By: Bivins S.B. No. 1696 A BILL TO BE ENTITLED AN ACT 1-1 relating to the creation of economic development districts in 1-2 certain counties; authorizing certain taxes. 1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-4 SECTION 1. Title 44, Revised Statutes, is amended by adding 1-5 Article 2370d-11 to read as follows: 1-6 ART. 2370d-11 COUNTY ECONOMIC DEVELOPMENT DISTRICTS 1-7 ARTICLE I. GENERAL PROVISIONS 1-8 Sec. 1.01. Short Title. This Act may be cited as the County 1-9 Economic Development District Act. 1-10 Sec. 1.02. Legislative Intent. The intent of the 1-11 Legislature is to further the public purpose of developing and 1-12 diversifying the the economy of the state by providing incentives 1-13 for the location and development of projects in certain counties to 1-14 attract visitors and tourists. 1-15 Sec. 1.03. Legislative Findings. The legislature finds 1-16 that: 1-17 (1) small and medium-sized counties in Texas are in 1-18 need of incentives for the development of public improvements to 1-19 attract visitors and tourists to such counties, and that such 1-20 counties are at a disadvantage in competing with counties in other 1-21 states for the location and development of projects that attract 1-22 visitors and tourists by virtue of the availability and prevalent 1-23 use in other states of financial incentives; 2-1 (2) that the means and measures authorized by this Act 2-2 are in the public interest and serve a public purpose of the state 2-3 in promoting the economic welfare of the citizens of the state by 2-4 providing incentives for the location and development in certain 2-5 Texas counties of projects that attract visitors and tourists and 2-6 that result in employment and economic activity; and 2-7 (3) the creation of county economic development 2-8 districts is essential to the accomplishment of Article III, 2-9 Section 52-2, Texas Constitution and to the accomplishment of the 2-10 other public purposes stated in this Act and further serves the 2-11 purpose of Article XVI, Section 59, and Article III, Section 52, 2-12 Texas Constitution. 2-13 Sec. 1.04. Definitions. In this Act: (1) "District" means 2-14 a county economic development district created under this Act. 2-15 (2) "Board" means the board of directors of the 2-16 district. 2-17 (3) "Director" means a member of the board. 2-18 (4) "Commissioners court" means the governing body of 2-19 the county in which the district is located. 2-20 (5) "County" means the county in which the district is 2-21 located. 2-22 (6) "Project" shall have the same meaning as that term 2-23 is defined in Article 5190.6, Section 4 B(a)(2), Texas Civil 2-24 Statutes. 2-25 (7) "Cost" shall have the same meaning as that term is 3-1 defined in Article 5190.6, Section 2(4), Texas Civil Statutes. 3-2 (8) "Bonds" means bonds, notes, and other obligations. 3-3 (9) "Taxing entity" means the state, a municipality, a 3-4 county, or other political subdivision, but shall not mean a school 3-5 district. 3-6 Sec. 1.05. Counties Authorized to Create Districts. The 3-7 commissioners court in a county with a population of not more than 3-8 400,000 according to the most recent federal decennial census may, 3-9 upon petition of the owners of land in a proposed county, commence 3-10 the creation of a county economic development district. The 3-11 creation of the district is subject to a confirmation election held 3-12 as provided by Article 2 of this Act. 3-13 ARTICLE 2. CREATION OF DISTRICTS 3-14 Sec. 2.01. Petition of Landowners. To create a district, a 3-15 petition requesting creation shall be filed with the county 3-16 commissioners court of the county is which all of the land in the 3-17 proposed district is located. The petition shall be accompanied by 3-18 a sworn statement indicating consent to creation signed by the 3-19 holders of fee simple title of all of the land within the proposed 3-20 district. 3-21 Sec. 2.02. Contents of petition. The petition shall: 3-22 (1) describe the boundaries of the proposed district by metes and 3-23 bounds or by lot and block number, if there is a recorded map or 3-24 plat and survey of the area; 3-25 (2) include a name of the district which shall include 4-1 the name of the county followed by the words Economic Development 4-2 District No. ____; 4-3 (3) include the names of five persons who are willing 4-4 and qualified to serve as temporary directors of the proposed 4-5 district; 4-6 (4) state the general nature of the work proposed to 4-7 be done and the cost of the project as then estimated by the 4-8 petitioners; and 4-9 (5) state the necessity and feasibility of the 4-10 proposed district and whether the district will serve the public 4-11 purpose of attracting visitors and tourists to the county. 