By Bailey H.B. No. 3258 Line and page numbers may not match official copy. Bill not drafted by TLC or Senate E&E. A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to the creation of commercial and industrial development 1-3 zones in certain populous counties; providing for the power of 1-4 eminent domain and the issuance of bonds. 1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-6 SECTION 1. Subtitle B, Title 12, Local Government Code, is 1-7 amended by adding Chapter 384 to read as follows: 1-8 CHAPTER 384. COMMERCIAL AND INDUSTRIAL DEVELOPMENT ZONES 1-9 SUBCHAPTER A. GENERAL PROVISIONS 1-10 Sec. 384.001. DEFINITIONS. In this chapter: 1-11 (1) "Board" means a board of directors of a commercial 1-12 and industrial development zone. 1-13 (2) "Development zone" means an area designated as a 1-14 commercial and industrial development zone under this chapter. 1-15 Sec. 384.002. JURISDICTION OF MUNICIPALITY. For the 1-16 purposes of this chapter, territory in the extraterritorial 1-17 jurisdiction of a municipality is considered to be in the 1-18 jurisdiction of the municipality. 1-19 (Sections 384.003-384.030 reserved for expansion 1-20 SUBCHAPTER B. CREATION OF COMMERCIAL AND INDUSTRIAL 1-21 DEVELOPMENT ZONE 2-1 Sec. 384.031. CRITERIA FOR DEVELOPMENT ZONE CREATION. (a) 2-2 To be created as a development zone, an area must: 2-3 (1) have a continuous boundary; 2-4 (2) be at least 10 square miles but not larger than 2-5 the greater of: 2-6 (A) 25 square miles, excluding lakes, waterways, 2-7 and transportation arteries; or 2-8 (B) an area that is equal to five percent of the 2-9 area, excluding lakes, waterways, and transportation arteries, of 2-10 the municipality, county, or combination of municipalities or 2-11 counties nominating the area as a development zone; 2-12 (3) be an area of pervasive poverty, unemployment, and 2-13 economic distress; 2-14 (4) be located in a county with a population of 2.5 2-15 million or more; 2-16 (5) be adjacent to major transportation nodes and 2-17 thoroughfares that may be used for exporting products to major 2-18 airports, railways, and ports; and 2-19 (6) be designated as a development zone by an 2-20 ordinance or order adopted by each creating body. 2-21 (b) A municipality may contain not more than three 2-22 development zones within its municipal boundaries. 2-23 (c) A county may contain not more than three development 2-24 zones in its unincorporated areas. 2-25 (d) Creation of a development zone in a municipality or 3-1 county does not affect the number of enterprise zones that may be 3-2 designated in the municipality or county under Chapter 2303, 3-3 Government Code. 3-4 Sec. 384.032. AREA OF PERVASIVE POVERTY, UNEMPLOYMENT, AND 3-5 ECONOMIC DISTRESS. An area is an area of pervasive poverty, 3-6 unemployment, and economic distress for the purposes of Section 3-7 384.031 if it meets the requirements of Section 2303.102, 3-8 Government Code. 3-9 Sec. 384.033. CREATION OF DEVELOPMENT ZONE. (a) The 3-10 governing body of a municipality or county, individually or in 3-11 combination with other municipalities or counties, by ordinance or 3-12 order may create as a development zone an area within its 3-13 jurisdiction that meets the criteria under Section 384.031. 3-14 (b) Each creating body must hold a public hearing before 3-15 adopting an ordinance or order under this section. 3-16 (c) The governing body of a county may not designate 3-17 territory in a municipality, including extraterritorial 3-18 jurisdiction of a municipality, to be included in a proposed 3-19 development zone unless the governing body of the municipality also 3-20 designates the territory. 3-21 (d) A development zone created under this section is a: 3-22 (1) political subdivision of the state; and 3-23 (2) special district. 