By: Gallegos S.B. No. 1907 Line and page numbers may not match official copy. Bill not drafted by TLC or Senate E&E. A BILL TO BE ENTITLED AN ACT 1-1 relating to the creation of commercial and industrial development 1-2 zones in certain populous counties; providing for taxes and the 1-3 issuance of bonds. 1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-5 SECTION 1. Subtitle B, Title 12, Local Government Code, is 1-6 amended by adding Chapter 384 to read as follows: 1-7 CHAPTER 384. COMMERCIAL AND INDUSTRIAL DEVELOPMENT ZONES 1-8 SUBCHAPTER A. GENERAL PROVISIONS 1-9 Sec. 384.001. DEFINITIONS. In this chapter: 1-10 (1) "Board" means a board of directors of a commercial 1-11 and industrial development zone. 1-12 (2) "Development zone" means an area designated as a 1-13 commercial and industrial development zone under this chapter. 1-14 Sec. 384.002. JURISDICTION OF MUNICIPALITY. For the 1-15 purposes of this chapter, territory in the extraterritorial 1-16 jurisdiction of a municipality is considered to be in the 1-17 jurisdiction of the municipality. 1-18 (Sections 384.003-384.030 reserved for expansion 1-19 SUBCHAPTER B. CREATION OF COMMERCIAL AND INDUSTRIAL 1-20 DEVELOPMENT ZONE 1-21 Sec. 384.031. CRITERIA FOR DEVELOPMENT ZONE CREATION. 1-22 (a) To be created as a development zone, and area must: 2-1 (1) have a continuous boundary; 2-2 (2) be at least 10 square miles but not larger than an 2-3 area that is equal to five percent of the area, excluding lakes, 2-4 waterways, and transportation arteries, of the municipality, 2-5 county, or combination of municipalities and the county nominating 2-6 the area as a development zone; 2-7 (3) be an area of pervasive poverty, unemployment, or 2-8 economic distress; 2-9 (4) be located in a county with a population of 2.5 2-10 million or more; 2-11 (5) be adjacent to major transportation nodes and 2-12 thoroughfares that may be used for exporting products to major 2-13 airports, railways, and ports; and 2-14 (6) be designated as a development zone by an 2-15 ordinance or order adopted by each creating body. 2-16 (b) A municipality may contain not more than three 2-17 development zones within its jurisdiction. 2-18 (c) A county may contain not more than three development 2-19 zones in its unincorporated areas. 2-20 (d) Creation of a development zone in a municipality or 2-21 county does not affect the number of enterprise zones that may be 2-22 designated in the municipality or county under Chapter 2303, 2-23 Government Code. 2-24 Sec. 384.032. AREA OF PERVASIVE POVERTY, UNEMPLOYMENT, OR 2-25 ECONOMIC DISTRESS. An area is an area of pervasive poverty, 2-26 unemployment, or economic distress for the purposes of Section 3-1 384.031 if: 3-2 (1) the average rate of unemployment in the area 3-3 during the most recent 12-month period for which data are available 3-4 was at least one and one-half times the state average for that 3-5 period; 3-6 (2) the area is a low-income poverty area; 3-7 (3) the area is in a jurisdiction or pocket of 3-8 poverty, according to the most recent certification available from 3-9 the United States Department of Housing and Urban Development; or 3-10 (4) at least 70 percent of the residents or households 3-11 of the area have an income that is less than 80 percent of the 3-12 median income of the residents or households of the locality or 3-13 state, whichever is less. 3-14 Sec. 384.033. CREATION OF DEVELOPMENT ZONE. (a) A 3-15 development zone is created to promote and encourage: 3-16 (1) commercial development, including the development 3-17 of businesses in the technology field; 3-18 (2) workforce development; 3-19 (3) the improvement of competitiveness in education; 3-20 (4) public and private sector partnerships; and 3-21 (5) the revitalization of neighborhoods. 3-22 (b) The governing body of a municipality or county, 3-23 individually or in combination with other municipalities, by 3-24 ordinance or order may create as a development zone an area within 3-25 its jurisdiction that meets the criteria under Section 384.031. 3-26 (c) Each creating body must hold a public hearing before 4-1 adopting an ordinance or order under this section. 4-2 (d) The governing body of a county may not designate 4-3 territory in the jurisdiction of a municipality as part of a 4-4 proposed development zone unless the governing body of the 4-5 municipality also designates the territory. 