1-1 AN ACT
1-2 relating to reinvestment zones and tax increment financing under
1-3 the Tax Increment Financing Act, tax abatement agreements within
1-4 those zones, and the administration of certain local government
1-5 corporations.
1-6 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-7 SECTION 1. Section 311.004(a), Tax Code, is amended to read
1-8 as follows:
1-9 (a) The ordinance designating an area as a reinvestment zone
1-10 must:
1-11 (1) describe the boundaries of the zone with
1-12 sufficient definiteness to identify with ordinary and reasonable
1-13 certainty the territory included in the zone;
1-14 (2) create a board of directors for the zone and
1-15 specify the number of directors of the board as provided by Section
1-16 311.009;
1-17 (3) provide that the zone take effect immediately upon
1-18 passage of the ordinance [on January 1 of the year following the
1-19 year in which the ordinance is adopted];
1-20 (4) provide a date for termination of the zone;
1-21 (5) assign a name to the zone for identification, with
1-22 the first zone created by a municipality designated as
1-23 "Reinvestment Zone Number One, City (or Town, as applicable) of
1-24 (name of municipality)" and subsequently created zones assigned
2-1 names in the same form numbered consecutively in the order of their
2-2 creation;
2-3 (6) establish a tax increment fund for the zone; and
2-4 (7) contain findings that:
2-5 (A) improvements in the zone will significantly
2-6 enhance the value of all the taxable real property in the zone and
2-7 will be of general benefit to the municipality; and
2-8 (B) the area meets the requirements of Section
2-9 311.005.
2-10 SECTION 2. Section 311.009, Tax Code, is amended by adding
2-11 Subsection (g) to read as follows:
2-12 (g) A member of the board of directors of a reinvestment
2-13 zone:
2-14 (1) is not a public official by virtue of that
2-15 position; and
2-16 (2) unless otherwise ineligible, may be appointed to
2-17 serve concurrently on the board of directors of a local government
2-18 corporation created under Subchapter D, Chapter 431, Transportation
2-19 Code.
2-20 SECTION 3. Section 311.010, Tax Code, is amended by amending
2-21 Subsections (a) and (b) and adding Subsections (d)-(f) to read as
2-22 follows:
2-23 (a) The board of directors of a reinvestment zone shall make
2-24 recommendations to the governing body of the municipality that
2-25 created the zone concerning the administration of this chapter in
2-26 the zone. The [In addition to the powers granted to the board
2-27 under this chapter, the] governing body of the municipality by
3-1 ordinance or resolution may authorize [delegate to] the board to
3-2 exercise any of the municipality's powers with respect to the
3-3 administration, management, or operation of the zone or [and duties
3-4 relating to] the implementation of the project plan for the zone,
3-5 except that the governing body may not authorize the board to:
3-6 (1) issue bonds;
3-7 (2) impose taxes or fees;
3-8 (3) exercise the power of eminent domain; or
3-9 (4) give final approval to the project plan [considers
3-10 advisable].
3-11 (b) The board of directors of a reinvestment zone and the
3-12 governing body of the municipality that creates a reinvestment zone
3-13 may each enter into agreements as the board or the governing body
3-14 considers necessary or convenient to implement the project plan and
3-15 reinvestment zone financing plan and achieve their purposes. An
3-16 agreement may provide for the regulation or restriction of the use
3-17 of land by imposing conditions, restrictions, or covenants that run
3-18 with the land. An agreement may during the term of the agreement
3-19 dedicate, pledge, or otherwise provide for the use of revenue in
3-20 [from] the tax increment fund to pay any project [the] costs that
3-21 benefit the reinvestment zone, including project costs relating to
3-22 the cost of buildings, schools, or other educational facilities
3-23 owned by or on behalf of a school district, community college
3-24 district, or other political subdivision of this state, railroad or
3-25 transit facilities, affordable housing, the remediation of
3-26 conditions that contaminate public or private land or buildings,
3-27 the preservation of the facade of a private or public building, or
4-1 the demolition of public or private buildings. An agreement may
4-2 dedicate revenue from the tax increment fund to pay the costs of
4-3 providing affordable [of replacing] housing or areas of public
4-4 assembly in or out of the zone. An agreement may dedicate revenue
4-5 from the tax increment fund to pay a neighborhood enterprise
4-6 association for providing services or carrying out projects
4-7 authorized under Subchapters E and G, Chapter 2303, Government
4-8 Code, in the zone. The term of an agreement with a neighborhood
4-9 enterprise association may not exceed 10 years.