3-24 Sec. 384.034. DESIGNATING ORDINANCE OR ORDER. (a) An 3-25 ordinance or order designating an area as a development zone must: 4-1 (1) describe precisely the area to be included in the 4-2 zone by a legal description or by reference to roadways, lakes, 4-3 waterways, or municipal or county boundaries; 4-4 (2) state a finding that the area meets the 4-5 requirements of this chapter; 4-6 (3) summarize briefly the incentives, including tax 4-7 incentives, that, at the election of the designating body, apply to 4-8 business enterprises in the area; and 4-9 (4) designate the area as a development zone. 4-10 (b) At least one of the incentives summarized under 4-11 Subsection (a)(3) must be an incentive that does not apply to all 4-12 business enterprises located in the jurisdiction of a governmental 4-13 entity that designated the area as a development zone. 4-14 (c) This section does not prohibit a municipality or county 4-15 from extending additional incentives, including tax incentives, to 4-16 business enterprises in a development zone by a separate ordinance 4-17 or order. 4-18 Sec. 384.035. TAX INCREMENT. A creating body may allow one 4-19 quarter of one percent of a local property tax increment to fund a 4-20 development zone, as provided by Chapter 311, Tax Code. On 4-21 adoption of an order or ordinance by each creating body, the fund 4-22 may be used to pay salaries of employees of the board and 4-23 administrative expenses of the development zone. 4-24 Sec. 384.036. AMENDING BOUNDARIES. (a) A creating body by 4-25 ordinance or order may amend the boundary of a development zone 5-1 after a public hearing on the issue. 5-2 (b) The amended boundary: 5-3 (1) must be continuous; 5-4 (2) may not exceed the original size requirement of 5-5 Section 384.031; and 5-6 (3) may not exclude any area originally included 5-7 within the boundary of the development zone as designated. 5-8 (c) The entire development zone with the amended boundary 5-9 must continue to meet the unemployment and economic distress 5-10 requirements of Section 384.031. 5-11 (d) A creating body may not make more than one boundary 5-12 amendment for a development zone in a calendar year. 5-13 (e) If more than one body created the development zone, each 5-14 body must agree on the amendment by ordinance or order. 5-15 (Sections 384.037-384.060 reserved for expansion 5-16 SUBCHAPTER C. BOARD OF DIRECTORS 5-17 Sec. 384.061. BOARD OF DIRECTORS. (a) A development zone 5-18 is governed by a board of seven directors who serve two-year terms, 5-19 appointed as follows: 5-20 (1) the governing body of the municipality, if any, 5-21 that includes the greatest part of the zone's territory shall 5-22 appoint three directors; 5-23 (2) other municipalities, if any, any part of which 5-24 are included in the zone's territory, jointly shall appoint one 5-25 director; and 6-1 (3) the commissioners court of the county in which the 6-2 zone is located shall appoint: 6-3 (A) seven directors, if the zone contains no 6-4 municipality; 6-5 (B) four directors, if the zone contains only 6-6 one municipality; or 6-7 (C) three directors, if the zone contains more 6-8 than one municipality. 6-9 (b) The initial terms of directors may be staggered, so long 6-10 as a term does not exceed two years. 6-11 Sec. 384.062. QUALIFICATIONS OF DIRECTORS. To serve as a 6-12 director, a person must: 6-13 (1) be at least 21 years old; and 6-14 (2) be registered to vote in the county in which the 6-15 development zone is located. 6-16 Sec. 384.063. PERSONS DISQUALIFIED FROM SERVING. Section 6-17 49.052, Water Code, applies to directors of a development zone 6-18 created under this chapter as if the zone were a district governed 6-19 by that section. 6-20 Sec. 384.064. BOARD VACANCIES. A vacancy in the office of 6-21 director shall be filled by appointment by the entity that 6-22 appointed the vacating director. 6-23 Sec. 384.065. REMOVAL OF DIRECTOR. A majority of the board 6-24 may remove a director for misconduct or failure to carry out the 6-25 director's duties. 