By Smithee H.B. No. 3228 A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to the creation of economic development districts in 1-3 certain counties; authorizing certain taxes. 1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-5 SECTION 1. Title 44, Revised Statutes, is amended by adding 1-6 Article 2370d-11 to read as follows: 1-7 ART. 2370D-11 COUNTY ECONOMIC DEVELOPMENT DISTRICTS 1-8 ARTICLE I. GENERAL PROVISIONS 1-9 Sec. 1.01. SHORT TITLE. This Act may be cited as the County 1-10 Economic Development District Act. 1-11 Sec. 1.02. LEGISLATIVE INTENT. The intent of the 1-12 Legislature is to further the public purpose of developing and 1-13 diversifying the economy of the state by providing incentives for 1-14 the location and development of projects in certain counties to 1-15 attract visitors and tourists. 1-16 Sec. 1.03. LEGISLATIVE FINDINGS. The legislature finds 1-17 that: 1-18 (1) certain counties in Texas are in need of 1-19 incentives for the development of public improvements to attract 1-20 visitors and tourists to such counties, and that such counties are 1-21 at a disadvantage in competing with counties in other states for 1-22 the location and development of projects that attract visitors and 1-23 tourists by virtue of the availability and prevalent use in other 2-1 states of financial incentives; 2-2 (2) that the means and measures authorized by this Act 2-3 are in the public interest and serve a public purpose of the state 2-4 in promoting the economic welfare of the citizens of the state by 2-5 providing incentives for the location and development in certain 2-6 Texas counties of projects that attract visitors and tourists and 2-7 that result in employment and economic activity; and 2-8 (3) the creation of county economic development 2-9 districts is essential to the accomplishment of Article III, 2-10 Section 52-2, Texas Constitution and to the accomplishment of the 2-11 other public purposes stated in this Act and further serves the 2-12 purpose of Article XVI, Section 59, and Article III, Section 52, 2-13 Texas Constitution. 2-14 Sec. 1.04. DEFINITIONS. In this Act: 2-15 (1) "District" means a county economic development 2-16 district created under this Act. 2-17 (2) "Board" means the board of directors of the 2-18 district. 2-19 (3) "Director" means a member of the board. 2-20 (4) "Commissioners court" means the governing body of 2-21 the county in which the district is located. 2-22 (5) "County" means the county in which the district is 2-23 located. 2-24 (6) "Project" means the land, buildings, equipment, 2-25 facilities, and improvements found by the board of directors to be 3-1 required or suitable for use for entertainment, tourist, 3-2 convention, public park, professional and amateur sports, and 3-3 athletic purposes and events, including auditoriums, arenas, 3-4 coliseums, conventions centers, amphitheaters, concert halls, Texas 3-5 heritage and learning centers, parks and park facilities, open 3-6 space improvements, public buildings, museums, exhibition 3-7 facilities, stadiums, and ball parks (either or all) that serve the 3-8 purpose of attracting visitors and tourists to the county, and 3-9 related store, restaurant, concession, and automobile parking 3-10 facilities, related area transportation facilities, including 3-11 trams, monorails, and other forms of transportation, and related 3-12 roads, streets, and water and sewer facilities, and other related 3-13 improvements that enhance any of those items. 3-14 (7) "Cost" as applied to a project means the cost of 3-15 acquisition, construction, reconstruction, improvement, and 3-16 expansion, maintenance, and operation, including the cost of the 3-17 acquisition of all land, rights-of-way, property rights, easements, 3-18 and interests, the cost of all machinery and equipment, financing 3-19 charges, inventory, raw materials and other supplies, research and 3-20 development costs, interest, whether or not capitalized, necessary 3-21 reserve funds, cost of estimates and of design, architectural, 3-22 engineering and legal services, plans, specifications, surveys, 3-23 estimates of cost and of revenue, other expenses necessary or 3-24 incident to determining the feasibility and practicability of 3-25 acquiring, constructing, reconstructing, improving, and expanding 4-1 any such project, administrative expense and such other expense as 4-2 may be necessary or incident to the acquisition, construction, 4-3 reconstruction, improvement, and expansion thereof, and the 4-4 financing or refinancing of any such project, including the 4-5 refunding of any outstanding obligations, mortgages, or advances 4-6 issued, made, or given by any person for any of the aforementioned 4-7 costs. 4-8 (8) "Comptroller" means the Texas Comptroller of 4-9 Public Accounts. 4-10 (9) "User" means an individual, partnership, 4-11 corporation, or any other private entity, whether organized for 4-12 profit or not for profit, or a city, county, district, or any other 4-13 political subdivision, public entity, or agency of the state or 4-14 federal government. 4-15 (10) "Developer of property in the district" means any 4-16 person who owns land or an interest in land located within a 4-17 district and who has divided or proposes to divide the land into 4-18 two or more parts or lease such land or interest in land for the 4-19 purpose of laying out any subdivision of any tract of land or any 4-20 addition to any town or city, or for laying out suburban lots or 4-21 building lots, and streets, alleys, or parks or other portions 4-22 intended for public use or for the use of purchasers or owners of 4-23 lots fronting thereon or adjacent thereto. 4-24 (11) "Bonds" means bonds, notes, and other 4-25 obligations. 5-1 (12) "Taxing entity" means the state, a municipality, 5-2 a county, or other political subdivision, but shall not mean a 5-3 school district. 5-4 Sec. 1.05. COUNTIES AUTHORIZED TO CREATE DISTRICTS. The 5-5 commissioners court in a county with a population of not less than 5-6 75,000 and not more than 400,000 according to the most recent 5-7 federal decennial census may, upon petition of the owners of land 5-8 in a proposed county, commence the creation of a county economic 5-9 development district. The creation of the district is subject to a 5-10 confirmation election held as provided by Article 2 of this Act. 5-11 ARTICLE 2. CREATION OF DISTRICTS 5-12 Sec. 2.01. PETITION OF LANDOWNERS. To create a district, a 5-13 petition requesting creation shall be filed with the county 5-14 commissioners court of the county in which all of the land in the 5-15 proposed district is located. The petition shall be signed by the 5-16 developer of land in the district and shall be accompanied by a 5-17 sworn statement indicating consent to creation signed by the 5-18 holders of fee simple title of all of the land within the proposed 5-19 district. 