GEC C.S.H.B. 92 75(R) BILL ANALYSIS BUSINESS & INDUSTRY C.S.H.B. 92 By: Brimer 4-18-97 Committee Report (Substituted) BACKGROUND Currently, there is not one statute which governs the building of venue projects, and the most used option (4b Corporations) was not initially designed to build these type of facilities. For this reason, the House Business and Industry Committee was given the charge during the interim after the 74th Regular Session of the Texas State Legislature to "study issues related to the public support of sports facilities for economic development." House Bill 92, and CSHB 92 are the culmination of the Committee's work. PURPOSE To even the playing field and allow any municipality or county the ability to build approved sports and community venue projects using specific financing methods. These venues include: sports facilities for amateur, high school, collegiate, and professional sports; convention center facilities; related improvement such as a convention center; civic center; civic center building; civic center hotel; auditorium; theater, opera house; music hall; exhibition hall; museum; aquarium; and plaza located in the vicinity of a convention center or facility owned by a municipality or a county. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Subtitle C, Title 10, Local Government Code by adding Chapters 334 and 335. CHAPTER 334 Sports and Community Venues Subchapter A. General Provisions Sec. 334.001. Definitions: Defines the following terms: Approved venue project, governing body, related infrastructure, venue, sports and community venue project, and venue project. Sec. 334.002 Application to Certain Municipalities and Counties States that a municipality with a population of 1.2 million and a county with a population of more than 2.2 million may only use this Act by creating a sports and community venue district under Chapter 335, but only to the extent that the chapter is applicable to the creation or operation of the district. Sec. 334.003. Application to Venue Constructed Under Other Law Spells out under what circumstances a county or municipality may use this chapter for venue related projects, including venues originally built under Section 4B, Development Corporation Act of 1979 (Article 5190.6, Vernon's Texas Civil Statutes), or Subchapter E, Chapter 451, Transportation Code. Sec. 334.004. Other Uses of Sports Venue Permitted States that this chapter does not prohibit the use of a venue for an event that is not related to a purpose described by Section 334.001, such as a community related event. Sec. 334.005. Specific Performance States that the legislature expressly finds and determines that the presence of a professional sports team in an approved venue project or renovated under this chapter provides a unique value to the municipality or county that built or renovated the project that cannot be adequately valued in money; and the municipality or county that built or renovated the approved venue project would suffer irreparable injury if a professional sports team breaches its obligation to play its home games in the approved venue project as required by an agreement between the sports team and the municipality or county. An agreement described in this subsection shall be enforceable by specific performance in the courts of this state and a waiver of this remedy is contrary to public policy and is unenforceable and void. Subchapter B. Venue Projects Sec. 334.021. Resolution Authorizing Project Establishes the criteria a resolution of a county or municipality must follow. The resolution must: (1) allow for comptroller determination that the project will have no significant negative fiscal impact on the state; (2) allow for a vote which must be approved by the residents of the county or municipality; and; (3) designate the project(s) to be financed and the financing method to be used for each project. Sec. 334.022. State Fiscal Impact Analysis. This section sets up the steps a county or municipality must follow when submitting their plan to the Office of the Comptroller of Public Accounts. (a) Before calling an election, municipality must send resolution to the comptroller. (b) Comptroller must determine if resolution would have a significant negative impact on state revenue; must provide written results of analysis within 15 days of receiving resolution. (c) If the Comptroller determines that implementation will have a significant negative fiscal impact on state revenue, the Comptroller must include information on how to change the resolution so that implementation will not have a significant negative impact on state revenue. (d) If the Comptroller does not complete the analysis within 15 days, the Comptroller is considered to have determined that approval and implementation of the resolution will not have a significant negative fiscal impact on state revenues. Sec. 334.023 Appeal of Comptroller Determination This section sets up the process that must be followed by the municipality or county and the Comptroller of Public Accounts when the municipality or county appeals the ruling of the Comptroller. The process is as follows: (a) The municipality or county has 10 days of receiving written notice from the Comptroller to file an appeal; (b) The Comptroller has 10 days after the appeal is received by the Comptroller to perform a new analysis and provide the municipality or county written notice of the results of the new analysis; (c) If the second analysis by the Comptroller shows that implementation will have a negative impact on state revenue, the Comptroller's written response must include information on how to change the resolution so that implementation will not have a significant negative fiscal impact on state revenue. (d) If the Comptroller does not comply before the eleventh day after the date the comptroller receives the appeal or request for information, the comptroller is considered to have determined that approval and implementation of the resolution will not have a negative fiscal impact on state revenue. Sec. 334.024. Election. If the Comptroller determines there is no significant negative fiscal impact to the state, the municipality or county may call an election on the resolution. The referendum must allow the voters to vote separately on each venue project, designate exactly what the sports and community venue project encompasses, designate each method of financing authorized by this chapter that the municipality or county wants to use to finance the project and the maximum rate of each method, and allow the voters to vote on the financing methods. The ballot must be printed with specific statutory language. The Election Code governs an election held under this chapter. Subchapter C. Powers and