7-1 Sec. 384.066. ORGANIZATION OF BOARD. After each appointment 7-2 and qualification of directors by the appointing entities, the 7-3 board shall organize by electing a president, a vice president, a 7-4 secretary, and any other officers the board considers necessary. 7-5 Sec. 384.067. QUORUM; DIRECTOR'S DUTIES; MANAGEMENT OF ZONE. 7-6 Sections 49.053, 49.057, and 49.058, Water Code, apply to the board 7-7 of directors of a development zone created under this chapter as if 7-8 the zone were a district governed by those sections. 7-9 Sec. 384.068. MEETINGS AND NOTICE. (a) The board shall 7-10 designate and establish a development zone office in the county. 7-11 (b) The board may establish regular meetings to conduct 7-12 development zone business and may hold special meetings at other 7-13 times as the business of a zone requires. 7-14 (c) Notice of the time, place, and purpose of any meeting of 7-15 the board shall be given by posting a notice containing that 7-16 information at a place convenient to the public within the 7-17 development zone. A copy of the notice shall be furnished to the 7-18 clerk or clerks of the county in which the zone is located, who 7-19 shall post the notice on a bulletin board in the county courthouse 7-20 used for that purpose. 7-21 Sec. 384.069. DIRECTOR'S COMPENSATION; BOND AND OATH OF 7-22 OFFICE. Sections 375.067, 375.069, and 375.070 apply to directors 7-23 of a development zone created under this chapter as if the zone 7-24 were a municipal management district. 7-25 (Sections 384.070-384.100 reserved for expansion 8-1 SUBCHAPTER D. POWERS AND DUTIES 8-2 Sec. 384.101. GENERAL POWERS. (a) A development zone may 8-3 acquire and dispose of projects and has powers, authority, rights, 8-4 and duties necessary to permit accomplishment of the purposes for 8-5 which the zone was created. 8-6 (b) A development zone may provide for general promotion of 8-7 and tourist advertising regarding the zone and its vicinity and for 8-8 a marketing program to attract visitors. Those activities may be 8-9 conducted by the zone under contracts for professional services 8-10 with persons or organizations selected by the zone. 8-11 (c) A development zone may enter into a memorandum of 8-12 understanding with any state agency, including an institution of 8-13 higher education, to further the economic development of the zone. 8-14 (d) To the extent not inconsistent with this chapter, a 8-15 development zone has the powers of: 8-16 (1) a municipal management district created under 8-17 Chapter 375; and 8-18 (2) a county commissioners court under Section 8-19 381.004. 8-20 Sec. 384.102. EMINENT DOMAIN. A development zone not 8-21 located within the corporate limits of a municipality may exercise 8-22 the power of eminent domain, as provided by Chapter 21, Property 8-23 Code, to acquire interests in land within the zone the board of 8-24 directors of the zone considers necessary to provide water and 8-25 sewer services. 9-1 Sec. 384.103. SUITS. A development zone may, through its 9-2 directors, sue and be sued in this state in the name of the 9-3 development zone. Service of process in any suit may be had by 9-4 serving a director. 9-5 (Sections 384.104-384.200 reserved for expansion 9-6 SUBCHAPTER E. BENEFITS OF DEVELOPMENT ZONE 9-7 Sec. 384.201. GENERAL BENEFITS. To the extent not 9-8 inconsistent with this chapter, a development zone has the powers 9-9 and benefits of an enterprise zone, including powers and benefits 9-10 relating to neighborhood enterprise associations, qualified 9-11 businesses, enterprise projects, and state agencies under: 9-12 (1) Chapter 2303, Government Code; and 9-13 (2) Chapters 151 and 171, Tax Code. 9-14 Sec. 384.202. ENTERPRISE ZONE REFERENCES. For purposes of 9-15 this chapter: 9-16 (1) a reference to the department in Chapter 2303, 9-17 Government Code, means the board, except for the references to the 9-18 department in Sections 2303.502 and 2303.503, Government Code, 9-19 which continue to mean the Texas Department of Economic 9-20 Development; and 9-21 (2) a reference to a "governing body of a municipality 9-22 or county that is the governing body of an enterprise zone" in 9-23 Chapter 2303, Government Code, means a creating body under this 9-24 chapter. 