1-1     By:  Tillery (Senate Sponsor - Carona)                 H.B. No. 782
 1-2           (In the Senate - Received from the House March 15, 2001;
 1-3     March 19, 2001, read first time and referred to Committee on
 1-4     Intergovernmental Relations; April 17, 2001, reported favorably by
 1-5     the following vote:  Yeas 7, Nays 0; April 17, 2001, sent to
 1-6     printer.)
 1-7                            A BILL TO BE ENTITLED
 1-8                                   AN ACT
 1-9     relating to the ability of a development corporation to receive
1-10     funding from a municipality.
1-11           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-12           SECTION 1.  Section 380.002, Local Government Code, is
1-13     amended by amending Subsection (b) and adding Subsection (c) to
1-14     read as follows:
1-15           (b)  A home-rule municipality may, under a contract with a
1-16     development corporation created by the municipality under the
1-17     Development Corporation Act of 1979 (Article 5190.6, Vernon's Texas
1-18     Civil Statutes), grant public money to the corporation.  The
1-19     development corporation shall use the grant money for the
1-20     development and diversification of the economy of the state,
1-21     elimination of unemployment or underemployment in the state, and
1-22     development and expansion of commerce in the state.
1-23           (c)  The funds granted by the municipality under this section
1-24     shall be derived from any source lawfully available to the
1-25     municipality under its charter or other law, other than from the
1-26     proceeds of bonds or other obligations of the municipality payable
1-27     from ad valorem taxes.
1-28           SECTION 2.  Sections 21 and 22, Development Corporation Act
1-29     of 1979 (Article 5190.6, Vernon's Texas Civil Statutes), are
1-30     amended to read as follows:
1-31           Sec. 21. Every unit is hereby authorized to utilize a
1-32     corporation to issue bonds on its behalf to finance the cost of
1-33     projects, including projects in federally designated empowerment
1-34     zones and enterprise communities or enterprise zones designated
1-35     under the Texas Enterprise Zone Act, to promote and develop new and
1-36     expanded business enterprises to promote and encourage employment
1-37     and the public welfare.  No unit is or shall be authorized to lend
1-38     its credit or grant any public money or thing of value in aid of a
1-39     corporation, except that a city may grant public money to a
1-40     corporation under a contract authorized by Section 380.002, Local
1-41     Government Code.  The unit will approve all programs and
1-42     expenditures of the corporation and annually review any financial
1-43     statements of the corporation, and at all times the unit will have
1-44     access to the books and records of the corporation.
1-45           Sec. 22. Bonds issued under the provisions of this Act shall
1-46     be deemed not to constitute a debt of the state, of the unit, or of
1-47     any other political corporation, subdivision, or agency of this
1-48     state or a pledge of the faith and credit of any of them, but such
1-49     bonds shall be payable solely from the funds herein provided
1-50     therefor from revenues.  All such revenue bonds shall contain on
1-51     the face thereof a statement to the effect that neither the state,
1-52     the unit, nor any political corporation, subdivision, or agency of
1-53     the state shall be obligated to pay the same or the interest
1-54     thereon and that neither the faith and credit nor the taxing power
1-55     of the state, the unit, or any other political corporation,
1-56     subdivision, or agency thereof is pledged to the payment of the
1-57     principal of or the interest on such bonds. The corporation shall
1-58     not be authorized to incur financial obligations which cannot be
1-59     paid from proceeds of the bonds, [or] from revenues realized from
1-60     the lease or sale of a project or realized from a loan made by the
1-61     corporation to finance or refinance in whole or in part a project,
1-62     or from revenues from a contract with a city under Section 380.002,
1-63     Local Government Code.  The corporation when established and
1-64     created pursuant to the terms of the Act shall be a constituted
 2-1     authority and an instrumentality (within the meaning of those terms
 2-2     in the regulations of the treasury and the rulings of the Internal
 2-3     Revenue Service prescribed and promulgated pursuant to Section 103
 2-4     of the Internal Revenue Code of 1954, as amended) and shall be
 2-5     authorized to act on behalf of the unit under whose auspices it is
 2-6     created for the specific public purpose or purposes authorized by
 2-7     such unit; but the corporation is not intended to be and shall not
 2-8     be a political subdivision or a political corporation within the
 2-9     meaning of the constitution and the laws of the state, including
2-10     without limitation Article III, Section 52, of the Texas
2-11     Constitution, and a unit shall never delegate to a corporation any
2-12     of such unit's attributes of sovereignty, including the power to
2-13     tax, the power of eminent domain, and the police power.
2-14           SECTION 3.  This Act takes effect immediately if it receives
2-15     a vote of two-thirds of all the members elected to each house, as
2-16     provided by Section 39, Article III, Texas Constitution.  If this
2-17     Act does not receive the vote necessary for immediate effect, this
2-18     Act takes effect September 1, 2001.
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