification to
4-51 the comptroller. Revenue collected after the obligations for the
4-52 specific project have been satisfied shall be forwarded by the
4-53 state to the governing body to be used to pay current bonded
4-54 indebtedness of the municipality. A corporation that has been
4-55 created to perform a specific project under this subsection may
4-56 remain in existence and perform other projects approved by the
4-57 voters of the city under an election called and held under
4-58 Subsection (d) of this section.
4-59 (6) Assumption of PreExisting Debt. A corporation
4-60 under this section may not assume a debt or make any expenditure to
4-61 pay principal or interest on a debt if the debt existed before the
4-62 date the city created the corporation.
4-63 (h) Eminent Domain. A corporation may exercise the power
4-64 of eminent domain only on approval of the action by the governing
4-65 body of the city. The power must be exercised in accordance with
4-66 and subject to the laws applicable to the city.
4-67 (i) Governmental Immunity under Tort Claims Act. The
4-68 corporation, a director of the corporation, the city creating the
4-69 corporation, a member of the governing body of the city, or an
4-70 employee of the corporation or city is not liable for damages
5-1 arising from the performance of a governmental function of the
5-2 corporation or city. For the purposes of Subchapter A, Chapter
5-3 101, Civil Practice and Remedies Code (Texas Tort Claims Act), the
5-4 corporation is a governmental unit and its actions are governmental
5-5 functions.
5-6 (j) Ownership of Projects under Tax Code. The legislature
5-7 finds for all constitutional and statutory purposes that projects
5-8 undertaken under this section are owned, used, and held for public
5-9 purposes for and on behalf of the city incorporating the
5-10 corporation, and Section 23(b) of this Act and Section 25.07(a),
5-11 Tax Code, do not apply to leasehold or other possessory interests
5-12 granted by the corporation during the period projects are owned by
5-13 the corporation on behalf of the city. Projects are exempt from
5-14 taxation under Section 11.11, Tax Code, for that period.
5-15 (k) Section 24 Applicability. Section 24 of this Act does
5-16 not apply to a corporation under this section.
5-17 Sec. 4B. Authorization to Levy Sales Tax for Other Than
5-18 Industrial Development. (a) ELECTION. A city that creates or has
5-19 created a corporation governed by Section 4A of this Act may submit
5-20 to the voters of the city, at a separate election or at an election
5-21 held under another provision of this Act, including the election at
5-22 which the proposition to initially authorize the collection of a
5-23 sales and use tax for the benefit of the corporation is submitted,
5-24 a ballot proposition that authorizes the corporation to use the
5-25 sales and use tax, including any amount previously authorized and
5-26 collected, for a specific project or for a specific category of
5-27 projects that does not qualify under Section 4A of this Act but
5-28 qualifies under the expanded project definition in Subsection (c)
5-29 of this section. Prior approval of a specific project at an
5-30 election or completion of a specific project approved at an
5-31 election does not prohibit a city from seeking voter approval of an
5-32 additional project or category of projects under this subsection to
5-33 be funded from the same sales and use tax.
5-34 (b) Ballot Proposition--Specific Project or Specific
5-35 Category of Projects. In the election to authorize the use of the
5-36 sales or use tax for a specific project or for a specific category
5-37 of projects not authorized under Section 4A of this Act, the
5-38 project or category of projects must be clearly described on the
5-39 ballot so that a voter will be able to discern the limits of the
5-40 specific project or category of projects authorized by the
5-41 proposition. If maintenance and operating costs of an otherwise
5-42 authorized facility are to be paid from the sales or use tax, the
5-43 ballot language must clearly state that fact.
5-44 (c)(1) Expanded "Project" Definition. In this section,
5-45 "project" or "category of projects" means land, buildings,
5-46 equipment, facilities, and improvements described by Subdivisions
5-47 (2) and (3) of this subsection.
5-48 (2) Municipal Facilities. Municipal facility projects
5-49 are land, buildings, equipment, facilities, and improvements found
5-50 by the board of directors to be required or suitable for use for:
5-51 (A) professional and amateur (including
5-52 children's) sports, athletic, entertainment, tourist, convention,
5-53 and public park purposes and events, including stadiums, ball
5-54 parks, auditoriums, amphitheaters, concert halls, learning centers,
5-55 parks, park facilities, open space improvements, municipal
5-56 buildings, museums, exhibition facilities, and related store,
5-57 restaurant, concession, and automobile parking facilities;
5-58 (B) related area transportation facilities;
5-59 (C) related roads, streets, and water and sewer
5-60 facilities; and
5-61 (D) other related improvements that enhance any
5-62 of those items.