4-10 (d) The board of directors of a reinvestment zone may
4-11 exercise any power granted to a municipality by Section 311.008,
4-12 except that:
4-13 (1) the municipality that created the reinvestment
4-14 zone by ordinance or resolution may restrict any power granted to
4-15 the board by this chapter; and
4-16 (2) the board may exercise a power granted to a
4-17 municipality under Section 311.008(a)(2) only with the consent of
4-18 the governing body of the municipality.
4-19 (e) After the governing body of a municipality by ordinance
4-20 creates a reinvestment zone under this chapter, the board of
4-21 directors of the zone may exercise any power granted to a board
4-22 under this chapter.
4-23 (f) The board of directors of a reinvestment zone and the
4-24 governing body of the municipality may enter into a contract with a
4-25 local government corporation to manage the reinvestment zone or
4-26 implement the project plan and reinvestment zone financing plan for
4-27 the term of the agreement. In this subsection, "local government
5-1 corporation" means a local government corporation created by the
5-2 municipality under Chapter 431, Transportation Code.
5-3 SECTION 4. Section 311.011, Tax Code, is amended by amending
5-4 Subsection (f) and adding Subsection (g) to read as follows:
5-5 (f) In a zone designated under Section 311.005(a)(5) that is
5-6 located in a county with a population of 2.1 million or more, the
5-7 project plan must provide that at least one-third of the [surface
5-8 area of the zone, excluding roads, streets, highways, utility
5-9 rights-of-way, and other public areas or areas exempt from ad
5-10 valorem taxation, be dedicated to residential housing and that at
5-11 least one-third of the] tax increment of the zone be used to
5-12 provide affordable [dedicated to providing low-income] housing
5-13 during the term of the zone.
5-14 (g) An amendment to the project plan or the reinvestment
5-15 zone financing plan for a zone does not apply to a school district
5-16 that participates in the zone unless the governing body of the
5-17 school district by official action approves the amendment, if the
5-18 amendment:
5-19 (1) has the effect of directly or indirectly
5-20 increasing the percentage or amount of the tax increment to be
5-21 contributed by the school district; or
5-22 (2) requires or authorizes the municipality creating
5-23 the zone to issue additional tax increment bonds or notes.
5-24 SECTION 5. Section 311.012, Tax Code, is amended by amending
5-25 Subsections (a) and (b) to read as follows:
5-26 (a) The amount of a taxing unit's tax increment for a year
5-27 is the amount of property taxes levied and collected by the unit
6-1 for that year on the captured appraised value of real property
6-2 taxable by the unit and located in a reinvestment zone.
6-3 (b) The captured appraised value of real property taxable by
6-4 a taxing unit for a year is the total appraised value of all real
6-5 [the] property taxable by the unit and located in a reinvestment
6-6 zone for that year less the tax increment base of the unit.
6-7 SECTION 6. Chapter 311, Tax Code, is amended by adding
6-8 Section 311.0125 to read as follows:
6-9 Sec. 311.0125. TAX ABATEMENT AGREEMENTS. (a)
6-10 Notwithstanding any provision in this chapter to the contrary, a
6-11 taxing unit other than a school district may enter into a tax
6-12 abatement agreement with an owner of real or personal property in a
6-13 reinvestment zone, regardless of whether the taxing unit deposits
6-14 or agrees to deposit any portion of its tax increment into the tax
6-15 increment fund.
6-16 (b) To be effective, an agreement to abate taxes on real
6-17 property in a reinvestment zone must be approved by:
6-18 (1) the board of directors of the reinvestment zone;
6-19 and
6-20 (2) the governing body of each taxing unit that
6-21 imposes taxes on real property in the reinvestment zone and
6-22 deposits or agrees to deposit any of its tax increment into the tax
6-23 increment fund for the zone.
