1-1 By: Sibley S.B. No. 747
1-2 (In the Senate - Filed February 25, 1997; March 3, 1997, read
1-3 first time and referred to Committee on Economic Development;
1-4 April 7, 1997, reported adversely, with favorable Committee
1-5 Substitute by the following vote: Yeas 10, Nays 0; April 7, 1997,
1-6 sent to printer.)
1-7 COMMITTEE SUBSTITUTE FOR S.B. No. 747 By: Sibley
1-8 A BILL TO BE ENTITLED
1-9 AN ACT
1-10 relating to the administration and financing of certain industrial
1-11 development corporations; providing an administrative penalty.
1-12 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-13 SECTION 1. Subsections (n) and (o), Section 4A, Development
1-14 Corporation Act of 1979 (Article 5190.6, Vernon's Texas Civil
1-15 Statutes), are amended to read as follows:
1-16 (n) At an election called and held under Subsection (d) or
1-17 (o) of this section, the city may also allow the voters to vote on
1-18 a ballot proposition that limits the length of time that a sales
1-19 and use tax may be imposed. If a city elects to limit the period
1-20 the sales and use tax may be imposed, there shall be added to the
1-21 end of the ballot proposition prescribed by Subsection (m) of this
1-22 section: "to be imposed for ________ years" (the number of years
1-23 to be inserted as appropriate). The governing body of the city
1-24 shall set the expiration date of the proposed tax to occur on the
1-25 appropriate anniversary of the effective date of the tax. A sales
1-26 and use tax imposed for a limited period under this subsection
1-27 expires on the date set by the governing body under this section or
1-28 on an earlier date if[, by a majority of the voters voting in an
1-29 election held in the city,] the tax is abolished under Subsection
1-30 (o) of this section [repealed]. [If an earlier abolition election
1-31 is held, Sections 321.102(a) and 321.402(b), Tax Code, apply to the
1-32 date of repeal.] A tax that is approved without a limit on its
1-33 period of imposition is effective until abolished in accordance
1-34 with Subsection (o) of this section [repealed by election]. Before
1-35 the 60th day before the date that a tax is to expire, the governing
1-36 body shall send a notice to the comptroller stating the expiration
1-37 date of the tax. Revenue collected after the expiration of the tax
1-38 from the imposition of the tax after its expiration date shall be
1-39 forwarded by the state to the governing body to be used to pay
1-40 current bonded indebtedness of the municipality. A municipality
1-41 that has imposed a tax under this section may not extend the period
1-42 of the tax's imposition or reimpose the tax unless the extension or
1-43 reimposition is approved by a majority of the qualified voters of
1-44 the municipality voting in an election called and held for that
1-45 purpose [after its expiration date]. If a city reduces the rate of
1-46 an additional sales and use tax under Chapter 321, Tax Code, to
1-47 impose a tax under this section for a limited period as provided
1-48 under this subsection, and does not have an election to change the
1-49 rate of the additional sales and use tax before the expiration date
1-50 of the tax under this section, the rate of the additional sales and
1-51 use tax under Section 321.101(b), Tax Code, in the city returns to
1-52 its previous rate in effect at the time the tax imposed under this
1-53 section was adopted on the expiration date of the tax under this
1-54 section without having to hold an election under Chapter 321, Tax
1-55 Code, to impose the increase in the rate.
1-56 (o) In a city in which a sales and use tax for the benefit
1-57 of a corporation has been imposed under this section, in the same
1-58 manner and by the same procedure the city by majority vote of the
1-59 qualified voters of the city voting at an election called and held
1-60 for the purpose may reduce, [or] increase, or abolish the tax. The
1-61 rate may be reduced in one or more increments of one-eighth of one
1-62 percent to a minimum of one-eighth of one percent or increased in
1-63 one or more increments of one-eighth of one percent to a maximum of
1-64 one-half of one percent. On petition of 10 percent or more of the
2-1 registered voters of the city requesting an election on the
2-2 increase, [or] decrease, or abolition of the tax under this
2-3 section, the governing body of the city shall order an election on
2-4 the issue. The ballot shall be printed in the same manner as the
2-5 ballot under Subsection (m) of this section, except that the ballot
2-6 to abolish the tax shall be printed to provide for voting for or
2-7 against the proposition: "The abolition of the sales and use tax
2-8 for the promotion and development of new and expanded business
2-9 enterprises." Section 321.102(a), Tax Code, applies to the
2-10 abolition of a tax under this subsection. However, if before the
2-11 date of the election the corporation had issued bonds or incurred
2-12 other obligations secured by the tax, the tax shall continue to be
2-13 collected until the bonds or other obligations are paid. The
2-14 corporation shall immediately notify the comptroller when the bonds
2-15 or other obligations have been paid. A tax imposed under this
2-16 section may not be collected after the last day of the first
2-17 calendar quarter beginning after the date of notification to the
2-18 comptroller.