4-6 (e) A development zone created under this section is a: 4-7 (1) political subdivision of the state; and 4-8 (2) special district. 4-9 Sec. 384.034. DESIGNATING ORDINANCE OR ORDER. (a) An 4-10 ordinance or order designating an area as a development zone must: 4-11 (1) describe precisely the area to be included in the 4-12 zone by a legal description or by reference to roadways, lakes, 4-13 waterways, or municipal or county boundaries; 4-14 (2) state a finding that the area meets the 4-15 requirements of this chapter; 4-16 (3) summarize briefly the: 4-17 (A) incentives, including tax incentives, that 4-18 the designating body chooses to apply to businesses in the area; or 4-19 (B) programs to be developed to affect 4-20 businesses in the area; and 4-21 (4) designate the area as a development zone. 4-22 (b) The incentives or programs summarized under Subsection 4-23 (a)(3) must include: 4-24 (1) an incentive that does not apply to all businesses 4-25 located in the jurisdiction of a governmental entity that 4-26 designated the area as a development zone; 5-1 (2) an incentive or program designed to improve the 5-2 skills of the local labor pool; and 5-3 (3) an incentive or program designed to address 5-4 infrastructure, housing, or other elements essential to improving 5-5 quality of life. 5-6 (c) This section does not prohibit a municipality or county 5-7 from extending additional incentives, including tax incentives, to 5-8 business enterprises in a development zone by a separate ordinance 5-9 or order. 5-10 Sec. 384.035. TAX INCREMENT. A creating body may allow one 5-11 quarter of one percent of a local property tax increment to fund a 5-12 development zone, as provided by Chapter 311, Tax Code. On 5-13 adoption of an order or ordinance by each creating body, the fund 5-14 may be used to pay salaries of employees of the board and 5-15 administrative expenses of the development zone. 5-16 Sec. 384.036. AMENDING BOUNDARIES. (a) A creating body by 5-17 ordinance or order may amend the boundary of a development zone 5-18 after a public hearing on the issue. 5-19 (b) The amended boundary: 5-20 (1) must be continuous; 5-21 (2) may not exceed the original size requirement of 5-22 Section 384.031; and 5-23 (3) may not exclude any area originally included 5-24 within the boundary of the development zone. 5-25 (c) The entire development zone with the amended boundary 5-26 must continue to meet the unemployment or economic distress 6-1 requirements of Section 384.031. 6-2 (d) A creating body may not make more than one boundary 6-3 amendment for a development zone in a calendar year. 6-4 (e) If more than one body created the development zone, each 6-5 body must agree on the amendment by ordinance or order. 6-6 (Sections 384.037-384.060 reserved for expansion 6-7 SUBCHAPTER C. BOARD OF DIRECTORS 6-8 Sec. 384.061. BOARD OF DIRECTORS. (a) A development zone 6-9 is governed by a board of nine directors who serve two-year terms, 6-10 appointed as follows: 6-11 (1) the governing body of the municipality, if any, 6-12 that includes the greatest part of the zone's territory shall 6-13 appoint four directors; 6-14 (2) other municipalities, if any, any part of which 6-15 are included in the zone's territory, jointly shall appoint one 6-16 director; 6-17 (3) the commissioners court of the county in which the 6-18 zone is located shall appoint: 6-19 (A) nine directors, if the zone contains no 6-20 municipality; or 6-21 (B) four directors, if the zone contains one or 6-22 more municipalities; and 6-23 (4) if a development zone contains territory in only 6-24 one municipality, the municipality and the county in which the zone 6-25 is located jointly shall appoint one director. 6-26 (b) The initial terms of directors may be staggered, but a 7-1 director's term may not exceed two years. 7-2 Sec. 384.062. QUALIFICATIONS OF DIRECTORS. To serve as a 7-3 director, a person must: 7-4 (1) be at least 21 years old; and 7-5 (2) be registered to vote in the county in which the 7-6 development zone is located. 7-7 Sec. 384.063. DISQUALIFICATION OF DIRECTORS. Section 7-8 49.052, Water Code, applies to directors of a development zone 7-9 created under this chapter as if the zone were a district governed 7-10 by that section. 