1-1 By: Bivins S.B. No. 1696 1-2 (In the Senate - Filed May 1, 1995; May 2, 1995, read first 1-3 time and referred to Committee on Economic Development; 1-4 May 10, 1995, reported adversely, with favorable Committee 1-5 Substitute by the following vote: Yeas 9, Nays 0; May 10, 1995, 1-6 sent to printer.) 1-7 COMMITTEE SUBSTITUTE FOR S.B. No. 1696 By: Lucio 1-8 A BILL TO BE ENTITLED 1-9 AN ACT 1-10 relating to the creation of development districts in certain 1-11 counties; authorizing certain taxes, the issuance of bonds, and the 1-12 exercise of eminent domain. 1-13 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-14 SECTION 1. Title 44, Revised Statutes, is amended by adding 1-15 Article 2372d-9 to read as follows: 1-16 Art. 2372d-9. COUNTY DEVELOPMENT DISTRICTS 1-17 ARTICLE I. GENERAL PROVISIONS 1-18 Sec. 1.01. SHORT TITLE. This Act may be cited as the County 1-19 Development District Act. 1-20 Sec. 1.02. LEGISLATIVE INTENT. The intent of the 1-21 legislature is to further the public purpose of developing and 1-22 diversifying the the economy of the state by providing incentives 1-23 for the location and development of projects in certain counties to 1-24 attract visitors and tourists. 1-25 Sec. 1.03. LEGISLATIVE FINDINGS. The legislature finds 1-26 that: 1-27 (1) small and medium-sized counties in Texas are in 1-28 need of incentives for the development of public improvements to 1-29 attract visitors and tourists to such counties, and that such 1-30 counties are at a disadvantage in competing with counties in other 1-31 states for the location and development of projects that attract 1-32 visitors and tourists by virtue of the availability and prevalent 1-33 use in other states of financial incentives; 1-34 (2) that the means and measures authorized by this Act 1-35 are in the public interest and serve a public purpose of the state 1-36 in promoting the economic welfare of the citizens of the state by 1-37 providing incentives for the location and development in certain 1-38 Texas counties of projects that attract visitors and tourists and 1-39 that result in employment and economic activity; and 1-40 (3) the creation of development districts is essential 1-41 to the accomplishment of Section 52-a, Article III, Texas 1-42 Constitution, and to the accomplishment of the other public 1-43 purposes stated in this Act and further serves the purpose of 1-44 Section 59, Article XVI, and Section 52, Article III, Texas 1-45 Constitution. 1-46 Sec. 1.04. DEFINITIONS. In this Act: 1-47 (1) "District" means a county development district 1-48 created under this Act. 1-49 (2) "Board" means the board of directors of the 1-50 district. 1-51 (3) "Director" means a member of the board. 1-52 (4) "Commissioners court" means the governing body of 1-53 the county in which the district is located. 1-54 (5) "County" means the county in which the district is 1-55 located. 1-56 (6) "Project" has the same meaning as that term is 1-57 defined to mean in Section 4B(a)(2), Development Corporation Act of 1-58 1979 (Article 5190.6, Vernon's Texas Civil Statutes). 1-59 (7) "Cost" has the same meaning as that term is 1-60 defined to mean in Section 2(4), Development Corporation Act of 1-61 1979 (Article 5190.6, Vernon's Texas Civil Statutes). 1-62 (8) "Bonds" means bonds, notes, and other obligations. 1-63 Sec. 1.05. COUNTIES AUTHORIZED TO CREATE DISTRICTS. The 1-64 commissioners court in a county with a population of not more than 1-65 400,000 according to the most recent federal decennial census may, 1-66 on petition of the owners of land in a proposed county, commence 1-67 the creation of a county development district. The creation of the 1-68 district is subject to a confirmation election held as provided by 2-1 Article 2 of this Act. 2-2 ARTICLE 2. CREATION OF DISTRICTS 2-3 Sec. 2.01. PETITION OF LANDOWNERS. To create a district, a 2-4 petition requesting creation shall be filed with the county 2-5 commissioners court of the county in which all of the land in the 2-6 proposed district is located. The petition shall be accompanied by 2-7 a sworn statement indicating consent to creation signed by the 2-8 holders of fee simple title of all of the land within the proposed 2-9 district. 