1-1 AN ACT
1-2 relating to the creation of commercial and industrial development
1-3 zones in certain populous counties; providing for taxes and the
1-4 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 386 to read as follows:
1-8 CHAPTER 386. COMMERCIAL AND INDUSTRIAL DEVELOPMENT ZONES
1-9 SUBCHAPTER A. GENERAL PROVISIONS
1-10 Sec. 386.001. 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. 386.002. 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 386.003-386.030 reserved for expansion
1-20 SUBCHAPTER B. CREATION OF COMMERCIAL AND INDUSTRIAL
1-21 DEVELOPMENT ZONE
1-22 Sec. 386.031. CRITERIA FOR DEVELOPMENT ZONE CREATION.
1-23 (a) To be created as a development zone, an area must:
1-24 (1) have a continuous boundary;
2-1 (2) be at least 10 square miles but not larger than an
2-2 area that is equal to five percent of the area, excluding lakes,
2-3 waterways, and transportation arteries, of the municipality,
2-4 county, or combination of municipalities and the county nominating
2-5 the area as a development zone;
2-6 (3) be an area of pervasive poverty, unemployment, or
2-7 economic distress;
2-8 (4) be located in a county with a population of 2.5
2-9 million or more;
2-10 (5) be adjacent to major transportation nodes and
2-11 thoroughfares that may be used for exporting products to major
2-12 airports, railways, and ports; and
2-13 (6) be designated as a development zone by an
2-14 ordinance or order adopted by each creating body.
2-15 (b) A municipality may contain not more than three
2-16 development zones within its jurisdiction.
2-17 (c) A county may contain not more than three development
2-18 zones in its unincorporated areas.
2-19 (d) Creation of a development zone in a municipality or
2-20 county does not affect the number of enterprise zones that may be
2-21 designated in the municipality or county under Chapter 2303,
2-22 Government Code.
2-23 Sec. 386.032. AREA OF PERVASIVE POVERTY, UNEMPLOYMENT, OR
2-24 ECONOMIC DISTRESS. An area is an area of pervasive poverty,
2-25 unemployment, or economic distress for the purposes of Section
2-26 386.031 if:
2-27 (1) the average rate of unemployment in the area
3-1 during the most recent 12-month period for which data are available
3-2 was at least 1-1/2 times the state average for that period;
3-3 (2) the area is a low-income poverty area;
3-4 (3) the area is in a jurisdiction or pocket of
3-5 poverty, according to the most recent certification available from
3-6 the United States Department of Housing and Urban Development; or
3-7 (4) at least 70 percent of the residents or households
3-8 of the area have an income that is less than 80 percent of the
3-9 median income of the residents or households of the locality or
3-10 state, whichever is less.
3-11 Sec. 386.033. CREATION OF DEVELOPMENT ZONE. (a) A
3-12 development zone is created to promote and encourage:
3-13 (1) commercial development, including the development
3-14 of businesses in the technology field;
3-15 (2) workforce development;
3-16 (3) excellence in education through cooperation with
3-17 public schools, junior colleges, and institutions of higher
3-18 education;
3-19 (4) public and private sector partnerships; and
3-20 (5) the revitalization of neighborhoods.
3-21 (b) The governing body of a municipality or county,
3-22 individually or in combination with other municipalities, by
3-23 ordinance or order may create as a development zone an area within
3-24 its jurisdiction that meets the criteria under Section 386.031.
3-25 (c) Each creating body must hold a public hearing before
3-26 adopting an ordinance or order under this section.
3-27 (d) The governing body of a county may not designate
4-1 territory in the jurisdiction of a municipality as part of a
4-2 proposed development zone unless the governing body of the
4-3 municipality also designates the territory.
4-4 (e) A development zone created under this section is a:
4-5 (1) political subdivision of the state; and
4-6 (2) special district.