Duties. Sec. 334.041. General Powers. (a) A municipality or county may perform any act necessary to the full exercise of the municipality's or county's powers under this chapter; (b) A municipality or county may acquire, sell, lease, convey, or otherwise dispose of property or an interest in property, including an approved venue project, under terms and conditions determined by the municipality or county; (c) Municipality or county may contract with a public or private person, including a sports team, club, or organization, or other entity to: (1) plan, acquire, establish, develop, construct, or renovate an approved venue project; or (2) perform any other act the municipality or county is authorized to perform under this chapter; (d) A municipality or county may contract with or enter into an interlocal agreement with a school district, junior or community college district, or an institution of higher education for the purposes described in Subsection (c). The contract or interlocal agreement may provide for joint ownership and operation or joint use; (e) The competitive bidding laws do not apply to the planning, acquisition, establishment, development, construction, or renovation of an approved venue project under this chapter; (f) A municipality or county may not use revenue derived from ad valorem taxes to plan, acquire, establish, develop, construct, or renovate an approved venue project. Sec. 334.042. Venue Project Fund. (a) Municipality or county where venue project is located must establish by resolution the Venue Project Fund. They shall also establish separate accounts within the fund for the various revenue sources. (b) Municipality or county shall deposit taxes, revenue, and other required money into fund. (c) Municipality or county may deposit into the fund innovative funding concepts including but not limited to luxury box sales, personal seat licenses, stadium rental payments and revenue from concessions and parking. (d) Spells out the uses which the venue project funds may be used by a municipality or county. (e) Money deposited in the venue project fund is the property of the municipality or county Sec. 334.043. Bonds and Other Obligations. (a) Municipality or county may issue revenue or refunding bonds to pay the costs of the approved venue project; (b) The bonds or obligations and the proceedings authorizing the bonds or other obligations shall be submitted to the Office of the Attorney General for review and approval. (c) Bonds are payable from and secured by revenues in the venue project fund. (d) Bonds mature within 30 years. (e) Bonds are not a debt of the municipality or county. Sec. 334.044 Public Purpose of Venue Project (a) The venue project is owned, used and held by the municipality or county for public purposes (b) Section 25.07(a), Tax Code, does not apply to a leasehold or other possessory interest granted by the municipality or county while the municipality or county owns the venue project; (c) The venue project is exempt from taxation under Section 11.11, Tax Code, while the municipality or county owns the venue project; (d) If approval and implementation of a resolution under this chapter results in the removal from a school district's property tax rolls of real property otherwise subject to ad valorem taxation, the operator of the approved venue project located on that property shall pay to the school district on January 1 of each year in which the property is exempt from ad valorem taxation an amount equal to the ad valorem taxes that would otherwise have been levied for the preceding tax year on that real property by the school district, without including the value of the improvements. This subsection does not apply if the operator of the project is a political subdivision of this state. Subchapter D. Sales and Use Tax Sec. 334.081. Sales and Use Tax. Municipality or county may impose sales and use tax for an approved venue project in a county or municipality and if approved by the voters. Municipality by ordinance or a county by order may repeal or decrease the rate of a tax imposed under this subchapter. Sec. 334.082. Tax Code Applicable. (a) Chapter 321, Tax Code, governs this subchapter for municipalities except as inconsistent with this chapter. (b) Chapter 323, Tax Code, governs this subchapter for counties except as inconsistent with this chapter. (c) Sections 321.101(b) and 323.101(b), Tax Code, do not apply to the tax authorized by this subchapter. Sec. 334.083. Tax Rate. (a) The rate of a tax adopted under this subchapter must be one-eighth, one-fourth, three-eighths, or one-half percent. (b) The ballot proposition at the election held to adopt the tax must specify the rate of the tax to be adopted. Sec. 334.084 Rate Increase (a) Municipality or county, if under the one-half of one percent tax rate, may raise the tax rate only with voter approval (b) Tax may be raised in increments of one-eighth of one percent to a maximum of one-half of one percent (c) The statutory ballot language for the rate increase Sec. 334.085. Imposition In Municipality or County With Other Taxing Authority. (a) Defines "taxing authority" (b) If a municipality or county is included within the boundaries of another taxing authority and the adoption or increase of the tax under this subchapter would result in a combined tax rate of more than 2% in any location of the municipality or county, the election to approve or increase the tax under this chapter is to be treated for all purposes as an election to reduce the tax rate of the other taxing authority to the highest rate that will not result in a combined tax rate of more than 2% in any location in the municipality or county. If the municipality or county is included within the boundaries of more than one taxing authority, the election to impose or increase the tax under this subchapter must allow the voters to choose which taxing authority's tax will be reduced. (c) The rate of the tax imposed by the other taxing authority is increased without further action of the board of the authority or the voters of the authority, municipality, or county on the date which the tax imposed under this subchapter is decreased or expires, but only to the extent that any tax imposed by the authority was reduced under this section when the tax imposed by the county was adopted or increased. (d) This section does not permit a taxing authority to impose taxes at differential tax rates within the territory of the authority. Sec. 334.086 Imposition of Tax (a) This tax, when adopted, is imposed on the receipts from retail sales of taxable items in the municipality or county. (b) There is also imposed an excise tax on the use, storage, or other consumption in the municipality or county of tangible