HBA-RBT H.B. 3258 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 3258 By: Bailey Ways & Means 5/3/1999 Introduced BACKGROUND AND PURPOSE H.B. 3258 is designed to meet needs of areas that have the transportation nodes necessary to build upon international, industrial and commercial opportunities. Historically, growth and prosperity have grown away from these transportation nodes, leaving an overlay of poverty and economic distress over areas that should be bursting with economic potential. Incentives that address economic development, education, and quality of life are necessary to entice business owners to once again take advantage of proximity to major transportation nodes and reinvest in these areas of the community while at the same time producing a stronger, more diversified market for international, commercial and industrial trade. If successful, the incentives would eliminate areas of poverty, increase the tax base, improve local labor skills, create needed jobs, elevate the quality of life of local residents, and allow the region and the state to better compete with others in international and domestic trade. This bill outlines provisions for the creation of a development zone and supportive neighborhood redevelopment zones. 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 Subtitle B, Title 12, Local Government Code, by adding Chapter 384 as follows: CHAPTER 384. COMMERCIAL AND INDUSTRIAL DEVELOPMENT ZONES SUBCHAPTER A. GENERAL PROVISIONS Sec. 384.001. DEFINITIONS. Defines "board" as a board of directors of a commercial and industrial development zone and "development zone" as an area designated as a commercial and industrial development zone under this chapter. Sec. 384.002. JURISDICTION OF MUNICIPALITY. Provides that, for the purposes of this chapter, territory in the extraterritorial jurisdiction of a municipality is considered to be in the jurisdiction of the municipality. SUBCHAPTER B. CREATION OF COMMERCIAL AND INDUSTRIAL DEVELOPMENT ZONE Sec. 384.031. CRITERIA FOR DEVELOPMENT ZONE CREATION. Sets forth criteria for development zone creation. Sec. 384.032. AREA OF PERVASIVE POVERTY, UNEMPLOYMENT, AND ECONOMIC DISTRESS. Provides that an area is an area of pervasive poverty, unemployment, and economic distress for the purposes of Section 384.031 if it meets the requirements of Section 2303.102 (Area of Pervasive Poverty, Unemployment, and Economic Distress), Government Code. Sec. 384.033. CREATION OF DEVELOPMENT ZONE. Provides that the governing body of a municipality or county, individually or in combination with other municipalities or counties, by ordinance or order may create as a development zone an area within its jurisdiction that meets the criteria under Section 384.031. Provides that each creating body must hold a public hearing before adopting an ordinance or order under this section. Prohibits the governing body of a county from designating territory in a municipality, including extraterritorial jurisdiction of a municipality, to be included in a proposed development zone unless the governing body of the municipality also designates the territory. Provides that a development zone created under this section is a political subdivision of the state and a special district. Sec. 384.034. DESIGNATING ORDINANCE OR ORDER. Provides that an ordinance or order designating an area as a development zone must describe precisely the area to be included in the zone by a legal description or by reference to roadways, lakes, waterways, or municipal or county boundaries, state a finding that the area meets the requirements of this chapter, summarize briefly the incentives, including tax incentives, that, at the election of the designating body, apply to business enterprises in the area, and designate the area as a development zone. Provides that a least one of the incentives must be an incentive that does not apply to all business enterprises located in the jurisdiction of a governmental entity that designated the area as a development zone. Sets forth that this section does not prohibit a municipality or county from extending additional incentives, including tax incentives, to business enterprises in a development zone by a separate ordinance or order. Sec. 384.035. TAX INCREMENT. Authorizes a creating body to allow one quarter of one percent of a local property tax increment to fund a development zone, as provided by Chapter 311 (Tax Increment Financing Act), Tax Code. Authorizes the fund, on adoption of an order or ordinance by each creating body, to be used to pay salaries of employees of the board and administrative expenses of the development zone. Sec. 384.036. AMENDING BOUNDARIES. Authorizes the creating body by ordinance or order to amend the boundary of a development zone after a public hearing on the issue. Sets forth requirements for the boundaries. Provides that the entire development zone with the amended boundary must continue to meet the unemployment and economic distress requirements of Section 384.031. Prohibits a creating body from making more than one boundary amendment for a development zone in a calendar year. Provides that if more than one body created the development zone, each body must agree on the amendment by ordinance or order. SUBCHAPTER C. BOARD OF DIRECTORS Sec. 384.061. BOARD OF DIRECTORS. Provides that a development zone is governed by a board of seven directors who serve two-year terms. Sets forth the manner of appointment of the directors. Provides that the initial terms of directors may be staggered, so long as a term does not exceed two years. Sec. 384.062. QUALIFICATIONS OF DIRECTORS. Provides that to serve as a director, a person must be at least 21 years old and be registered to vote in the county in which the development zone is located. Sec. 384.063. PERSONS DISQUALIFIED FROM SERVING. Provides that Section 49.052 (Disqualification of Directors), Water Code, applies to directors of a development zone created under this chapter as if the zone were a district governed by that section. Sec. 384.064. BOARD VACANCIES. Requires a vacancy in the office of director to be filled by appointment by the entity that appointed the vacating director. Sec. 384.065. REMOVAL OF DIRECTOR. Authorizes a majority of the board to remove a director for misconduct or failure to carry out the director's duties. Sec. 384.066. ORGANIZATION OF BOARD. Requires