4-7 Sec. 386.034. DESIGNATING ORDINANCE OR ORDER. (a) An
4-8 ordinance or order designating an area as a development zone must:
4-9 (1) describe precisely the area to be included in the
4-10 zone by a legal description or by reference to roadways, lakes,
4-11 waterways, or municipal or county boundaries;
4-12 (2) state a finding that the area meets the
4-13 requirements of this chapter;
4-14 (3) summarize briefly the:
4-15 (A) incentives, including tax incentives, that
4-16 the designating body chooses to apply to businesses in the area; or
4-17 (B) programs to be developed to affect
4-18 businesses in the area; and
4-19 (4) designate the area as a development zone.
4-20 (b) The incentives or programs summarized under Subsection
4-21 (a)(3) must include:
4-22 (1) an incentive that does not apply to all businesses
4-23 located in the jurisdiction of a governmental entity that
4-24 designated the area as a development zone;
4-25 (2) an incentive or program designed to improve the
4-26 skills of the local labor pool; and
4-27 (3) an incentive or program designed to address
5-1 infrastructure, housing, or other elements essential to improving
5-2 quality of life.
5-3 (c) This section does not prohibit a municipality or county
5-4 from extending additional incentives, including tax incentives, to
5-5 business enterprises in a development zone by a separate ordinance
5-6 or order.
5-7 Sec. 386.035. TAX INCREMENT. (a) A creating body may use
5-8 tax increment financing to fund a development zone, as provided by
5-9 Chapter 311, Tax Code, and as modified by this section.
5-10 (b) On adoption of an order or ordinance by each creating
5-11 body, the fund may be used to pay salaries of employees of the
5-12 board and administrative expenses of the development zone.
5-13 (c) For the purpose of tax increment financing under this
5-14 section, the board is considered the board of directors of the
5-15 reinvestment zone under Chapter 311, Tax Code. Section 311.009,
5-16 Tax Code, does not apply to this chapter.
5-17 Sec. 386.036. AMENDING BOUNDARIES. (a) A creating body by
5-18 ordinance or order may amend the boundary of a development zone
5-19 after a public hearing on the issue.
5-20 (b) The amended boundary:
5-21 (1) must be continuous;
5-22 (2) may not exceed the original size requirement of
5-23 Section 386.031; and
5-24 (3) may not exclude any area originally included
5-25 within the boundary of the development zone.
5-26 (c) The entire development zone with the amended boundary
5-27 must continue to meet the unemployment or economic distress
6-1 requirements of Section 386.031.
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 386.037-386.060 reserved for expansion
6-7 SUBCHAPTER C. BOARD OF DIRECTORS
6-8 Sec. 386.061. 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.
6-27 Sec. 386.062. QUALIFICATIONS OF DIRECTORS. To serve as a
7-1 director, a person must:
7-2 (1) be at least 21 years old; and
7-3 (2) be registered to vote in the county in which the
7-4 development zone is located.
7-5 Sec. 386.063. DISQUALIFICATION OF DIRECTORS. Section
7-6 49.052, Water Code, applies to directors of a development zone
7-7 created under this chapter as if the zone were a district governed
7-8 by that section.
7-9 Sec. 386.064. BOARD VACANCIES. A vacancy in the office of
7-10 director shall be filled by appointment by the entity that
7-11 appointed the vacating director.
7-12 Sec. 386.065. REMOVAL OF DIRECTOR. A majority of the board
7-13 may remove a director for misconduct or failure to carry out the
7-14 director's duties.
7-15 Sec. 386.066. ORGANIZATION OF BOARD. (a) Except as
7-16 provided by Subsection (b), after each appointment and
7-17 qualification of directors by the appointing entities, the board
7-18 shall organize by electing a president, a vice president, a
7-19 secretary, and any other officers the board considers necessary.
7-20 (b) If a director is appointed under Section 386.061(a)(4),
7-21 that director shall serve as board president.
7-22 Sec. 386.067. QUORUM; DIRECTOR'S DUTIES; MANAGEMENT OF ZONE.
