1-1 By: Coleman (Senate Sponsor - Gallegos) H.B. No. 2684
1-2 (In the Senate - Received from the House April 26, 1999;
1-3 April 27, 1999, read first time and referred to Committee on
1-4 Intergovernmental Relations; May 10, 1999, reported adversely, with
1-5 favorable Committee Substitute by the following vote: Yeas 3, Nays
1-6 0; May 10, 1999, sent to printer.)
1-7 COMMITTEE SUBSTITUTE FOR H.B. No. 2684 By: Madla
1-8 A BILL TO BE ENTITLED
1-9 AN ACT
1-10 relating to reinvestment zones and tax increment financing under
1-11 the Tax Increment Financing Act, tax abatement agreements within
1-12 those zones, and the administration of certain local government
1-13 corporations.
1-14 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-15 SECTION 1. Section 311.009, Tax Code, is amended by adding
1-16 Subsection (g) to read as follows:
1-17 (g) A member of the board of directors of a reinvestment
1-18 zone:
1-19 (1) is not a public official by virtue of that
1-20 position; and
1-21 (2) unless otherwise ineligible, may be appointed to
1-22 serve concurrently on the board of directors of a local government
1-23 corporation created under Subchapter D, Chapter 431, Transportation
1-24 Code.
1-25 SECTION 2. Section 311.010, Tax Code, is amended by amending
1-26 Subsections (a) and (b) and adding Subsections (d)-(f) to read as
1-27 follows:
1-28 (a) The board of directors of a reinvestment zone shall make
1-29 recommendations to the governing body of the municipality that
1-30 created the zone concerning the administration of this chapter in
1-31 the zone. The [In addition to the powers granted to the board
1-32 under this chapter, the] governing body of the municipality by
1-33 ordinance or resolution may authorize [delegate to] the board to
1-34 exercise any of the municipality's powers with respect to the
1-35 administration, management, or operation of the zone or [and duties
1-36 relating to] the implementation of the project plan for the zone,
1-37 except that the governing body may not authorize the board to:
1-38 (1) issue bonds;
1-39 (2) impose taxes or fees;
1-40 (3) exercise the power of eminent domain; or
1-41 (4) give final approval to the project plan [considers
1-42 advisable].
1-43 (b) The board of directors of a reinvestment zone and the
1-44 governing body of the municipality that creates a reinvestment zone
1-45 may each enter into agreements as the board or the governing body
1-46 considers necessary or convenient to implement the project plan and
1-47 reinvestment zone financing plan and achieve their purposes. An
1-48 agreement may provide for the regulation or restriction of the use
1-49 of land by imposing conditions, restrictions, or covenants that run
1-50 with the land. An agreement may during the term of the agreement
1-51 dedicate, pledge, or otherwise provide for the use of revenue in
1-52 [from] the tax increment fund to pay any project [the] costs that
1-53 benefit the reinvestment zone, including project costs relating to
1-54 the cost of buildings, schools, or other educational facilities
1-55 owned by or on behalf of a school district, community college
1-56 district, or other political subdivision of this state, railroad or
1-57 transit facilities, affordable housing, the remediation of
1-58 conditions that contaminate public or private land or buildings,
1-59 the preservation of the facade of a private or public building, the
1-60 demolition of public or private buildings, or the replacement of
1-61 [replacing] housing or areas of public assembly in or out of the
1-62 zone. An agreement may dedicate revenue from the tax increment
1-63 fund to pay a neighborhood enterprise association for providing
1-64 services or carrying out projects authorized under Subchapters E
2-1 and G, Chapter 2303, Government Code, in the zone. The term of an
2-2 agreement with a neighborhood enterprise association may not exceed
2-3 10 years.
2-4 (d) The board of directors of a reinvestment zone may
2-5 exercise any power granted to a municipality by Section 311.008,
2-6 except that:
2-7 (1) the municipality that created the reinvestment
2-8 zone by ordinance or resolution may restrict any power granted to
2-9 the board by this chapter; and
2-10 (2) the board may exercise a power granted to a
2-11 municipality under Section 311.008(a)(2) only with the consent of
2-12 the governing body of the municipality.