2-10 Sec. 2.02. CONTENTS OF PETITION. The petition shall: 2-11 (1) describe the boundaries of the proposed district 2-12 by metes and bounds or by lot and block number, if there is a 2-13 recorded map or plat and survey of the area; 2-14 (2) include a name of the district which shall include 2-15 the name of the county followed by the words Development District 2-16 No. ____; 2-17 (3) include the names of five persons who are willing 2-18 and qualified to serve as temporary directors of the proposed 2-19 district; 2-20 (4) state the general nature of the work proposed to 2-21 be done and the cost of the project as then estimated by the 2-22 petitioners; and 2-23 (5) state the necessity and feasibility of the 2-24 proposed district and whether the district will serve the public 2-25 purpose of attracting visitors and tourists to the county. 2-26 Sec. 2.03. HEARING ON PETITION. Not later than the 60th day 2-27 after the date a petition is received, the commissioners court 2-28 shall fix a date, time, and place at which the petition shall be 2-29 heard and shall issue notice of the date, time, place, and subject 2-30 matter of the hearing. The notice shall inform all persons of 2-31 their right to appear and present evidence and testify for or 2-32 against the creation of the district. 2-33 Sec. 2.04. NOTICE OF HEARING. At least 30 days before the 2-34 date set for the hearing, notice of the hearing shall be mailed to 2-35 the developer who signed the petition and the landowner of all the 2-36 land in the district and shall be published in a newspaper with 2-37 general circulation in the county in which the proposed district is 2-38 located. 2-39 Sec. 2.05. HEARING. At the hearing, the commissioners court 2-40 shall examine the petition to ascertain its sufficiency, and any 2-41 person interested may appear before the commission to offer 2-42 testimony on the sufficiency of the petition and whether or not the 2-43 district should be created. 2-44 Sec. 2.06. GRANTING OR REFUSING PETITION. (a) After the 2-45 hearing, if it is found that the petition conforms to the 2-46 requirements of Section 2.02 of this Act and that the creation of 2-47 the district and the proposed project is feasible and necessary and 2-48 would serve the public purpose of attracting visitors and tourists 2-49 to the county, the commissioners court shall so find and enter an 2-50 order creating the district. 2-51 (b) If the commissioners court finds that the petition does 2-52 not conform to the requirements of Section 2.02 of this Act or that 2-53 the creation of the district and the proposed project is not 2-54 feasible and necessary and would not serve the purpose of 2-55 attracting visitors and tourists to the county, the commissioners 2-56 court shall so find by its order and deny the petition. 2-57 Sec. 2.07. TEMPORARY DIRECTORS; VACANCY IN OFFICE. If the 2-58 commissioners court grants the petition, it shall appoint to serve 2-59 as temporary directors of the district five persons who are 2-60 qualified under this Act to serve as directors. A vacancy in the 2-61 office of temporary director shall be filled by appointment by the 2-62 commissioners court. 2-63 Sec. 2.08. QUALIFICATION OF TEMPORARY DIRECTORS. Each 2-64 temporary director shall execute a bond in accordance with the 2-65 provisions of Section 3.09 of this Act and shall take an oath of 2-66 office, and the board shall meet and organize. 2-67 Sec. 2.09. CONFIRMATION AND SALES AND USE TAX ELECTION. The 2-68 temporary board of directors shall conduct an election within the 2-69 boundaries of the district to confirm the creation of the district 2-70 and authorize a sales and use tax in conformity with this Act. 3-1 Sec. 2.10. ELECTION ORDER. An order calling an election 3-2 under Section 2.09 of this Act must state: 3-3 (1) the nature of the election, including the 3-4 proposition that is to appear on the ballot; 3-5 (2) the date of the election; 3-6 (3) the hours during which the polls will be open; 3-7 (4) the location of the polling places; and 3-8 (5) the proposed rate of the sales and use tax for the 3-9 district. 3-10 Sec. 2.11. NOTICE. The temporary directors shall give 3-11 notice of the confirmation and sales and use tax election by 3-12 publishing a substantial copy of the election order in a newspaper 3-13 with general circulation in the county in which the proposed 3-14 district is located once a week for two consecutive weeks. The 3-15 first publication must appear at least 14 days before the date set 3-16 for the election. 