5-20 Sec. 2.02. CONTENTS OF PETITION. The petition shall: 5-21 (1) describe the boundaries of the proposed district 5-22 by metes and bounds or by lot and block number, if there is a 5-23 recorded map or plat and survey of the area; 5-24 (2) include a name of the district which shall include 5-25 the name of the county followed by the words Economic Development 6-1 District No. ___; 6-2 (3) include the names of five persons who are willing 6-3 and qualified to serve as temporary directors of the proposed 6-4 district; 6-5 (4) state the general nature of the work proposed to 6-6 be done and the cost of the project as then estimated by the 6-7 petitioner; and 6-8 (5) state the necessity and feasibility of the 6-9 proposed district and whether the district will serve the public 6-10 purpose of attracting visitors and tourists to the county. 6-11 Sec. 2.03. HEARING ON PETITION. Not later than the 60th day 6-12 after the date a petition is received, the commissioners court 6-13 shall fix a date, time, and place at which the petition shall be 6-14 heard and shall issue notice of the date, time, place, and subject 6-15 matter of the hearing. The notice shall inform all persons of 6-16 their right to appear and present evidence and testify for or 6-17 against the creation of the district. 6-18 Sec. 2.04. NOTICE OF HEARING. At least 30 days before the 6-19 date set for the hearing, notice of the hearing shall be mailed to 6-20 the developer who signed the petition and the landowner of all the 6-21 land in the district and shall be published in a newspaper with 6-22 general circulation in the county in which the proposed district is 6-23 located. 6-24 Sec. 2.05. HEARING. At the hearing, the commissioners court 6-25 shall examine the petition to ascertain its sufficiency, and any 7-1 person interested may appear before the commission to offer 7-2 testimony on the sufficiency of the petition and whether or not the 7-3 district should be created. 7-4 Sec. 2.06. GRANTING OR REFUSING PETITION. (a) After the 7-5 hearing, if it is found that the petition conforms to the 7-6 requirements of Section 2.02 of this Act and that the creation of 7-7 the district and the proposed project is feasible and necessary and 7-8 would serve the public purpose of attracting visitors and tourists 7-9 to the county, the commissioners court shall so find and enter an 7-10 order creating the district. 7-11 (b) If the commissioners court finds that the petition does 7-12 not conform to the requirements of Section 2.02 of this Act or that 7-13 the creation of the district and the proposed project is not 7-14 feasible and necessary and would not serve the purpose of 7-15 attracting visitors and tourists to the county, the commissioners 7-16 court shall so find by its order and deny the petition. 7-17 Sec. 2.07. TEMPORARY DIRECTORS. If the commissioners court 7-18 grants the petition, it shall appoint to serve as temporary 7-19 directors of the district five persons who are qualified under this 7-20 Act to serve as directors. 7-21 Sec. 2.08. VACANCY IN OFFICE. A vacancy in the office of 7-22 temporary director shall be filled by appointment by the 7-23 commissioners court. 7-24 Sec. 2.09. QUALIFICATION OF TEMPORARY DIRECTORS. Each 7-25 temporary director shall execute a bond in accordance with the 8-1 provisions of Section 3.14 of this Act and shall take an oath of 8-2 office, and the board shall meet and organize. 8-3 Sec. 2.10. CONFIRMATION AND SALES AND USE TAX ELECTION. The 8-4 temporary board of directors shall conduct an election within the 8-5 boundaries of the district to confirm the creation of the district 8-6 and authorize a sales and use tax in conformity with this Act. 8-7 Sec. 2.11. ELECTION ORDER. An order calling an election 8-8 under Section 2.10 of this Act must state: 8-9 (1) the nature of the election, including the 8-10 proposition that is to appear on the ballot; 8-11 (2) the date of the election; 8-12 (3) the hours during which the polls will be open; 8-13 (4) the location of the polling places; and 8-14 (5) the proposed rate of the sales and use tax for the 8-15 district. 8-16 Sec. 2.12. NOTICE. The temporary directors shall give 8-17 notice of the confirmation and sales and use tax election by 8-18 publishing a substantial copy of the election order in a newspaper 8-19 with general circulation in the county in which the proposed 8-20 district is located once a week for two consecutive weeks. The 8-21 first publication must appear at least 14 days before the date set 8-22 for the election. 8-23 Sec. 2.13. CONDUCT OF ELECTION. (a) The election shall be 8-24 held in accordance with the provisions of the Election Code, to the 8-25 extent not inconsistent with this Act. 9-1 (b) The ballot shall be printed to permit voting for or 9-2 against the proposition: "The creation of ___________ County 9-3 Economic Development District No. ____ and the adoption of a 9-4 proposed local sales and use tax rate of ____ (the rate specified 9-5 in the election order) to be used for the promotion and development 9-6 of tourism." 9-7 Sec. 2.14. RESULTS OF ELECTION. (a) After the confirmation 9-8 and sales and use tax election, the presiding judge shall make 9-9 returns of the result to the temporary board of directors. The 9-10 temporary board of directors shall canvass the returns and declare 9-11 the results. 9-12 (b) If a majority of the votes cast in the election favor 9-13 the creation of the district and the adoption of the sales and use 9-14 tax, then the temporary board shall declare that the district is 9-15 created and shall declare the amount of the local sales and use tax 9-16 adopted and enter the result on its minutes. If a majority of the 9-17 votes cast in the election are against the creation of the district 9-18 and the adoption of the sales and use tax, the temporary board 9-19 shall declare that the proposition to create the district was 9-20 defeated and enter the result in its minutes. 9-21 (c) A certified copy of the minute order declaring that the 9-22 district is created and the local sales and use tax adopted and 9-23 including the rate of the sales and use tax, or declaring that the 9-24 proposition to create the district was defeated, shall be sent to 9-25 the commissioners court, the Comptroller, and any taxing entity by 10-1 certified or registered mail. Such order also shall show: 10-2 (1) the date of the election; 10-3 (2) the proposition on which the vote was held; 10-4 (3) the total number of votes cast for or against the 10-5 proposition; and 10-6 (4) the number of votes by which the proposition was 10-7 approved. 10-8 ARTICLE 3. DISTRICT ADMINISTRATION 10-9 Sec. 3.01. BOARD OF DIRECTORS. (a) A district is governed 10-10 by a board of five directors appointed by the county commissioners 10-11 of the county in which the district is located. The temporary 10-12 directors appointed under Section 2.07 of this Act shall become 10-13 permanent directors of the district provided that the creation of 10-14 the district is confirmed at the confirmation election. 