HBA-NLM C.S.H.B. 2894 76(R)BILL ANALYSIS Office of House Bill AnalysisC.S.H.B. 2894 By: Coleman County Affairs 4/13/1999 Committee Report (Substituted) BACKGROUND AND PURPOSE Midtown Houston is currently being revitalized by the Midtown Redevelopment Authority, in conjunction with a tax increment reinvestment zone established by the city. The purpose of this bill is to create a public improvement district to expand revitalization efforts in the area. C.S.H.B. 2894 creates the Midtown Municipal Management District to assess the needs of commercial property owners in the area to finance improvements and services, in accordance with Chapter 375 (Municipal Management Districts in General), Local Government Code. In addition, this bill sets forth the intent and findings of the legislature relating to the public benefit and purpose of the creation of the district. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Chapter 376, Local Government Code, by adding Subchapter H, as follows: SUBCHAPTER H. MIDTOWN MANAGEMENT DISTRICT Sec. 376.301. CREATION OF DISTRICT. Creates the Midtown Management District (district) as a special district under Section 59, Article XVI, Texas Constitution. Authorizes the name of the district to be changed by resolution of the board of directors of the district (board). Specifies that the creation of the district is essential to accomplish the purposes of Section 52 (Counties, Cities or Other Political Corporations or Subdivisions; Lending Credit; Grants; Bonds) and 52-a (Loan or Grant of Public Money for Economical Development), Article III, and Section 59 (Conservation and Development of Natural Resources; Conservation and Reclamation Districts), Article XVI, Texas Constitution. Sec. 376.302. DECLARATION OF INTENT. Sets forth the intent relating to the creation of the district. Sec. 376.303. DEFINITIONS. Defines "board," "district," "municipality," "county," and "utility" for the purposes of this Act. Sec. 376.304. BOUNDARIES. Specifies the territory contained in the district. . Sec. 376.305. FINDINGS RELATING TO BOUNDARIES. Sets forth the findings relating to the boundaries. Sec. 376.306. FINDINGS OF BENEFIT AND PUBLIC PURPOSE. Sets forth the findings relating to public benefit and purpose. Provides that the district will not act as the agent or instrumentality of any private interest even though many private interests will be benefited by the district, as will the general public. Sec. 376.307. APPLICATION OF OTHER LAW. Applies Chapter 375 (Municipal Management Districts in General), Local Government Code, to the district and its governing body and employees, except as otherwise provided by this Act, . Sec. 376.308. LIBERAL CONSTRUCTION OF SUBCHAPTER. Requires this subchapter to be liberally construed in conformity with the legislative findings and purposes stated in this subchapter. Sec. 376.309. BOARD OF DIRECTORS IN GENERAL. (a) Provides that the district is governed by a board of 17 directors who shall serve staggered four-year terms, with eight directors' terms expiring June 1 of an odd-numbered year and nine directors' terms expiring June 1 of the following odd-numbered year. Requires a director to receive compensation in accordance with Section 49.060 (Fees of Office; Reimbursement), Water Code. Sec. 376.310. APPOINTMENT OF DIRECTORS. Requires the mayor and the members of the governing body of the municipality to appoint directors from persons recommended by the board. Provides that a person is appointed if a majority of the members and the mayor vote to appoint that person. Prohibits a person from being appointed to the board if the appointment of that person would result in less than two-thirds of the directors residing in the municipality. Sec. 376.311. EX OFFICIO BOARD MEMBERS. Requires the director of certain departments described in this section to serve as a nonvoting ex officio director. Authorizes the board to appoint a director of the consolidated, renamed, or changed department, if a department described in this section is consolidated, renamed, or changed, as a nonvoting ex officio board member. Authorizes the board to appoint a representative of another department of the municipality that performs duties comparable to those performed by the abolished department. Authorizes the board to appoint the presiding officer of a nonprofit corporation that is actively involved in activities in the municipality's midtown area to serve as a nonvoting ex officio director. Sec. 376.312. CONFLICTS OF INTEREST; ONE-TIME AFFIDAVIT. (a) Authorizes a director to participate in all board votes and decisions, and provides that Chapter 171 governs conflict of interests for board members. (b) Provides that Section 171.004 does not apply to the district. Requires a director who has substantial interest in a business or charitable entity that will receive a pecuniary benefit from a board action to file a one-time affidavit declaring the interest. Authorizes the director to participate in a discussion or vote on that action under specified conditions. (c) Prohibits a director who is also an officer or employee of a public entity from participating in the discussion of or vote on a matter regarding a contract with that same public entity. (d) Provides that for the purposes of this section, a director has a substantial interest in a charitable entity in the same manner that a person would have a substantial interest in a business entity under Section 171.002. Sec. 376.313. ADDITIONAL