2-19 SECTION 2. Section 4A, Development Corporation Act of 1979
2-20 (Article 5190.6, Vernon's Texas Civil Statutes), is amended by
2-21 adding Subsection (s) to read as follows:
2-22 (s)(1) A city that creates or has created a corporation
2-23 governed by this section may submit to the voters of the city, at a
2-24 separate election to be held on an available uniform election date
2-25 or at an election held under another provision of this Act,
2-26 including the election at which the proposition to initially
2-27 authorize the collection of a sales and use tax for the benefit of
2-28 the corporation is submitted, a ballot proposition that authorizes
2-29 the corporation to use the sales and use tax, including any amount
2-30 previously authorized and collected, for a specific project or for
2-31 a specific category of projects that does not qualify under this
2-32 section but qualifies under Section 4B of this Act. Prior approval
2-33 of a specific project at an election or completion of a specific
2-34 project approved at an election does not prohibit a city from
2-35 seeking voter approval of an additional project or category of
2-36 projects under this subsection to be funded from the same sales and
2-37 use tax.
2-38 (2) In the election to authorize the use of the sales
2-39 or use tax for a specific project or for a specific category of
2-40 projects not authorized under this section, the project or category
2-41 of projects must be clearly described on the ballot so that a voter
2-42 will be able to discern the limits of the specific project or
2-43 category of projects authorized by the proposition. If maintenance
2-44 and operating costs of an otherwise authorized facility are to be
2-45 paid from the sales or use tax, the ballot language must clearly
2-46 state that fact.
2-47 (3) Before an election may be held under this
2-48 subsection, the corporation must comply with the public notice and
2-49 hearing requirements prescribed by Section 4B(a-1) of this Act.
2-50 (4) If a majority of the voters voting on the issue do
2-51 not approve a specific project or a specific category of projects
2-52 at an election under this subsection, another election may not be
2-53 held on the same project or category of projects before the first
2-54 anniversary of the date of the most recent election disapproving
2-55 the project or category of projects.
2-56 SECTION 3. Section 4B, Development Corporation Act of 1979
2-57 (Article 5190.6, Vernon's Texas Civil Statutes), is amended by
2-58 redesignating Subsection (a-1) as Subsection (a-3) and adding a new
2-59 Subsection (a-1) to read as follows:
2-60 (a-1) A corporation may not undertake or spend money to
2-61 undertake a project unless the city has adopted a sales and use tax
2-62 under this section for the benefit of the corporation. Before
2-63 spending money to undertake a specific project or general type of
2-64 project, a corporation shall publish notice of the project and hold
2-65 at least one public hearing on the proposed project. The
2-66 corporation shall publish notice under this subsection by
2-67 publishing notice of the project in a newspaper of general
2-68 circulation in the city or by posting a written notice of the
2-69 project in a place readily accessible to the general public at all
3-1 times. The corporation shall publish or post the notice not
3-2 earlier than 15 days or later than seven days before the scheduled
3-3 time of the public hearing on the project. Notice required under
3-4 this subsection is in addition to any notice required under Chapter
3-5 551, Government Code.
3-6 (a-3) A corporation may undertake a project under this
3-7 section unless within 60 days after first publishing notice of a
3-8 specific project or type of general project under Subsection (a-1)
3-9 of this section the governing body of the city receives a petition
3-10 from more than 10 percent of the registered voters of the city
3-11 where the petition requests that an election be held before that
3-12 specific project or that general type of project is undertaken. An
3-13 election is not required to be held after the submission of a
3-14 petition if the qualified citizens of the city have previously
3-15 approved the undertaking of a specific project or that general type
3-16 of project at an election called for that purpose by the governing
3-17 body of the city or in conjunction with another election required
3-18 to be held under this section.