2-13 (e) After the governing body of a municipality by ordinance
2-14 creates a reinvestment zone under this chapter, the board of
2-15 directors of the zone may exercise any power granted to a board
2-16 under this chapter.
2-17 (f) The board of directors of a reinvestment zone and the
2-18 governing body of the municipality may enter into a contract with a
2-19 local government corporation to manage the reinvestment zone or
2-20 implement the project plan and reinvestment zone financing plan for
2-21 the term of the agreement. In this subsection, "local government
2-22 corporation" means a local government corporation created by the
2-23 municipality under Chapter 431, Transportation Code.
2-24 SECTION 3. Section 311.011(f), Tax Code, is amended to read
2-25 as follows:
2-26 (f) In a zone designated under Section 311.005(a)(5) that is
2-27 located in a county with a population of 2.1 million or more, the
2-28 project plan must provide that at least one-third of the [surface
2-29 area of the zone, excluding roads, streets, highways, utility
2-30 rights-of-way, and other public areas or areas exempt from ad
2-31 valorem taxation, be dedicated to residential housing and that at
2-32 least one-third of the] tax increment of the zone be used to
2-33 provide affordable [dedicated to providing low-income] housing
2-34 during the term of the zone.
2-35 SECTION 4. Section 311.012, Tax Code is amended by amending
2-36 subsections (a) and (b) as follows:
2-37 (a) The amount of a taxing unit's tax increment for a year
2-38 is the amount of property taxes levied and collected by the taxing
2-39 unit for that year on the captured appraised value of real property
2-40 taxable by the unit and located in a reinvestment zone.
2-41 (b) The captured appraised value of real property taxable by
2-42 a taxing unit for a year is the total appraised value of all real
2-43 [the] property taxable by the unit and located in a reinvestment
2-44 zone for that year less the tax increment base of the unit.
2-45 SECTION 5. Chapter 311, Tax Code, is amended by adding
2-46 Section 311.0125 to read as follows:
2-47 Sec. 311.0125. TAX ABATEMENT AGREEMENTS. (a)
2-48 Notwithstanding any provision in this chapter to the contrary, a
2-49 taxing unit other than a school district may enter into a tax
2-50 abatement agreement with an owner of real or personal property in a
2-51 reinvestment zone, regardless of whether the taxing unit deposits
2-52 or agrees to deposit any portion of its tax increment into the tax
2-53 increment fund.
2-54 (b) To be effective, an agreement to abate taxes on real
2-55 property in a reinvestment zone must be approved by:
2-56 (1) the board of directors of the reinvestment zone;
2-57 and
2-58 (2) the governing body of each taxing unit that
2-59 imposes taxes on real property in the reinvestment zone and
2-60 deposits or agrees to deposit any of its tax increment into the tax
2-61 increment fund for the zone.
2-62 (c) In any contract entered into by the board of directors
2-63 of a reinvestment zone in connection with bonds or other
2-64 obligations, the board may convenant that the board will not
2-65 approve a tax abatement agreement that applies to real property in
2-66 that zone.
2-67 (d) If a taxing unit enters into a tax abatement agreement
2-68 authorized by this section, taxes that are abated under that
2-69 agreement are not considered taxes to be imposed or produced by
3-1 that taxing unit in calculating the amount of:
3-2 (1) the tax increment of that taxing unit; or
3-3 (2) that taxing unit's deposit to the tax increment
3-4 fund for the reinvestment zone.
3-5 SECTION 6. Amend Section 311.013, Tax Code, by amending
3-6 subsections (b), (f), (g), (h) and (i) as follows:
3-7 (b) Each taxing unit shall pay into the tax increment
3-8 financing fund for the zone an amount equal to the tax increment
3-9 produced by the unit, less the sum of:
3-10 (1) property taxes produced from the tax increments
3-11 that are, by contract executed before the designation of the area
3-12 as a reinvestment zone, required to be paid by the unit to another
3-13 political subdivision; and
3-14 (2) a portion, not to exceed 15 percent, of the tax
3-15 increment produced by the unit as provided by the reinvestment zone
3-16 financing plan or a larger portion as provided by Subsection (f)
3-17 [or (g)].