6-24 (c) In any contract entered into by the board of directors
6-25 of a reinvestment zone in connection with bonds or other
6-26 obligations, the board may convenant that the board will not
6-27 approve a tax abatement agreement that applies to real property in
7-1 that zone.
7-2 (d) If a taxing unit enters into a tax abatement agreement
7-3 authorized by this section, taxes that are abated under that
7-4 agreement are not considered taxes to be imposed or produced by
7-5 that taxing unit in calculating the amount of:
7-6 (1) the tax increment of that taxing unit; or
7-7 (2) that taxing unit's deposit to the tax increment
7-8 fund for the reinvestment zone.
7-9 SECTION 7. Section 311.013, Tax Code, is amended by amending
7-10 Subsections (b), (f), (g), (h), and (i) and adding Subsections (j)
7-11 and (k) to read as follows:
7-12 (b) Each taxing unit shall pay into the tax increment fund
7-13 for the zone an amount equal to the tax increment produced by the
7-14 unit, less the sum of:
7-15 (1) property taxes produced from the tax increments
7-16 that are, by contract executed before the designation of the area
7-17 as a reinvestment zone, required to be paid by the unit to another
7-18 political subdivision; and
7-19 (2) a portion, not to exceed 15 percent, of the tax
7-20 increment produced by the unit as provided by the reinvestment zone
7-21 financing plan or a larger portion as provided by Subsection (f)
7-22 [or (g)].
7-23 (f) [The governing body of a taxing unit that taxes real
7-24 property located in the zone may determine the portion of the tax
7-25 increment produced by the taxing unit that the taxing unit will
7-26 retain from the tax increment and may decide to retain all of that
7-27 tax increment. The determination is not effective unless the
8-1 governing body of the taxing unit notifies the board of directors
8-2 of the zone in writing of its determination under this subsection
8-3 on or before the 60th day after the date on which the governing
8-4 body of the municipality approves the reinvestment zone financing
8-5 plan as provided by Section 311.011(d). The governing body of the
8-6 taxing unit may not decrease the portion of the tax increment that
8-7 it has determined to dedicate to a reinvestment zone fund after the
8-8 project plan is approved.]
8-9 [(g)] A taxing unit is not required to pay into the tax
8-10 increment fund any of its tax increment produced from property
8-11 located in a reinvestment zone designated under Section
8-12 311.005(a)[(5)] or in an area added to a reinvestment zone under
8-13 Section 311.007[(b)] unless the taxing unit enters into an
8-14 agreement to do so with the governing body of the municipality that
8-15 created the zone. A taxing unit may enter into an agreement under
8-16 this subsection at any time before or after the zone is created or
8-17 enlarged. The agreement may include conditions for payment of that
8-18 tax increment into the fund and must specify the portion of the tax
8-19 increment to be paid into the fund and the years for which that tax
8-20 increment is to be paid into the fund. The agreement and the
8-21 conditions in the agreement are binding on the taxing unit, the
8-22 municipality, and the board of directors of the zone.
8-23 (g) Subject to the provisions of Section 311.0125, in [(h)
8-24 In] lieu of permitting a portion of its tax increment to be paid
8-25 into the tax increment fund, and notwithstanding the provisions of
8-26 Section 312.203, a taxing unit, other than a city, may elect to
8-27 offer the owners of taxable real property in a reinvestment zone
9-1 created under this chapter an exemption from taxation of all or
9-2 part of the value of the property. Any agreement concerning an
9-3 exemption from ad valorem taxes shall be executed in the manner and
9-4 subject to the limitations of Chapter 312; provided, however, the
9-5 property covered by the agreement need not be in a zone created
9-6 pursuant to Chapter 312. A taxing unit may not offer a tax
9-7 abatement agreement to property owners in the zone after it has
9-8 entered into an agreement that its tax increments would be paid
9-9 into the tax increment fund pursuant to Subsection (f) [(g)].
9-10 (h) Subsection [(i) Subsections] (f) does [and (g) do] not
9-11 apply to a city with a population of more than 230,000 that borders
9-12 Mexico.