5-63 (3) Expanded Business Enterprises. Expanded business
5-64 enterprise projects are land, buildings, equipment, facilities, and
5-65 improvements found by the board of directors to promote or develop
5-66 new or expanded business enterprises, including a project to
5-67 provide public safety facilities, streets and roads, drainage and
5-68 related improvements, demolition of existing structures, general
5-69 municipally owned improvements, and any improvements or facilities
5-70 that are related to any of those projects.
6-1 (d) SPECIFIC PROJECT UNDER GENERAL AUTHORITY. If a
6-2 corporation has previously held an election authorizing a category
6-3 of projects, the corporation may undertake a project of the general
6-4 type described by the category unless within 60 days after the date
6-5 of first publishing notice of the project the governing body of the
6-6 city receives a petition signed by more than 10 percent of the
6-7 registered voters of the city requesting that an election be held
6-8 before that specific project is undertaken. If such a petition is
6-9 submitted, the corporation may undertake the project only if the
6-10 specific project is approved at a subsequent election.
6-11 (e)(1) Previous Election in Certain Cities. An election
6-12 under Section 4A(d) of this Act is not required to carry out a
6-13 project under this section in a city that is located in a county
6-14 with a population in excess of 750,000 if a sales and use tax was
6-15 approved under this section at an election held before February 1,
6-16 1993.
6-17 (2) Bond Requirements. In a city to which Subdivision
6-18 (1) of this subsection applies, bonds or other obligations having a
6-19 maturity not longer than 30 years and issued to pay the costs of
6-20 projects of the types authorized by this section may be made
6-21 payable from any source of funds available to the corporation,
6-22 including the proceeds of a sales and use tax imposed under this
6-23 section. The sum of the principal amount of bonds and other
6-24 obligations that by their terms are payable in whole or in part
6-25 from the sales and use tax plus the amount of the costs of the
6-26 projects, other than interest on bonds and other obligations, for
6-27 which payment is made in cash directly from the proceeds of the tax
6-28 may not exceed $135 million. The bonds or other obligations that
6-29 by their terms are payable from the tax may not be paid in whole or
6-30 part from property taxes raised by the city, are not a debt of the
6-31 city, and do not give rise to a claim for payment against the city
6-32 except as to sales and use tax revenue held by a city and required
6-33 under this section to be paid over to the corporation.
6-34 (3) Expiration of Sales and Use Tax. In a city to
6-35 which Subdivision (1) of this subsection applies, a sales and use
6-36 tax imposed for a project under this section may not be collected
6-37 after the last day of the first calendar quarter occurring after
6-38 notification to the comptroller by the corporation that all bonds
6-39 or other obligations of the corporation that are payable in whole
6-40 or in part from the proceeds of the sales and use tax under this
6-41 section, including any refunding bonds or other obligations, have
6-42 been paid in full or the full amount of money, exclusive of
6-43 guaranteed interest, necessary to pay in full the bonds and other
6-44 obligations has been set aside in a trust account dedicated to the
6-45 payment of the bonds and other obligations.
6-46 <Sec. 4A. (a) This section applies only to a city:>
6-47 <(1) located in a county with a population of 500,000
6-48 or fewer according to the most recent federal decennial census; or>
6-49 <(2) with a population of fewer than 50,000 according
6-50 to the most recent federal decennial census that:>
6-51 <(A) is located in two or more counties, one of
6-52 which has a population of 500,000 or greater according to the most
6-53 recent federal decennial census;>
6-54 <(B) is located within the territorial limits
6-55 but has not elected to become a part of a metropolitan rapid
6-56 transit authority that has a principal city with a population of
6-57 less than 1.2 million according to the most recent federal
6-58 decennial census, with such authority being created before January
6-59 1, 1980, under Chapter 141, Acts of the 63rd Legislature, Regular
6-60 Session, 1973 (Article 1118x, Vernon's Texas Civil Statutes); or>
6-61 <(C) is located within the territorial limits
6-62 but has not elected to become a part of a metropolitan rapid
6-63 transit authority that has a principal city with a population of
6-64 more than 750,000 according to the most recent federal decennial
6-65 census, with such authority being created under Chapter 683, Acts
6-66 of the 66th Legislature, Regular Session, 1979 (Article 1118y,
6-67 Vernon's Texas Civil Statutes).>
6-68 <(b)(1) A city may create a corporation under this Act
6-69 governed by this section. The corporation has the powers and is
6-70 subject to the limitations of a corporation created under other
7-1 provisions of this Act. To the extent of a conflict between this
7-2 section and another provision of this Act, this section prevails.