10-15 (b) Directors serve staggered four-year terms that expire 10-16 September 1. Following confirmation of the district at the 10-17 election, the temporary directors shall draw lots to determine: 10-18 (1) the two directors to serve terms that expire on 10-19 September 1 of the second year following creation of the district; 10-20 and 10-21 (2) the three directors to serve terms that expire on 10-22 September 1 of the fourth year following creation of the district. 10-23 Sec. 3.02. QUALIFICATIONS FOR DIRECTORS. To be qualified to 10-24 serve as a director, a person shall be at least 21 years old, a 10-25 resident citizen of the state of Texas, and a qualified voter 11-1 within the county in which the district is located. 11-2 Sec. 3.03. PERSONS DISQUALIFIED FROM SERVING. (a) A person 11-3 is disqualified from serving as a director if: 11-4 (1) he is related within the third degree of affinity 11-5 or consanguinity, as determined under Chapter 573, Government Code, 11-6 to a developer of property in the district, any other member of the 11-7 board of directors of the district, or the manager, engineer, or 11-8 attorney for the district; 11-9 (2) he is an employee of any developer of property in 11-10 the district or any director, manager, engineer, or attorney for 11-11 the district; 11-12 (3) he is a developer of property in the district; or 11-13 (4) he is serving as an attorney, consultant, 11-14 engineer, manager, architect, or in some other professional 11-15 capacity for the district or a developer of property in the 11-16 district in connection with the district or property located in the 11-17 district. 11-18 (b) Within 60 days after the board of directors determines a 11-19 relationship or employment which constitutes a disqualification 11-20 under Subsection (a) of this section, it shall petition the 11-21 commissioners court to replace the director with a person who would 11-22 not be disqualified. 11-23 (c) Any person who willfully occupies an office as a 11-24 director and exercises the powers and duties of that office when 11-25 disqualified under the provisions of Subsection (a) of this section 12-1 is guilty of a misdemeanor, and on conviction, shall be fined not 12-2 less than $100 nor more than $1,000. 12-3 (d) Any rights obtained by any third party through official 12-4 action of the board of directors are not impaired or affected by 12-5 the disqualification under this section of any director to serve, 12-6 provided that the third party had no knowledge at the time the 12-7 rights were obtained of the fact that the director was disqualified 12-8 to serve. 12-9 Sec. 3.04. VACANCIES ON THE BOARD. A vacancy in the office 12-10 of director shall be filled by appointment of the commissioners 12-11 court. 12-12 Sec. 3.05. BOARD POSITION NOT CIVIL OFFICE OF EMOLUMENT. A 12-13 position on the board may not construed to be a civil office of 12-14 emolument for any purpose, including those purposes described by 12-15 Article XVI, Section 40, of the Texas Constitution. 12-16 Sec. 3.06. REMOVAL OF DIRECTOR. The governing body of the 12-17 commissioners court, after notice and hearing, may remove a 12-18 director for misconduct or failure to carry out the director's 12-19 duties on petition by a majority of the remaining directors. 12-20 Sec. 3.07. ORGANIZATION OF BOARD. After each appointment of 12-21 directors by the commissioners court, and after the directors have 12-22 qualified by taking the proper oath, they shall organize by 12-23 electing a president, a vice president, a secretary, and any other 12-24 officers as in the judgment of the board are considered necessary. 12-25 Sec. 3.08. QUORUM; OFFICERS' DUTIES. (a) Three directors 13-1 shall constitute a quorum and a concurrence of three shall be 13-2 sufficient in all matters pertaining to the business of the 13-3 district. 13-4 (b) The president shall preside at all meetings of the board 13-5 and shall be the chief executive officer of the district. The vice 13-6 president shall act as president in case of the absence or 13-7 disability of the president. 13-8 (c) The secretary shall act as president if both the 13-9 president and vice president are absent or disabled. The secretary 13-10 shall act as secretary of the board of directors and shall be 13-11 charged with the duty of seeing that all records and books of the 13-12 district are properly kept. 13-13 (d) The board may appoint another director, the general 13-14 manager, or any employee as assistant or deputy secretary to assist 13-15 the secretary and any such person shall be entitled to certify as 13-16 to the authenticity of any record of the district, including all 13-17 proceedings relating to bonds, contracts, or indebtedness of the 13-18 district. 13-19 Sec. 3.09. BYLAWS. The board is empowered to adopt bylaws 13-20 to govern: 13-21 (1) the time, place, and manner of conducting its 13-22 meetings; 13-23 (2) the powers, duties, and responsibilities of its 13-24 officers and employees; 13-25 (3) the disbursement of funds by checks, drafts, and 14-1 warrants; 14-2 (4) the appointment and authority of director 14-3 committees; 14-4 (5) the keeping of records and accounts; and 14-5 (6) other matters as the board considers appropriates. 14-6 Sec. 3.10. MEETINGS AND NOTICE. (a) The board may 14-7 establish regular meetings to conduct district business and may 14-8 hold special meetings at other times as the business of a district 14-9 requires. 14-10 (b) Notice of the time, place, and purpose of any meeting of 14-11 the board shall be given by posting at a place convenient to the 14-12 public within the district. A copy of the notice shall be 14-13 furnished to the clerk or clerks of the county in which the 14-14 district is located, who shall post them on a bulletin board in the 14-15 county courthouse used for such purpose. 14-16 (c) Except as herein provided the provisions of Chapter 551, 14-17 Government Code, shall be applicable to meetings of the board of 14-18 directors. Any interested person may attend any meeting of the 14-19 board. 14-20 Sec. 3.11. DISTRICT OFFICE AND MEETING PLACE. The board 14-21 shall designate and establish a district office in the county. The 14-22 meeting place may be a private residence or office provided that 14-23 the board of directors in its order establishing the meeting place 14-24 declares the same to be a public place and invites the public to 14-25 attend any meeting of the board. 15-1 Sec. 3.12. MANAGEMENT OF DISTRICT. (a) The board of 15-2 directors shall have control over and management of all the affairs 15-3 of the district and shall employ or engage in professional 15-4 contracts with all persons, firms, partnerships, or corporations 15-5 deemed necessary by the board for the conduct of the affairs of the 15-6 district, including, but not limited to, architects, engineers, 15-7 attorneys, financial advisors, a project manager, a general 15-8 manager, bookkeepers, auditors, and secretaries. 