personal property purchased, leases, or rented from a retailer during the period that the tax is effective in the municipality or county. The rate of the excise tax is the same as the rate of the sales tax portion of the tax and is applied to the sale price of the tangible personal property. Sec. 334.087. Effective Date of Tax. Tax takes effect on the first day of the first calendar quarter after the expiration of the first complete quarter after the comptroller receives notice of the results of the election. Sec. 334.088. Deposit of Tax Revenues. Revenue derived from this tax shall be deposited in the venue project fund of the municipality or county. Sec. 334.089. Abolition of Tax. (a) A sales and use tax imposed under this subchapter may not be collected after the last day of the first calendar quarter occurring after notification to the comptroller by the municipality or county that the municipality or county has abolished the tax or that all bonds or other obligations of the municipality or county have been paid in full or the full amount of the money, exclusive of guaranteed interest, necessary to pay in full the bonds and other obligations has been set aside in a trust account dedicated to the payments of the bonds and other obligations. (b) Municipality or county must notify the Comptroller 60 days before the expiration date of the tax. Subchapter E. Short-term Motor Vehicle Rental Tax. Sec. 334.101. Definitions. (a) Defines the terms: Motor vehicle, rental, and place of business of owner (b) Except as provided by Subsection (a), words used in this subchapter and defined by Chapter 152, Tax Code, have the same meaning assigned by Chapter 152, Tax Code. Sec. 334.102. Tax Authorized. (a) A municipality by ordinance or a county by order, may impose a tax on the rental of a motor vehicle in the municipality or county. (b) A municipality or county may decrease or repeal the rate (c) Tax may only be imposed by municipality or county if an approved venue project is to be built in the municipality or county and it is approved by a majority of the voters Sec. 334.103. Short-term rental tax. Tax rate to be imposed in increments of one-eighth of one percent, not to exceed ten percent Sec. 334.104. Rate Increase (a) Rate may only be increased with approval of the voters. Increase may not place the municipality or county over the ten percent maximum (b) Statutory ballot language for an election to increase the rate of the tax Sec. 334.105. Computation of Tax (a) Owner of the motor vehicle shall collect the tax on behalf of the county or municipality (b) Owner shall add the short-term motor vehicle rental tax imposed by this subchapter, and the gross rental receipts tax imposed by Chapter 152, Tax Code, to the rental charge, and the sum of these taxes is a debt owed to the motor vehicle owner by the person renting the vehicle. Sec. 334.106. Consummation of Rental. Rental of the motor vehicle occurs in the county or municipality in which transfer of possession occurs Sec. 334.107. Short-term Tax Inapplicable When No State Tax. The tax authorized by this subchapter does not apply to the gross receipts from the rental of a motor vehicle unless the tax imposed by Chapter 152, Tax Code, also applies to the rental. Sec. 334.108. Exemptions Applicable. The exemptions provided by Subchapter E, Chapter 152, Tax Code, apply to the tax authorized by this subchapter. Sec. 334.109 Notice of Tax. Each bill or receipt for a rental subject to this tax must contain specific statutory statement indicating the additional tax was levied by the municipality or county for the purpose of building a venue project. Sec. 334.110. Gross Receipts Presumed Subject to Tax All gross receipts of an owner of a motor vehicle from the rental of the motor vehicle are presumed to be subject to the tax imposed by this subchapter, except for gross receipts for which the owner has accepted in good faith a properly completed exemption certificate. Sec. 334.111. Records. Owner must keep tax records for four years. Sec. 334.112. Failure to Keep Records. Failure to keep records results in misdemeanor fine of $25-$500. Sec. 334.113. Effective Date and Ending Date of Tax. (a) Tax takes effect on date prescribed by ordinance. (b) Tax may only be imposed while municipality or county has outstanding bonds or other obligations for venue project. Sec. 334.114. Tax Collection; Penalty. (a) Rental taxes are sent to municipality or county by the owner of the motor vehicle. (b) Municipality or county may prescribe penalties for failure to keep records or pay taxes. (c) The attorney for the municipality or county may bring suit against those who fail to collect the tax Sec. 334.115. Collection Procedures on Purchase of Motor Vehicle Rental Business. (a) Purchaser withholds an amount of the purchase price sufficient to pay taxes due until seller provides receipt showing taxes have been paid. (b) Purchaser is liable for amount to be withheld. (c) Purchaser may request a receipt from municipality or county stating amount due if any. (d) If municipality or county does not issue receipt within 60 days, purchaser is released from obligation of withholding. Sec. 334.116. Reimbursement for Tax Collection Expenses. A municipality or county may permit person collecting tax to retain a percentage for reimbursement of collection costs; however the municipality or county may require that in order to be eligible, the person must pay the tax and file the reports required by the municipality. Sec. 334.117. Deposit of Tax Revenue. Revenue from this tax shall be deposited in the venue project fund. Subchapter F. Admissions Tax. Sec. 334.151. Tax Authorized. (a) A municipality or county may impose a tax on each person admitted to an event at an approved venue project. (b) A municipality or county may not impose a tax on each person admitted to an event that is not an approved venue project. (c) Tax may only be imposed if an approved venue project is or will be located in the municipality or county and the voters of the municipality or county have approved the tax. Sec. 334.152. Tax Rate. (a) Tax is imposed on each person admitted. (b) The tax may not exceed $2. (c) Ballot proposition must specify maximum rate to be adopted (d) Municipality or county may repeal, or decrease tax. Sec. 334.153. Rate Increase. (a) A municipality or county may increase the tax rate by approval of the voters but only to an amount not to exceed the $2 maximum amount (b) Statutory ballot language for the increase of the tax rate Sec. 334.154. Collection. (a) Municipality or county may require the owner or lessee of venue project to collect the tax. (b) Owner shall add the tax to the admissions price (c) Tax is not an occupation tax imposed on the owner or