7-3 The articles of incorporation of a corporation under this section
7-4 must state that the corporation is governed by this section. A
7-5 city may not create more than one corporation governed by this
7-6 section. A corporation created under this section may spend no
7-7 more than 10 percent of the corporate revenues for promotional
7-8 purposes and may contract with other existing private corporations
7-9 to carry out industrial development programs consistent with the
7-10 purposes and duties as set out in this Act.>
7-11 <(2) Notwithstanding Subdivision (1), a corporation
7-12 created under this section may spend no more than 25 percent of the
7-13 corporate revenues for promotional purposes if the corporation was
7-14 created by a city:>
7-15 <(i) the municipal limits of which include
7-16 two counties;>
7-17 <(ii) that has less than 24,250 population
7-18 according to the 1990 federal census; and>
7-19 <(iii) any part of which is located within
7-20 ten miles of a federal military reservation.>
7-21 <(c) The board of directors of a corporation under this
7-22 section consists of five directors who are appointed by the
7-23 governing body of the city and who serve at the pleasure of the
7-24 governing body. A majority of the entire membership of the board
7-25 constitutes a quorum. The board shall conduct each of its meetings
7-26 within the boundaries of the city. The board shall appoint a
7-27 president, a secretary, and other officers of the corporation that
7-28 the governing body of the city considers necessary. The
7-29 corporation's registered agent must be an individual resident of
7-30 the state and the corporation's registered office must be within
7-31 the boundaries of the city.>
7-32 <(d) The city may levy a sales and use tax for the benefit
7-33 of a corporation under this section if the tax is authorized by a
7-34 majority of the qualified voters of the city voting at an election
7-35 called and held for that purpose. If the city adopts the tax,
7-36 there is imposed a tax on the receipts from the sale at retail of
7-37 taxable items within the city at the rate approved by the voters.
7-38 The rate must be equal to one-eighth, one-fourth, three-eighths, or
7-39 one-half of one percent. The city may not adopt a rate that would
7-40 result in a combined rate of all sales and use taxes, including the
7-41 tax under this section, imposed by the city and other political
7-42 subdivisions of this state having territory in the city that
7-43 exceeds two percent. An election adopting a rate that exceeds the
7-44 limit on the combined rate has no effect. There is also imposed an
7-45 excise tax on the use, storage, or other consumption within the
7-46 city of taxable items purchased, leased, or rented from a retailer
7-47 during the period that the tax is effective within the city. The
7-48 rate of the excise tax is the same as the rate of the sales tax
7-49 portion of the tax and is applied to the sales price of the taxable
7-50 items.>
7-51 <(e) The Municipal Sales and Use Tax Act (Chapter 321, Tax
7-52 Code) governs an election to authorize the imposition of the sales
7-53 and use tax under this section and governs the imposition,
7-54 computation, administration, governance, abolition, and use of the
7-55 tax except as inconsistent with this section. If an election is
7-56 held under Subsection (f) of this section at the same time as
7-57 another election under this section and an additional sales and use
7-58 tax under Section 321.101(b), Tax Code, is adopted or repealed or
7-59 its rate is increased or reduced, each tax under this section and
7-60 the imposition or change in the rate of the additional sales and
7-61 use tax takes effect as provided by Section 321.102(b), Tax Code.>
7-62 <(f) On receipt of the proceeds of the sales and use tax
7-63 imposed under this section from the comptroller, the city shall
7-64 deliver the proceeds to the corporation to use in carrying out its
7-65 functions. Tax proceeds may be used to pay the principal of,
7-66 interest on, and other costs relating to the corporation's bonds,
7-67 but neither the bonds nor any instrument related to the bonds may
7-68 give a bondholder a right to demand payment from tax proceeds in
7-69 excess of those collected from the tax imposed by this section.>
7-70 <(g) The corporation may not exercise the power of eminent
8-1 domain except by action of the governing body of the city that
8-2 created the corporation.>
8-3 <(h) Section 24 of this Act does not apply to a corporation
8-4 under this section.>
8-5 <(i) Except as provided by this subsection, the corporation
8-6 may not undertake a project the primary purpose of which is to
8-7 provide transportation facilities, solid waste disposal facilities,
8-8 or air or water pollution control facilities. However, the
8-9 corporation may provide those facilities to benefit property
8-10 acquired for a project having another primary purpose. The
8-11 corporation may undertake a project the primary purpose of which is
8-12 to provide:>
8-13 <(1) a general aviation business service airport that