9-13 (i) Notwithstanding Subsection (c), a taxing unit is not
9-14 required to pay into a tax increment fund the applicable portion of
9-15 a tax increment attributable to delinquent taxes until those taxes
9-16 are collected.
9-17 (j) Section 26.05(f) does not prohibit a taxing unit from
9-18 depositing all of the tax increment produced by the taxing unit in
9-19 a reinvestment zone into the tax increment fund for that zone.
9-20 (k) A school district is not required to pay into the tax
9-21 increment fund any of its tax increment produced from property
9-22 located in an area added to the reinvestment zone under Section
9-23 311.007(a) or (b) unless the governing body of the school district
9-24 enters into an agreement to do so with the governing body of the
9-25 municipality that created the zone, including a municipality
9-26 described by Subsection (h). The governing body of a school
9-27 district may enter into an agreement under this subsection at any
10-1 time before or after the zone is created or enlarged. The
10-2 agreement may include conditions for payment of that tax increment
10-3 into the fund and must specify the portion of the tax increment to
10-4 be paid into the fund and the years for which that tax increment is
10-5 to be paid into the fund. The agreement and the conditions in the
10-6 agreement are binding on the school district, the municipality, and
10-7 the board of directors of the zone.
10-8 SECTION 8. Chapter 311, Tax Code, is amended by adding
10-9 Section 311.018 to read as follows:
10-10 Sec. 311.018. CONFLICTS WITH MUNICIPAL CHARTER. To the
10-11 extent of a conflict between this chapter and a municipal charter,
10-12 this chapter controls.
10-13 SECTION 9. Section 403.302(d), Government Code, as amended
10-14 by Chapters 1039, 1040, and 1071, Acts of the 75th Legislature,
10-15 Regular Session, 1997, is reenacted and amended to read as follows:
10-16 (d) For the purposes of this section, "taxable value" means
10-17 the market value of all taxable property less:
10-18 (1) the total dollar amount of any residence homestead
10-19 exemptions lawfully granted under Section 11.13(b) or (c), Tax
10-20 Code, in the year that is the subject of the study for each school
10-21 district;
10-22 (2) the total dollar amount of any exemptions granted
10-23 before May 31, 1993, within a reinvestment zone under agreements
10-24 authorized by Chapter 312, Tax Code;
10-25 (3) subject to Subsection (e), the total dollar amount
10-26 of any captured appraised value of property that:
10-27 (A) is within a reinvestment zone created on or
11-1 before May 31, 1999, or is proposed to be included within the
11-2 boundaries of a reinvestment zone as the boundaries of the zone and
11-3 the proposed portion of tax increment paid into the tax increment
11-4 fund by a school district are described in a written notification
11-5 provided by the municipality or the board of directors of the zone
11-6 to the governing bodies of the other taxing units in the manner
11-7 provided by Section 311.003(e), Tax Code, before May 31, 1999, and
11-8 within the boundaries of the zone as those boundaries existed on
11-9 September 1, 1999, including subsequent improvements to the
11-10 property regardless of when made;
11-11 (B) [is located in a reinvestment zone on August
11-12 31, 1999, that] generates taxes [a tax increment] paid into a tax
11-13 increment fund created under Chapter 311, Tax Code, under a
11-14 reinvestment zone financing plan approved under Section 311.011(d),
11-15 Tax Code, on or before September 1, 1999; [,] and
11-16 (C) is eligible for tax increment financing
11-17 under Chapter 311, Tax Code[, under a reinvestment zone financing
11-18 plan approved under Section 311.011(d), Tax Code, before September
11-19 1, 1999];
11-20 (4) the total dollar amount of any exemptions granted
11-21 under Section 11.251, Tax Code;
11-22 (5) the difference between the comptroller's estimate
11-23 of the market value and the productivity value of land that
11-24 qualifies for appraisal on the basis of its productive capacity,
11-25 except that the productivity value estimated by the comptroller may
11-26 not exceed the fair market value of the land;
11-27 (6) the portion of the appraised value of residence
12-1 homesteads of the elderly on which school district taxes are not
12-2 imposed in the year that is the subject of the study, calculated as
12-3 if the residence homesteads were appraised at the full value
12-4 required by law;
12-5 (7) a portion of the market value of property not
12-6 otherwise fully taxable by the district at market value because of
12-7 action required by statute or the constitution of this state that,
12-8 if the tax rate adopted by the district is applied to it, produces
12-9 an amount equal to the difference between the tax that the district
12-10 would have imposed on the property if the property were fully
12-11 taxable at market value and the tax that the district is actually
12-12 authorized to impose on the property, if this subsection does not
12-13 otherwise require that portion to be deducted;
12-14 (8) the market value of all tangible personal
12-15 property, other than manufactured homes, owned by a family or
12-16 individual and not held or used for the production of income;
12-17 (9) the appraised value of property the collection of
12-18 delinquent taxes on which is deferred under Section 33.06, Tax
12-19 Code;
12-20 (10) the portion of the appraised value of property
12-21 the collection of delinquent taxes on which is deferred under
12-22 Section 33.065, Tax Code; and
12-23 (11) the amount by which the market value of a
12-24 residence homestead to which Section 23.23, Tax Code, applies
12-25 exceeds the appraised value of that property as calculated under
12-26 that section.