lessee. Sec. 334.155. Effective Date and Ending Date. (a) Tax takes effect on the date prescribed by ordinance or order. (b) Municipality or county may only impose tax for outstanding bonds or obligations. Sec. 334.156. Collection of Tax. (a) Taxes sent to municipality or county. (b) Municipality or county may prescribe penalties for failure to keep records and pay tax. (c) Municipality or county may provide reimbursement for costs of collection. Sec. 334.157. Deposit of Tax Revenue. Taxes from this revenue source shall be deposited in the venue project fund of the municipality or county. Subchapter G. Parking Tax. Sec. 334.201. Event Parking Tax. (a) Municipality or county may impose a tax on each vehicle parking in a facility of an approved venue project. (b) Tax may be imposed not more than three hours before or three hours after an event. (c) Tax must be approved by the voters. Sec. 334.202. Tax Rate. (a) Tax may be flat or percentage amount of parking price. (b) $1 limit. (c) The ballot proposition must specify the maximum rate of the tax to be adopted (d) Municipality or county may repeal, or decrease the rate of the tax. Sec. 334.203. Rate Increase. (a) Municipality or county may only raise the tax rate, to an amount not to exceed the $1 maximum, with approval of the voters. (b) Statutory ballot language to be used for rate increase Sec. 334.204. Collection. (a) Municipality or county may require the owner or lessee of the parking facility to collect the tax. (b) Owner shall add to the parking charge the tax rate (c) The tax is not an occupation tax imposed on the owner. Sec. 334.205. Effective Date and Ending Date. (a) Tax takes effect on date prescribed by the ordinance or order imposing it. (b) Municipality or county may only impose tax for outstanding bonds or obligations. Sec. 334.206. Collection of Tax. (a) Taxes sent to municipality or county. (b) Municipality or county may prescribe penalties for failure to keep records or pay taxes. (c) Municipality or county may provide reimbursement for costs of tax collection. Sec. 334.207. Deposit of Tax Revenue. Revenue from the tax imposed shall be deposited into the venue project fund of the municipality or county. Subchapter H. Hotel Occupancy Taxes. Sec. 334.251. Definition Definition of hotel Sec. 334.252. Imposition of Tax. (a) Municipality or county may impose a hotel tax on a hotel room that costs $2 or more per day and is ordinarily used for sleeping. (b) Municipality or county may only impose tax if a venue project is or is planned to be located in the municipality or county, and the tax is approved by the voters. Sec. 334.253 Tax Code Applicable (a) Sections 351.002(c), 351.004, 351.0041, 351.005, and 351.006, Tax Code, govern the imposition, computation, administration, collection, and remittance of a municipal tax authorized under this subchapter except as inconsistent with this subchapter. (b) Sections 352.002(c), 352.004, 352.0041, 352.005, and 352.007, Tax Code, govern the imposition, computation, administration, collection, and remittance of a county tax authorized under this chapter except as inconsistent with this subchapter. (c) The tax imposed under this subchapter is in addition to a tax imposed under Chapter 351 or 352, Tax Code. Sec. 334.254. Tax Rate. (a) The tax authorized by this subchapter may be imposed at any rate not to exceed 5% of the price paid for a room in a hotel; (b) The ballot proposition at the election held to adopt the tax must specify the maximum rate of the tax to be adopted. Sec. 334.255. Rate Increase. (a) Municipality or county may only increase the rate, to an amount not to exceed the 5% per day maximum, with the approval of the voters. (b) Statutory ballot language to increase the rate Sec. 334.256. Notice of Tax Each bill or receipt for a rental subject to this tax must contain a statement indicating the additional tax was levied by the municipality or county for the purpose of building a venue project. Sec. 334.257. Effective Date and Ending Date. (a) Tax takes effect on date prescribed by the ordinance or order imposing it. (b) Municipality or county may only impose tax for outstanding bonds or obligations. Sec. 334.258. Deposit of Tax Revenue. Revenue from the tax imposed under this subchapter shall be deposited into the venue project fund of the municipality or county. Subchapter I. Facility Use Tax Sec. 334.301. Definition. Defines major league team Sec. 334.302. Tax Authorized (a) A municipality by ordinance or a county by order may impose a facility use tax on each member of a major league team that plays a professional sports game in an approved venue project in the municipality or county for which the municipality or county has issued bonds to plan, acquire, establish, develop, construct, or renovate the approved venue project. (b) The municipality or county may not impose the facility tax under this subchapter for a professional sports game at a venue that is not an approved venue project or for which the municipality or county has not issued bonds to plan, acquire, establish, develop, construct, or renovate the approved venue project. (c) A municipality or county may impose a tax under this subchapter only if an approved venue project is or will be located in the municipality or county; and the tax is approved at an election held under Section 334.024. Sec. 334.303. Tax Rate (a) The tax authorized by this subchapter is imposed at the tax rate on each member of the professional sports team for each professional game the member plays at the approved venue project; (b) The amount of the tax may be imposed at any uniform monetary amount, not to exceed $5,000 a game; (c) The ballot proposition at the election held to adopt the tax must specify the maximum rate of the tax to be adopted; (d) The municipality by ordinance or the county by order may repeal or decrease the rate of the tax imposed under this subchapter. Sec. 334.034 Rate Increase. (a) A municipality or county that has adopted a tax under this subchapter at the rate of less than $5,000 a game may by ordinance or order increase the rate of the tax to a maximum of $5,000 a game if the increase is approved by a majority of the registered voters of that municipality or county voting at an election called and held for that purpose; (b) Statutory ballot language for the election. Sec. 334.305. Collection. (a) The municipality or county may require the owner or lessee of an approved venue project in the municipality or county to collect the tax for the benefit of the municipality or county; (b) The tax imposed by this subchapter is a debt owed to the owner or lessee of the approved venue project by the team member and recoverable at law; (c) The tax imposed by this subchapter is not an