8-14 is an integral part of an industrial park; or>
8-15 <(2) port-related facilities to support waterborne
8-16 commerce.>
8-17 <(j) The corporation, a director of the corporation, the
8-18 city creating the corporation, a member of the governing body of
8-19 the city, or an employee of the corporation or city is not liable
8-20 for damages arising from the performance of a governmental function
8-21 of the corporation or city. For the purposes of the Texas Tort
8-22 Claims Act (Subchapter A, Chapter 101, Civil Practice and Remedies
8-23 Code), the corporation is a governmental unit and its actions are
8-24 governmental functions.>
8-25 <(k) On petition of 10 percent or more of the registered
8-26 voters of the city requesting an election on the dissolution of the
8-27 corporation, the governing body shall order an election on the
8-28 issue at the next available uniform election date that is not less
8-29 than 45 days after the date that the petition is filed. The
8-30 election must be conducted according to the applicable provisions
8-31 of the Election Code. The ballot for the election shall be printed
8-32 to provide for voting for or against the proposition: "Dissolution
8-33 of the ________________ (name of the corporation)." If a majority
8-34 of voters voting on the issue approve the dissolution, the
8-35 corporation shall continue operations only as necessary to pay the
8-36 principal of and interest on its bonds and to meet obligations
8-37 incurred before the date of the election and, to the extent
8-38 practicable, shall dispose of its assets and apply the proceeds to
8-39 satisfy those obligations. When the last of the obligations is
8-40 satisfied, any remaining assets of the corporation shall be
8-41 transferred to the city, and the corporation is dissolved. A tax
8-42 imposed under this section may not be collected after the last day
8-43 of the first calendar quarter beginning after notification to the
8-44 comptroller by the corporation that the last of its obligations is
8-45 satisfied.>
8-46 <(l) On approval of the governing body of each unit and
8-47 corporation involved, a corporation created under this Act that is
8-48 not created under this section may transfer all of its assets to a
8-49 corporation governed by this section and dissolve as provided by
8-50 this Act.>
8-51 <(m) In an election to adopt the tax under this section, the
8-52 ballot shall be printed to provide for voting for or against the
8-53 proposition: "The adoption of a sales and use tax for the
8-54 promotion and development of new and expanded business enterprises
8-55 at the rate of ________ of one percent" (one-eighth, one-fourth,
8-56 three-eighths, or one-half to be inserted as appropriate).>
8-57 <(n) At an election called and held under Subsection (d) or
8-58 (o) of this section, the city may also allow the voters to vote on
8-59 a ballot proposition that limits the length of time that a sales
8-60 and use tax may be imposed. If a city elects to limit the period
8-61 the sales and use tax may be imposed, there shall be added to the
8-62 end of the ballot proposition prescribed by Subsection (m) of this
8-63 section: "to be imposed for ________ years" (the number of years
8-64 to be inserted as appropriate). The governing body of the city
8-65 shall set the expiration date of the proposed tax to occur on the
8-66 appropriate anniversary of the effective date of the tax. A sales
8-67 and use tax imposed for a limited period under this subsection
8-68 expires on the date set by the governing body under this section or
8-69 on an earlier date if, by a majority of the voters voting in an
8-70 election held in the city, the tax is repealed. If an earlier
9-1 abolition election is held, Sections 321.102(a) and 321.402(b), Tax
9-2 Code, apply to the date of repeal. A tax that is approved without
9-3 a limit on its period of imposition is effective until repealed by
9-4 election. Before the 60th day before the date that a tax is to
9-5 expire, the governing body shall send a notice to the comptroller
9-6 stating the expiration date of the tax. Revenue collected after
9-7 the expiration of the tax from the imposition of the tax after its
9-8 expiration date shall be forwarded by the state to the governing
9-9 body to be used to pay current bonded indebtedness of the
9-10 municipality. A municipality that has imposed a tax under this
9-11 section may not extend the period of the tax's imposition or
9-12 reimpose the tax after its expiration date. If a city reduces the
9-13 rate of an additional sales and use tax under Chapter 321, Tax
9-14 Code, to impose a tax under this section for a limited period as
9-15 provided under this subsection, and does not have an election to
9-16 change the rate of the additional sales and use tax before the
9-17 expiration date of the tax under this section, the rate of the
9-18 additional sales and use tax under Section 321.101(b), Tax Code, in
9-19 the city returns to its previous rate in effect at the time the tax