3-19 SECTION 4. Subsection (c), Section 4B, Development
3-20 Corporation Act of 1979 (Article 5190.6, Vernon's Texas Civil
3-21 Statutes), is amended to read as follows:
3-22 (c) The board of directors of a corporation under this
3-23 section consists of seven directors who are appointed by the
3-24 governing body of the eligible city for two-year terms of office.
3-25 A director may be removed by the governing body of the eligible
3-26 city at any time without cause. Each director must be a resident
3-27 of the eligible city. Three directors shall be persons who are not
3-28 employees, officers, or members of the governing body of the
3-29 eligible city. A majority of the entire membership of the board is
3-30 a quorum. Notwithstanding any other provision of this subsection,
3-31 if a city dissolves a corporation created under Section 4A of this
3-32 Act and creates a corporation under this section, a person serving
3-33 as a director of the corporation created under Section 4A of this
3-34 Act at the time of dissolution may serve on the board of the
3-35 corporation created under this section. The board shall conduct
3-36 all meetings within the boundaries of the eligible city. The board
3-37 shall appoint a president, a secretary, and other officers of the
3-38 corporation that the governing body of the eligible city considers
3-39 necessary. The corporation's registered agent must be an
3-40 individual resident of the state and the corporation's registered
3-41 office must be within the boundaries of the eligible city.
3-42 SECTION 5. Section 4B, Development Corporation Act of 1979
3-43 (Article 5190.6, Vernon's Texas Civil Statutes), as amended by
3-44 Chapters 1022 and 1031, Acts of the 73rd Legislature, 1993, is
3-45 amended by amending Subsections (e) and (f) and adding Subsections
3-46 (i-1), (i-2), and (i-3) to read as follows:
3-47 (e) The rate of a tax adopted under this section must be
3-48 one-eighth, one-fourth, three-eighths, or one-half of one percent.
3-49 The ballot proposition at the election held to adopt the tax must
3-50 clearly state that the voters are voting on the adoption of a new
3-51 sales and use tax, specify the rate of the tax to be adopted, and
3-52 identify the proposed use of or purpose for the tax revenue. In
3-53 addition, if maintenance and operating costs are to be paid from
3-54 the tax, the ballot language must clearly state that fact. A
3-55 corporation that holds an election to reduce or abolish a tax
3-56 imposed under Section 4A of this Act may, in the same or in a
3-57 separate proposition on the same ballot, adopt a tax under this
3-58 section. If an eligible city adopts the tax, a tax is imposed on
3-59 the receipts from the sale at retail of taxable items within the
3-60 eligible city at the rate approved at the election. There is also
3-61 imposed an excise tax on the use, storage, or other consumption
3-62 within the eligible city of tangible personal property purchased,
3-63 leased, or rented from a retailer during the period that the tax is
3-64 effective within the eligible city. The rate of the excise tax is
3-65 the same as the rate of the sales tax portion of the tax and is
3-66 applied to the sale price of the tangible personal property.
3-67 [(e) If an eligible city adopts the tax, a tax is imposed on
3-68 the receipts from the sale at retail of taxable items within the
3-69 eligible city at a rate approved by the governing body of the
4-1 eligible city. The rate must be equal to one-eighth, one-fourth,
4-2 three-eighths, or one-half of one percent. There is also imposed
4-3 an excise tax on the use, storage, or other consumption within the
4-4 eligible city of tangible personal property purchased, leased, or
4-5 rented from a retailer during the period that the tax is effective
4-6 within the eligible city. The rate of the excise tax is the same
4-7 as the rate of the sales tax portion of the tax and is applied to
4-8 the sale price of the tangible personal property.]
4-9 (f) Chapter 321, Tax Code, governs the imposition,
4-10 computation, administration, collection, abolition, and remittance
4-11 of the tax except as inconsistent with this section. The tax
4-12 imposed under this section takes effect as provided by Section
4-13 321.102(a), Tax Code. If, however, an election is held under this
4-14 section at the same time an election is held to impose or change
4-15 the rate of the additional municipal sales and use tax, the tax
4-16 under this section and the imposition or change in rate of the
4-17 additional municipal sales and use tax take effect as provided by
4-18 Section 321.102(b), Tax Code. The ballot proposition for an
4-19 election to impose the tax under this section and to impose or
4-20 change the rate of the additional municipal sales and use tax must
4-21 clearly state that the voters are voting on the adoption of a new
4-22 sales and use tax or the change of an existing tax, or both, and
4-23 include the information prescribed by Subsection (e) of this
4-24 section, as appropriate. An election to impose the tax under this
4-25 section and to impose or change the rate of the additional
4-26 municipal sales and use tax may be held on the same day, and voters
4-27 may vote on the issues in the same proposition or in separate
4-28 propositions on the same ballot. After the effective date of the
4-29 taxes imposed under this section, the adoption of a sales and use
4-30 tax or the attempted adoption of a sales and use tax by the
4-31 eligible city or any other taxing jurisdiction having territory in
4-32 the city does not impair the taxes imposed under this section.
