By: Sibley S.B. No. 747
A BILL TO BE ENTITLED
AN ACT
1-1 relating to the administration and financing of certain industrial
1-2 development corporations; providing an administrative penalty.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Subsections (n) and (o), Section 4A, Development
1-5 Corporation Act of 1979 (Article 5190.6, Vernon's Texas Civil
1-6 Statutes), are amended to read as follows:
1-7 (n) At an election called and held under Subsection (d) or
1-8 (o) of this section, the city may also allow the voters to vote on
1-9 a ballot proposition that limits the length of time that a sales
1-10 and use tax may be imposed. If a city elects to limit the period
1-11 the sales and use tax may be imposed, there shall be added to the
1-12 end of the ballot proposition prescribed by Subsection (m) of this
1-13 section: "to be imposed for ________ years" (the number of years
1-14 to be inserted as appropriate). The governing body of the city
1-15 shall set the expiration date of the proposed tax to occur on the
1-16 appropriate anniversary of the effective date of the tax. A sales
1-17 and use tax imposed for a limited period under this subsection
1-18 expires on the date set by the governing body under this section or
1-19 on an earlier date if[, by a majority of the voters voting in an
1-20 election held in the city,] the tax is abolished under Subsection
1-21 (o) of this section [repealed]. [If an earlier abolition election
1-22 is held, Sections 321.102(a) and 321.402(b), Tax Code, apply to the
1-23 date of repeal.] A tax that is approved without a limit on its
2-1 period of imposition is effective until abolished in accordance
2-2 with Subsection (o) of this section [repealed by election]. Before
2-3 the 60th day before the date that a tax is to expire, the governing
2-4 body shall send a notice to the comptroller stating the expiration
2-5 date of the tax. Revenue collected after the expiration of the tax
2-6 from the imposition of the tax after its expiration date shall be
2-7 forwarded by the state to the governing body to be used to pay
2-8 current bonded indebtedness of the municipality. A municipality
2-9 that has imposed a tax under this section may not extend the period
2-10 of the tax's imposition or reimpose the tax unless the extension or
2-11 reimposition is approved by a majority of the qualified voters of
2-12 the municipality voting in an election called and held for that
2-13 purpose [after its expiration date]. If a city reduces the rate of
2-14 an additional sales and use tax under Chapter 321, Tax Code, to
2-15 impose a tax under this section for a limited period as provided
2-16 under this subsection, and does not have an election to change the
2-17 rate of the additional sales and use tax before the expiration date
2-18 of the tax under this section, the rate of the additional sales and
2-19 use tax under Section 321.101(b), Tax Code, in the city returns to
2-20 its previous rate in effect at the time the tax imposed under this
2-21 section was adopted on the expiration date of the tax under this
2-22 section without having to hold an election under Chapter 321, Tax
2-23 Code, to impose the increase in the rate.
2-24 (o) In a city in which a sales and use tax for the benefit
2-25 of a corporation has been imposed under this section, in the same
3-1 manner and by the same procedure the city by majority vote of the
3-2 qualified voters of the city voting at an election called and held
3-3 for the purpose may reduce, [or] increase, or abolish the tax. The
3-4 rate may be reduced in one or more increments of one-eighth of one
3-5 percent to a minimum of one-eighth of one percent or increased in
3-6 one or more increments of one-eighth of one percent to a maximum of
3-7 one-half of one percent. On petition of 10 percent or more of the
3-8 registered voters of the city requesting an election on the
3-9 increase, [or] decrease, or abolition of the tax under this
3-10 section, the governing body of the city shall order an election on
3-11 the issue. The ballot shall be printed in the same manner as the
3-12 ballot under Subsection (m) of this section, except that the ballot
3-13 to abolish the tax shall be printed to provide for voting for or
3-14 against the proposition: "The abolition of the sales and use tax
3-15 for the promotion and development of new and expanded business
3-16 enterprises." Section 321.102(a), Tax Code, applies to the
3-17 abolition of a tax under this subsection. However, if before the
3-18 date of the election the corporation had issued bonds or incurred
3-19 other obligations secured by the tax, the tax shall continue to be
3-20 collected until the bonds or other obligations are paid. The
3-21 corporation shall immediately notify the comptroller when the bonds
3-22 or other obligations have been paid. A tax imposed under this
3-23 section may not be collected after the last day of the first
3-24 calendar quarter beginning after the date of notification to the
3-25 comptroller.