occupation tax imposed on the owner or lessee of the approved venue project or on the professional sports team member. Sec. 334.306 Effective Date and Ending Date of the Tax. (a) A tax imposed under this subchapter or a change in the tax rate takes effect on the date prescribed by the ordinance or order imposing the tax or changing the rate (b) A municipality or county may impose a tax under this subchapter only if the municipality or county issues bonds or other obligations under Sec. 334.043. The municipality or county may impose the tax only while those bonds or other obligations are outstanding and unpaid. Sec. 334.307 Collection of Tax (a) A person required to collect a tax imposed under this subchapter shall report and send the taxes to the municipality or county as provided by the municipality or county imposing the tax. (b) A municipality or county may prescribe penalties, including interest charges, for failure to keep records required by the municipality or county, to report when required, or to pay the tax when due. The attorney acting for the municipality or county may bring suit against a person who fails to collect a tax under this subchapter and to pay it over to the municipality or county as required. (c) A municipality by ordinance or a county by order may permit a person who is required to collect a tax under this subchapter to retain a percentage of the amount collected and required to be reported as reimbursement to the person for the costs of collecting the tax. The municipality or county may provide that the person may retain the amount only if the person pays the tax and files reports as required by the municipality or county. Sec. 334.308 Deposit of Tax Revenue Revenue from the tax imposed under this subchapter shall be deposited in the venue project fund of the municipality or county imposing the tax. Chapter 335. Sports and Community Venue Districts Subchapter A. General Provisions. Sec. 335.001 Definitions. Defines the terms: Approved venue project, board, district, related infrastructure, venue, and venue project. Sec. 335.002. Application to Venue project Constructed Under Other Law. Spells out under what circumstances a district may use this chapter for venue related projects, including venues originally built under Section 4B, Development Corporation Act of 1979 (Article 5190.6, Vernon's Texas Civil Statutes), or Subchapter E, Chapter 451, Transportation Code Sec. 335.003. Other Uses of Venue project Permitted. This chapter does not prohibit the use of a venue project for an event that is not related to a purpose described by Section 334.001, such as a community related event. Sec. 335.004 Specific Performance States that the legislature expressly finds and determines that the presence of a professional sports team in an approved venue project built or renovated under this chapter provides a unique value to the district that built or renovated the project and to each political subdivision that created the district that cannot be adequately valued in money; and the district that built or renovated the approved venue project and the political subdivisions that created the district would suffer irreparable injury if a professional sports team breaches its obligation to play its home games in the approved venue project as required by an agreement between the sports team and the district. An agreement described in this subsection shall be enforceable by specific performance in the courts of this state and a waiver of this remedy is contrary to public policy and is unenforceable and void. Subchapter B. Venue District. Sec. 335.021. Creation. Two or more counties, two or more municipalities, or a municipality and a county may create a venue project district subject to voter approval. Sec. 335.022. Order Creating District. (a) Two or more counties, two or more municipalities, or a county and a municipality must adopt concurrent orders that must: (1) be identical (2) define the boundaries to be coextensive with each creating political subdivision; and (3) designate the number of directors, manner of appointment, and the manner the chair will be appointed in accordance with Section 335.031. Sec. 335.023. Political Subdivision; Open Meetings. A district is a political subdivision of the creating political subdivisions and the state and is subject to Chapter 551, Government Code. Subchapter C. Board of Directors. Sec. 335.031. Composition and Appointment of Board. (a) The board must have at least four directors. (b) Appointed by the mayors or county judges, or both as appropriate, of the political subdivisions that create the district in accordance with the concurrent order. (c) Directors serve staggered two-year terms and may be removed by the appointing mayor or county judge at any time without cause. Successor directors are appointed in the same manner as the original appointees. (d) Director must be a resident of the appointing political subdivision. An employee, officer, or member of the governing body of the appointing political subdivision may serve as director, but may not have a personal interest in the contract executed by the district other than as an employee, officer, or member of the governing body of the political subdivision. Sec. 335.032. Compensation. Board member is not entitled to compensation but is entitled for reimbursement of expenses. Sec. 335.033. Meetings. The board shall conduct its meetings in the district. Sec. 335.034. Officers. The presiding officer is designated as provided by the concurrent order. The board shall designate from the members of the board a secretary and other officers the board considers necessary. Subchapter D. Venue Projects Sec. 335.051 Resolution Authorizing Project. (a) A district by resolution may provide for a venue project if: (1) comptroller determines it would have no significant negative fiscal impact, (2) voters approve it. (b) Resolution must designate project and each method of financing for the project. Sec. 335.052. State Fiscal Impact Analysis. This section sets up the steps a district must follow when submitting their plan to the Office of the Comptroller of Public Accounts. (a) Before calling an election, district must send resolution to the comptroller. (b) Comptroller must determine if resolution would have a significant negative impact on state revenue; must provide written results of analysis within 15 days of receiving resolution. (c) If the Comptroller determines that implementation will have a significant negative fiscal impact on state revenue, the Comptroller must include information on how to change the resolution so that implementation will not have a significant negative impact on state revenue. (d) If the Comptroller does not complete the analysis within 