LEGISLATIVE BUDGET BOARD
                          Austin, Texas

                           FISCAL NOTE
                       74th Regular Session

                          April 24, 1995



 TO:     Honorable Rene O. Oliveira, Chair      IN RE:  House Bill No. 1706
         Committee on Economic Development              By: Ramsay
         House of Representatives
         Austin, Texas






FROM: John Keel, Director

In response to your request for a Fiscal Note on House Bill No.
1706 (relating to the creation and operation of an industrial
development corporation by a city) this office has determined the
following:

The bill would repeal Section 4A of the Development Corporation
Act of 1979.

The bill would amend Section 4B of the Development Corporation
Act of 1979 by adding Section 4A eligibility requirements for
cities to create industrial development corporations.  The bill
would amend Section 4B to limit corporation expenditures for
promotional purposes to 25 percent of revenues, and would allow a
corporation to contract with other existing private corporations
to carry out programs.

A Section 4A corporation created before the effective date of the
bill would continue to exist as if it had been created under
Section 4B.  By January 1, 1996, a 4A corporation would be
required to amend its articles of incorporation to state that it
is governed by Section 4B, except 4A corporations would be
allowed to continue projects and collect taxes authorized before
the effective date of the bill under the provisions of Section
4A.  The bill would allow a Section 4A corporation to dissolve,
on approval by the corporation's governing board, by transferring
its assets to a Section 4B corporation.

Under Section 4B, cities may create only one industrial
development corporation subject to a maximum tax rate of one-half
of one percent.  As a result, it is assumed that some cities with    




both 4A and 4B corporations may be required to abolish 4A 
corporations after existing 4A projects are completed.

No significant fiscal implication to the state is anticipated.

The fiscal implication to units of local government cannot be
determined as the number of cities that would abolish 4A
corporations and the sales and use taxes levied cannot be
estimated.





Source:   Comptroller of Public Accounts, Department of Commerce
          LBB Staff: JK, SM, RR