4-1 SECTION 2. Section 4A, Development Corporation Act of 1979
4-2 (Article 5190.6, Vernon's Texas Civil Statutes), is amended by
4-3 adding Subsection (s) to read as follows:
4-4 (s)(1) A city that creates or has created a corporation
4-5 governed by this section may submit to the voters of the city, at a
4-6 separate election to be held on an available uniform election date
4-7 or at an election held under another provision of this Act,
4-8 including the election at which the proposition to initially
4-9 authorize the collection of a sales and use tax for the benefit of
4-10 the corporation is submitted, a ballot proposition that authorizes
4-11 the corporation to use the sales and use tax, including any amount
4-12 previously authorized and collected, for a specific project or for
4-13 a specific category of projects that does not qualify under this
4-14 section but qualifies under Section 4B of this Act. Prior approval
4-15 of a specific project at an election or completion of a specific
4-16 project approved at an election does not prohibit a city from
4-17 seeking voter approval of an additional project or category of
4-18 projects under this subsection to be funded from the same sales and
4-19 use tax.
4-20 (2) In the election to authorize the use of the sales
4-21 or use tax for a specific project or for a specific category of
4-22 projects not authorized under this section, the project or category
4-23 of projects must be clearly described on the ballot so that a voter
4-24 will be able to discern the limits of the specific project or
4-25 category of projects authorized by the proposition. If maintenance
5-1 and operating costs of an otherwise authorized facility are to be
5-2 paid from the sales or use tax, the ballot language must clearly
5-3 state that fact.
5-4 (3) Before an election may be held under this
5-5 subsection, the corporation must comply with the public notice and
5-6 hearing requirements prescribed by Section 4B(a-1) of this Act.
5-7 (4) If a majority of the voters voting on the issue do
5-8 not approve a specific project or a specific category of projects
5-9 at an election under this subsection, another election may not be
5-10 held on the same project or category of projects before the first
5-11 anniversary of the date of the most recent election disapproving
5-12 the project or category of projects.
5-13 SECTION 3. Section 4B, Development Corporation Act of 1979
5-14 (Article 5190.6, Vernon's Texas Civil Statutes), is amended by
5-15 redesignating Subsection (a-1) as Subsection (a-3) and adding a new
5-16 Subsection (a-1) to read as follows:
5-17 (a-1) A corporation may not undertake or spend money to
5-18 undertake a project unless the city has adopted a sales and use tax
5-19 under this section for the benefit of the corporation. Before
5-20 spending money to undertake a specific project or general type of
5-21 project, a corporation shall publish notice of the project and hold
5-22 at least one public hearing on the proposed project. The
5-23 corporation shall publish notice under this subsection by
5-24 publishing notice of the project in a newspaper of general
5-25 circulation in the city or by posting a written notice of the
6-1 project in a place readily accessible to the general public at all
6-2 times. The corporation shall publish or post the notice not
6-3 earlier than 15 days or later than seven days before the scheduled
6-4 time of the public hearing on the project. Notice required under
6-5 this subsection is in addition to any notice required under Chapter
6-6 551, Government Code.
6-7 (a-3) A corporation may undertake a project under this
6-8 section unless within 60 days after first publishing notice of a
6-9 specific project or type of general project under Subsection (a-1)
6-10 of this section the governing body of the city receives a petition
6-11 from more than 10 percent of the registered voters of the city
6-12 where the petition requests that an election be held before that
6-13 specific project or that general type of project is undertaken. An
6-14 election is not required to be held after the submission of a
6-15 petition if the qualified citizens of the city have previously
6-16 approved the undertaking of a specific project or that general type
6-17 of project at an election called for that purpose by the governing
6-18 body of the city or in conjunction with another election required
6-19 to be held under this section.
6-20 SECTION 4. Subsection (c), Section 4B, Development
6-21 Corporation Act of 1979 (Article 5190.6, Vernon's Texas Civil
6-22 Statutes), is amended to read as follows:
6-23 (c) The board of directors of a corporation under this
6-24 section consists of seven directors who are appointed by the
6-25 governing body of the eligible city for two-year terms of office.