4-12 Sec. 2.03. Hearing on Petition. Not later than the 60th day 4-13 after the date a petition is received, the commissioners court 4-14 shall fix a date, time, and place at which the petition shall be 4-15 heard and shall issue notice of the date, time, place, and subject 4-16 matter of the hearing. The notice shall inform all persons of 4-17 their right to appear and present evidence and testify for or 4-18 against the creation of the district. 4-19 Sec. 2.04. Notice of Hearing. At least 30 days before the 4-20 date set for the hearing, notice of the hearing shall be mailed to 4-21 the developer who signed the petition and the landowner of all the 4-22 land in the district and shall be published in a newspaper with 4-23 general circulation in the county in which the proposed district is 4-24 located. 4-25 Sec. 2.05. Hearing. At the hearing, the commissioners court 5-1 shall examine the petition to ascertain its sufficiency, and any 5-2 person interested may appear before the commission to offer 5-3 testimony on the sufficiency of the petition and whether or not the 5-4 district should be created. 5-5 Sec. 2.06. Granting or Refusing Petition. (a) After the 5-6 hearing, if it is found that the petition conforms to the 5-7 requirements of Section 2.02 of this Act and that the creation of 5-8 the district and the proposed project is feasible and necessary and 5-9 would serve the public purpose of attracting visitors and tourists 5-10 to the county, the commissioners court shall so find and enter an 5-11 order creating the district. 5-12 (b) If the commissioners court finds that the petition does 5-13 not conform to the requirements of Section 2.02 of this Act or that 5-14 the creation of the district and the proposed project is not 5-15 feasible and necessary and would not serve the purpose of 5-16 attracting visitors and tourists to the county, the commissioners 5-17 court shall so find by its order and deny the petition. 5-18 Sec. 2.07. Temporary Directors; Vacancy in office. If the 5-19 commissioners court grants the petition, it shall appoint to serve 5-20 as temporary directors of the district five persons who are 5-21 qualified under this Act to serve as directors. A vacancy in the 5-22 office of temporary director shall be filled by appointment by the 5-23 commissioners court. 5-24 Sec. 2.08. Qualification of Temporary Directors. Each 5-25 temporary director shall execute a bond in accordance with the 6-1 provisions of Section 3.14 of this Act and shall take an oath of 6-2 office, and the board shall meet and organize. 6-3 Sec. 2.09. Confirmation and Sales and Use Tax Election. The 6-4 temporary board of directors shall conduct an election within the 6-5 boundaries of the district to confirm the creation of the district 6-6 and authorize a sales and use tax in conformity with this Act. 6-7 Sec. 2.10. Election Order. An order calling an election 6-8 under Section 2.09 of this Act must state: (1) the nature of the 6-9 election, including the proposition that is to appear on the 6-10 ballot; 6-11 (2) the date of the election; 6-12 (3) the hours during which the polls will be open; 6-13 (4) the location of the polling places; and 6-14 (5) the proposed rate of the sales and use tax for the 6-15 district. 6-16 Sec. 2.11. Notice. The temporary directors shall give 6-17 notice of the confirmation and sales and use tax election by 6-18 publishing a substantial copy of the election order in a newspaper 6-19 with general circulation in the county in which the proposed 6-20 district is located once a week for two consecutive weeks. The 6-21 first publication must appear at least 14 days before the date set 6-22 for the election. 6-23 Sec. 2.12. Conduct of election. (a) The election shall be 6-24 held in accordance with the provisions of the Election Code, to the 6-25 extent not inconsistent with this Act. 7-1 (b) The ballot shall be printed to permit voting for or 7-2 against the proposition: "The creation of _____________ County 7-3 Economic Development District No. ______ and the adoption of a 7-4 proposed local sales and use tax rate of ____ (the rate specified 7-5 in the election order) to be used for the promotion and development 7-6 of tourism." 