12-27 SECTION 10. Sections 403.302(e)-(g), Government Code, are
13-1 amended to read as follows:
13-2 (e) The total dollar amount deducted in each year as
13-3 required by Subsection (d)(3) in a reinvestment zone created after
13-4 January 1, 1999, may not exceed the captured appraised value
13-5 estimated for that year as required by Section 311.011(c)(8), Tax
13-6 Code, in the reinvestment zone financing plan approved under
13-7 Section 311.011(d), Tax Code, before September 1, 1999. The number
13-8 of years for which the total dollar amount may be deducted under
13-9 Subsection (d)(3) shall for any zone, including those created on or
13-10 before January 1, 1999, be limited to the duration of the zone as
13-11 specified as required by Section 311.011(c)(9), Tax Code, in the
13-12 reinvestment zone financing plan approved under Section 311.011(d),
13-13 Tax Code, before September 1, 1999. The total dollar amount
13-14 deducted under Subsection (d)(3) for any zone, including those
13-15 created on or before January 1, 1999, may not be increased by any
13-16 reinvestment zone financing plan amendments that occur after August
13-17 31, 1999. The total dollar amount deducted under Subsection (d)(3)
13-18 for any zone, including those created on or before January 1, 1999,
13-19 may not be increased by a change made after August 31, 1999, in the
13-20 portion of the tax increment retained by the school district.
13-21 (f) The study shall determine the values as of January 1 of
13-22 each year.
13-23 (g) [(f)] The comptroller shall publish preliminary
13-24 findings, listing values by district, before February 1 of the year
13-25 following the year of the study. Preliminary findings shall be
13-26 delivered to each school district and shall be certified to the
13-27 commissioner of education.
14-1 (h) [(g)] On request of the commissioner of education or a
14-2 school district, the comptroller may audit a school district to
14-3 determine the total taxable value of property in the school
14-4 district, including the productivity values of land only if the
14-5 land qualifies for appraisal on that basis and the owner of the
14-6 land has applied for and received a productivity appraisal. The
14-7 comptroller shall certify the comptroller's findings to the
14-8 commissioner.
14-9 SECTION 11. Section 403.303(a), Government Code, is amended
14-10 to read as follows:
14-11 (a) A school district or a property owner whose property is
14-12 included in the study under Section 403.302 and whose tax liability
14-13 on the property is $100,000 or more may protest the comptroller's
14-14 findings under Section 403.302(g) [403.302(f)] or (h) [(g)] by
14-15 filing a petition with the comptroller. The petition must be filed
14-16 not later than the 40th day after the date on which the
14-17 comptroller's findings are certified to the commissioner of
14-18 education and must specify the grounds for objection and the value
14-19 claimed to be correct by the school district or property owner.