9-20 imposed under this section was adopted on the expiration date of
9-21 the tax under this section without having to hold an election under
9-22 Chapter 321, Tax Code, to impose the increase in the rate.>
9-23 <(o) In a city in which a sales and use tax for the benefit
9-24 of a corporation has been imposed under this section, in the same
9-25 manner and by the same procedure the city by majority vote of the
9-26 qualified voters of the city voting at an election called and held
9-27 for the purpose may reduce or increase the tax. The rate may be
9-28 reduced in one or more increments of one-eighth of one percent to a
9-29 minimum of one-eighth of one percent or increased in one or more
9-30 increments of one-eighth of one percent to a maximum of one-half of
9-31 one percent. On petition of 10 percent or more of the registered
9-32 voters of the city requesting an election on the increase or
9-33 decrease of the tax under this section, the governing body of the
9-34 city shall order an election on the issue. The ballot shall be
9-35 printed in the same manner as the ballot under Subsection (m) of
9-36 this section.>
9-37 <(p) A city that is authorized by this section to impose,
9-38 reduce, increase, or abolish the tax under this section may, at the
9-39 same time and on the same ballot, impose, reduce, increase, or
9-40 abolish the additional sales and use tax imposed under Section
9-41 321.101(b), Tax Code, if the city is authorized by Chapter 321, Tax
9-42 Code, to impose, reduce, increase, or abolish the additional sales
9-43 and use tax. The city must follow, in relation to the imposition,
9-44 reduction, increase, or abolishment of the additional sales and use
9-45 tax imposed under Section 321.101(b), Tax Code, the procedures of
9-46 that chapter, except that in an election to impose, reduce,
9-47 increase, or abolish the tax under this section and the additional
9-48 sales and use tax the ballot shall be printed to provide for voting
9-49 for or against the proposition: "The adoption of a sales and use
9-50 tax within the city for the promotion and development of new and
9-51 expanded business enterprises at the rate of __________ of one
9-52 percent (one-eighth, one-fourth, three-eighths, or one-half to be
9-53 inserted as appropriate) and the adoption of an additional sales
9-54 and use tax within the city at the rate of ________ of one percent
9-55 to be used to reduce the property tax rate" (one-eighth,
9-56 one-fourth, three-eighths, or one-half to be inserted as
9-57 appropriate).>
9-58 <(q) A corporation under this section may not assume a debt
9-59 or make any expenditure to pay principal or interest on a debt if
9-60 the debt existed before the date the city created the corporation.>
9-61 <(r) At an election called or held under Subsection (d) or
9-62 (o) of this section, the city may also allow the voters to vote on
9-63 a ballot proposition that limits the use of the sales and use tax
9-64 to a specific project. If a city elects to limit the use to a
9-65 specific project, in the ballot proposition prescribed by
9-66 Subsection (m) or (p) a description of the project shall be
9-67 substituted in place of the words "new and expanded business
9-68 enterprises." When the last of its obligations for the specific
9-69 project have been satisfied, the corporation shall send a notice to
9-70 the comptroller stating that the sales and use tax imposed for the
10-1 specific project may not be collected after the last day of the
10-2 first calendar quarter beginning after the date of notification. A
10-3 sales and use tax imposed for a specific project under this
10-4 subsection may not be collected after the last day of the first
10-5 calendar quarter beginning after the date of the notification to
10-6 the comptroller. Revenue collected after the obligations for the
10-7 specific project have been satisfied shall be forwarded by the
10-8 state to the governing body to be used to pay current bonded
10-9 indebtedness of the municipality. A corporation that has been
10-10 created to perform a specific project under this subsection may
10-11 retain its corporate existence and perform other projects as may be
10-12 approved by the voters of the city under an election called and
10-13 held under Subsection (d) or (o) of this section.>
10-14 <Sec. 4B. (a) In this section:>
10-15 <(1) "Eligible city" means a city:>
10-16 <(A) that is located in a county with a
10-17 population of 750,000 or more, according to the most recent federal
10-18 decennial census and in which the combined rate of all sales and
10-19 use taxes imposed by the city, the state, and other political
10-20 subdivisions of the state having territory in the city does not
10-21 exceed 7.25 percent on the date of any election held under or made
10-22 applicable to this section;>
10-23 <(B) that has a population of 400,000 or more,
10-24 according to the most recent federal decennial census, and that is
10-25 located in more than one county, and in which the combined rate of
10-26 all sales and use taxes imposed by the city, the state, and other
