75R12047 CBH-D By Hawley H.B. No. 1029 Substitute the following for H.B. No. 1029: By Craddick C.S.H.B. No. 1029 A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to the creation of municipal development districts; 1-3 authorizing the imposition of certain local taxes and the issuance 1-4 of local bonds. 1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-6 SECTION 1. Subtitle A, Title 12, Local Government Code, is 1-7 amended by adding Chapter 377 to read as follows: 1-8 CHAPTER 377. MUNICIPAL DEVELOPMENT DISTRICTS 1-9 SUBCHAPTER A. GENERAL PROVISIONS 1-10 Sec. 377.001. DEFINITIONS. In this chapter: 1-11 (1) "Board" means the board of directors of a 1-12 municipal development district. 1-13 (2) "District" means a municipal development district 1-14 created under this chapter. 1-15 (3) "Development project": 1-16 (A) means: 1-17 (i) a "project" as that term is defined by 1-18 Section 4B(a), Development Corporation Act of 1979 (Article 5190.6, 1-19 Vernon's Texas Civil Statutes); and 1-20 (ii) a convention center facility or 1-21 related improvement such as a convention center, civic center, 1-22 civic center building, civic center hotel, or auditorium; and 1-23 (B) includes parking areas or facilities that 1-24 are used to park vehicles and that are located at or in the 2-1 vicinity of other convention center facilities. 2-2 Sec. 377.002. APPLICATION. This chapter applies only to a 2-3 municipality with a population of less than 10,000 that is located 2-4 in more than two counties, at least one of which borders the Gulf 2-5 of Mexico. 2-6 (Sections 377.003-377.020 reserved for expansion 2-7 SUBCHAPTER B. MUNICIPAL DEVELOPMENT DISTRICT 2-8 Sec. 377.021. CREATION. (a) A municipality may call an 2-9 election on the question of creating a municipal development 2-10 district under this chapter to plan, acquire, establish, develop, 2-11 construct, or renovate one or more development projects in the 2-12 district. 2-13 (b) The order calling the election must: 2-14 (1) define the boundaries of the district to include 2-15 all or part of the boundaries of the municipality; and 2-16 (2) call for the election to be held within those 2-17 boundaries. 2-18 (c) The ballot at an election held under this section must 2-19 be printed to permit voting for or against the proposition: 2-20 "Authorizing the creation of the ____ Municipal Development 2-21 District (insert name of district) and the imposition of a sales 2-22 and use tax at the rate of ____ of one percent (insert one-eighth, 2-23 one-fourth, three-eighths, or one-half, as appropriate) for the 2-24 purpose of financing development projects in the district." 2-25 (d) The district is created if a majority of the registered 2-26 voters of the proposed district voting at the election favor 2-27 creation of the district. 3-1 (e) If a majority of the registered voters of the proposed 3-2 district voting at the election to create the district vote against 3-3 creation of the district, another election on the question of 3-4 creating a municipal development district may not be held in the 3-5 municipality before the first anniversary of the most recent 3-6 election concerning creation of a district. 3-7 (f) The Election Code governs an election held under this 3-8 chapter. 3-9 Sec. 377.022. POLITICAL SUBDIVISION; OPEN MEETINGS. (a) A 3-10 district is a political subdivision of this state and of the 3-11 municipality in which the district is located. 3-12 (b) A district is subject to Chapter 551, Government Code. 3-13 (Sections 377.023-377.050 reserved for expansion 3-14 SUBCHAPTER C. BOARD OF DIRECTORS 3-15 Sec. 377.051. COMPOSITION AND APPOINTMENT OF BOARD. (a) A 3-16 district is governed by a board of at least four directors. 3-17 (b) The board is appointed by the governing body of the 3-18 municipality in which the district is located. 3-19 (c) Directors serve staggered two-year terms. A director 3-20 may be removed by the appointing municipality at any time without 3-21 cause. Successor directors are appointed in the same manner as the 3-22 original appointees. 3-23 (d) To qualify to serve as a director, a person must be a 3-24 resident of the municipality in which the district is located. An 3-25 employee, officer, or member of the governing body of the 3-26 municipality may serve as a director, but may not have a personal 3-27 interest in a contract executed by the district other than as an 4-1 employee, officer, or member of the governing body of the 4-2 municipality. 