3-17 Sec. 2.12. CONDUCT OF ELECTION. (a) The election shall be 3-18 held in accordance with the provisions of the Election Code, to the 3-19 extent not inconsistent with this Act. 3-20 (b) The ballot shall be printed to permit voting for or 3-21 against the proposition: "The creation of _____________ County 3-22 Development District No. ______ and the adoption of a proposed 3-23 local sales and use tax rate of ____ (the rate specified in the 3-24 election order) to be used for the promotion and development of 3-25 tourism." 3-26 Sec. 2.13. RESULTS OF ELECTION. (a) After the confirmation 3-27 and sales and use tax election, the presiding judge shall make 3-28 returns of the result to the temporary board of directors. The 3-29 temporary board of directors shall canvass the returns and declare 3-30 the results. 3-31 (b) If a majority of the votes cast in the election favor 3-32 the creation of the district and the adoption of the sales and use 3-33 tax, then the temporary board shall declare that the district is 3-34 created and shall declare the amount of the local sales and use tax 3-35 adopted and enter the result on its minutes. If a majority of the 3-36 votes cast in the election are against the creation of the district 3-37 and the adoption of the sales and use tax, the temporary board 3-38 shall declare that the proposition to create the district was 3-39 defeated and enter the result in its minutes. 3-40 (c) A certified copy of the minute order declaring that the 3-41 district is created and the local sales and use tax adopted and 3-42 including the rate of the sales and use tax, or declaring that the 3-43 proposition to create the district was defeated, shall be sent to 3-44 the commissioners court, the comptroller, and any taxing entity by 3-45 certified or registered mail. Such order also shall show the date 3-46 of the election, the proposition on which the vote was held, the 3-47 total number of votes cast for or against the proposition, and the 3-48 number of votes by which the proposition was approved. 3-49 ARTICLE 3. DISTRICT ADMINISTRATION 3-50 Sec. 3.01. BOARD OF DIRECTORS. (a) A district is governed 3-51 by a board of five directors appointed by the county commissioners 3-52 of the county in which the district is located. The temporary 3-53 directors appointed under Section 2.07 of this Act shall become 3-54 permanent directors of the district provided that the creation of 3-55 the district is confirmed at the confirmation election. 3-56 (b) Directors serve staggered four-year terms that expire 3-57 September 1. Following confirmation of the district at the 3-58 election, the temporary directors shall draw lots to determine: 3-59 (1) the two directors to serve terms that expire on 3-60 September 1 of the second year following creation of the district; 3-61 and 3-62 (2) the three directors to serve terms that expire on 3-63 September 1 of the fourth year following creation of the district. 3-64 Sec. 3.02. QUALIFICATIONS FOR DIRECTORS. To be qualified to 3-65 serve as a director, a person shall be at least 21 years old, a 3-66 resident citizen of the State of Texas, and a qualified voter 3-67 within the county in which the district is located. 3-68 Sec. 3.03. PERSONS DISQUALIFIED FROM SERVING. Section 3-69 50.026, Water Code, relating to disqualification of directors, 3-70 shall apply to directors of districts created under this Act. 4-1 Sec. 3.04. VACANCIES ON THE BOARD. A vacancy in the office 4-2 of director shall be filled by appointment of the commissioners 4-3 court. 4-4 Sec. 3.05. REMOVAL OF DIRECTOR. The governing body of the 4-5 commissioners court, after notice and hearing, may remove a 4-6 director for misconduct or failure to carry out the director's 4-7 duties on petition by a majority of the remaining directors. 4-8 Sec. 3.06. ORGANIZATION OF BOARD. After each appointment of 4-9 directors by the commissioners court, and after the directors have 4-10 qualified by taking the proper oath, they shall organize by 4-11 electing a president, a vice president, a secretary, and any other 4-12 officers as in the judgment of the board are considered necessary. 4-13 Sec. 3.07. QUORUM; OFFICERS' DUTIES; MANAGEMENT OF DISTRICT. 4-14 Sections 54.107, 54.108, 54.111, and 54.118, Water Code, relating 4-15 to quorum, officers' duties, and management of the district, shall 4-16 govern the board of directors of a district created under this Act. 4-17 Sec. 3.08. MEETINGS AND NOTICE. (a) The board shall 4-18 designate and establish a district office in the county. 