7-7 Sec. 2.13. Results of Election. (a) After the confirmation 7-8 and sales and use tax election, the presiding judge shall make 7-9 returns of the result to the temporary board of directors. The 7-10 temporary board of directors shall canvass the returns and declare 7-11 the results. 7-12 (b) If a majority of the votes cast in the election favor 7-13 the creation of the district and the adoption of the sales and use 7-14 tax, then the temporary board shall declare that the district is 7-15 created and shall declare the amount of the local sales and use tax 7-16 adopted and enter the result on its minutes. If a majority of the 7-17 votes cast in the election are against the creation of the district 7-18 and the adoption of the sales and use tax, the temporary board 7-19 shall declare that the proposition to create the district was 7-20 defeated and enter the result in its minutes. 7-21 (c) A certified copy of the minute order declaring that the 7-22 district is created and the local sales and use tax adopted and 7-23 including the rate of the sales and use tax, or declaring that the 7-24 proposition to create the district was defeated, shall be sent to 7-25 the commissioners court, the Comptroller, and any taxing entity by 8-1 certified or registered mail. Such order also shall show the date 8-2 of the election; the proposition on which the vote was held; the 8-3 total number of votes cast for or against the proposition; and the 8-4 number of votes by which the proposition was approved. 8-5 ARTICLE 3. DISTRICT ADMINISTRATION 8-6 Sec. 3.01. Board of Directors. (a) A district is governed 8-7 by a board of five directors appointed by the county commissioners 8-8 of the county in which the district is located. The temporary 8-9 directors appointed under Section 2.07 of this Act shall become 8-10 permanent directors of the district provided that the creation of 8-11 the district is confirmed at the confirmation election. 8-12 (b) Directors serve staggered four-year terms that expire 8-13 September 1. Following confirmation of the district at the 8-14 election, the temporary directors shall draw lots to determine: 8-15 (1) the two directors to serve terms that expire on 8-16 September 1 of the second year following creation of the district; 8-17 and 8-18 (2) the three directors to serve terms that expire on 8-19 September 1 of the fourth year following creation of the district. 8-20 Sec. 3.02. Qualifications for Directors. To be qualified to 8-21 serve as a director, a person shall be at least 21 years old, a 8-22 resident citizen of the State of Texas, and a qualified voter 8-23 within the county in which the district is located. 8-24 Sec. 3.03. Persons Disqualified from Serving. Section 8-25 50.026, Water Code, relating to disqualification of directors, 9-1 shall apply to directors of districts created under this Act. 9-2 Sec. 3.04. Vacancies on the Board. A vacancy in the office 9-3 of director shall be filled by appointment of the commissioners 9-4 court. 9-5 Sec. 3.05. Removal of Director. The governing body of the 9-6 commissioners court, after notice and hearing, may remove a 9-7 director for misconduct or failure to carry out the director's 9-8 duties on petition by a majority of the remaining directors. 9-9 Sec. 3.06. Organization of Board. After each appointment of 9-10 directors by the commissioners court, and after the directors have 9-11 qualified by taking the proper oath, they shall organize by 9-12 electing a president, a vice president, a secretary, and any other 9-13 officers as in the judgment of the board are considered necessary. 9-14 Sec. 3.07. Quorum; Officers' Duties; Management of District. 9-15 Sections 54.107, 54.108, 54.111, 54.118, Water Code, relating to 9-16 quorum, officers' duties, and management of the district, shall 9-17 govern the board of directors of a district created under this Act. 9-18 Sec. 3.08. Meetings and Notice. (a) The board shall 9-19 designate and establish a district office in the county. 9-20 (b) The board may establish regular meetings to conduct 9-21 district business and may hold special meetings at other times as 9-22 the business of a district requires. 9-23 (c) Notice of the time, place, and purpose of any meeting of 9-24 the board shall be given by posting at a place convenient to the 9-25 public within the district. A copy of the notice shall be 10-1 furnished to the clerk or clerks of the county in which the 10-2 district is located, who shall post them on a bulletin board in the 10-3 county courthouse used for such purpose. 10-4 (d) Except as herein provided the provisions of Chapter 551, 10-5 Government Code, shall be applicable to meetings of the board of 10-6 directors. Any interested person may attend any meeting of the 10-7 board. 