4-3 Sec. 377.052. COMPENSATION. A board member is not entitled 4-4 to compensation, but is entitled to reimbursement for actual and 4-5 necessary expenses. 4-6 Sec. 377.053. MEETINGS. The board shall conduct its 4-7 meetings in the municipality in which the district is located. 4-8 Sec. 377.054. OFFICERS. The board shall designate from the 4-9 members of the board a presiding officer, a secretary, and other 4-10 officers the board considers necessary. 4-11 (Sections 377.055-377.070 reserved for expansion 4-12 SUBCHAPTER D. POWERS AND DUTIES 4-13 Sec. 377.071. GENERAL POWERS OF DISTRICT. (a) A district 4-14 may: 4-15 (1) perform any act necessary to the full exercise of 4-16 the district's powers; 4-17 (2) accept a grant or loan from a: 4-18 (A) department or agency of the United States; 4-19 (B) department, agency, or political subdivision 4-20 of this state; or 4-21 (C) public or private person; 4-22 (3) acquire, sell, lease, convey, or otherwise dispose 4-23 of property or an interest in property, including a development 4-24 project, under terms and conditions determined by the district; 4-25 (4) employ necessary personnel; and 4-26 (5) adopt rules to govern the operation of the 4-27 district and its employees and property. 5-1 (b) A district may contract with a public or private person 5-2 to: 5-3 (1) plan, acquire, establish, develop, construct, or 5-4 renovate a development project; or 5-5 (2) perform any other act the district is authorized 5-6 to perform under this chapter. 5-7 (c) A district may not levy an ad valorem tax. 5-8 Sec. 377.072. DEVELOPMENT PROJECT FUND. (a) A district 5-9 shall establish by resolution a fund known as the development 5-10 project fund. The district may establish separate accounts within 5-11 the fund. 5-12 (b) The district shall deposit into the development project 5-13 fund: 5-14 (1) the proceeds from any sales and use tax imposed by 5-15 the district; 5-16 (2) all revenue from the sale of bonds or other 5-17 obligations by the district; and 5-18 (3) any other money required by law to be deposited in 5-19 the fund. 5-20 (c) The district may use money in the development project 5-21 fund only to: 5-22 (1) pay the costs of planning, acquiring, 5-23 establishing, developing, constructing, or renovating one or more 5-24 development projects in the district; 5-25 (2) pay the principal of, interest on, and other costs 5-26 relating to bonds or other obligations issued by the district or 5-27 to refund bonds or other obligations; or 6-1 (3) pay the costs of operating or maintaining one or 6-2 more development projects during the planning, acquisition, 6-3 establishment, development, construction, or renovation or while 6-4 bonds or other obligations for the planning, acquisition, 6-5 establishment, development, construction, or renovation are 6-6 outstanding. 6-7 Sec. 377.073. BONDS AND OTHER OBLIGATIONS. (a) A district 6-8 may issue bonds, including revenue bonds and refunding bonds, or 6-9 other obligations to pay the costs of a development project. 6-10 (b) The bonds or other obligations and the proceedings 6-11 authorizing the bonds or other obligations shall be submitted to 6-12 the attorney general for review and approval as required by 6-13 Article 3, Chapter 53, Acts of the 70th Legislature, 2nd Called 6-14 Session, 1987 (Article 717k-8, Vernon's Texas Civil Statutes). 6-15 (c) The bonds or other obligations must be payable from and 6-16 secured by the revenues of the district. 6-17 (d) The bonds or other obligations may mature serially or 6-18 otherwise not more than 30 years from their date of issuance. 6-19 (e) The bonds or other obligations are not a debt of and do 6-20 not create a claim for payment against the revenue or property of 6-21 the district other than a development project for which the bonds 6-22 are issued. 6-23 Sec. 377.074. PUBLIC PURPOSE OF PROJECT. (a) The 6-24 legislature finds for all constitutional and statutory purposes 6-25 that a development project is owned, used, and held for public 6-26 purposes by the district. 6-27 (b) Section 25.07(a), Tax Code, does not apply to a 7-1 leasehold or other possessory interest granted by the district 7-2 while the district owns the development project. 7-3 (c) The development project is exempt from taxation under 7-4 Section 11.11, Tax Code, while the district owns the project. 7-5 (Sections 377.075-377.100 reserved for expansion 7-6 SUBCHAPTER E. SALES AND USE TAX 7-7 Sec. 377.101. SALES AND USE TAX. (a) A district by order 7-8 may impose a sales and use tax under this subchapter. 