4-19 (b) The board may establish regular meetings to conduct 4-20 district business and may hold special meetings at other times as 4-21 the business of a district requires. 4-22 (c) Notice of the time, place, and purpose of any meeting of 4-23 the board shall be given by posting at a place convenient to the 4-24 public within the district. A copy of the notice shall be 4-25 furnished to the clerk or clerks of the county in which the 4-26 district is located, who shall post them on a bulletin board in the 4-27 county courthouse used for such purpose. 4-28 (d) Except as herein provided the provisions of the open 4-29 meetings law, Chapter 551, Government Code, shall be applicable to 4-30 meetings of the board of directors. Any interested person may 4-31 attend any meeting of the board. 4-32 Sec. 3.09. DIRECTOR'S COMPENSATION; BOND AND OATH OF OFFICE. 4-33 A director is not entitled to receive compensation for service on 4-34 the board. Sections 375.067, 375.069, and 375.070, Local 4-35 Government Code, apply to directors of a district created under 4-36 this Act. 4-37 Sec. 3.10. GOVERNMENTAL AGENCY; SUITS. (a) A district, 4-38 when created and confirmed, may, through its directors, sue and be 4-39 sued in any and all courts of this state in the name of the 4-40 district. Service of process in any suit may be had by serving any 4-41 two directors. 4-42 (b) A district is a governmental agency, a body politic and 4-43 corporate, and a political subdivision of the state. Section 4-44 375.004, Local Government Code, applies to a district created under 4-45 this Act. 4-46 ARTICLE 4. POWERS AND DUTIES 4-47 Sec. 4.01. POWERS. (a) A district shall have the power to 4-48 acquire and dispose of projects and shall have all of the other 4-49 powers, authority, rights, and duties which will permit 4-50 accomplishment of the purposes for which the district was created. 4-51 (b) The district shall have the power to provide for general 4-52 promotion and tourist advertising of the district and its vicinity 4-53 and to conduct a marketing program to attract visitors, any of 4-54 which may be conducted by the district pursuant to contracts for 4-55 professional services with persons or organizations selected by the 4-56 district. 4-57 (c) The district shall have the powers of a municipal 4-58 management district created under Chapter 375, Local Government 4-59 Code, to the extent not inconsistent with this Act. 4-60 Sec. 4.02. COMPETITIVE BIDDING; CONTRACT AWARD. Section 4-61 375.221 and 375.223, Local Government Code, apply to a district 4-62 created under this Act. Notwithstanding any other provision of 4-63 this Act to the contrary, any contract between the district and a 4-64 governmental entity or nonprofit corporation created under the 4-65 Development Corporation Act of 1979 (Article 5190.6, Vernon's Texas 4-66 Civil Statutes) shall not be subject to the competitive bidding 4-67 requirement of this Act. 4-68 Sec. 4.03. EMINENT DOMAIN. A district not located within 4-69 the corporate limits of a municipality may exercise the power of 4-70 eminent domain to acquire land or interests in land within the 5-1 district deemed necessary by the board of directors of the district 5-2 for the purpose of providing water and sewer services to an 5-3 authorized project. The right of eminent domain shall be exercised 5-4 in the manner provided in Chapter 21, Property Code. 5-5 ARTICLE 5. GENERAL FISCAL PROVISIONS 5-6 Sec. 5.01. EXPENDITURES. A district's money may be 5-7 disbursed only by check, draft, order, or other instrument which 5-8 shall be signed by at least three directors. The general manager, 5-9 treasurer, or other employee of the district when authorized by 5-10 resolution of the board may sign checks, drafts, orders, or other 5-11 instruments on any district operation account and these need not be 5-12 signed by anyone else. 5-13 Sec. 5.02. PURPOSES FOR BORROWING MONEY. The district may 5-14 borrow money for any corporate purpose or combination of corporate 5-15 purposes. 