3-18 (f) [The governing body of a taxing unit that taxes real
3-19 property located in the zone may determine the portion of the tax
3-20 increment produced by the taxing unit that the taxing unit will
3-21 retain from the tax increment and may decide to retain all of that
3-22 tax increment. The determination is not effective unless the
3-23 governing body of the taxing unit notifies the board of directors
3-24 of the zone in writing of its determination under this subsection
3-25 on or before the 60th day after the date on which the governing
3-26 body of the municipality approves the reinvestment zone financing
3-27 plan as provided by Section 311.011(d). The governing body of the
3-28 taxing unit may not decrease the portion of the tax increment that
3-29 it has determined to dedicate to a reinvestment zone fund after the
3-30 project plan is approved.]
3-31 [(g)] A taxing unit is not required to pay into the tax
3-32 increment fund any of its tax increment produced from property
3-33 located in a reinvestment zone designated under Section
3-34 311.005(a)[(5)] or in an area added to a reinvestment zone under
3-35 Section 311.007[(b)] unless the taxing unit enters into an
3-36 agreement to do so with the governing body of the municipality that
3-37 created the zone. A taxing unit may enter into an agreement under
3-38 this subsection at any time before or after the zone is created or
3-39 enlarged. The agreement may include conditions for payment of that
3-40 tax increment into the fund and must specify the portion of the tax
3-41 increment to be paid into the fund and the years for which that tax
3-42 increment is to be paid into a fund. The agreement and the
3-43 conditions in the agreement are binding on the taxing unit, the
3-44 municipality, and the board of directors of the zone.
3-45 (g) [(h)] Subject to the provisions of 311.125, in [In] lieu
3-46 of permitting a portion of its tax increment to be paid into the
3-47 tax increment fund, and notwithstanding the provisions of Section
3-48 312.203, a taxing unit, other than a city, may elect to offer the
3-49 owners of taxable real property in a reinvestment zone created
3-50 under this chapter an exemption from taxation of all or part of the
3-51 value of the property. Any agreement concerning an exemption from
3-52 ad valorem taxes shall be executed in the manner and subject to the
3-53 limitations of Chapter 312; provided, however, the property covered
3-54 by the agreement need not be in a zone created pursuant to Chapter
3-55 312. A taxing unit may not offer a tax abatement agreement to
3-56 property owners in the zone after it has entered into an agreement
3-57 that its tax increments would be paid into the tax increment fund
3-58 pursuant to Subsection (f) [(g)].
3-59 (h) [(i)] Subsection [Subsection] (f) does [and (g) do] not
3-60 apply to a city with a population of more than 230,000 that borders
3-61 Mexico.
3-62 (i) Notwithstanding Subsection (c), a taxing unit is not
3-63 required to pay into a tax increment fund the applicable portion of
3-64 a tax increment attributable to delinquent taxes until those taxes
3-65 are collected.
3-66 (j) Section 26.05(f), Tax Code does not prohibit a taxing
3-67 unit from depositing all of the tax increment produced by the
3-68 taxing unit in a reinvestment zone into the tax increment fund for
3-69 that zone.
4-1 SECTION 7. Section 431.101, Transportation Code, is amended
4-2 to read as follows:
4-3 Sec. 431.101. CREATION OF LOCAL GOVERNMENT CORPORATION.
4-4 (a) A local government corporation may be created to aid and act
4-5 on behalf of one or more local governments to accomplish any
4-6 governmental purpose of those local governments. To be effective,
4-7 the articles of incorporation and the bylaws of a local government
4-8 corporation must be approved by ordinance, resolution, or order
4-9 adopted by the governing body of each local government for which
4-10 the corporation is created to aid and act on behalf of.
4-11 (b) A local government corporation has the powers of a
4-12 corporation authorized for creation by the commission under this
4-13 chapter.
4-14 (c) The provisions of the Texas Non-Profit Corporation Act
4-15 (Article 1396-1.01 et seq., Vernon's Texas Civil Statutes) relating
4-16 to powers, standards of conduct, and interests in contracts apply
4-17 to the directors and officers of the local government corporation.
4-18 (d) A provision of this chapter relating to the creation,
4-19 dissolution, administration, or supervision of a corporation by the
4-20 commission does not apply to a local government corporation.