POWERS OF DISTRICT. Authorizes the district to exercise the powers given to a corporation created under Section 4B, Article 5190.6, V.T.C.S. (Development Corporation Act of 1979). Authorizes the district to own, operate, acquire, construct, lease, improve, and maintain projects described by that section. Authorizes the district to exercise the powers given to a housing finance corporation created under Chapter 394 (Housing Financing Corporations in Municipalities and Counties), Local Government Code, to provide housing or residential development projects within the district. Sec. 376.314. AGREEMENTS: GENERAL; DONANTIONS, INTERLOCAL AGREEMENTS, AND LAW ENFORCEMENT SERVICES. Authorizes the district to make an agreement with or accept a donation, grant, or loan from any person. Provides that the implementation of a project is a governmental function or service for the purposes of Chapter 791, Government Code. Authorizes the district to contract with the municipality or the county for the municipality or county to provide law enforcement services in the district for a fee. Sec.376.315. NONPROFIT CORPORATION. (a) Authorizes the board by resolution to authorize the creation of a nonprofit corporation to aid, assist, and act on behalf of the district in implementing a project or providing a service authorized by this Act. (b) Requires the board to appoint the board of directors of a nonprofit corporation created under this section. Requires the board of directors of the nonprofit corporation to serve in the same manner as, for the same term as, and on the conditions of the board of directors of a local government corporation created under Subchapter D (Local Government Corporations), Chapter 431, Transportation Code. (c) Provides that a nonprofit corporation created under this section has the powers of and is considered for purposes of this Act to be a local government corporation created under Subchapter D, Chapter 431, Transportation Code. (d) Authorizes a nonprofit corporation created under this section to implement any project and provide any services authorized by this Act. Sec. 376.316. ANNEXATION. Authorizes the district, without further authorization, to annex land located within the boundaries of a reinvestment zone created by the city under Chapter 311 (Tax Increment Financing Act), Tax Code, with the consent of the city council of the city, in addition to annexing land in accordance with Subchapter C (Boundaries), Chapter 375, Local Government Code. Sec. 376.317. PETITION REQUIRED FOR FINANCING SERVICES AND IMPROVEMENTS. Prohibits the board from financing services and improvement projects under this Act unless a written petition requesting those improvements or services has been filed with the board. Provides that the petition must be signed by certain persons described by this section. Sec. 376.318. ELECTIONS. Requires the district to hold an election in the manner provided by Subchapter L (Elections), Chapter 375, Government Code, to obtain voter approval before the district imposes a maintenance tax or issues bonds payable from ad valorem taxes or assessments in addition to other necessary elections. Authorizes the board to submit multiple purposes in a single proposition at an election. Sec. 376.319. MAINTENANCE TAX. Authorizes the district, if authorized at an election held in accordance with Section 376.318, to impose and collect an annual ad valorem tax on taxable property in the district for the maintenance and operation of the district and the improvements constructed or acquired by the district or for the provision of services. Requires the board to determine the tax rate. Sec. 376.320. CERTAIN RESIDENTIAL PROPERTY IS NOT EXEMPT. Prohibits certain properties described by the section from being exempt from the imposition of a tax, an impact fee, or an assessment under this subchapter. Sec. 376.321. UTILITIES. Prohibits the district from imposing an assessment or impact fee on a utility's property. Sec. 376.322. DISBURSEMENTS OR TRANSFERS OF FUNDS. Requires the board by resolution to establish the number of directors' signatures and the procedure required for a disbursement or transfer of the district's money. Sec. 376.323. COMPETITIVE BIDDING. Authorizes the district to enter a contract for more than $25,000 for certain services, improvements, or purchases. Sec. 376.324. EXCEPTION FOR DISSOLUTION OF DISTRICT WITH OUTSTANDING DEBTS. Authorizes the board to vote to dissolve a district that has debt. Requires the district to remain in existence solely for the limited purpose of discharging its debts, if the vote is in favor of dissolution. SECTION 2. Sets forth the findings of the legislature relating to the proper and legal notice of the intention to introduce this Act, recommendations filed by the Texas Natural Resource Conservation Commission, and compliance with the constitution and other state laws. SECTION 3. Provides that, notwithstanding Section 376.310, Local Government Code, as added by this Act, the initial board consists of certain persons named section. Provides that of the initial directors, the directors appointed for positions 1 through 9 serve until June 1, 2003, and the directors appointed for positions 10 through 17 serve until June 1, 2001. SECTION 4. Emergency clause. Effective date: upon passage. COMPARISON OF ORIGINAL TO SUBSTITUTE The substitute modifies the original in the caption by deleting text regarding the administration, powers, and duties of the Midtown Municipal