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