10-8 Sec. 3.09. Director's Compensation; Bond and Oath of Office. 10-9 A director is not entitled to receive compensation for service on 10-10 the board. Sections 375.070, 375.069, Local Government Code, shall 10-11 apply to directors of a district created under this Act. 10-12 Sec. 3.10. Governmental Agency; Suits. (a) A district, 10-13 when created and confirmed, may, through its directors, sue and be 10-14 sued in any and all courts of this state in the name of the 10-15 district. Service of process in any suit may be had by serving any 10-16 two directors. 10-17 (b) A district is a governmental agency, a body politic and 10-18 corporate, and a political subdivision of the state. Section 10-19 357.004, Local Government Code, shall apply to a district created 10-20 under this Act. 10-21 ARTICLE 4. POWERS AND DUTIES 10-22 Sec. 4.01. Powers. (a) A district shall have the power to 10-23 acquire and dispose of projects and shall have all of the other 10-24 powers, authority, rights, and duties which will permit 10-25 accomplishment of the purposes for which the district was created. 11-1 (b) The district shall have the power to provide for general 11-2 promotion and tourist advertising of the district and its vicinity 11-3 and to conduct a marketing program to attract visitors, any of 11-4 which may be conducted by the district pursuant to contracts for 11-5 professional services with persons or organizations selected by 11-6 district. 11-7 (c) The district shall have the powers and duties of a 11-8 municipal management district created under Chapter 375, Local 11-9 Government Code, to the extent not inconsistent with this Act. 11-10 Sec. 4.02. Competitive Bidding; Contract Award. Section 11-11 375.221, Local Government Code, shall apply to a district created 11-12 under this Act. Notwithstanding any other provision of this Act to 11-13 the contrary, any contract between the district and a governmental 11-14 entity or nonprofit corporation created under Article 5190.6, Texas 11-15 Civil Statutes, as amended, shall not be subject to the competitive 11-16 bidding requirement of this Act. 11-17 Sec. 4.03. Eminent Domain. The district may exercise the 11-18 power of eminent domain to acquire land or interests in land within 11-19 the district deemed necessary by the board of directors of the 11-20 district for the purpose of providing water and sewer services to 11-21 an authorized project. The right of eminent domain shall be 11-22 exercised in the manner provided in Title 52, Texas Civil Statutes, 11-23 as amended. 11-24 ARTICLE 5. GENERAL FISCAL PROVISIONS 11-25 Sec. 5.01. Expenditures. A district's money may be 12-1 disbursed only by check, draft, order, or other instrument which 12-2 shall be signed by at least three directors. The general manager, 12-3 treasurer, or other employee of the district when authorized by 12-4 resolution of the board may sign checks, drafts, orders, or other 12-5 instruments on any district operation account and these need not be 12-6 signed by anyone else. 12-7 Sec. 5.02. Purposes For Borrowing Money. The district may 12-8 borrow money for any corporate purpose or combination of corporate 12-9 purposes. 12-10 Sec. 5.03. Repayment of Organizational Expenses. The 12-11 district's directors are authorized to pay all costs and expenses 12-12 necessarily incurred in the creation and organization of a 12-13 district, the cost of investigation and making plans, the cost of 12-14 the engineer's report, project designer fees, legal fees, and other 12-15 incidental expenses, and to reimburse any person for money advanced 12-16 for these purposes. These payments may be made from money obtained 12-17 from the issuance of notes or the sale of bonds first issued by the 12-18 district or out of other revenues of the district. 12-19 ARTICLE 6. ISSUANCE OF BONDS 12-20 Sec. 6.01. Issuance of Bonds. The district may issue bonds 12-21 for the purpose of defraying all or part of the cost of any project 12-22 as provided in this Act. Sections 375.201 through 375.208, 12-23 inclusive, Local Government Code, shall apply to district created 12-24 under this Act to the extent not inconsistent with this Act. 12-25 Sec. 6.02. Manner of Repayment of Bonds. The board may 13-1 provide for the payment of principal of and interest and redemption 13-2 price on bonds from taxes; by pledging all or any part of the 13-3 designated revenues, license fees, or other compensation from a 13-4 project or any part thereof, including revenues and receipts 13-5 derived by the district from the lease or sale of the project, or 13-6 by pledging all or any part of any grant, donation, revenues, or 13-7 income received or to be received from any public or private 13-8 source; or a combination of such sources. 