9-25 Sec. 384.203. MONITORING. (a) The board shall monitor each 10-1 person in a development zone that receives benefits available under 10-2 this chapter. 10-3 (b) On the board's request, the Texas Workforce Commission 10-4 or the comptroller's office shall provide to the board tax records 10-5 of a person that receives benefits under this chapter. 10-6 (Sections 384.204-384.300 reserved for expansion 10-7 SUBCHAPTER F. GENERAL FISCAL PROVISIONS 10-8 Sec. 384.301. EXPENDITURES. A development zone's money may 10-9 be disbursed only by check, draft, order, or other instrument 10-10 signed by at least three directors. The general manager, 10-11 treasurer, or other employee of the development zone, if authorized 10-12 by resolution of the board, may sign checks, drafts, orders, or 10-13 other instruments on any development zone operation account on 10-14 behalf of the board. 10-15 Sec. 384.302. COMPETITIVE BIDDING; CONTRACT AWARD. Sections 10-16 375.221 and 375.223 apply to a development zone created under this 10-17 chapter as if the zone were a municipal management district, except 10-18 that a contract between the development zone and a governmental 10-19 entity or nonprofit corporation created under the Development 10-20 Corporation Act of 1979 (Article 5190.6, Vernon's Texas Civil 10-21 Statutes) is not subject to the competitive bidding requirement. 10-22 (Sections 384.303-384.400 reserved for expansion 10-23 SUBCHAPTER G. DISSOLUTION 10-24 Sec. 384.401. DISSOLUTION OF DEVELOPMENT ZONE BY CREATING 10-25 BODY. (a) After a hearing, a creating body may dissolve a 11-1 development zone if: 11-2 (1) the area no longer meets the criteria for 11-3 designation under this chapter; 11-4 (2) the best interests of the creating body and the 11-5 owners of property and interests in property in the zone will be 11-6 served by dissolving the zone; and 11-7 (3) each creating body agrees by ordinance or order on 11-8 the: 11-9 (A) proposition that the zone should be 11-10 dissolved; 11-11 (B) disposition of zone assets; and 11-12 (C) assumption of liabilities by the creating 11-13 bodies. 11-14 (b) The dissolution of a development zone does not affect 11-15 the validity of a: 11-16 (1) tax incentive or regulatory relief granted or 11-17 accrued before the removal; or 11-18 (2) bond issued under this chapter. 11-19 Sec. 384.402. DISSOLUTION BY BOARD REQUEST. A board may 11-20 petition a creating body to dissolve the development zone under 11-21 Section 384.401 if a majority of the board finds at any time: 11-22 (1) before the authorization of bonds or the final 11-23 lending of its credit that the proposed undertaking is 11-24 impracticable or cannot be successfully and beneficially 11-25 accomplished; or 12-1 (2) that all bonds of the development zone or other 12-2 debts of the zone have been paid and the purposes of the zone have 12-3 been accomplished. 12-4 Sec. 384.403. TAXES. On dissolution of a development zone, 12-5 any taxes levied on behalf of the zone are abolished. 12-6 SECTION 2. The importance of this legislation and the 12-7 crowded condition of the calendars in both houses create an 12-8 emergency and an imperative public necessity that the 12-9 constitutional rule requiring bills to be read on three several 12-10 days in each house be suspended, and this rule is hereby suspended, 12-11 and that this Act take effect and be in force from and after its 12-12 passage, and it is so enacted.