5-16 Sec. 5.03. REPAYMENT OF ORGANIZATIONAL EXPENSES. The 5-17 district's directors are authorized to pay all costs and expenses 5-18 necessarily incurred in the creation and organization of a 5-19 district, the cost of investigation and making plans, the cost of 5-20 the engineer's report, project designer fees, legal fees, and other 5-21 incidental expenses and to reimburse any person for money advanced 5-22 for these purposes. These payments may be made from money obtained 5-23 from the issuance of notes or the sale of bonds first issued by the 5-24 district or out of other revenues of the district. 5-25 ARTICLE 6. ISSUANCE OF BONDS 5-26 Sec. 6.01. ISSUANCE OF BONDS. The district may issue bonds 5-27 for the purpose of defraying all or part of the cost of any project 5-28 as provided in this Act. Sections 375.201 through 375.208, 5-29 inclusive, Local Government Code, shall apply to a district created 5-30 under this Act to the extent not inconsistent with this Act. 5-31 Sec. 6.02. MANNER OF REPAYMENT OF BONDS. The board may 5-32 provide for the payment of principal of and interest and redemption 5-33 price on bonds from taxes; by pledging all or any part of the 5-34 designated revenues, license fees, or other compensation from a 5-35 project or any part thereof, including revenues and receipts 5-36 derived by the district from the lease or sale of the project, or 5-37 by pledging all or any part of any grant, donation, revenues, or 5-38 income received or to be received from any public or private 5-39 source; or from a combination of such sources. 5-40 Sec. 6.03. USE OF BOND PROCEEDS. The district may use bond 5-41 proceeds to pay interest on the bonds during and after the period 5-42 of the acquisition or construction of a project, to pay 5-43 administrative and operating expenses, to create a reserve fund for 5-44 the payment of principal and interest on the bonds, and to pay all 5-45 expenses incurred and to be incurred in the issuance, sale, and 5-46 delivery of the bonds. 5-47 ARTICLE 7. TAXES 5-48 Sec. 7.01. SALES AND USE TAX. (a) A district may levy a 5-49 sales and use tax for the benefit of the district if authorized by 5-50 a majority of the qualified voters of the district voting at an 5-51 election called and held for that purpose. The sales and use tax, 5-52 if adopted, does not count toward the limitation imposed by Chapter 5-53 323, Tax Code (County Sales and Use Tax Act), on any sales and use 5-54 tax that has been levied by the county. 5-55 (b) If a district adopts the tax, there is imposed a tax on 5-56 the receipts from the sale at retail of taxable items within the 5-57 district at a rate of up to one-half of one percent. For purposes 5-58 of this section, the term "taxable items" includes all items 5-59 subject to any sales and use tax that is imposed by the county in 5-60 which the district is located if the county has imposed a sales and 5-61 use tax. There is also imposed an excise tax on the use, storage, 5-62 or other consumption within the district of taxable items 5-63 purchased, leased, or rented from a retailer during the period that 5-64 the tax is effective within the district. The rate of the excise 5-65 tax is the same as the rate of the sales tax portion of the tax 5-66 applied to the sales price of the taxable items and is included in 5-67 the sales tax. 5-68 (c) Chapter 323, Tax Code (County Sales and Use Tax Act), to 5-69 the extent not inconsistent with this Act, governs the imposition, 5-70 computation, administration, and governance of the tax under this 6-1 section, except that Subsections (b) and (e), Section 323.101, and 6-2 Sections 323.209, 323.401 through 323.406, and 323.505 do not 6-3 apply. Chapter 323, Tax Code (County Sales and Use Tax Act), does 6-4 not apply to the use and allocation of revenues under this Act. In 6-5 applying the procedures under Chapter 323, Tax Code (County Sales 6-6 and Use Tax Act), the district's name shall be substituted for "the 6-7 county" and "board of directors" is substituted for "commissioners 6-8 court." 6-9 (d) The permissible rates for a local sales and use tax 6-10 levied under this Act are one-fourth of one percent, three-eighths 6-11 of one percent, and one-half of one percent. 