HBA-KDB H.B. 2842 77(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 2842
By: Coleman
Ways & Means
3/30/2001
Introduced



BACKGROUND AND PURPOSE 

Tax increment reinvestment zones are created by municipalities issuing
bonds and investing the  funds into designated zones.  The funds are used
for structural improvements and to enhance infrastructures, which may lead
to increased property values.  The extra property taxes that are generated
from increased property values are used to pay interest on the bonds.  The
reinvestment zones are only allowed to spend funds which are outlined in
the project and financing plans for the zones.  Currently, because of
rapidly rising property values, such reinvestment zones may end up having a
surplus of funds after paying the interest on the bonds and utilizing all
of the funds necessary to complete projects in an annual plan.  House Bill
2842 authorizes a municipality that creates such a reinvestment zone to
reduce its contributions to the tax increment fund to an amount adequate to
pay its share of the estimated annual project costs of the reinvestment
zone. 

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. 

ANALYSIS

House Bill 2842 amends the Tax Code to authorize the board of directors of
a local government corporation administering a reinvestment zone to
contract with the municipality that created the reinvestment zone to pay
for the incremental costs of providing municipal services incurred as a
result of the creation of the reinvestment zone or the development or
redevelopment of the land within the zone without regard to whether the
costs of services are identified in the project plan and reinvestment zone
financing plan. 

The bill authorizes the municipality, after payment of all tax increment
bonds or notes and other obligations of a reinvestment zone, but prior to
the payment of all project costs, to reduce its contributions to the tax
increment fund to an amount adequate to pay, together with all other money
to be paid by other taxing units into the tax increment fund, the estimated
annual project costs of the zone as shown in the project plan and
reinvestment zone financing plan. 

EFFECTIVE DATE

September 1, 2001.