the board, after each appointment and qualification of directors by the appointing entities, to organize by electing a president, a vice president, a secretary, and any other officers the board considers necessary. Sec. 384.067. QUORUM; DIRECTOR'S DUTIES; MANAGEMENT OF ZONE. Provides that Sections 49.053 (Quorum), 49.057 (Management of District), and 49.058 (Conflicts of Interest), Water Code, apply to the board of directors of a development zone created under this chapter as if the zone were a district governed by those sections. Sec. 384.068. MEETINGS AND NOTICE. Requires the board to designate and establish a development zone office in the county. Authorizes the board to establish regular meetings to conduct development zone business and to hold special meetings at other times as the business of a zone requires. Requires notice of the time, place, and purpose of any meeting of the board to be given by posting a notice containing that information at a place convenient to the public within the development zone. Requires a copy of the notice to be furnished to the clerk or clerks of the county in which the zone is located, who shall post the notice on a bulletin board in the county courthouse used for that purpose. Sec. 384.069. DIRECTOR'S COMPENSATION; BOND AND OATH OF OFFICE. Provides that Sections 375.067 (Director's Bond and Oath), 375.069 (Board Position Not Civil Office of Emolument), and 375.070 (Compensation of Directors; Reimbursement of Expenses) apply to directors of a development zone created under this chapter as if the zone were a municipal management district. SUBCHAPTER D. POWERS AND DUTIES Sec. 384.101. GENERAL POWERS. Authorizes a development zone to acquire and dispose of projects and have the powers, authority, rights, and duties necessary to permit accomplishment of the purposes for which the zone was created. Authorizes a development zone to provide for general promotion of and tourist advertising regarding the zone and its vicinity and for a marketing program to attract visitors. Authorizes those activities to be conducted by the zone under contracts for professional services with persons or organizations selected by the zone. Authorizes a development zone to enter into a memorandum of understanding with any state agency, including an institution of higher education, to further the economic development of the zone. Provides that to the extent not inconsistent with this chapter, a development zone has the powers of a municipal management district created under Chapter 375 (Municipal Management Districts in General) and a county commissioners court under Section 381.004. Sec. 384.102. EMINENT DOMAIN. Authorizes a development zone not located within the corporate limits of a municipality to exercise the power of eminent domain, as provided by Chapter 21 (Eminent Domain), Property Code, to acquire interests in land within the zone the board of directors of the zone considers necessary to provide water and sewer services. Sec. 384.103. SUITS. Authorizes a development zone to, through its directors, sue and be sued in this state in the name of the development zone. Authorizes service of process in any suit to be had by serving a director. SUBCHAPTER E. BENEFITS OF DEVELOPMENT ZONE Sec. 384.201. GENERAL BENEFITS. Provides that to the extent not inconsistent with this chapter, a development zone has the powers and benefits of an enterprise zone, including powers and benefits relating to neighborhood enterprise associations, qualified businesses, enterprise projects, and state agencies under Chapter 2303 (Enterprise Zones), Government Code, and Chapters 151 (Limited Sales, Excise, and Use Tax) and 171 (Franchise Tax), Tax Code. Sec. 384.202. ENTERPRISE ZONE REFERENCES. Provides that a reference to the department in Chapter 2303, Government Code, means the board, except for the references to the department in Sections 2303.502 (Review of State Agency Rules; Report) and 2303.503 (State Preferences), Government Code, which continue to mean the Texas Department of Economic Development and a reference to a "governing body of a municipality or county that is the governing body of an enterprise zone" in Chapter 2303, Government Code, means a creating body under this chapter. Sec. 384.203. MONITORING. Requires the board to monitor each person in a development zone that receives benefits available under this chapter. Requires, on the board's request, the Texas Workforce Commission or the comptroller's office to provide to the board tax records of a person that receives benefits under this chapter. SUBCHAPTER F. GENERAL FISCAL PROVISIONS Sec. 384.301. EXPENDITURES. Authorizes a development zone's money to be disbursed only by check, draft, order, or other instrument signed by at least three directors. Authorizes the general manager, treasurer, or other employee of the development zone, if authorized by resolution of the board, to sign checks, drafts, orders, or other instruments on any development zone operation account on behalf of the board. Sec. 384.302. COMPETITIVE BIDDING; CONTRACT AWARD. Provides that Sections 375.221 (Competitive Bidding on Certain Public Works Contracts) and 375.223 (Supersedes Other Law) apply to a development zone created under this chapter as if the zone were a municipal management district, except that a contract between the development zone and a governmental entity or nonprofit corporation created under the Development Corporation Act of 1979 (Article 5190.6, V.T.C.S.) is not subject to the competitive bidding requirement. SUBCHAPTER G. DISSOLUTION Sec. 384.401. DISSOLUTION OF DEVELOPMENT ZONE BY CREATING BODY. Authorizes the dissolution of a development zone under specified criteria. Sec. 384.402. DISSOLUTION BY BOARD REQUEST. Authorizes a board to petition a creating body to dissolve the development zone under Section 384.401 if a majority of the board finds at any time before the authorization of bonds or the final lending of its credit that the proposed undertaking is impracticable or cannot be successfully and beneficially accomplished, or that all bonds of the development zone or other debts of the zone have been paid and the purposes of the zone have been accomplished. Sec. 384.403. TAXES. On dissolution of a development zone, any taxes levied on behalf of the zone are abolished. SECTION 2. Emergency clause. Effective date: upon passage.