4-33 (i-1) On petition of 10 percent or more of the registered
4-34 voters of the city requesting an election on the dissolution of the
4-35 corporation, the governing body shall order an election on the
4-36 issue at the next available uniform election date that is not less
4-37 than 45 days after the date that the petition is filed. The
4-38 election must be conducted according to the applicable provisions
4-39 of the Election Code. The ballot for the election shall be printed
4-40 to provide for voting for or against the proposition: "Dissolution
4-41 of the ___________________ (name of the corporation)." If a
4-42 majority of voters voting on the issue approve the dissolution, the
4-43 corporation shall continue operations only as necessary to pay the
4-44 principal of and interest on its bonds and to meet obligations
4-45 incurred before the date of the election and, to the extent
4-46 practicable, shall dispose of its assets and apply the proceeds to
4-47 satisfy those obligations. When the last of the obligations is
4-48 satisfied, any remaining assets of the corporation shall be
4-49 transferred to the city, and the corporation is dissolved. A tax
4-50 imposed under this section may not be collected after the last day
4-51 of the first calendar quarter beginning after notification to the
4-52 comptroller by the corporation that the last of its obligations is
4-53 satisfied.
4-54 (i-2) The governing body of an eligible city may call and
4-55 hold an election on the issue of abolishing the tax imposed under
4-56 this section. On petition of 10 percent or more of the registered
4-57 voters of the city requesting an election on the issue of
4-58 abolishing the tax, the governing body shall order an election on
4-59 the issue. The ballot shall be printed to provide for voting for
4-60 or against the proposition: "The abolition of the sales and use
4-61 tax for the promotion and development of new and expanded business
4-62 enterprises." Section 321.102(a), Tax Code, applies to the
4-63 abolition of a tax under this subsection. However, if before the
4-64 date of the election the corporation had issued bonds or incurred
4-65 other obligations secured by the tax, the tax shall continue to be
4-66 collected until the bonds or other obligations are paid. During
4-67 that period, the corporation, to the extent practicable, shall
4-68 dispose of its assets and apply the proceeds to satisfy the bonds
4-69 or other obligations. The corporation shall immediately notify the
5-1 comptroller when the bonds or other obligations have been paid.
5-2 When the last of the bonds or obligations is satisfied, any
5-3 remaining assets of the corporation shall be transferred to the
5-4 city, and the corporation is dissolved. A tax imposed under this
5-5 section may not be collected after the last day of the first
5-6 calendar quarter beginning after the date of notification to the
5-7 comptroller.
5-8 (i-3) At an election held to adopt a sales and use tax under
5-9 this section, the city may also allow the voters to vote to limit
5-10 the time during which the tax may be imposed. The city shall add
5-11 to the end of the ballot proposition prescribed by Subsection (e)
5-12 or (f) of this section: "to be imposed for _______ years" (insert
5-13 number of years). The governing body of the city shall set the
5-14 expiration date of the proposed tax to occur on the appropriate
5-15 anniversary of the effective date of the tax. A sales and use tax
5-16 imposed for a limited period under this subsection expires on the
5-17 date set by the governing body under this section or on an earlier
5-18 date if the corporation is dissolved under Subsection (i-1) of this
5-19 section or the tax is abolished under Subsection (i-2) of this
5-20 section. Before the 60th day before the date the tax is to expire,
5-21 the governing body shall send a notice to the comptroller stating
5-22 the expiration date of the tax. Revenue collected after the
5-23 expiration of the tax from the imposition of the tax after its
5-24 expiration date shall be forwarded by the state to the governing
5-25 body to be used to pay current bonded indebtedness of the city. A
5-26 city that has imposed a tax under this section may not extend the
5-27 period of the tax's imposition or reimpose the tax unless the
5-28 extension or reimposition is approved by a majority of the
5-29 qualified voters of the city voting in an election called and held
5-30 for that purpose.