15-9 (b) The board of directors shall determine the term of 15-10 office and the compensation of all employees and consultants by 15-11 contracts or by resolution of the board. 15-12 (c) All employees may be removed by the board. 15-13 (d) The board of directors may require a bond of any officer 15-14 or employee payable to the district and conditioned on the faithful 15-15 performance of his duties. 15-16 Sec. 3.13. COMPENSATION OF DIRECTORS; REIMBURSEMENT OF 15-17 EXPENSES. (a) A director is not entitled to receive compensation 15-18 for service on the board. 15-19 (b) Upon approval by the board, a director may be reimbursed 15-20 for travel or other expenses incurred on behalf of the district 15-21 upon presentation of a verified statement. 15-22 Sec. 3.14. BOND AND OATH OF OFFICE. (a) As soon as 15-23 practicable after a director is appointed, the director shall 15-24 execute a bond for $10,000 payable to the district and conditioned 15-25 on the faithful performance of the director's duties. 16-1 (b) All bonds of the directors, including the bonds of the 16-2 temporary directors, shall be approved by the board. 16-3 (c) Each director shall take the oath of office prescribed 16-4 by the Constitution for public officers. 16-5 (d) The bond and oath shall be filed with the district and 16-6 retained in its records. 16-7 Sec. 3.15. DIRECTOR INTERESTED IN CONTRACT. (a) A director 16-8 who is financially interested in any contract with the district or 16-9 a director who is an employee of a person who or firm which is 16-10 financially interested in any contract with the district shall 16-11 disclose that fact to the other directors, and the disclosure shall 16-12 be entered into the minutes of the meeting. 16-13 (b) An interested director may not vote on the acceptance of 16-14 the contract or participate in the discussion on the contract. 16-15 (c) The failure of a director to disclose his financial 16-16 interest and to have it entered on the minutes shall invalidate the 16-17 contract. 16-18 Sec. 3.16. SUITS. (a) A district, when created and 16-19 confirmed, may, through its directors, sue and be sued in any and 16-20 all courts of this state in the name of the district. Service of 16-21 process in any suit may be had by serving any two directors. 16-22 (b) A district is a governmental agency, a body politic and 16-23 corporate, and a political subdivision of the state. 16-24 (c) A district is a unit of government for purposes of 16-25 Chapter 101, Civil Practice and Remedies Code (Texas Tort Claims 17-1 Act), and operations of a district are considered to be essential 17-2 governmental functions and not proprietary functions for all 17-3 purposes, including application of the Texas Tort Claims Act. 17-4 Sec. 3.17. CONTRACTS. A district shall contract and be 17-5 contracted within the name of the district. 17-6 ARTICLE 4. POWERS AND DUTIES 17-7 Sec. 4.01. POWERS. (a) A district shall have all of the 17-8 powers, authority, rights, and duties which will permit 17-9 accomplishment of the purposes for which the district was created. 17-10 (b) The district shall have the power to provide for general 17-11 promotion and tourist advertising of the district and its vicinity 17-12 and to conduct a marketing program to attract visitors, any of 17-13 which may be conducted by the district pursuant to contracts for 17-14 professional services with persons or organizations selected by 17-15 district. 17-16 (c) The district shall have the following powers with 17-17 respect to projects together with all powers incidental thereto or 17-18 necessary for the performance of those hereinafter stated: 17-19 (1) to acquire, whether by construction, devise, 17-20 purchase, lease, lease-purchase, gift, or otherwise or any one or 17-21 more of such methods and to design, construct, improve, maintain, 17-22 equip, and furnish one or more projects located within the 17-23 district; 17-24 (2) to lease, license, or otherwise contract for the 17-25 use of all or any part of any project for such rentals, license 18-1 fees, revenues, or other compensation deemed appropriate, upon such 18-2 terms and conditions as the board of directors deems advisable and 18-3 not in conflict with the provisions of this Act; 18-4 (3) to sell, transfer, or otherwise dispose of all or 18-5 any part of any project to a user or other party for such sales 18-6 price, installment payment, license fee, lease payment or other 18-7 compensation deemed appropriate, and upon such terms and conditions 18-8 as its board of directors may deem advisable and not in conflict 18-9 with the provisions of this Act; 18-10 (4) to issue bonds for the purpose of defraying all or 18-11 part of the cost of any project and to secure the payment of such 18-12 bonds as provided in this Act; 18-13 (5) to provide for security for the payment of the 18-14 principal of and interest on any bonds issued and any agreements 18-15 made in connection therewith, to mortgage and pledge any or all of 18-16 its projects or any part or parts thereof, or any revenues, license 18-17 fees, lease payments or other compensation derived therefrom and to 18-18 pledge any tax revenues, assessments, or other sources of funds 18-19 available to the district; and 18-20 (6) to enter into contracts with a user or other 18-21 person, including but not limited to governmental entities and 18-22 nonprofit corporations created under Article 5190.6, Texas Civil 18-23 Statutes, as amended, to perform any of the rights, powers, or 18-24 authority granted to the district. Notwithstanding any other 18-25 provision of this Act to the contrary, any contract between the 19-1 district and a governmental entity or nonprofit corporation created 19-2 under Article 5190.6, Texas Civil Statutes, as amended, shall not 19-3 be subject to the competitive bidding requirement of this Act. 19-4 (d) The district shall not have the power to own or operate 19-5 any project as a business other than as lessor or seller or 19-6 pursuant to the requirements of any trust agreement securing the 19-7 credit transaction. Accordingly, the user pursuant to any lease or 19-8 sale agreement relating to a project shall be considered to be the 19-9 owner of the project for the purposes of the application of any ad 19-10 valorem, sales, and use taxes or any other taxes levied or imposed 19-11 by this state or any political subdivision of this state. The 19-12 purchase and holding of mortgages, deeds of trust, or other 19-13 security interests and contracting for any servicing thereof shall 19-14 not be deemed the operation of a project. 