7-11 Sec. 384.064. BOARD VACANCIES. A vacancy in the office of 7-12 director shall be filled by appointment by the entity that 7-13 appointed the vacating director. 7-14 Sec. 384.065. REMOVAL OF DIRECTOR. A majority of the board 7-15 may remove a director for misconduct or failure to carry out the 7-16 director's duties. 7-17 Sec. 384.066. ORGANIZATION OF BOARD. (a) Except as 7-18 provided by Subsection (b), after each appointment and 7-19 qualification of directors by the appointing entities, the board 7-20 shall organize by electing a president, a vice president, a 7-21 secretary, and any other officers the board considers necessary. 7-22 (b) If a director is appointed under Section 384.061(a)(4), 7-23 that director shall serve as board president. 7-24 Sec. 384.067. QUORUM; DIRECTOR'S DUTIES; MANAGEMENT OF ZONE. 7-25 Sections 49.053, 49.057, and 49.058, Water Code, apply to the board 7-26 of directors of a development zone created under this chapter as if 8-1 the zone were a district governed by those sections. 8-2 Sec. 384.068. MEETINGS AND NOTICE. (a) The board shall 8-3 designate and establish a development zone office in the county. 8-4 (b) The board may establish regular meetings to conduct 8-5 development zone business and may hold special meetings at other 8-6 times as the business of a zone requires. 8-7 (c) Notice of the time, place, and purpose of any meeting of 8-8 the board shall be given by posting a notice containing that 8-9 information at a place convenient to the public within the 8-10 development zone. A copy of the notice shall be furnished to the 8-11 clerk or clerks of the county in which the zone is located, who 8-12 shall post the notice on a bulletin board in the county courthouse 8-13 used for that purpose. 8-14 Sec. 384.069. DIRECTOR'S COMPENSATION; BOND AND OATH OF 8-15 OFFICE. Sections 375.067, 375.069, and 375.070 apply to directors 8-16 of a development zone created under this chapter as if the zone 8-17 were a municipal management district. 8-18 (Sections 384.070-384.100 reserved for expansion 8-19 SUBCHAPTER D. POWERS AND DUTIES 8-20 Sec. 384.101. GENERAL POWERS. (a) A development zone may 8-21 acquire and dispose of projects and has the powers, authority, 8-22 rights, and duties that are necessary to permit the accomplishment 8-23 of purposes for which the zone was created. 8-24 (b) A development zone may provide for general promotion of 8-25 and tourist advertising regarding the zone and its vicinity and for 8-26 a marketing program to attract visitors. The zone may conduct 9-1 those activities under contracts for professional services with 9-2 persons or organizations the zone selects. 9-3 (c) A development zone may enter into a memorandum of 9-4 understanding with any state agency, including an institution of 9-5 higher education, to further the economic development of the zone. 9-6 (d) To the extent not inconsistent with this chapter, a 9-7 development zone has the powers of: 9-8 (1) a municipal management district created under 9-9 Chapter 375; and 9-10 (2) a county commissioners court under Section 9-11 381.004. 9-12 Sec. 384.102. DUTY TO EVALUATE AVAILABLE FINANCING OPTIONS. 9-13 The board shall evaluate all options available to the development 9-14 zone as alternatives to imposing a tax under Section 384.035, 9-15 including: 9-16 (1) regional grants from federal and state agencies; 9-17 (2) local money from a creating body; 9-18 (3) money from charities; 9-19 (4) sales taxes for economic development in the 9-20 development zone; 9-21 (5) use or impact fees on affected business entities; 9-22 (6) incentives for business entities that may benefit 9-23 from the development zone; 9-24 (7) money provided by local governmental entities; and 9-25 (8) in-kind contributions. 9-26 Sec. 384.103. LIMIT ON DEVELOPMENT ZONE POWERS; OTHER LAWS 10-1 SUPERSEDE. (a) For purposes of this section, "district or zone" 10-2 means: 10-3 (1) a federal enterprise zone; 10-4 (2) a state enterprise zone; 10-5 (3) a municipal management district; or 10-6 (4) any other special district, other than a 10-7 development zone. 10-8 (b) This section applies only to a district or zone that 10-9 contains territory included in the development zone's territory. 