10-27 political subdivisions of the state having territory in the city,
10-28 including taxes under this section, does not exceed 8.25 percent;
10-29 or>
10-30 <(C) to which Section 4A of this Act applies.>
10-31 <(2) "Project" means land, buildings, equipment,
10-32 facilities, and improvements included in the definition of that
10-33 term under Section 2 of this Act, including recycling facilities,
10-34 and land, buildings, equipment, facilities, and improvements found
10-35 by the board of directors to:>
10-36 <(A) be required or suitable for use for
10-37 professional and amateur (including children's) sports, athletic,
10-38 entertainment, tourist, convention, and public park purposes and
10-39 events, including stadiums, ball parks, auditoriums, amphitheaters,
10-40 concert halls, learning centers, parks and park facilities, open
10-41 space improvements, municipal buildings, museums, exhibition
10-42 facilities, and related store, restaurant, concession, and
10-43 automobile parking facilities, related area transportation
10-44 facilities, and related roads, streets, and water and sewer
10-45 facilities, and other related improvements that enhance any of
10-46 those items; or>
10-47 <(B) promote or develop new or expanded business
10-48 enterprises, including a project to provide public safety
10-49 facilities, streets and roads, drainage and related improvements,
10-50 demolition of existing structures, general municipally owned
10-51 improvements, as well as any improvements or facilities that are
10-52 related to any of those projects and any other project that the
10-53 board in its discretion determines promotes or develops new or
10-54 expanded business enterprises.>
10-55 <(a-1) A corporation may undertake a project under this
10-56 section unless within 60 days after first publishing notice of a
10-57 specific project or type of general project the governing body of
10-58 the city receives a petition from more than 10 percent of the
10-59 registered voters of the city where the petition requests that an
10-60 election be held before that specific project or that general type
10-61 of project is undertaken. An election is not required to be held
10-62 after the submission of a petition if the qualified citizens of the
10-63 city have previously approved the undertaking of a specific project
10-64 or that general type of project at an election called for that
10-65 purpose by the governing body of the city or in conjunction with
10-66 another election required to be held under this section.>
10-67 <(a-2) The costs of a publicly owned and operated project
10-68 that is purchased or constructed under this section include the
10-69 maintenance and operating costs of the project, and the proceeds of
10-70 taxes may be used to pay the maintenance and operating costs of a
11-1 project, unless within 60 days after first publishing notice of
11-2 this specific use of the proceeds of the taxes the governing body
11-3 of the city receives a petition from more than 10 percent of the
11-4 registered voters of the city where the petition requests that an
11-5 election be held before the proceeds of taxes imposed under this
11-6 section may be used to pay the maintenance and operating costs of a
11-7 project. An election is not required to be held after the
11-8 submission of a petition if the qualified citizens of the city have
11-9 previously approved that the costs of a publicly owned and operated
11-10 project purchased or constructed under this section include the
11-11 maintenance and operating costs of the project and that the
11-12 proceeds of taxes may be used to pay the maintenance and operating
11-13 costs of a project, at an election called for that purpose by the
11-14 governing body of the city or in conjunction with another election
11-15 required to be held under this section. The election in this
11-16 subsection shall not be required in a municipality located in a
11-17 county with a population in excess of 750,000 that has held an
11-18 election prior to February 1, 1993, under this section and at which
11-19 election the additional sales tax was approved.>
11-20 <(b) An eligible city may create a corporation under this
11-21 Act governed by this section. The corporation has the powers
11-22 granted by this section and by other sections of this Act and is
11-23 subject to the limitations of a corporation created under other
11-24 provisions of this Act. To the extent of a conflict between this
11-25 section and another provision of this Act, this section prevails.
11-26 The articles of incorporation of a corporation under this section
11-27 must state that the corporation is governed by this section and may
11-28 include within its name any words and phrases specified by the
11-29 eligible city. An eligible city may not create more than one
11-30 corporation governed by this section.>
11-31 <(c) The board of directors of a corporation under this
11-32 section consists of seven directors who are appointed by the
11-33 governing body of the eligible city for two-year terms of office.