5-31 SECTION 6. The Development Corporation Act of 1979 (Article
5-32 5190.6, Vernon's Texas Civil Statutes) is amended by adding Section
5-33 4C to read as follows:
5-34 Sec. 4C. (a) Not later than February 1 of each year, the
5-35 board of directors of a corporation created under Section 4A or 4B
5-36 of this Act shall submit to the comptroller a report in the form
5-37 required by the comptroller.
5-38 (b) The reporting form shall not exceed one page in length
5-39 and must include:
5-40 (1) a statement of the corporation's primary economic
5-41 development objectives;
5-42 (2) a statement of the corporation's total revenues
5-43 during the preceding fiscal year;
5-44 (3) a statement of the corporation's total
5-45 expenditures during the preceding fiscal year;
5-46 (4) a statement of the corporation's total
5-47 expenditures during the preceding fiscal year in each of the
5-48 following categories:
5-49 (A) administration;
5-50 (B) personnel;
5-51 (C) marketing or promotion;
5-52 (D) direct business incentives;
5-53 (E) debt service;
5-54 (F) capital costs; and
5-55 (G) payments to taxing units, including school
5-56 districts;
5-57 (5) a list of the corporation's capital assets,
5-58 including land and buildings; and
5-59 (6) any other information the comptroller requires to
5-60 determine the use of the sales and use tax imposed under Section 4A
5-61 or 4B of this Act to encourage economic development in this state.
5-62 (c) If a corporation fails to file a report in accordance
5-63 with this section or fails to include sufficient information in the
5-64 report, the comptroller shall provide to the corporation written
5-65 notice of this failure. The written notice must include
5-66 information on how to correct the failure.
5-67 (d) The comptroller may impose an administrative penalty of
5-68 $200 against a corporation that does not correct the failure before
5-69 the 31st day after the date the corporation receives the written
6-1 notice under Subsection (c) of this section.
6-2 (e) The comptroller by rule shall prescribe the procedures
6-3 for the imposition of an administrative penalty under this section.
6-4 The rules must protect the due process rights of a corporation.
6-5 (f) Not later than November 1 of each even-numbered year,
6-6 the comptroller shall submit to the legislature a report on the use
6-7 of the sales and use tax imposed under Sections 4A and 4B of this
6-8 Act to encourage economic development in this state.
6-9 (g) On request, the comptroller shall provide without charge
6-10 a copy of the report required by Subsection (f) of this section to
6-11 a corporation organized under Section 4A or 4B of this Act.
6-12 SECTION 7. (a) An election held before the effective date
6-13 of this Act to impose a sales and use tax for a limited period
6-14 under Section 4B, Development Corporation Act of 1979 (Article
6-15 5190.6, Vernon's Texas Civil Statutes), is valid and the
6-16 municipality may impose the tax in accordance with the election if:
6-17 (1) the election was otherwise held in accordance with
6-18 Section 4B, Development Corporation Act of 1979 (Article 5190.6,
6-19 Vernon's Texas Civil Statutes), as it existed on the date of the
6-20 election;
6-21 (2) the ballot proposition at the election held to
6-22 impose the tax prescribed the number of years for which the tax may
6-23 be imposed; and
6-24 (3) a majority of the voters voting at the election
6-25 voted in favor of the proposition to impose the tax.
6-26 (b) This section does not apply to an election held before
6-27 the effective date of this Act or to the imposition of a sales and
6-28 use tax in accordance with that election if the validity of the tax
6-29 is the subject of a lawsuit pending on the effective date of this
6-30 Act.
6-31 SECTION 8. This Act does not affect the authority of an
6-32 industrial development corporation created before the effective
6-33 date of this Act to continue a project that the corporation had
6-34 undertaken before the effective date of this Act.
6-35 SECTION 9. Subsection (n), Section 4B, Development
6-36 Corporation Act of 1979 (Article 5190.6, Vernon's Texas Civil
6-37 Statutes), is repealed.
6-38 SECTION 10. This Act takes effect September 1, 1997.
6-39 SECTION 11. The importance of this legislation and the
6-40 crowded condition of the calendars in both houses create an
6-41 emergency and an imperative public necessity that the
6-42 constitutional rule requiring bills to be read on three several
6-43 days in each house be suspended, and this rule is hereby suspended.
6-44 * * * * *