7-23 Sections 49.053, 49.057, and 49.058, Water Code, apply to the board
7-24 of directors of a development zone created under this chapter as if
7-25 the zone were a district governed by those sections.
7-26 Sec. 386.068. MEETINGS AND NOTICE. (a) The board shall
7-27 designate and establish a development zone office in the county.
8-1 (b) The board may establish regular meetings to conduct
8-2 development zone business and may hold special meetings at other
8-3 times as the business of a zone requires.
8-4 (c) Notice of the time, place, and purpose of any meeting of
8-5 the board shall be given by posting a notice containing that
8-6 information at a place convenient to the public within the
8-7 development zone. A copy of the notice shall be furnished to the
8-8 clerk or clerks of the county in which the zone is located, who
8-9 shall post the notice on a bulletin board in the county courthouse
8-10 used for that purpose.
8-11 Sec. 386.069. DIRECTOR'S COMPENSATION; BOND AND OATH OF
8-12 OFFICE. Sections 375.067, 375.069, and 375.070 apply to directors
8-13 of a development zone created under this chapter as if the zone
8-14 were a municipal management district.
8-15 (Sections 386.070-386.100 reserved for expansion
8-16 SUBCHAPTER D. POWERS AND DUTIES
8-17 Sec. 386.101. GENERAL POWERS. (a) A development zone may
8-18 acquire and dispose of projects and has the powers, authority,
8-19 rights, and duties that are necessary to permit the accomplishment
8-20 of purposes for which the zone was created.
8-21 (b) A development zone may provide for general promotion of
8-22 and tourist advertising regarding the zone and its vicinity and for
8-23 a marketing program to attract visitors. The zone may conduct
8-24 those activities under contracts for professional services with
8-25 persons or organizations the zone selects.
8-26 (c) A development zone may enter into a memorandum of
8-27 understanding with any state agency, including an institution of
9-1 higher education, to further the economic development of the zone.
9-2 (d) To the extent not inconsistent with this chapter, a
9-3 development zone has the powers of:
9-4 (1) a municipal management district created under
9-5 Chapter 375; and
9-6 (2) a county commissioners court under Section
9-7 381.004.
9-8 Sec. 386.102. DUTY TO EVALUATE AVAILABLE FINANCING OPTIONS.
9-9 The board shall evaluate all options available to the development
9-10 zone as alternatives to imposing a tax under Section 386.035,
9-11 including:
9-12 (1) regional grants from federal and state agencies;
9-13 (2) local money from a creating body;
9-14 (3) money from charities;
9-15 (4) sales taxes for economic development in the
9-16 development zone;
9-17 (5) use or impact fees on affected business entities;
9-18 (6) incentives for business entities that may benefit
9-19 from the development zone;
9-20 (7) money provided by local governmental entities; and
9-21 (8) in-kind contributions.
9-22 Sec. 386.103. LIMIT ON DEVELOPMENT ZONE POWERS; OTHER LAWS
9-23 SUPERSEDE. (a) For purposes of this section, "district or zone"
9-24 means:
9-25 (1) a federal enterprise zone;
9-26 (2) a state enterprise zone;
9-27 (3) a municipal management district; or
10-1 (4) any other special district, other than a
10-2 development zone.
10-3 (b) This section applies only to a district or zone that
10-4 contains territory included in the development zone's territory.
10-5 (c) The authority granted to a development zone under this
10-6 chapter is not intended to duplicate the authority granted to a
10-7 district or zone.
10-8 (d) This chapter does not limit the authority or
10-9 jurisdiction of any district or zone.
10-10 (e) To the extent the laws of this chapter conflict with the
10-11 laws of any other district or zone, the laws of the other district
10-12 or zone shall control over this chapter.
10-13 Sec. 386.104. MONITORING. (a) The board shall monitor each
10-14 person in a development zone that receives benefits available under
10-15 this chapter.
10-16 (b) On the board's request, the Texas Workforce Commission
10-17 or the comptroller's office shall provide to the board tax records
10-18 of a person that receives benefits under this chapter.