11-34 A director may be removed by the governing body of the eligible
11-35 city at any time without cause. Each director must be a resident
11-36 of the eligible city. Three directors shall be persons who are not
11-37 employees, officers, or members of the governing body of the
11-38 eligible city. A majority of the entire membership of the board is
11-39 a quorum. The board shall conduct all meetings within the
11-40 boundaries of the eligible city. The board shall appoint a
11-41 president, a secretary, and other officers of the corporation that
11-42 the governing body of the eligible city considers necessary. The
11-43 corporation's registered agent must be an individual resident of
11-44 the state and the corporation's registered office must be within
11-45 the boundaries of the eligible city.>
11-46 <(d) The governing body of an eligible city by ordinance may
11-47 levy a sales and use tax for the benefit of the corporation under
11-48 this section if the tax is authorized by a majority of the
11-49 qualified voters of the eligible city voting at an election called
11-50 and held for that purpose in accordance with Chapter 321, Tax Code.
11-51 This election requirement is satisfied and another election is not
11-52 required if the voters of the eligible city approved the levy and
11-53 collection of an additional one-half cent sales and use tax at an
11-54 election held before the effective date of this section under an
11-55 ordinance calling the election that was published in a newspaper of
11-56 general circulation within the eligible city at least 14 days in
11-57 advance of the election and that expressly stated that the election
11-58 was held in anticipation of the enactment of enabling and
11-59 implementing legislation without further elections. An election
11-60 described by this section and held before the effective date of
11-61 this section is validated as of the date on which the election
11-62 occurred.>
11-63 <(e) The rate of a tax adopted under this section must be
11-64 one-eighth, one-fourth, three-eighths, or one-half of one percent.
11-65 The ballot proposition at the election held to adopt the tax must
11-66 specify the rate of the tax to be adopted. A corporation that
11-67 holds an election to reduce a tax imposed under Section 4A of this
11-68 Act may in a separate proposition on the same ballot adopt a tax
11-69 under this section. If an eligible city adopts the tax, a tax is
11-70 imposed on the receipts from the sale at retail of taxable items
12-1 within the eligible city at a rate approved by the governing body
12-2 of the eligible city. The rate must be equal to one-eighth,
12-3 one-fourth, three-eighths, or one-half of one percent. There is
12-4 also imposed an excise tax on the use, storage, or other
12-5 consumption within the eligible city of tangible personal property
12-6 purchased, leased, or rented from a retailer during the period that
12-7 the tax is effective within the eligible city. The rate of the
12-8 excise tax is the same as the rate of the sales tax portion of the
12-9 tax and is applied to the sale price of the tangible personal
12-10 property.>
12-11 <(f) Chapter 321, Tax Code, governs the imposition,
12-12 computation, administration, collection, and remittance of the tax
12-13 except as inconsistent with this section. The tax imposed under
12-14 this section takes effect as provided by Section 321.102(a), Tax
12-15 Code. If, however, an election is held under this section at the
12-16 same time an election is held to impose or change the rate of the
12-17 additional municipal sales and use tax, the tax under this section
12-18 and the imposition or change in rate of the additional municipal
12-19 sales and use tax take effect as provided by Section 321.102(b),
12-20 Tax Code. After the effective date of the taxes imposed under this
12-21 section, the adoption of a sales and use tax or the attempted
12-22 adoption of a sales and use tax by the eligible city or any other
12-23 taxing jurisdiction having territory in the city does not impair
12-24 the taxes imposed under this section.>
12-25 <(g) On receipt of the proceeds of the sales and use tax
12-26 imposed under this section from the comptroller, the eligible city
12-27 shall deliver the proceeds to the corporation. Tax proceeds may be
12-28 used to:>
12-29 <(1) pay the costs of projects of the types added to
12-30 the definition of that term by Subsection (a) of this section; or>
12-31 <(2) pay the principal of, interest on, and other
12-32 costs relating to bonds or other obligations issued by the
12-33 corporation to pay the costs of the projects or to refund bonds or
12-34 other obligations issued to pay the costs of projects.>
12-35 <(h) Bonds or other obligations having a maturity not longer
12-36 than 30 years and issued to pay the costs of projects of the types
12-37 added to the definition of that term by Subsection (a) of this
12-38 section may be made payable from any source of funds available to
12-39 the corporation, including the proceeds of a sales and use tax
12-40 imposed under this section. The principal amount of bonds and
12-41 other obligations that by their terms are payable in whole or in
12-42 part from the sales and use tax, together with the amount of the
12-43 costs of the projects, other than interest on bonds and other