14-20 SECTION 12. Section 431.101, Transportation Code, is amended
14-21 to read as follows:
14-22 Sec. 431.101. CREATION OF LOCAL GOVERNMENT CORPORATION. (a)
14-23 A local government corporation may be created to aid and act on
14-24 behalf of one or more local governments to accomplish any
14-25 governmental purpose of those local governments. To be effective,
14-26 the articles of incorporation and the bylaws of a local government
14-27 corporation must be approved by ordinance, resolution, or order
15-1 adopted by the governing body of each local government that the
15-2 corporation is created to aid and act on behalf of.
15-3 (b) A local government corporation has the powers of a
15-4 corporation authorized for creation by the commission under this
15-5 chapter.
15-6 (c) The provisions of the Texas Non-Profit Corporation Act
15-7 (Article 1396-1.01 et seq., Vernon's Texas Civil Statutes) relating
15-8 to powers, standards of conduct, and interests in contracts apply
15-9 to the directors and officers of the local government corporation.
15-10 (d) A provision of this chapter relating to the creation,
15-11 dissolution, administration, or supervision of a corporation by the
15-12 commission does not apply to a local government corporation.
15-13 (e) Section 394.904(a), Local Government Code, applies to
15-14 property and improvements owned by a local government corporation.
15-15 Section 394.904(b) of that code applies to each contract awarded by
15-16 the local government corporation.
15-17 (f) A member of the board of directors of a local government
15-18 corporation:
15-19 (1) is not a public official by virtue of that
15-20 position; and
15-21 (2) unless otherwise ineligible, may be appointed to
15-22 serve concurrently on the board of directors of a reinvestment zone
15-23 created under Chapter 311, Tax Code.
15-24 SECTION 13. Section 431.102, Transportation Code, is amended
15-25 by adding Subsection (c) to read as follows:
15-26 (c) The requirement of Section 394.021(a), Local Government
15-27 Code, that all directors must be residents of the local government
16-1 shall not be applicable to directors of a local government
16-2 corporation except that a person may not be appointed to the board
16-3 of a local government corporation if the appointment of that person
16-4 would result in less than a majority of the board members being
16-5 residents of the local government.
16-6 SECTION 14. Section 311.003(h), Tax Code, is repealed.
16-7 SECTION 15. (a) Nothing in this Act is intended to prohibit
16-8 a member of a governing body of a taxing unit that levies taxes on
16-9 real property in the reinvestment zone from serving as a member of
16-10 the board of directors of a reinvestment zone under the Tax
16-11 Increment Financing Act (Chapter 311, Tax Code).
16-12 (b) Section 311.013(f), Tax Code, as amended by this Act,
16-13 applies only to a reinvestment zone created on or after the
16-14 effective date of this Act. A reinvestment zone created before the
16-15 effective date of this Act is governed by Section 311.013(f), Tax
16-16 Code, as that section existed immediately before the effective date
16-17 of this Act, and the former law is continued in effect for that
16-18 purpose.
16-19 SECTION 16. The importance of this legislation and the
16-20 crowded condition of the calendars in both houses create an
16-21 emergency and an imperative public necessity that the
16-22 constitutional rule requiring bills to be read on three several
16-23 days in each house be suspended, and this rule is hereby suspended,
16-24 and that this Act take effect and be in force from and after its
16-25 passage, and it is so enacted.
_______________________________ _______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 2684 was passed by the House on April
23, 1999, by the following vote: Yeas 140, Nays 0, 1 present, not
voting; that the House refused to concur in Senate amendments to
H.B. No. 2684 on May 21, 1999, and requested the appointment of a
conference committee to consider the differences between the two
houses; and that the House adopted the conference committee report
on H.B. No. 2684 on May 28, 1999, by the following vote: Yeas 142,
Nays 0, 3 present, not voting.
_______________________________
Chief Clerk of the House
I certify that H.B. No. 2684 was passed by the Senate, with
amendments, on May 17, 1999, by the following vote: Yeas 30, Nays
0; at the request of the House, the Senate appointed a conference
committee to consider the differences between the two houses; and
that the Senate adopted the conference committee report on H.B. No.
2684 on May 29, 1999, by the following vote: Yeas 30, Nays 0.
_______________________________
Secretary of the Senate
APPROVED: _____________________
Date
_____________________
Governor