7-1 A director may be removed by the governing body of the eligible
7-2 city at any time without cause. Each director must be a resident
7-3 of the eligible city. Three directors shall be persons who are not
7-4 employees, officers, or members of the governing body of the
7-5 eligible city. A majority of the entire membership of the board is
7-6 a quorum. Notwithstanding any other provision of this subsection,
7-7 if a city dissolves a corporation created under Section 4A of this
7-8 Act and creates a corporation under this section, a person serving
7-9 as a director of the corporation created under Section 4A of this
7-10 Act at the time of dissolution may serve on the board of the
7-11 corporation created under this section. The board shall conduct
7-12 all meetings within the boundaries of the eligible city. The board
7-13 shall appoint a president, a secretary, and other officers of the
7-14 corporation that the governing body of the eligible city considers
7-15 necessary. The corporation's registered agent must be an
7-16 individual resident of the state and the corporation's registered
7-17 office must be within the boundaries of the eligible city.
7-18 SECTION 5. Section 4B, Development Corporation Act of 1979
7-19 (Article 5190.6, Vernon's Texas Civil Statutes), as amended by
7-20 Chapters 1022 and 1031, Acts of the 73rd Legislature, 1993, is
7-21 amended by amending Subsections (e) and (f) and adding Subsections
7-22 (i-1), (i-2), and (i-3) to read as follows:
7-23 (e) The rate of a tax adopted under this section must be
7-24 one-eighth, one-fourth, three-eighths, or one-half of one percent.
7-25 The ballot proposition at the election held to adopt the tax must
8-1 clearly state that the voters are voting on the adoption of a new
8-2 sales and use tax, specify the rate of the tax to be adopted, and
8-3 identify the proposed use of or purpose for the tax revenue. In
8-4 addition, if maintenance and operating costs are to be paid from
8-5 the tax, the ballot language must clearly state that fact. A
8-6 corporation that holds an election to reduce or abolish a tax
8-7 imposed under Section 4A of this Act may, in the same or in a
8-8 separate proposition on the same ballot, adopt a tax under this
8-9 section. If an eligible city adopts the tax, a tax is imposed on
8-10 the receipts from the sale at retail of taxable items within the
8-11 eligible city at the rate approved at the election. There is also
8-12 imposed an excise tax on the use, storage, or other consumption
8-13 within the eligible city of tangible personal property purchased,
8-14 leased, or rented from a retailer during the period that the tax is
8-15 effective within the eligible city. The rate of the excise tax is
8-16 the same as the rate of the sales tax portion of the tax and is
8-17 applied to the sale price of the tangible personal property.
8-18 [(e) If an eligible city adopts the tax, a tax is imposed on
8-19 the receipts from the sale at retail of taxable items within the
8-20 eligible city at a rate approved by the governing body of the
8-21 eligible city. The rate must be equal to one-eighth, one-fourth,
8-22 three-eighths, or one-half of one percent. There is also imposed
8-23 an excise tax on the use, storage, or other consumption within the
8-24 eligible city of tangible personal property purchased, leased, or
8-25 rented from a retailer during the period that the tax is effective
9-1 within the eligible city. The rate of the excise tax is the same
9-2 as the rate of the sales tax portion of the tax and is applied to
9-3 the sale price of the tangible personal property.]
9-4 (f) Chapter 321, Tax Code, governs the imposition,
9-5 computation, administration, collection, abolition, and remittance
9-6 of the tax except as inconsistent with this section. The tax
9-7 imposed under this section takes effect as provided by Section
9-8 321.102(a), Tax Code. If, however, an election is held under this
9-9 section at the same time an election is held to impose or change
9-10 the rate of the additional municipal sales and use tax, the tax
9-11 under this section and the imposition or change in rate of the
9-12 additional municipal sales and use tax take effect as provided by
9-13 Section 321.102(b), Tax Code. The ballot proposition for an
9-14 election to impose the tax under this section and to impose or
9-15 change the rate of the additional municipal sales and use tax must
9-16 clearly state that the voters are voting on the adoption of a new
9-17 sales and use tax or the change of an existing tax, or both, and
9-18 include the information prescribed by Subsection (e) of this
9-19 section, as appropriate. An election to impose the tax under this
9-20 section and to impose or change the rate of the additional
9-21 municipal sales and use tax may be held on the same day, and voters
9-22 may vote on the issues in the same proposition or in separate
9-23 propositions on the same ballot. After the effective date of the
9-24 taxes imposed under this section, the adoption of a sales and use
9-25 tax or the attempted adoption of a sales and use tax by the
10-1 eligible city or any other taxing jurisdiction having territory in
10-2 the city does not impair the taxes imposed under this section.