4-21 (e) Section 394.904(a), Local Government Code, applies to
4-22 property and improvements owned by a local government corporation.
4-23 Section 394.904(b) of that code applies to each contract awarded by
4-24 the local government corporation.
4-25 (f) A member of the board of directors of a local government
4-26 corporation:
4-27 (1) is not a public official by virtue of that
4-28 position; and
4-29 (2) unless otherwise ineligible, may be appointed to
4-30 serve concurrently on the board of directors of a reinvestment zone
4-31 created under Chapter 311, Tax Code.
4-32 SECTION 8. Chapter 311, Tax Code, is amended by adding
4-33 Section 311.018 to read as follows:
4-34 Sec. 311.018. CONFLICTS WITH MUNICIPAL CHARTER. To the
4-35 extent of a conflict between this chapter and a municipal charter,
4-36 this chapter controls.
4-37 SECTION 9. Section 311.003(h), Tax Code, is repealed.
4-38 SECTION 10. Section 403.302(d), Government Code, as amended
4-39 by Chapters 1039, 1040, and 1071, Acts of the 75th Legislature,
4-40 Regular Session, 1997, is reenacted and amended to read as follows:
4-41 (d) For the purposes of this section, "taxable value" means
4-42 the market value of all taxable property less:
4-43 (1) the total dollar amount of any residence homestead
4-44 exemptions lawfully granted under Section 11.13(b) or (c), Tax
4-45 Code, in the year that is the subject of the study for each school
4-46 district;
4-47 (2) the total dollar amount of any exemptions granted
4-48 before May 31, 1993, within a reinvestment zone under agreements
4-49 authorized by Chapter 312, Tax Code;
4-50 (3) subject to Subsection (e), the total dollar amount
4-51 of any captured appraised value of property that is located in a
4-52 reinvestment zone [on August 31, 1999], [that] generates a tax
4-53 increment paid into a tax increment fund, and is eligible for tax
4-54 increment financing under Chapter 311, Tax Code, under a
4-55 reinvestment zone financing plan approved under Section 311.011(d),
4-56 Tax Code, before September 1, 1999;
4-57 (4) the total dollar amount of any exemptions granted
4-58 under Section 11.251, Tax Code;
4-59 (5) the difference between the comptroller's estimate
4-60 of the market value and the productivity value of land that
4-61 qualifies for appraisal on the basis of its productive capacity,
4-62 except that the productivity value estimated by the comptroller may
4-63 not exceed the fair market value of the land;
4-64 (6) the portion of the appraised value of residence
4-65 homesteads of the elderly on which school district taxes are not
4-66 imposed in the year that is the subject of the study, calculated as
4-67 if the residence homesteads were appraised at the full value
4-68 required by law;
4-69 (7) a portion of the market value of property not
5-1 otherwise fully taxable by the district at market value because of
5-2 action required by statute or the constitution of this state that,
5-3 if the tax rate adopted by the district is applied to it, produces
5-4 an amount equal to the difference between the tax that the district
5-5 would have imposed on the property if the property were fully
5-6 taxable at market value and the tax that the district is actually
5-7 authorized to impose on the property, if this subsection does not
5-8 otherwise require that portion to be deducted;
5-9 (8) the market value of all tangible personal
5-10 property, other than manufactured homes, owned by a family or
5-11 individual and not held or used for the production of income;
5-12 (9) the appraised value of property the collection of
5-13 delinquent taxes on which is deferred under Section 33.06, Tax
5-14 Code;
5-15 (10) the portion of the appraised value of property
5-16 the collection of delinquent taxes on which is deferred under
5-17 Section 33.065, Tax Code; and
5-18 (11) the amount by which the market value of a
5-19 residence homestead to which Section 23.23, Tax Code, applies
5-20 exceeds the appraised value of that property as calculated under
5-21 that section.
5-22 SECTION 11. Sections 403.302(e)-(g), Government Code, are
5-23 amended to read as follows:
5-24 (e) Subsection (d)(3) applies only to the captured appraised
5-25 value of:
5-26 (1) real property that is located in the reinvestment
5-27 zone before September 1, 1999; or
5-28 (2) an improvement to real property described by
5-29 Subdivision (1), regardless of the date the improvement is made.