15 days, the Comptroller is considered to have determined that approval and implementation of the resolution will not have a significant negative fiscal impact on state revenues. Sec. 335.053. Appeal of Comptroller Determination This section sets up the process that must be followed by the district when the district appeals the ruling of the Comptroller. The process is as follows: (a) The district has 10 days of receiving written notice from the Comptroller to file an appeal; (b) The Comptroller has 10 days after the appeal is received by the Comptroller to perform a new analysis and provide the district written notice of the results of the new analysis; (c) If the second analysis by the Comptroller shows that implementation will have a negative impact on state revenue, the Comptroller's written response must include information on how to change the resolution so that implementation will not have a significant negative fiscal impact on state revenue. (d) If the Comptroller does not comply before the eleventh day after the date the comptroller receives the appeal or request for information, the comptroller is considered to have determined that approval and implementation of the resolution will not have a significant negative fiscal impact on state revenue. Sec. 335.054. Election. (a) If Comptroller determines the resolution will have no significant negative impact on state revenue, the board may order the election to be held in each of the political subdivision. The election must be held on the same day. (b) The order calling the election must allow the voters to vote separately on each venue project, designate each venue project, and designate the method of financing for each project with the maximum rate of each method. (c) Statutory ballot language for the election (d) Statutory ballot language if more than one method of financing is to be voted on. (e) If the majority of voters in each political subdivision approves the proposition authorizing the project, the district may implement the resolution. If a majority of the voters in one or more political subdivisions disapproves the proposition, the district may not implement the resolution. (f) The election code governs an election held under this chapter Subchapter E. Powers and Duties. Sec. 335.071. General Powers of District. (a) A district may perform any act necessary to the full exercise of the district's powers; accept a grant or loan from the state, federal government or public/private person; acquire, sell, lease, convey, or otherwise dispose of property, including a right-of-way of easement or an approved venue project, under terms and conditions determined by the district; (b) A district may contract with a public or private person, including one or more political subdivisions that created the district or a sports team, club, organization, or other entity, to plan, acquire, establish, develop, construct or renovate an approved venue project; or perform any other act the district is authorized to perform under this chapter. (c) A district may contract with or enter into an interlocal agreement with a school district, junior or community college district, or an institution of higher education, for a purpose described in Subsection (b). The contract or interlocal agreement may provide for joint ownership and operation or joint use; (d) The competitive bidding laws, including Chapter 271, do not apply to the planning, acquisition, establishment, development, construction, or renovation of an approved venue project; (e) A district may impose any tax a county may impose under Chapter 334. (f) A district may not levy an ad valorem tax. Sec. 335.072. Venue Project Fund. (a) District shall establish venue project fund and establish within the fund separate accounts for each source of revenue used. (b) District shall deposit into the venue project fund the proceeds of any tax imposed by the district, money received under Section 335.075 from a political subdivision that created the district, all revenue from the sale of bonds or other obligations of the district, any other money required by law to be deposited into the fund. (c) District may deposit into the venue project fund money derived from innovative finding concepts such as the sale or lease of luxury boxes or the sale of personal seat licenses, and any other revenue derived from the approved venue project including stadium rental payments and revenue from concessions and parking. (d) Stipulates on what the money in the venue project fund may be used (e) Money deposited into the venue project fund is the property of the district depositing the money Sec. 335.073. Bonds and Other Obligations. (a) District may issue bonds or other obligations to pay for project. For a district created by a county with a population of more than 2.2 million and municipality with a population of more than 1.2 million, the power of the district to issue bonds or other obligations is subject to the prior approval by the governing bodies of the county and municipality; (b) Bonds or other obligations shall be submitted to the Office of the Attorney General for review and approval (c) Bonds are payable from venue project fund (d) Bonds or obligations must mature within 30 years. (e) The bonds or other obligations are not a debt of or create a claim against the district. (f) A district may issue short term obligation bonds and enter into credit agreements Sec. 335.074. Public Purpose of Venue Project. (a) The approved venue project is owned, used, and held for public purposes by the district. (b) Section 25.07(a), Tax Code, does not apply (c) Section 11.11 Tax Code does not apply (d) If approval and implementation of a resolution under this chapter results in the removal from a school district's property tax rolls of real property otherwise subject to ad valorem taxation, the operator of the approved venue project located on that property shall pay to the school district on January 1 of each year in which the property is exempt from ad valorem taxation an amount equal to the ad valorem taxes that would otherwise have been levied for the preceding tax year on that real property by the school district, without including the value of the improvements. This subsection does not apply if the operator of the project is a political subdivision of this state. Sec. 335.075 Dedication or Grant Of Certain Revenue By Creating Municipality (a) A municipality that created the district may contribute or dedicate to the district municipal sales and use tax revenue received by the municipality that is generated, paid, or collected by any or all businesses operating in an approved venue project. (b) The municipality may contribute or dedicate money under this section if the contribution