19-15 Sec. 4.02. COMPETITIVE BIDDING; CONTRACT AWARD. (a) A 19-16 contract, other than a contract for services, for more than $15,000 19-17 for the construction of public improvements or the purchase of 19-18 material, machinery, equipment, supplies, and other property used 19-19 in public improvements, except real property, may be entered into 19-20 only after competitive bids. Notice of bid solicitation shall be 19-21 published once a week for two consecutive weeks in a newspaper with 19-22 general circulation in the county in which the district is located. 19-23 The first publication of notice must be not later than the 15th day 19-24 before the date set for receiving bids. The board shall adopt 19-25 rules governing receipt of bids and the award of the contract and 20-1 providing for the waiver of the competitive bid requirement if: 20-2 (1) there is an emergency; 20-3 (2) the needed materials are available from only one 20-4 source; 20-5 (3) in a procurement requiring design by the supplier 20-6 competitive bidding would not be appropriate and competitive 20-7 negotiation, with proposals solicited from an adequate number of 20-8 qualified sources, would permit reasonable competition consistent 20-9 with the nature and requirements of the procurement; or 20-10 (4) after solicitation, it is ascertained that there 20-11 will be only one bidder; or 20-12 (5) the contract is entered into between the district 20-13 and a governmental entity or nonprofit corporation created under 20-14 Article 5190.6, Texas Civil Statutes. 20-15 (b) If a proposed contract for works, plant improvements, 20-16 facilities other than land, or the purchase of equipment, 20-17 appliances, materials, or supplies for public improvements is for 20-18 an estimated amount of more than $15,000 but less than $25,000 or 20-19 for a duration of more than two years, competitive bids shall be 20-20 asked from at least three persons. 20-21 (c) This section provides the necessary procedures for the 20-22 district to award certain contracts and supersedes any law or other 20-23 requirement with respect to the award of contracts. 20-24 Sec. 4.03. EMINENT DOMAIN. (a) The district may exercise 20-25 the power of eminent domain to acquire land or interests in land 21-1 within the district deemed necessary by the board of directors of 21-2 the district for the purpose of providing water and sewer services 21-3 to an authorized project. 21-4 (b) the right of eminent domain shall be exercised in the 21-5 manner provided in Title 52, Texas Civil Statutes, as amended. 21-6 Sec. 4.04. GRANTS AND GIFTS. A district may accept grants, 21-7 gratuities, advances, and loans in any form from any source 21-8 approved by the board, including the United States, the state or 21-9 any of its agencies, any private or public corporation, and any 21-10 other person and may make and enter into contracts, agreements, and 21-11 covenants which the board considers appropriate in connection with 21-12 acceptance of grants, gratuities, advances, and loans. 21-13 ARTICLE 5. GENERAL FISCAL PROVISIONS 21-14 Sec. 5.01. EXPENDITURES. A district's money may be 21-15 disbursed only by check, draft, order, or other instrument which 21-16 shall be signed by at least three directors. The general manager, 21-17 treasurer, or other employee of the district when authorized by 21-18 resolution of the board may sign checks, drafts, orders or other 21-19 instruments on any district operation account and these need not be 21-20 signed by anyone else. 21-21 Sec. 5.02. PURPOSES FOR BORROWING MONEY. The district may 21-22 borrow money for any corporate purpose or combination of corporate 21-23 purposes. 21-24 Sec. 5.03. REVENUE NOTES. (a) The board may borrow money 21-25 on negotiable notes of the district to mature over a term of not 22-1 more than 20 years and to bear interest at any rate permitted by 22-2 the Constitution and laws of the state to be paid solely from 22-3 district revenues. 22-4 (b) The notes may be first or subordinate lien notes within 22-5 the discretion of the board, but no obligation may ever be a charge 22-6 on the property of the district but shall be solely a charge on the 22-7 revenues pledged for the payment of the obligation. 22-8 Sec. 5.04. BOND ANTICIPATION NOTES. (a) The board may 22-9 declare an emergency in the matter of funds not being available to 22-10 pay principal of and interest on any bonds of the district or to 22-11 meet any other needs of the district and may issue negotiable bond 22-12 anticipation notes to borrow the money needed by the district. 22-13 Bond anticipation notes may bear interest at any rate permitted by 22-14 the Constitution and laws of the state and shall mature within one 22-15 year of their date. 22-16 (b) Bond anticipation notes may be issued for any purpose 22-17 for which bonds of the district may be issued and for the purpose 22-18 of refunding previously issued bond anticipation notes. A district 22-19 may covenant with the purchases of the bond anticipation notes that 22-20 the district will use the proceeds of sale of any bonds in the 22-21 process of issuance for the purpose of refunding the bond 22-22 anticipation notes, in which case the board will be required to use 22-23 the process received from sale of the bonds in the process of 22-24 issuance to pay principal, interest, or redemption price on the 22-25 bond anticipation notes. 23-1 Sec. 5.05. REPAYMENT OF ORGANIZATIONAL EXPENSES. The 23-2 district's directors are authorized to pay all costs and expenses 23-3 necessarily incurred in the creation and organization of a 23-4 district, the cost of investigation and making plans, the cost of 23-5 the engineer's report, project designer fees, legal fees, and other 23-6 incidental expenses, and to reimburse any person for money advanced 23-7 for these purposes. These payments may be made from money obtained 23-8 from the issuance of notes or the sale of bonds first issued by the 23-9 district or out of other revenues of the district. 23-10 Sec. 5.06. DEPOSITORY. (a) The board, by order or 23-11 resolution, shall designate one or more banks inside or outside the 23-12 district to serve as the depository for the funds of the district. 23-13 All funds of the district shall be deposited in the depository bank 23-14 or banks unless otherwise required by orders or resolutions 23-15 authorizing the issuance of the district's bonds. 23-16 (b) To the extent that funds in the depository bank or banks 23-17 are not insured by the Federal Deposit Insurance Corporation, they 23-18 shall be secured in the manner provided by law for the security of 23-19 funds of counties of the State of Texas. 23-20 (c) The board, by resolution, may authorize a designated 23-21 representative to supervise the substitution of securities pledged 23-22 to secure the district's funds. 