Management District. C.S.H.B. 2894 modifies the original by conforming to legislative council format. C.S.H.B. 2894 modifies the original in SECTION 1 by amending Chapter 376, Local Government Code, to include a new Subchapter H (Midtown Management District), Chapter 376, Local Government Code. The substitutes redesignates and clarifies proposed text in certain SECTIONS of the original as new sections in Subchapter H, as follows: _Section 376.301 (Creation of the District), Local Government Code, redesignated from proposed SECTION 1. _Section 376.302 (Declaration of Intent), Local Government Code, redesignated from proposed SECTION 2. _Section 376.303 (Definitions), Local Government Code, redesignated from proposed SECTION 3. _Section 376.304 (Boundaries), Local Government Code, redesignated from proposed SECTION 4. _Section 376.305 (Findings Relating to Boundaries), Local Government Code, redesignated from proposed SECTION 5. _Section 376.306 (Findings of Benefit and Public Purpose), Local Government Code, redesignated from proposed SECTION 6. _Section 376.307 (Application of Other Law), Local Government Code, redesignated from proposed SECTION 7. _Section 376.308 (Liberal Construction of Subchapter), Local Government Code, redesignated from proposed SECTION 8. _Section 376.309 (Board of Directors in General), Local Government Code, redesignated from proposed SECTION 9 (Subsections (a)-(c).) Provides that the district is governed by a board of 17, rather than 11, directors, and establishes June 1 as the expiration date of a directors term in a given year. _Section 376.310 (Appointment of Directors), Local Government Code, redesignated from proposed SECTION 11. _Section 376.311 (Ex Officio Board Members), Local Government Code, redesignated from proposed SECTION 12 (b). _Section 376.312 (Conflicts of Interest; One-Time Affidavit), Local Government Code, redesignated from proposed SECTION 9 (Subsection (d).) The substitute includes new subsections, as follows: (b) Provides that Section 171.004 does not apply to the district. Requires a director who has substantial interest in a business or charitable entity that will receive a pecuniary benefit from a board action to file a one-time affidavit declaring the interest. Authorizes the director to participate in a discussion or vote on that action under specified conditions. (c) Prohibits a director who is also an officer or employee of a public entity from participating in the discussion of or vote on a matter regarding a contract with that same public entity. (d) Provides that for the purposes of this section, a director has a substantial interest in a charitable entity in the same manner that a person would have a substantial interest in a business entity under Section 171.002. _Section 376.313 (Additional Powers of the District), Local Government Code, redesignated from proposed SECTION 13 (Subsections (c) and (d).) _Section 376.314 (Agreements: General; Donations, Interlocal Agreements, and Law Enforcement Service), Local Government Code, redesignated from proposed SECTION 26 (Subsection (c)). _Section 376.315 (Nonprofit Corporation), Local Government Code, redesignated from proposed SECTION 17. _Section 376.316 (Annexation), Local Government Code, redesignated from proposed SECTION 28. _Section 376.317 (Petition Required For Financing Services and Improvements), Local Government Code, redesignated from proposed SECTION 15. _Section 376.318 (Elections), Local Government Code, redesignated from proposed SECTION 22. _Section 376.319 (Maintenance Tax), Local Government Code, redesignated from proposed SECTION 24. _Section 376.320 (Certain Residential Property is not Exempt), Local Government Code, redesignated from proposed SECTION 16. _Section 376.321 (Utilities), Local Government Code, redesignated from proposed SECTION 20 (Subsection (d).) The substitute clarifies the proposed text by prohibiting the district from imposing an assessment or impact fee on a utility's property. _Section 376.322 (Disbursements or Transfers of Funds), Local Government Code, redesignated from proposed SECTION 18. _Section 376.323 (Competitive Bidding Limit), Local Government Code, redesignated from proposed SECTION 27. _New Section 376.324 (Exception for Dissolution of District with Outstanding Debts), Local Government Code, redesignated from proposed SECTION 25. _SECTION 2 redesignated from proposed SECTION 29. _SECTION 3 redesignated from proposed SECTION 10. Includes names of certain persons serving as the intial board of directors. _SECTION 4 redesignated from proposed SECTION 31. The substitute deletes the proposed SECTION 30 which provided an effective date of September 1, 1999. The substitute deletes the proposed SECTION 14 relating to conflicts or inconsistencies with other laws. The substitute deletes the proposed SECTION 19 relating to the issuance of bonds by the district. The substitute deletes the proposed SECTION 20 (Subsections (a)-(c)), relating to the authority of the board to levy and collect an assessment, and relating to the effective date of a lien. The substitute deletes the proposed SECTION 21 relating to the city's approval of certain improvement projects. The substitute deletes the proposed SECTION 23 relating to the district's authority to impose impact fees. The substitute deletes the proposed SECTION 26 (Subsection (a) and (b)) relating to the protection of the public's interest and the authority of the district to contract with certain entities.