and dedication is approved at an election called and held for that purpose in the municipality and the municipality determines that the approved venue project from which the revenue was derived will contribute to the economic, cultural, or recreational development or well being of the residents of the municipality. (c) This section is cumulative of any provision in Chapter 321, Tax Code, authorizing a municipality to pledge sales and use tax revenue for an approved project. An election held for the purpose of pledging revenue under Chapter 321, Tax Code, satisfies the election requirements prescribed by Subsection (b)(1). SECTION 2 Amends Section 4A, Development Corporation Act of 1979 (Article 5190.6, Vernon's Texas Civil Statutes). Section 4A, Development Corporation Act of 1979 is amended by adding Subsection (i-1) which prohibits a 4A Corporation from undertaking a project to acquire, construct, remodel, operate, or maintain a sports venue or related infrastructure. Defines related infrastructure and sports venue. SECTION 3 Amends Section 4B, Development Corporation Act of 1979 (Article 5190.6, Vernon's Texas Civil Statutes) Section 4B, Development Corporation Act of 1979 is amended by amending Subsection (a)(2) and adding Subsections (a-3) and (a-4). These changes would prohibit a 4B Corporation from undertaking a project to acquire, construct, remodel, operate, or maintain a venue project or related infrastructure. Defines related infrastructure and sports venue. SECTION 4 Amends Subchapter F, Chapter 321, Tax Code, by adding a new Section 321.508. (a) A municipality may call and hold an election on the issue of authorizing the municipality to pledge a percentage of the sales and use tax revenue received under Section 321.101(a) or (b), or both, to the payment of obligations issued to pay all or part of the costs of one or more sports and community venue projects located in the municipality. (b) Ballot language (c) If a majority of the voters vote in favor of the proposition, the municipality may: issue bonds, notes, or other obligations that are payable from the pledged revenues to pay for all or part of the costs of the sports and community venue project or projects described in the proposition; and set aside the portion of the revenue approved at the election that the municipality actually receives and pledges that revenue as security for the payment of the bonds, notes, or other obligations. (d) If the municipality pledges revenue under Subsection (c), the pledge and security interest shall continue while the bonds, notes, or obligations, including refunding obligations, are outstanding and unpaid. (e) The municipality may direct the Comptroller to deposit the pledged revenue to a trust or account as may be required to obtain the financing and to protect related security interest. (f) Sections 321.506 and 321.507 do not apply to taxes pledged under this section. (g) Under this section, "sports and community venue project" has the meaning assigned by Section 334.001, Local Government Code. SECTION 5 The changes in law made by this Act do not apply to the use of tax revenue pledged to secure bonds issued before the effective date of this Act. SECTION 6 (a) This Act does not affect the authority of: (1) a municipality that created an industrial development corporation under Section 4A or 4B, Development Corporation Act of 1979, before the effective date of this Act to continue to collect any tax authorized for the benefit of the corporation before that date; or (2) an industrial development corporation described by Subdivision (1) to continue a project or category of projects authorized for the corporation before the effective date of this Act that the corporation had begun before that date. (b) A tax collected under Subsection (a)(1) of this section or a project continued under Subsection (a)(2) of this section is subject to the same restrictions applicable under Section 4A and 4B, Development Corporation Act of 1979, as those sections existed immediately before the effective date of this Act. SECTION 7. (a) Notwithstanding any other provision of Chapter 334 or 335, Local Government Code, as added by this Act, an election to approve a sports and community venue project, to approve a method of financing for the project, other than the imposition of a sales and use tax, or to create a sports and community venue district in a specific county or municipality is not necessary if, at an election held before the effective date of this Act, the voters of that county, or of the county in which the municipality or district is primarily located, authorized the establishment and operation of new or renovated stadiums, arenas, or other facilities for professional sports teams. This section: (1) negated the necessity of an election only for the type of venue approved at the previous election; and (2) does not negate the necessity of an election for approval of the imposition of a sales and use tax to finance a venue. (b) Effective October 1, 1997, there is imposed within the boundaries of a sport and community venue described by Subsection (a) of this section: (1) a short-term motor vehicle rental tax in accordance with Subchapter E, Chapter 334, Local Government Code, as added by this Act, at the rate prescribed by order of the district but not to exceed the maximum rate prescribed by Section 334.103(a), Local Government Code, as added by this Act; and (2) a hotel motel occupancy tax in accordance with Subchapter H, Chapter 334, Local Government Code, as added by this Act, at the rate prescribed by order of the district but not to exceed the maximum rate prescribed by Section 334.254(a), Local Government Code, as added by this Act. SECTION 8 Notwithstanding any other provision of Chapter 334 or 335, Local Government Code, as added by this Act, a municipality, county, or venue district is not required to obtain from the comptroller a determination of state fiscal impact if, at an election held before the effective date of this Act, the voters of that county, or of the county in which the municipality or district is primarily located, authorized the establishment and operation of new or renovated stadiums, arenas, or other facilities for professional sports teams. This section negates the necessity of a comptroller determination only for the type of venue project approved at the previous election. SECTION 9 All acts or proceedings authorized or undertaken by a sports and community venue district or by a county or municipality that created the district that were undertaken before the effective date of this Act, including acts or proceedings to create the district, are validated and confirmed in all respects, provided that the validation and confirmation do not apply to an act or proceeding that is subject to litigation that is pending on the effective date of this Act. SECTION 10 Severability Clause SECTION 11 Emergency Clause COMPARISON OF ORIGINAL TO SUBSTITUTE The committee changed the bill in the following ways: 1. Changed the projects in this bill from "sports venue projects" to "sports and community venue projects." Defines what a venue is, showed that it is more then a sports facility. Made it clear that the 4A and 4B Economic Development Corporation is not to be used to build sports facilities (but can continue to be used for what it has been used for in the past--as long as it is not a sports facility). 