23-23 Sec. 5.07. INVESTMENTS. Funds of the district may be 23-24 invested and reinvested by the board or its authorized 23-25 representative in direct or indirect obligations of the United 24-1 States, the state, or any county, city, school district, or other 24-2 political subdivision of the state. Funds of the district may be 24-3 placed in certificates of deposit of state or national banks or 24-4 savings and loan associations within the state provided that they 24-5 are secured in the manner provided for the security of the funds of 24-6 counties of the State of Texas. Money may be withdrawn from the 24-7 appropriate accounts of the district for the investments on such 24-8 terms as the board considers advisable. 24-9 ARTICLE 6. ISSUANCE OF BONDS 24-10 Sec. 6.01. ISSUANCE OF BONDS. The district may issue bonds 24-11 for the purpose of defraying all or part of the cost of any project 24-12 as provided in this Act. 24-13 Sec. 6.02. FORM OF BONDS. (a) A district may issue its 24-14 bonds in various series or issues. 24-15 (b) Bonds shall mature serially or otherwise not more than 24-16 40 years from their date. Bonds may bear interest and may be 24-17 issued in accordance with Articles 717k, 717k-2, 717k-6, 717k-8, 24-18 and 717q, Civil Statutes, as amended. 24-19 (c) A district's bonds are investment securities under the 24-20 terms of Chapter 8 of the Business & Commerce Code and may be 24-21 issued registrable as to principal or as to both principal and 24-22 interest and shall or may be made redeemable before maturity, at 24-23 the option of the district, or may contain a mandatory redemption 24-24 provision all as may be provided by the board. A district's bonds 24-25 may be issued in the form, denominations, and manner and under the 25-1 terms, conditions, and details, and shall be signed and executed, 25-2 as provided by the board in the resolution or order authorizing the 25-3 issuance of the bonds. 25-4 Sec. 6.03. MANNER OF REPAYMENT OF BONDS. The board may 25-5 provide for the payment of principal of and interest and redemption 25-6 price on bonds in any one of the following manners: 25-7 (1) from the levy and collections of sales and use 25-8 taxes, hotel occupancy taxes, and other revenues as set forth in 25-9 Article 7 of this Act; 25-10 (2) by pledging all or any part of the designated 25-11 revenues, license fees, or other compensation from a project or any 25-12 part thereof, including revenues and receipts derived by the 25-13 district from the lease or sale of the project, or by pledging all 25-14 or any part of any grant, donation, revenues, or income received or 25-15 to be received from any public or private source; or 25-16 (3) a combination of the sources set forth in 25-17 subsections (1) and (2) of this section. 25-18 Sec. 6.04. Additional Security for Bonds. (a) The 25-19 principal of and interest on any bonds issued by the district for a 25-20 project may be secured by a mortgage covering all or any part of 25-21 such project, including any enlargements of and additions to such 25-22 project thereafter made. The resolution under which bonds are 25-23 authorized to be issued and any such mortgage may contain any 25-24 agreements and provisions respecting the maintenance of the project 25-25 covered thereby, the fixing and collection of rents, purchase price 26-1 payments, the creation and maintenance of special funds from such 26-2 revenues and the rights and remedies available in the event of 26-3 default, all as the board of directors shall deem advisable and not 26-4 in conflict with the provisions hereof. Each pledge, agreement, 26-5 and mortgage made for the benefit or security of any of the bonds 26-6 of the district shall continue in effect until the principal of and 26-7 interest on the bonds for the benefit for which the same were made 26-8 have been fully paid. 26-9 (b) Bonds may be secured by a trust agreement by and between 26-10 the district and a corporate trustee, which may be any trust 26-11 company or bank having the powers of a trust company within or 26-12 without the state. Any such trust agreement may evidence a pledge 26-13 or assignment of the lease or sale revenues to be received from a 26-14 lessee or purchaser with respect to a project for the payment of 26-15 principal of and interest and any premium on such bonds as the same 26-16 shall become due and payable and may provide for creation and 26-17 maintenance of reserves for such purposes. Any such trust 26-18 agreement or resolution providing for the issuance of such bonds 26-19 may contain such provisions for protecting and enforcing the rights 26-20 and remedies of the bondholders as may be reasonable and proper and 26-21 not in violation of law, including covenants setting forth the 26-22 duties in relation to the acquisition of property and the 26-23 construction, improvement, maintenance, repair, operation, and 26-24 insurance of the project in connection with which such bonds shall 26-25 have been authorized, and the custody, safeguarding, and 27-1 application of all money. It shall be lawful for any bank or trust 27-2 company incorporated under the laws of the state which may act as 27-3 depository of the proceeds of bonds or of revenues to furnish such 27-4 indemnifying bonds or to pledge such securities as may be required 27-5 by the district. Any such trust agreement may contain such 27-6 provisions as the district may deem reasonable and proper for the 27-7 security of the bondholders. All expenses incurred in carrying out 27-8 the provisions of any such trust agreement may be treated as a part 27-9 of the cost of the operation of the project. 27-10 (c) Any agreement relating to any project shall be for the 27-11 benefit of the district. Any such agreement shall contain a 27-12 provision that, in the event of a default in the payment of the 27-13 principal of or the interest or premium on such bonds or in the 27-14 performance of any agreement contained in such proceedings, 27-15 mortgage, or instrument, such payment and performance may be 27-16 enforced by mandamus or by the appointment of a receiver in equity 27-17 with power to charge and collect rents and purchase price payments 27-18 and to apply the revenues from the project in accordance with such 27-19 resolution, mortgage, or instrument. 27-20 (d) Any mortgage to secure bonds issued thereunder may also 27-21 provide that, in the event of a default in the payment thereof or 27-22 the violation of any agreement contained in the mortgage, the 27-23 mortgage may be foreclosed and sold under proceedings in equity or 27-24 in any other manner now or hereafter permitted by law. Such 27-25 mortgage may also provide that any trustee under such mortgage or 28-1 the holder of any of the bonds secured thereby may become the 28-2 purchaser at any foreclosure sale if the highest bidder therefor. 