10-3 (i-1) On petition of 10 percent or more of the registered
10-4 voters of the city requesting an election on the dissolution of the
10-5 corporation, the governing body shall order an election on the
10-6 issue at the next available uniform election date that is not less
10-7 than 45 days after the date that the petition is filed. The
10-8 election must be conducted according to the applicable provisions
10-9 of the Election Code. The ballot for the election shall be printed
10-10 to provide for voting for or against the proposition: "Dissolution
10-11 of the ___________________ (name of the corporation)." If a
10-12 majority of voters voting on the issue approve the dissolution, the
10-13 corporation shall continue operations only as necessary to pay the
10-14 principal of and interest on its bonds and to meet obligations
10-15 incurred before the date of the election and, to the extent
10-16 practicable, shall dispose of its assets and apply the proceeds to
10-17 satisfy those obligations. When the last of the obligations is
10-18 satisfied, any remaining assets of the corporation shall be
10-19 transferred to the city, and the corporation is dissolved. A tax
10-20 imposed under this section may not be collected after the last day
10-21 of the first calendar quarter beginning after notification to the
10-22 comptroller by the corporation that the last of its obligations is
10-23 satisfied.
10-24 (i-2) The governing body of an eligible city may call and
10-25 hold an election on the issue of abolishing the tax imposed under
11-1 this section. On petition of 10 percent or more of the registered
11-2 voters of the city requesting an election on the issue of
11-3 abolishing the tax, the governing body shall order an election on
11-4 the issue. The ballot shall be printed to provide for voting for
11-5 or against the proposition: "The abolition of the sales and use
11-6 tax for the promotion and development of new and expanded business
11-7 enterprises." Section 321.102(a), Tax Code, applies to the
11-8 abolition of a tax under this subsection. However, if before the
11-9 date of the election the corporation had issued bonds or incurred
11-10 other obligations secured by the tax, the tax shall continue to be
11-11 collected until the bonds or other obligations are paid. During
11-12 that period, the corporation, to the extent practicable, shall
11-13 dispose of its assets and apply the proceeds to satisfy the bonds
11-14 or other obligations. The corporation shall immediately notify the
11-15 comptroller when the bonds or other obligations have been paid.
11-16 When the last of the bonds or obligations is satisfied, any
11-17 remaining assets of the corporation shall be transferred to the
11-18 city, and the corporation is dissolved. A tax imposed under this
11-19 section may not be collected after the last day of the first
11-20 calendar quarter beginning after the date of notification to the
11-21 comptroller.
11-22 (i-3) At an election held to adopt a sales and use tax under
11-23 this section, the city may also allow the voters to vote to limit
11-24 the time during which the tax may be imposed. The city shall add
11-25 to the end of the ballot proposition prescribed by Subsection (e)
12-1 or (f) of this section: "to be imposed for _______ years" (insert
12-2 number of years). The governing body of the city shall set the
12-3 expiration date of the proposed tax to occur on the appropriate
12-4 anniversary of the effective date of the tax. A sales and use tax
12-5 imposed for a limited period under this subsection expires on the
12-6 date set by the governing body under this section or on an earlier
12-7 date if the corporation is dissolved under Subsection (i-1) of this
12-8 section or the tax is abolished under Subsection (i-2) of this
12-9 section. Before the 60th day before the date the tax is to expire,
12-10 the governing body shall send a notice to the comptroller stating
12-11 the expiration date of the tax. Revenue collected after the
12-12 expiration of the tax from the imposition of the tax after its
12-13 expiration date shall be forwarded by the state to the governing
12-14 body to be used to pay current bonded indebtedness of the city. A
12-15 city that has imposed a tax under this section may not extend the
12-16 period of the tax's imposition or reimpose the tax unless the
12-17 extension or reimposition is approved by a majority of the
12-18 qualified voters of the city voting in an election called and held
12-19 for that purpose.