5-30 (f) The study shall determine the values as of January 1 of
5-31 each year.
5-32 (g) [(f)] The comptroller shall publish preliminary
5-33 findings, listing values by district, before February 1 of the year
5-34 following the year of the study. Preliminary findings shall be
5-35 delivered to each school district and shall be certified to the
5-36 commissioner of education.
5-37 (h) [(g)] On request of the commissioner of education or a
5-38 school district, the comptroller may audit a school district to
5-39 determine the total taxable value of property in the school
5-40 district, including the productivity values of land only if the
5-41 land qualifies for appraisal on that basis and the owner of the
5-42 land has applied for and received a productivity appraisal. The
5-43 comptroller shall certify the comptroller's findings to the
5-44 commissioner.
5-45 SECTION 12. Section 403.303(a), Government Code, is amended
5-46 to read as follows:
5-47 (a) A school district or a property owner whose property is
5-48 included in the study under Section 403.302 and whose tax liability
5-49 on the property is $100,000 or more may protest the comptroller's
5-50 findings under Section 403.302(g) [403.302(f)] or (h) [(g)] by
5-51 filing a petition with the comptroller. The petition must be filed
5-52 not later than the 40th day after the date on which the
5-53 comptroller's findings are certified to the commissioner of
5-54 education and must specify the grounds for objection and the value
5-55 claimed to be correct by the school district or property owner.
5-56 SECTION 13. Section 431.102, Transportation Code, is amended
5-57 by adding Subsection (c) to read as follows:
5-58 (c) The requirement of Section 394.021(a), Local Government
5-59 Code, that all directors must be residents of the local government
5-60 shall not be applicable to directors of a local government
5-61 corporation except that a person may not be appointed to the board
5-62 of a local government corporation if the appointment of that person
5-63 would result in less than a majority of the board members being
5-64 residents of the local government.
5-65 SECTION 14. Section 311.004(a), Tax Code, is amended to read
5-66 as follows:
5-67 (a) The ordinance designating an area as a reinvestment zone
5-68 must:
5-69 (1) describe the boundaries of the zone with
6-1 sufficient definiteness to identify with ordinary and reasonable
6-2 certainty the territory included in the zone;
6-3 (2) create a board of directors for the zone and
6-4 specify the number of directors of the board as provided by Section
6-5 311.009;
6-6 (3) provide that the zone take effect immediately upon
6-7 passage of the ordinance [on January 1 of the year following the
6-8 year in which the ordinance is adopted];
6-9 (4) provide a date for termination of the zone;
6-10 (5) assign a name to the zone for identification, with
6-11 the first zone created by a municipality designated as
6-12 "Reinvestment Zone Number One, City (or Town, as applicable) of
6-13 (name of municipality)" and subsequently created zones assigned
6-14 names in the same form numbered consecutively in the order of their
6-15 creation;
6-16 (6) establish a tax increment fund for the zone; and
6-17 (7) contain findings that:
6-18 (A) improvements in the zone will significantly
6-19 enhance the value of all the taxable real property in the zone and
6-20 will be of general benefit to the municipality; and
6-21 (B) the area meets the requirements of Section
6-22 311.005.
6-23 SECTION 15. (a) Nothing in this Act is intended to prohibit
6-24 a member of a governing body of a taxing unit that levies taxes on
6-25 real property in the reinvestment zone from serving as a member of
6-26 the board of directors of a reinvestment zone under the Texas Tax
6-27 Increment Financing Act (Chapter 311, Tax Code).
6-28 (b) The provisions of 311.013(f), Tax Code as they existed
6-29 before the application of this act shall continue to be applicable
6-30 to reinvestment zones created before the application date of this
6-31 act.
6-32 SECTION 16. The importance of this legislation and the
6-33 crowded condition of the calendars in both houses create an
6-34 emergency and an imperative public necessity that the
6-35 constitutional rule requiring bills to be read on three several
6-36 days in each house be suspended, and this rule is hereby suspended,
6-37 and that this Act take effect and be in force from and after its
6-38 passage, and it is so enacted.
6-39 * * * * *