28-3 Sec. 6.05. Provisions of Bonds. (a) In the orders or 28-4 resolutions authorizing the issuance of bonds, including refunding 28-5 bonds, the board may provide for the flow of funds, the 28-6 establishment and maintenance of the interest and sinking fund, the 28-7 reserve fund, and other funds, and may make additional convenants 28-8 with respect to the bonds and the pledged revenues. 28-9 (b) The orders or resolutions of the board authorizing the 28-10 issuance of bonds may also prohibit the further issuance of bonds 28-11 or other obligations payable from the pledged revenue or may 28-12 reserve the right to issue additional bonds to be secured by a 28-13 pledge of and payable from the revenue on a parity with or 28-14 subordinate to the lien and pledge in support of the bonds being 28-15 issued, subject to the conditions which may be set forth in the 28-16 orders or resolutions. 28-17 (c) The orders or resolutions of the board issuing bonds may 28-18 contain other provisions and covenants as the board may determine, 28-19 not prohibited by the Constitution or by this Act. 28-20 (d) The board may adopt and cause to be executed any other 28-21 proceedings or instruments necessary and convenient in the issuance 28-22 of bonds. 28-23 Sec. 6.06. Use of Bond Proceeds. The district may use bond 28-24 proceeds to pay interest on the bonds during and after the period 28-25 of the acquisition or construction of a project, to pay 29-1 administrative and operating expenses, to create a reserve fund for 29-2 the payment of principal and interest on the bonds, and to pay all 29-3 expenses incurred and to be incurred in the issuance, sale, and 29-4 delivery of the bonds. 29-5 Sec. 6.07. Notice of Bond Sale. Except for refunding bonds, 29-6 bonds sold to a state or federal agency, and bonds registered with 29-7 any federal agency, after any bonds are finally approved and before 29-8 they are sold by a district, the board shall publish an appropriate 29-9 notice of the sale: 29-10 (1) at least one time not less than 10 days before the 29-11 date of sale in a newspaper of general circulation which is 29-12 published in the county in which the district is located; and 29-13 (2) at least one time in one or more recognized 29-14 financial publications of general circulation in the state as 29-15 approved by the Attorney General. 29-16 Sec. 6.08. Approval by Attorney General; Registration by 29-17 Comptroller. (a) Bonds issued by a district shall be submitted to 29-18 the Attorney General of the State of Texas for examination as 29-19 required by this Act and general law. 29-20 (b) If the Attorney General finds that the bonds have been 29-21 authorized in accordance with law, the Attorney General shall 29-22 approve the bonds, and the bonds shall be registered by the 29-23 Comptroller. 29-24 (c) After the approval and registration of bonds by the 29-25 Comptroller they shall be incontestable in any court or other 30-1 forum, for any reason, and shall be valid and binding obligations 30-2 in accordance with their terms for all purposes. 30-3 (d) If the bonds recite that they are secured partially or 30-4 otherwise by a pledge of the proceeds of a contract or a lease made 30-5 between the district and another party or parties, a copy of the 30-6 contract or lease and the proceedings authorizing the contract or 30-7 lease may or may not be submitted to the Attorney General along 30-8 with the bond records, and if submitted, the approval by the 30-9 Attorney General of the bonds shall constitute an approval of the 30-10 contract or lease, and the contract or lease shall be 30-11 incontestable. 30-12 Sec. 6.09. Refunding Bonds. (a) Bonds issued under this 30-13 Act may be refunded or otherwise refinanced by the issuance of 30-14 refunding bonds under terms or conditions determined by order or 30-15 resolution of the board. Refunding bonds may be issued in amounts 30-16 necessary to pay the principal of, and interest on and redemption 30-17 premium, if any, on bonds to be refunded, at maturity or on any 30-18 redemption dates and to provide for the payment of costs incurred 30-19 in connection with the refunding. 30-20 (b) The refunding bonds shall be issued in the manner 30-21 provided by this Act for other bonds. 30-22 Sec. 6.10. Authorized Investments; Security. All bonds 30-23 issued by a district shall be legal and authorized investments for 30-24 all banks, trust companies, building and loan associations, savings 30-25 and loan associations, insurance companies of all kinds and types, 31-1 fiduciaries, and trustees, and for all interest and sinking funds 31-2 and other public funds of the State of Texas, and all agencies, 31-3 subdivisions, and instrumentalities of the state including all 31-4 counties, cities, towns, villages, school districts, and all other 31-5 kinds and types of districts, public agencies, and bodies politic. 31-6 A district's bonds, notes, and other obligations shall be eligible 31-7 and lawful security for all deposits of public funds of the State 31-8 of Texas, and all agencies, subdivisions, and instrumentalities of 31-9 the state including all counties, cities, towns, villages, school 31-10 districts, and all other kinds and types of districts, public 31-11 agencies, and bodies politic, to the extent of the market value of 31-12 the bonds, and other obligations when accompanied by any unmatured 31-13 interest coupons attached to them. 31-14 ARTICLE 7. TAXES 31-15 Sec. 7.01. Sales and Use Tax. (a) A district may levy a 31-16 sales and use tax for the benefit of the district if authorized by 31-17 a majority of the qualified voters of the district voting at an 31-18 election called and held for that purpose. The sales and use tax, 31-19 if adopted, does not count toward the limitation imposed by Chapter 31-20 323, Tax Code (County Sales and Use Tax Act) on any sales and use 31-21 tax that has been levied by the county. 31-22 (b) If a district adopts the tax, there is imposed a tax on 31-23 the receipts from the sale at retail of taxable items within the 31-24 district at a rate of up to one-half of one percent. For purposes 31-25 of this section, the term "taxable items" shall include all items 32-1 subject to any sales and use tax that is imposed by the county in 32-2 which the district is located if the county has imposed a sales and 32-3 use tax. There is also imposed an excise tax on the use, storage, 32-4 or other consumption within the district of taxable items 32-5 purchased, leased, or rented from a retailer during the period that 32-6 the tax is effective within the district. The rate of the excise 32-7 tax is the same as the rate of the sales tax portion of the tax 32-8 applied to the sales price of the taxable items and is included in 32-9 the sales tax. 32-10 (c) Chapter 323, Tax Code (County Sales and Use Tax Act), to 32-11 the extent not inconsistent with this Act, governs the imposition, 32-12 computation, administration, and governance, of the tax under this 32-13 section, except that Sections 323.101 (b), (e), 323.209, 32-14 323.401-406, and 323.505 do not apply. Chapter 323, Tax Code 32-15 (County Sales and Use Tax Act) does not apply to the use and 32-16 allocation of revenues under this Act. In applying the procedures 32-17 under Chapter 323, Tax Code (County Sales and Use Tax Act), the 32-18 district's name shall be substituted for "the county" and "board of 32-19 directors" is substituted for "commissioners court." 