13-9 Sec. 6.03. Use of Bond Proceeds. The district may use bond 13-10 proceeds to pay interest on the bonds during and after the period 13-11 of the acquisition or construction of a project, to pay 13-12 administrative and operating expenses, to create a reserve fund for 13-13 the payment of principal and interest on the bonds, and to pay all 13-14 expenses incurred and to be incurred in the issuance, sale, and 13-15 delivery of the bonds. 13-16 ARTICLE 7. TAXES 13-17 Sec. 7.01. Sales and Use Tax. (a) A district may levy a 13-18 sales and use tax for the benefit of the district if authorized by 13-19 a majority of the qualified voters of the district voting at an 13-20 election called and held for that purpose. The sales and use tax, 13-21 if adopted, does not count toward the limitation imposed by Chapter 13-22 323, Tax Code (County Sales and Use Tax Act) on any sales and use 13-23 tax that has been levied by the county. 13-24 (b) If a district adopts the tax, there is imposed a tax on 13-25 the receipts from the sale at retail of taxable items within the 14-1 district at a rate of up to one-half of one percent. For purposes 14-2 of this section, the term "taxable items" shall include all items 14-3 subject to any sales and use tax that is imposed by the county in 14-4 which the district is located if the county has imposed a sales and 14-5 use tax. There is also imposed an excise tax on the use, storage, 14-6 or other consumption within the district of taxable items 14-7 purchased, leased, or rented from a retailer during the period that 14-8 the tax is effective within the district. The rate of the excise 14-9 tax is the same as the rate of the sales tax portion of the tax 14-10 applied to the sales price of the taxable items and is included in 14-11 the sales tax. 14-12 (c) Chapter 323, Tax Code (County Sales and Use Tax Act), to 14-13 the extent not inconsistent with this Act, governs the imposition, 14-14 computation, administration, and governance, of the tax under this 14-15 section, except that Sections 323.101 (b), (e), 323.209, 14-16 323.401-406, and 323.505 do not apply. Chapter 323, Tax Code 14-17 (County Sales and Use Tax Act) does not apply to the use and 14-18 allocation of revenues under this Act. In applying the procedures 14-19 under Chapter 323, Tax Code (County Sales and Use Tax Act), the 14-20 district's name shall be substituted for "the county" and "board of 14-21 directors" is substituted for "commissioners court." 14-22 (d) The permissible rates for a local sales and use tax 14-23 levied under this Act are one-fourth of one percent; three-eighths 14-24 of one percent; and one-half of one percent. 14-25 (e) The board by order may decrease or abolish the local 15-1 sales and use tax rate or may call an election to increase, 15-2 decrease, or abolish the local sales and use tax rate. 15-3 (f) At the election, the ballots shall be prepared to permit 15-4 voting for or against the proposition: "The increase (decrease) of 15-5 the local sales and use tax rate of (name of district) to 15-6 (percentage) to be used for the promotion and development of 15-7 tourism" or, "The abolition of the district sales and use tax used 15-8 for the promotion and development of tourism." The increase or 15-9 decrease in the tax rate is effective if it is approved by a 15-10 majority of the votes cast. In calling and holding the election, 15-11 the board shall use the procedures for the confirmation and tax 15-12 election set forth in Article 2 of this Act. 15-13 (g) Taxes collected under this section may be used only for 15-14 the purposes for which the district was created, and the district 15-15 may pledge the revenue derived from the taxes imposed under this 15-16 Section to the payment of bonds issued by the district. 15-17 Sec. 7.02. Hotel Occupancy Tax. (a) The board of directors 15-18 by the adoption of an order or resolution may impose a hotel 15-19 occupancy tax. The hotel occupancy tax, if adopted, does not count 15-20 toward the limitation imposed by Chapter 352, Tax Code, on the 15-21 hotel occupancy tax that has been levied by the county. 