6-12 (e) The board by order may decrease or abolish the local 6-13 sales and use tax rate or may call an election to increase, 6-14 decrease, or abolish the local sales and use tax rate. 6-15 (f) At the election, the ballots shall be prepared to permit 6-16 voting for or against the proposition: "The increase (decrease) of 6-17 the local sales and use tax rate of (name of district) to 6-18 (percentage) to be used for the promotion and development of 6-19 tourism" or "The abolition of the district sales and use tax used 6-20 for the promotion and development of tourism." The increase or 6-21 decrease in the tax rate is effective if it is approved by a 6-22 majority of the votes cast. In calling and holding the election, 6-23 the board shall use the procedures for the confirmation and tax 6-24 election set forth in Article 2 of this Act. 6-25 (g) Taxes collected under this section may be used only for 6-26 the purposes for which the district was created, and the district 6-27 may pledge the revenue derived from the taxes imposed under this 6-28 section to the payment of bonds issued by the district. 6-29 ARTICLE 8. ADDING AND EXCLUDING TERRITORY; 6-30 CONSOLIDATING AND DISSOLVING DISTRICTS 6-31 Sec. 8.01. ADDING AND EXCLUDING LAND FROM THE DISTRICT. 6-32 (a) Before the board issues bonds, the board may, on its own 6-33 motion or on request of a landowner in the district, petition the 6-34 county commissioners for the addition of land to or exclusion of 6-35 land from the district. 6-36 (b) If the commissioners court unanimously determines from 6-37 the evidence that the best interests of the persons and property in 6-38 the district will be served by adding or excluding land, the 6-39 commissioners court shall enter in its records the appropriate 6-40 findings and order adding or excluding land. 6-41 Sec. 8.02. DISSOLUTION OF DISTRICT. (a) A district may be 6-42 dissolved only as provided by this section. 6-43 (b) The board of directors may petition the commissioners 6-44 court to dissolve the district if a majority of the board finds at 6-45 any time (1) before the authorization of bonds or the final lending 6-46 of its credit, that the proposed undertaking is impracticable or 6-47 cannot be successfully and beneficially accomplished, or (2) that 6-48 all bonds of the district or other debts of the district have been 6-49 paid and the purposes of the district have been accomplished. 6-50 (c) On receipt of a petition from the board for dissolution 6-51 of the district, the county commissioners shall hold a hearing as 6-52 provided in Article 2 of this Act. 6-53 (d) If the commissioners court unanimously determines from 6-54 the evidence that the best interests of the county and the owners 6-55 of property and interests in property within the district will be 6-56 served by dissolving the district, the commissioners court shall 6-57 enter in its records the appropriate findings and order dissolving 6-58 the district. Otherwise the commissioners court shall enter its 6-59 order providing that the district has not been dissolved. On 6-60 dissolution of the district, funds and property of the district, if 6-61 any, shall be transferred to the commissioners court. 6-62 SECTION 2. Chapter 352, Tax Code, is amended by adding 6-63 Section 352.107 to read as follows: 6-64 Sec. 352.107. HOTEL TAX AUTHORIZED FOR COUNTY DEVELOPMENT 6-65 DISTRICTS. Notwithstanding any other provision of this chapter to 6-66 the contrary, a commissioners court of a county with a population 6-67 of less than 400,000 may impose a hotel occupancy tax not to exceed 6-68 seven percent on a person who pays for the use or possession or for 6-69 the right to the use or possession of a room in a hotel ordinarily 6-70 used for sleeping that is located within the boundaries of the 7-1 county development district created under Article 2372d-9, Revised 7-2 Statutes, and that is not located within the corporate limits of a 7-3 municipality, subject to the limitations set forth in Section 7-4 352.002(b) and (c). Taxes collected by a county under this section 7-5 shall be remitted to the county development district not later than 7-6 the 10th day after the date the county receives such funds and may 7-7 be used by the district for the purposes for which sales and use 7-8 tax proceeds may be used by the district. 7-9 SECTION 3. The importance of this legislation and the 7-10 crowded condition of the calendars in both houses create an 7-11 emergency and an imperative public necessity that the 7-12 constitutional rule requiring bills to be read on three several 7-13 days in each house be suspended, and this rule is hereby suspended, 7-14 and that this Act take effect and be in force from and after its 7-15 passage, and it is so enacted. 7-16 * * * * *