12-20 SECTION 6. The Development Corporation Act of 1979 (Article
12-21 5190.6, Vernon's Texas Civil Statutes) is amended by adding Section
12-22 4C to read as follows:
12-23 Sec. 4C. (a) Not later than February 1 of each year, the
12-24 board of directors of a corporation created under Section 4A or 4B
12-25 of this Act shall submit to the comptroller a report in the form
13-1 required by the comptroller.
13-2 (b) The reporting form shall not exceed one page in length
13-3 and must include:
13-4 (1) a statement of the corporation's primary economic
13-5 development objectives;
13-6 (2) a statement of the corporation's total revenues
13-7 during the preceding fiscal year;
13-8 (3) a statement of the corporation's total
13-9 expenditures during the preceding fiscal year;
13-10 (4) a statement of the corporation's total
13-11 expenditures during the preceding fiscal year in each of the
13-12 following categories:
13-13 (A) administration;
13-14 (B) personnel;
13-15 (C) marketing or promotion;
13-16 (D) direct business incentives;
13-17 (E) debt service;
13-18 (F) capital costs; and
13-19 (G) payments to taxing units, including school
13-20 districts;
13-21 (5) a list of the corporation's capital assets,
13-22 including land and buildings; and
13-23 (6) any other information the comptroller requires to
13-24 determine the use of the sales and use tax imposed under Section 4A
13-25 or 4B of this Act to encourage economic development in this state.
14-1 (c) If a corporation fails to file a report in accordance
14-2 with this section or fails to include sufficient information in the
14-3 report, the comptroller shall provide to the corporation written
14-4 notice of this failure. The written notice must include
14-5 information on how to correct the failure.
14-6 (d) The comptroller may impose an administrative penalty of
14-7 $200 against a corporation that does not correct the failure before
14-8 the 31st day after the date the corporation receives the written
14-9 notice under Subsection (c) of this section.
14-10 (e) The comptroller by rule shall prescribe the procedures
14-11 for the imposition of an administrative penalty under this section.
14-12 The rules must protect the due process rights of a corporation.
14-13 (f) Not later than November 1 of each even-numbered year,
14-14 the comptroller shall submit to the legislature a report on the use
14-15 of the sales and use tax imposed under Sections 4A and 4B of this
14-16 Act to encourage economic development in this state.
14-17 (g) On request, the comptroller shall provide without charge
14-18 a copy of the report required by Subsection (f) of this section to
14-19 a corporation organized under Section 4A or 4B of this Act.
14-20 SECTION 7. (a) An election held before the effective date
14-21 of this Act to impose a sales and use tax for a limited period
14-22 under Section 4B, Development Corporation Act of 1979 (Article
14-23 5190.6, Vernon's Texas Civil Statutes), is valid and the
14-24 municipality may impose the tax in accordance with the election if:
14-25 (1) the election was otherwise held in accordance with
15-1 Section 4B, Development Corporation Act of 1979 (Article 5190.6,
15-2 Vernon's Texas Civil Statutes), as it existed on the date of the
15-3 election;
15-4 (2) the ballot proposition at the election held to
15-5 impose the tax prescribed the number of years for which the tax may
15-6 be imposed; and
15-7 (3) a majority of the voters voting at the election
15-8 voted in favor of the proposition to impose the tax.
15-9 (b) This section does not apply to an election held before
15-10 the effective date of this Act or to the imposition of a sales and
15-11 use tax in accordance with that election if the validity of the tax
15-12 is the subject of a lawsuit pending on the effective date of this
15-13 Act.
15-14 SECTION 8. This Act does not affect the authority of an
15-15 industrial development corporation created before the effective
15-16 date of this Act to continue a project that the corporation had
15-17 undertaken before the effective date of this Act.
15-18 SECTION 9. Subsection (n), Section 4B, Development
15-19 Corporation Act of 1979 (Article 5190.6, Vernon's Texas Civil
15-20 Statutes), is repealed.
15-21 SECTION 10. This Act takes effect September 1, 1997.
15-22 SECTION 11. The importance of this legislation and the
15-23 crowded condition of the calendars in both houses create an
15-24 emergency and an imperative public necessity that the
15-25 constitutional rule requiring bills to be read on three several
16-1 days in each house be suspended, and this rule is hereby suspended.