15-22 (b) Chapter 352, Tax Code (County Hotel Occupancy Taxes), to 15-23 the extent not inconsistent with this Act, governs the imposition 15-24 and collection of the tax under section, except that Sections 15-25 352.002(a), (d) and 352.003 do not apply. Chapter 352, Tax Code 16-1 (County Hotel Occupancy Taxes) does not apply to the use and 16-2 allocation of revenues under this Act. In applying the procedures 16-3 under Chapter 352, Tax Code (County Hotel Occupancy Taxes), the 16-4 district's name shall be substituted for "the county" and "board of 16-5 directors" is substituted for "commissioners court." 16-6 (c) The permissible rate for a hotel occupancy tax 16-7 authorized by this Act shall not exceed seven percent of the price 16-8 paid for a room in a hotel. 16-9 (d) Taxes collected under this Section may be used only for 16-10 the purposes for which the district was created, and the district 16-11 may pledge the revenue derived from the taxes imposed under this 16-12 Section to the payment of bonds issued by the district. 16-13 Sec. 7.03. Receipt of Incremental Tax Proceeds. (a) The 16-14 district shall receive a payment equal to 100 percent of the 16-15 incremental tax proceeds collected by taxing entities within the 16-16 district during the first twenty years following creation of the 16-17 district. 16-18 (b) For purposes of this section, "tax proceeds" means the 16-19 hotel occupancy taxes and sales and use taxes collected from 16-20 individuals or entities within the boundaries of the district and 16-21 "incremental tax proceeds" means the amount by which the tax 16-22 proceeds collected by the taxing entity in a fiscal year exceeds 16-23 the amount of such tax proceeds collected by such entity during the 16-24 last fiscal year before the district was created. 16-25 (c) Tax increments collected under this section may be used 17-1 only for the purposes for which the district was created, and the 17-2 district may pledge the revenues derived from the taxes imposed 17-3 under this Section to the payment of bonds issued by the district. 17-4 ARTICLE 8. ADDING AND EXCLUDING TERRITORY; 17-5 CONSOLIDATING AND DISSOLVING DISTRICTS 17-6 Sec. 8.01. Adding and Excluding Land from the district. 17-7 (a) Before the board issues bonds, the board may, upon its own 17-8 motion or upon request of a landowner in the district, petition the 17-9 county commissioners for the addition of land to or exclusion of 17-10 land from the district. 17-11 (b) If the commissioners court unanimously determines from 17-12 the evidence that the best interests of the persons and property in 17-13 the district will be served by adding or excluding land, the 17-14 commissioners court shall enter the appropriate findings and order 17-15 in its record adding or excluding land. 17-16 Sec. 8.02. Dissolution of district. (a) A district may be 17-17 dissolved only as provided by this Section. 17-18 (b) The board of directors may petition the commissioners 17-19 court to dissolve the district if a majority of the board finds at 17-20 any time (1) before the authorization of bonds, or the final 17-21 lending of its credit that the proposed undertaking is 17-22 impracticable or cannot be successfully and beneficially 17-23 accomplished, or (2) after all bonds of the district or other debts 17-24 of the district have been paid and the purposes of the district 17-25 shall have been accomplished. 18-1 (c) Upon receipt of a petition from the board for 18-2 dissolution of the district, the county commissioners shall hold a 18-3 hearing as provided in Article 2 of this Act. 18-4 (d) If the commissioners court unanimously determines from 18-5 the evidence that the best interests of the county and the owners 18-6 of property and interests in property within the district will be 18-7 served by dissolving the district, the commissioners court shall 18-8 enter the appropriate findings and order in its records dissolving 18-9 the district. Otherwise the commissioners court shall enter its 18-10 order providing that the district has not been dissolved. Upon 18-11 dissolution of the district, funds and property of the district, if 18-12 any, shall be transferred to the commissioners court. 18-13 SECTION 2. The importance of this legislation and the 18-14 crowded condition of the calendars in both houses create an 18-15 emergency and an imperative public necessity that the 18-16 constitutional rule requiring bills to be read on three several 18-17 days in each house be suspended, and this rule is hereby suspended, 18-18 and that this Act take effect and be in force from and after its 18-19 passage, and it is so enacted.