10-19 Sec. 386.105. NEIGHBORHOOD REDEVELOPMENT ZONES. (a) The
10-20 board may designate an area as a neighborhood redevelopment zone if
10-21 the area is:
10-22 (1) adjacent to the development zone; and
10-23 (2) eligible for inclusion in the development zone
10-24 under Sections 386.036(b) and (c).
10-25 (b) A development zone may exercise the powers available to
10-26 it in an area designated by the board under Subsection (a).
10-27 Sec. 386.106. SUITS. A development zone may, through its
11-1 directors, sue and be sued in this state in the name of the
11-2 development zone. Service of process in a suit may be had by
11-3 serving a director.
11-4 (Sections 386.107-386.200 reserved for expansion
11-5 SUBCHAPTER E. GENERAL FISCAL PROVISIONS
11-6 Sec. 386.201. EXPENDITURES. A development zone's money may
11-7 be disbursed only by check, draft, order, or other instrument
11-8 signed by at least three directors. The general manager,
11-9 treasurer, or other employee of the development zone, if authorized
11-10 by resolution of the board, may sign checks, drafts, orders, or
11-11 other instruments on any development zone operation account on
11-12 behalf of the board.
11-13 Sec. 386.202. COMPETITIVE BIDDING; CONTRACT AWARD.
11-14 Subchapter K, Chapter 375, applies to a development zone created
11-15 under this chapter as if the zone were a municipal management
11-16 district.
11-17 (Sections 386.203-386.300 reserved for expansion
11-18 SUBCHAPTER F. DISSOLUTION
11-19 Sec. 386.301. DISSOLUTION OF DEVELOPMENT ZONE BY CREATING
11-20 BODY. (a) After a hearing, a creating body may dissolve a
11-21 development zone if:
11-22 (1) the area no longer meets the criteria for
11-23 designation under this chapter;
11-24 (2) the best interests of the creating body and the
11-25 owners of property and interests in property in the zone will be
11-26 served by dissolving the zone; and
11-27 (3) each creating body agrees by ordinance or order on
12-1 the:
12-2 (A) proposition that the zone should be
12-3 dissolved;
12-4 (B) disposition of zone assets; and
12-5 (C) assumption of liabilities by the creating
12-6 bodies.
12-7 (b) The dissolution of a development zone does not affect
12-8 the validity of a:
12-9 (1) tax incentive or regulatory relief granted or
12-10 accrued before the removal; or
12-11 (2) bond issued under this chapter.
12-12 Sec. 386.302. DISSOLUTION BY BOARD REQUEST. A board may
12-13 petition a creating body to dissolve the development zone under
12-14 Section 386.301 if a majority of the board finds at any time:
12-15 (1) before the authorization of bonds or the final
12-16 lending of its credit that the continuation of the development zone
12-17 is impracticable or cannot be successfully and beneficially
12-18 accomplished; or
12-19 (2) that all bonds of the development zone or other
12-20 debts of the zone have been paid and the purposes of the zone have
12-21 been accomplished.
12-22 Sec. 386.303. TAXES. On dissolution of a development zone,
12-23 any taxes levied on behalf of the zone are abolished.
12-24 SECTION 2. This Act takes effect immediately if it receives
12-25 a vote of two-thirds of all the members elected to each house, as
12-26 provided by Section 39, Article III, Texas Constitution. If this
12-27 Act does not receive the vote necessary for immediate effect, this
13-1 Act takes effect September 1, 2001.
_______________________________ _______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 1053 was passed by the House on May
3, 2001, by the following vote: Yeas 144, Nays 0, 2 present, not
voting.
_______________________________
Chief Clerk of the House
I certify that H.B. No. 1053 was passed by the Senate on May
17, 2001, by the following vote: Yeas 30, Nays 0, 1 present, not
voting.
_______________________________
Secretary of the Senate
APPROVED: __________________________
Date
__________________________
Governor