32-20 (d) The permissible rates for a local sales and use tax 32-21 levied under this Act are: 32-22 (1) one-fourth of one percent; 32-23 (2) three-eighths of one percent; and 32-24 (3) one-half of one percent. 32-25 (e) The board by order may decrease or abolish the local 33-1 sales and use tax rate or may call an election to increase, 33-2 decrease or abolish the local sales and use tax rate. 33-3 (f) At the election, the ballots shall be prepared to permit 33-4 voting for or against the proposition: "The increase (decrease) of 33-5 the local sales and use tax rate of (name of district) to 33-6 (percentage) to be used for the promotion and development of 33-7 tourism" or, "The abolition of the district sales and use tax used 33-8 for the promotion and development of tourism." The increase or 33-9 decrease in the tax rate is effective if it is approved by a 33-10 majority of the votes cast. In calling and holding the election, 33-11 the board shall use the procedures for the confirmation and tax 33-12 election set forth in Article 2 of this Act. 33-13 (g) Taxes collected under this section may be used only for 33-14 the purposes for which the district was created, and the district 33-15 may pledge the revenue derived from the taxes imposed under this 33-16 Section to the payment of bonds issued by the district. 33-17 Sec. 7.02. Hotel Occupancy Tax. (a) The board of directors 33-18 by the adoption of an order or resolution may impose a hotel 33-19 occupancy tax. The hotel occupancy tax, if adopted, does not count 33-20 toward the limitation imposed by Chapter 352, Tax Code, on the 33-21 hotel occupancy tax that has been levied by the county. 33-22 (b) Chapter 352, Tax Code (County Hotel Occupancy Taxes), to 33-23 the extent not inconsistent with this Act, governs the imposition 33-24 and collection of the tax under section, except that Sections 33-25 352.002(a), (d) and 352.003 do not apply. Chapter 352, Tax Code 34-1 (County Hotel Occupancy Taxes) does not apply to the use and 34-2 allocation of revenues under this Act. In applying the procedures 34-3 under Chapter 352, Tax Code (County Hotel Occupancy Taxes), the 34-4 district's name shall be substituted for "the county" and "board of 34-5 directors" is substituted for "commissioners court." 34-6 (c) The permissible rate for a hotel occupancy tax 34-7 authorized by this Act shall not exceed seven percent of the price 34-8 paid for a room in a hotel. 34-9 (d) Taxes collected under this Section may be used only for 34-10 the purposes for which the district was created, and the district 34-11 may pledge the revenue derived from the taxes imposed under this 34-12 Section to the payment of bonds issued by the district. 34-13 Sec. 7.03. Receipt of Incremental Tax Proceeds. (a) The 34-14 district shall receive a payment equal to 100 percent of the 34-15 incremental tax proceeds collected by taxing entities within the 34-16 district during the first twenty years following creation of the 34-17 district. 34-18 (b) For purposes of this section, "tax proceeds" means the 34-19 hotel occupancy taxes, ad valorem taxes, and sales and use taxes 34-20 collected from individuals or entities within the boundaries of the 34-21 district and "incremental tax proceeds" means the amount by which 34-22 the tax proceeds collected by the taxing entity in a fiscal year 34-23 exceeds the amount of such tax proceeds collected by such entity 34-24 during the last fiscal year before the district was created. 34-25 (c) Tax increments collected under this section may be used 35-1 only for the purposes for which the district was created, and the 35-2 district may pledge the revenues derived from the taxes imposed 35-3 under this Section to the payment of bonds issued by the district. 35-4 ARTICLE 8. ADDING AND EXCLUDING TERRITORY; 35-5 CONSOLIDATING AND DISSOLVING DISTRICTS 35-6 Sec. 8.01. Adding and Excluding Land from the district. (a) 35-7 Before the board issues bonds, the board may, upon its own motion 35-8 or upon request of a landowner in the district, petition the county 35-9 commissioners for the addition of land to or exclusion of land from 35-10 the district. 35-11 (b) Upon receipt of a petition from the board for addition 35-12 or exclusion of land to the district, the commissioners court shall 35-13 hold a hearing as provided in Article 2 of this Act. 35-14 (c) If the commissioners court unanimously determines from 35-15 the evidence that the best interests of the persons and property in 35-16 the district will be served by adding or excluding land, the 35-17 commissioners court shall enter the appropriate findings and order 35-18 in its record adding or excluding land. 35-19 Sec. 8.02. Dissolution of district. (a) A district may be 35-20 dissolved only as provided by this Section. 35-21 (b) The board of directors may petition the commissioners 35-22 court to dissolve the district if a majority of the board finds at 35-23 any time (1) before the authorization of bonds, or the final 35-24 lending of its credit that the proposed undertaking is 35-25 impracticable or cannot be successfully and beneficially 36-1 accomplished, or (2) after all bonds of the district or other debts 36-2 of the district have been paid and the purposes of the district 36-3 shall have been accomplished. 36-4 (c) Upon receipt of a petition from the board for 36-5 dissolution of the district, the county commissioners shall hold a 36-6 hearing as provided in Article 2 of this Act. 36-7 (d) If the commissioners court unanimously determines from 36-8 the evidence that the best interests of the county and the owners 36-9 of property and interests in property within the district will be 36-10 served by dissolving the district, the commissioners court shall 36-11 enter the appropriate findings and order in its records dissolving 36-12 the district. Otherwise the commissioners court shall enter its 36-13 order providing that the district has not been dissolved. Upon 36-14 dissolution of the district, funds and property of the district, if 36-15 any, shall be transferred to the commissioners court. 36-16 SECTION 2. The importance of this legislation and the 36-17 crowded condition of the calendars in both houses create an 36-18 emergency and an imperative public necessity that the 36-19 constitutional rule requiring bills to be read on three several 36-20 days in each house be suspended, and this rule is hereby suspended, 36-21 and that this Act take effect and be in force from and after its 36-22 passage, and it is so enacted.