7-9 (b) A district may impose a tax under this subchapter only 7-10 if the tax is approved at an election held under Section 377.021. 7-11 (c) A district may not adopt a sales and use tax under this 7-12 subchapter if the adoption of the tax under this subchapter would 7-13 result in a combined tax rate of all local sales and use taxes of 7-14 more than two percent in any location in the district. 7-15 Sec. 377.102. TAX CODE APPLICABLE. (a) Chapter 323, Tax 7-16 Code, governs the imposition, computation, administration, 7-17 collection, and remittance of a tax authorized under this 7-18 subchapter except as inconsistent with this subchapter. 7-19 (b) Section 323.101(b), Tax Code, does not apply to the tax 7-20 authorized by this subchapter. 7-21 Sec. 377.103. TAX RATE. The rate of a tax adopted under 7-22 this subchapter must be one-eighth, one-fourth, three-eighths, or 7-23 one-half of one percent. 7-24 Sec. 377.104. REPEAL OR RATE CHANGE. (a) A district that 7-25 has adopted a sales and use tax under this subchapter may by order 7-26 and subject to Section 377.101(c), change the rate of the tax or 7-27 repeal the tax if the change or repeal is approved by a majority of 8-1 the registered voters of that district voting at an election called 8-2 and held for that purpose. 8-3 (b) The tax may be changed under Subsection (a) in one or 8-4 more increments of one-eighth of one percent to a maximum of 8-5 one-half of one percent. 8-6 (c) The ballot for an election to change the tax shall be 8-7 printed to permit voting for or against the proposition: "The 8-8 adoption of a sales and use tax at the rate of ____ of one percent 8-9 (insert one-fourth, three-eighths, or one-half, as appropriate)." 8-10 (d) The ballot for the election to repeal the tax shall be 8-11 printed to permit voting for or against the proposition: "The 8-12 repeal of the sales and use tax for financing development projects 8-13 in the __________ Municipal Development District (insert name of 8-14 district)." 8-15 Sec. 377.105. IMPOSITION OF TAX. (a) If the district 8-16 adopts the tax, a tax is imposed on the receipts from the sale at 8-17 retail of taxable items in the district at the rate approved at the 8-18 election. 8-19 (b) There is also imposed an excise tax on the use, storage, 8-20 or other consumption in the district of tangible personal property 8-21 purchased, leased, or rented from a retailer during the period that 8-22 the tax is effective in the district. The rate of the excise tax 8-23 is the same as the rate of the sales tax portion of the tax and is 8-24 applied to the sale price of the tangible personal property. 8-25 Sec. 377.106. EFFECTIVE DATE OF TAX. Except as provided by 8-26 Section 377.107, the adoption of the tax, the change of the tax 8-27 rate, or the repeal of the tax takes effect on the first day of the 9-1 first calendar quarter occurring after the expiration of the first 9-2 complete quarter occurring after the date on which the comptroller 9-3 receives a notice of the results of the election adopting, 9-4 changing, or repealing the tax. 9-5 Sec. 377.107. COLLECTION OF TAX TO PAY BONDS OR OTHER 9-6 OBLIGATIONS. (a) If the district votes to repeal the sales and 9-7 use tax under Section 377.104, and the district had issued bonds or 9-8 incurred other obligations secured by the tax before the date of 9-9 the election, the district shall continue to collect the tax until 9-10 the bonds or other obligations are paid. 9-11 (b) The district shall immediately notify the comptroller 9-12 when the bonds or other obligations have been paid. 9-13 (c) The repeal of the tax takes effect on the first day of 9-14 the first calendar quarter occurring after the expiration of the 9-15 first complete quarter occurring after the date on which the 9-16 comptroller receives the notice under Subsection (b). 9-17 Sec. 377.108. DEPOSIT OF TAX REVENUES. Revenue from the tax 9-18 imposed under this subchapter shall be deposited in the development 9-19 project fund of the district imposing the tax. 9-20 SECTION 2. The importance of this legislation and the 9-21 crowded condition of the calendars in both houses create an 9-22 emergency and an imperative public necessity that the 9-23 constitutional rule requiring bills to be read on three several 9-24 days in each house be suspended, and this rule is hereby suspended, 9-25 and that this Act take effect and be in force from and after its 9-26 passage, and it is so enacted.