12-44 obligations, for which payment is made in cash directly from the
12-45 proceeds of the tax, may not, in the aggregate, exceed $135
12-46 million. The bonds or other obligations that by their terms are
12-47 payable from the tax may not be paid in whole or in part from any
12-48 property taxes raised or to be raised by the eligible city and are
12-49 not a debt of and do not give rise to a claim for payment against
12-50 the eligible city except as to sales and use tax revenue held by a
12-51 city and required under this section to be paid over to the
12-52 corporation.>
12-53 <(i) A sales and use tax imposed under this section may not
12-54 be collected after the last day of the first calendar quarter
12-55 occurring after notification to the comptroller by the corporation
12-56 that all bonds or other obligations of the corporation that are
12-57 payable in whole or in part from the proceeds of the sales and use
12-58 tax under this section, including any refunding bonds or other
12-59 obligations, have been paid in full or the full amount of money,
12-60 exclusive of guaranteed interest, necessary to pay in full the
12-61 bonds and other obligations has been set aside in a trust account
12-62 dedicated to the payment of the bonds and other obligations.>
12-63 <(j) The corporation may exercise the power of eminent
12-64 domain only on approval of the action by the governing body of the
12-65 eligible city. The power must be exercised in accordance with and
12-66 subject to the laws applicable to the eligible city.>
12-67 <(k) The legislature finds for all constitutional and
12-68 statutory purposes that projects of the types added to the
12-69 definition of that term by Subsection (a) of this section are
12-70 owned, used, and held for public purposes for and on behalf of the
13-1 eligible city incorporating the corporation, and Section 23(b) of
13-2 this Act and Section 25.07(a), Tax Code, are not applicable to
13-3 leasehold or other possessory interests granted by the corporation
13-4 during the period projects are owned by the corporation on behalf
13-5 of the eligible city. Projects are exempt from taxation under
13-6 Section 11.11, Tax Code, for that period.>
13-7 <(l) Section 24 of this Act does not apply to a corporation
13-8 under this section.>
13-9 <(m) The corporation, a director of the corporation, the
13-10 eligible city creating the corporation, a member of the governing
13-11 body of the eligible city, or an employee of the corporation or
13-12 eligible city is not liable for damages arising from the
13-13 performance of a governmental function of the corporation or
13-14 eligible city. For the purposes of Chapter 101, Civil Practice and
13-15 Remedies Code, the corporation is a governmental unit and its
13-16 actions are governmental functions.>
13-17 <(n) Before expending funds to undertake a project, a
13-18 corporation under this section shall hold at least one public
13-19 hearing on the proposed project.>
13-20 SECTION 2. (a) A corporation created before the effective
13-21 date of this Act under Section 4A or 4B, Development Corporation
13-22 Act of 1979 (Article 5190.6, Vernon's Texas Civil Statutes),
13-23 continues to exist on and after the effective date of this Act.
13-24 The city that created the corporation may continue to collect any
13-25 tax authorized for the benefit of the corporation before the
13-26 effective date of this Act, and the corporation may continue to
13-27 undertake any project or category of projects authorized for the
13-28 corporation before the effective date of this Act. The tax and
13-29 project are subject to the same restrictions applicable under
13-30 Sections 4A and 4B as those sections existed immediately before the
13-31 effective date of this Act. A tax authorized for the corporation
13-32 on or after the effective date of this Act or a project not
13-33 previously authorized by the voters is governed by Sections 4A and
13-34 4B as amended by this Act.
13-35 (b) On January 1, 1996, a corporation created before the
13-36 effective date of this Act under Section 4B, Development
13-37 Corporation Act of 1979 (Article 5190.6, Vernon's Texas Civil
13-38 Statutes), is governed by Section 4A, Development Corporation Act
13-39 of 1979 (Article 5190.6, Vernon's Texas Civil Statutes), as amended
13-40 by this Act, which includes the authority to hold an election under
13-41 Section 4B, Development Corporation Act of 1979 (Article 5190.6,
13-42 Vernon's Texas Civil Statutes), as amended by this Act.
13-43 SECTION 3. All acts and procedures of a city in calling and
13-44 holding an industrial development sales tax election under
13-45 authority of Section 4A or 4B, Development Corporation Act of 1979
13-46 (Article 5190.6, Vernon's Texas Civil Statutes), before the
13-47 effective date of this Act are validated as of the dates on which
13-48 they occurred.
13-49 SECTION 4. The importance of this legislation and the
13-50 crowded condition of the calendars in both houses create an
13-51 emergency and an imperative public necessity that the
13-52 constitutional rule requiring bills to be read on three several
13-53 days in each house be suspended, and this rule is hereby suspended,
13-54 and that this Act take effect and be in force from and after its
13-55 passage, and it is so enacted.
13-56 * * * * *