2. Allows this bill to be used to renovate existing facilities. Original bill only allowed for renovation of a facility whose bonds had been paid off. 3. Changed the focus of the Comptroller's Impact Statement from "negative impact" to "significant negative impact." The change also has the Comptroller spell out immediately why he has rejected a project and what an be done to fix the problems found by the Comptroller's office. 4. Clearly states that ad-valorem taxes may not be used to fund these type projects. 5. Persons or entities who are leasing the venue do not have to comply with the competitive bidding requirements that the city or county is required to comply with. 6. Requires more than one account within the Venue Project Fund in order to help with maintain an accurate account of what money has come in from what source. 7. Allows the city or county to be refunded for any "up-front" expenses (such as architectural expenses, etc.) 8. Adds a new section that requires that the entity which leases the facility will continue to pay property taxes on the land to the school district. This is different because as this land is off the property tax roles (the land is"public use" land). The amount paid to the school district on January 1 of each year will be an amount equal to the ad valorem that would otherwise have been levied for the preceding tax year on that real property by the school district, without applying the value of the improvements. 9. Allows cities who have a rapid transit authority, a regional transportation authority, or a crime control district, who are at their statutory sales tax cap, to use sales tax money. This is accomplished by the fact that for all purposes that an election to approve or increase the sales tax will be treated as an election to reduce the tax rate of one or more of the other taxing authorities to the highest rate that will not result in a combined tax rate of more than two percent in any location in the municipality or county. 10. Allows car rental fees to be up to 10% 11. Allows hotel/motel fees up to 5% 12. Allows each city or county to come up with their own "district board" make up. Allows the Mayor/County Judge to appoint the members with consent of their councils. 13. Allows city/county to give "right of way" to the district for maintenance. 14. Allows the district the ability to contract with the political subdivision that created them. 15. Changes bond maturity from 20 years to 30 years. 16. Grandfathers in the Harris County election; forces new referendum if they decide to build anything besides the baseball park and renovate the Astrodome. Also forces new referendum if sales tax is to be used for funding. 17. Grandfathers the Comptroller review for the election already held by Harris County. However, if they decide to build something other than the downtown baseball park or renovate the Astrodome, or if they decide to use sales tax money, they must go back to the Comptroller for review. 18. Adds maintenance and operation of the venue to what can be paid from out of the venue project. 19. Adds "on-site hotel" to the definition of infrastructure. 20. Allows for a new funding mechanism to be used by the district. This funding mechanism would allow the city to dedicate a portion of the sales tax collected within in the facility itself to be used for paying off the bonds on the sports facilities. This would have to be approved by the voters. 21. Allows for a new funding mechanism called a Facility Use Tax. This tax would be imposed, after passage of a voter referendum, on every member of the National Football League, National Basketball Association, National Hockey League or a major league baseball team, that played a game in an approved venue project built with funds from this bill. The amount to be charged per player is not to exceed $5,000 per game per player. 22. The bill adds a severability clause. 23. The bill adds a specific performance clause which says in part that the municipality or county that built or renovated an approved venue project would suffer irreparable injury if a professional sports team breaches its obligation to play its home games in an approved venue project as required by an agreement between the sports team and the municipality or county and that this agreement shall be enforceable by specific performance in the courts of this state. It also adds that a waiver of this remedy is contrary to public policy and is unenforceable and void. 24. The bill adds a validation clause which says all acts or proceedings authorized or undertaken by a sports and community venue district or by a county or municipality that created the district that were undertaken before the effective date of this Act, including acts or proceedings to create the district, are validated and confirmed in all respects, provided that the validation and confirmation do not apply to an act or proceeding that is subject to litigation that is pending on the effective date of this Act. 25. Allows for the hotel/motel and car rental fees to begin being imposed on October 1, 1997, in Harris County. 26. As filed the bill allowed the election on these projects to be held at any time. The Committee substitute allows for the election code and the uniform election dates to be used. 27. Provides that in Houston/Harris County the provisions of the bill may only be exercised through a Sports Authority, i.e., the City and County could not use this law separately, only in a partnership. 28. Provides that in Houston/Harris County, the bonds by the sports authority must be approved by the governing bodies of the City and County. 29. Adds a new subsection allowing the use of commercial paper in anticipation of bonds for use in financing a project. 30. Adds new language that allows the municipality or county to contract with or enter into an interlocal agreement with a school district, junior or community college district, or an institution of higher education, for the purpose of planning, acquiring, establishing, developing, constructing or renovating, a sports and community venue.