10-10 (c) The authority granted to a development zone under this 10-11 chapter is not intended to duplicate the authority granted to a 10-12 district or zone. 10-13 (d) This chapter does not limit the authority or 10-14 jurisdiction of any district or zone. 10-15 (e) To the extent the laws of this chapter conflict with the 10-16 laws of any other district or zone, the laws of the other district 10-17 or zone shall control over this chapter. 10-18 Sec. 384.104. SUITS. A development zone may, through its 10-19 directors, sue and be sued in this state in the name of the 10-20 development zone. Service of process in a suit may be had by 10-21 serving a director. 10-22 (Sections 384.105-384.200 reserved for expansion 10-23 SUBCHAPTER E. BENEFITS OF DEVELOPMENT ZONE 10-24 Sec. 384.201. MONITORING. (a) The board shall monitor each 10-25 person in a development zone that receives benefits available under 10-26 this chapter. 11-1 (b) On the board's request, the Texas Workforce Commission 11-2 or the comptroller's office shall provide to the board tax records 11-3 of a person that receives benefits under this chapter. 11-4 Sec. 384.202. NEIGHBORHOOD REDEVELOPMENT ZONES. (a) The 11-5 board may designate an area as a neighborhood redevelopment zone if 11-6 the area is: 11-7 (1) adjacent to the development zone; and 11-8 (2) eligible for inclusion in the development zone 11-9 under Sections 384.036(b) and (c). 11-10 (b) A development zone may exercise the powers available to 11-11 it in an area designated by the board under Subsection (a). 11-12 (Sections 384.203-384.300 reserved for expansion 11-13 SUBCHAPTER F. GENERAL FISCAL PROVISIONS 11-14 Sec. 384.301. EXPENDITURES. A development zone's money may 11-15 be disbursed only by check, draft, order, or other instrument 11-16 signed by at least three directors. The general manager, 11-17 treasurer, or other employee of the development zone, if authorized 11-18 by resolution of the board, may sign checks, drafts, orders, or 11-19 other instruments on any development zone operation account on 11-20 behalf of the board. 11-21 Sec. 384.302. COMPETITIVE BIDDING; CONTRACT AWARD. Sections 11-22 375.221, 375.222, and 375.223 apply to a development zone created 11-23 under this chapter as if the zone were a municipal management 11-24 district. 12-1 (Sections 384.303-384.400 reserved for expansion 12-2 SUBCHAPTER G. DISSOLUTION 12-3 Sec. 384.401. DISSOLUTION OF DEVELOPMENT ZONE BY CREATING 12-4 BODY. (a) After a hearing, a creating body may dissolve a 12-5 development zone if: 12-6 (1) the area no longer meets the criteria for 12-7 designation under this chapter; 12-8 (2) the best interests of the creating body and the 12-9 owners of property and interests in property in the zone will be 12-10 served by dissolving the zone; and 12-11 (3) each creating body agrees by ordinance or order on 12-12 the: 12-13 (A) proposition that the zone should be 12-14 dissolved; 12-15 (B) disposition of zone assets; and 12-16 (C) assumption of liabilities by the creating 12-17 bodies. 12-18 (b) The dissolution of a development zone does not affect 12-19 the validity of a: 12-20 (1) tax incentive or regulatory relief granted or 12-21 accrued before the removal; or 12-22 (2) bond issued under this chapter. 12-23 Sec. 384.402. DISSOLUTION BY BOARD REQUEST. A board may 12-24 petition a creating body to dissolve the development zone under 12-25 Section 384.401 if a majority of the board finds at any time: 12-26 (1) before the authorization of bonds or the final 13-1 lending of its credit that the continuation of the development zone 13-2 is impracticable or cannot be successfully and beneficially 13-3 accomplished; or 13-4 (2) that all bonds of the development zone or other 13-5 debts of the zone have been paid and the purposes of the zone have 13-6 been accomplished. 13-7 Sec. 384.403. TAXES. On dissolution of a development zone, 13-8 any taxes levied on behalf of the zone are abolished. 13-9 SECTION 2. The importance of this legislation and the 13-10 crowded condition of the calendars in both houses create an 13-11 emergency and an imperative public necessity that the 13-12 constitutional rule requiring bills to be read on three several 13-13 days in each house be suspended, and this rule is hereby suspended, 13-14 and that this Act take effect and be in force from and after its 13-15 passage, and it is so enacted.