1-1     By:  Coleman (Senate Sponsor - Gallegos)              H.B. No. 1053
 1-2           (In the Senate - Received from the House May 4, 2001;
 1-3     May 7, 2001, read first time and referred to Committee on Business
 1-4     and Commerce; May 11, 2001, reported favorably by the following
 1-5     vote:  Yeas 4, Nays 0; May 11, 2001, sent to printer.)
 1-6                            A BILL TO BE ENTITLED
 1-7                                   AN ACT
 1-8     relating to the creation of commercial and industrial development
 1-9     zones in certain populous counties; providing for taxes and the
1-10     issuance of bonds.
1-11           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-12           SECTION 1.  Subtitle B, Title 12, Local Government Code, is
1-13     amended by adding Chapter 386 to read as follows:
1-14          CHAPTER 386.  COMMERCIAL AND INDUSTRIAL DEVELOPMENT ZONES
1-15                      SUBCHAPTER A.  GENERAL PROVISIONS
1-16           Sec. 386.001.  DEFINITIONS.  In this chapter:
1-17                 (1)  "Board" means a board of directors of a commercial
1-18     and industrial development zone.
1-19                 (2)  "Development zone" means an area designated as a
1-20     commercial and industrial development zone under this chapter.
1-21           Sec. 386.002.  JURISDICTION OF MUNICIPALITY.  For the
1-22     purposes of this chapter, territory in the extraterritorial
1-23     jurisdiction of a municipality is considered to be in the
1-24     jurisdiction of the municipality.
1-25              (Sections 386.003-386.030 reserved for expansion
1-26            SUBCHAPTER B.  CREATION OF COMMERCIAL AND INDUSTRIAL
1-27                              DEVELOPMENT ZONE
1-28           Sec. 386.031.  CRITERIA FOR DEVELOPMENT ZONE CREATION.
1-29     (a)  To be created as a development zone, an area must:
1-30                 (1)  have a continuous boundary;
1-31                 (2)  be at least 10 square miles but not larger than an
1-32     area that is equal to five percent of the area, excluding lakes,
1-33     waterways, and transportation arteries, of the municipality,
1-34     county, or combination of municipalities and the county nominating
1-35     the area as a development zone;
1-36                 (3)  be an area of pervasive poverty, unemployment, or
1-37     economic distress;
1-38                 (4)  be located in a county with a population of 2.5
1-39     million or more;
1-40                 (5)  be adjacent to major transportation nodes and
1-41     thoroughfares that may be used for exporting products to major
1-42     airports, railways, and ports; and
1-43                 (6)  be designated as a development zone by an
1-44     ordinance or order adopted by each creating body.
1-45           (b)  A municipality may contain not more than three
1-46     development zones within its jurisdiction.
1-47           (c)  A county may contain not more than three development
1-48     zones in its unincorporated areas.
1-49           (d)  Creation of a development zone in a municipality or
1-50     county does not affect the number of enterprise zones that may be
1-51     designated in the municipality or county under Chapter 2303,
1-52     Government Code.
1-53           Sec. 386.032.  AREA OF PERVASIVE POVERTY, UNEMPLOYMENT, OR
1-54     ECONOMIC DISTRESS.  An area is an area of pervasive poverty,
1-55     unemployment, or economic distress for the purposes of Section
1-56     386.031 if:
1-57                 (1)  the average rate of unemployment in the area
1-58     during the most recent 12-month period for which data are available
1-59     was at least 1-1/2 times the state average for that period;
1-60                 (2)  the area is a low-income poverty area;
1-61                 (3)  the area is in a jurisdiction or pocket of
1-62     poverty, according to the most recent certification available from
1-63     the United States Department of Housing and Urban Development; or
1-64                 (4)  at least 70 percent of the residents or households
 2-1     of the area have an income that is less than 80 percent of the
 2-2     median income of the residents or households of the locality or
 2-3     state, whichever is less.
 2-4           Sec. 386.033.  CREATION OF DEVELOPMENT ZONE.  (a)  A
 2-5     development zone is created to promote and encourage:
 2-6                 (1)  commercial development, including the development
 2-7     of businesses in the technology field;
 2-8                 (2)  workforce development;
 2-9                 (3)  excellence in education through cooperation with
2-10     public schools, junior colleges, and institutions of higher
2-11     education;
2-12                 (4)  public and private sector partnerships; and
2-13                 (5)  the revitalization of neighborhoods.
2-14           (b)  The governing body of a municipality or county,
2-15     individually or in combination with other municipalities, by
2-16     ordinance or order may create as a development zone an area within
2-17     its jurisdiction that meets the criteria under Section 386.031.
2-18           (c)  Each creating body must hold a public hearing before
2-19     adopting an ordinance or order under this section.
2-20           (d)  The governing body of a county may not designate
2-21     territory in the jurisdiction of a municipality as part of a
2-22     proposed development zone unless the governing body of the
2-23     municipality also designates the territory.
2-24           (e)  A development zone created under this section is a:
2-25                 (1)  political subdivision of the state; and
2-26                 (2)  special district.
2-27           Sec. 386.034.  DESIGNATING ORDINANCE OR ORDER.  (a)  An
2-28     ordinance or order designating an area as a development zone must:
2-29                 (1)  describe precisely the area to be included in the
2-30     zone by a legal description or by reference to roadways, lakes,
2-31     waterways, or municipal or county boundaries;
2-32                 (2)  state a finding that the area meets the
2-33     requirements of this chapter;
2-34                 (3)  summarize briefly the:
2-35                       (A)  incentives, including tax incentives, that
2-36     the designating body chooses to apply to businesses in the area; or
2-37                       (B)  programs to be developed to affect
2-38     businesses in the area; and
2-39                 (4)  designate the area as a development zone.
2-40           (b)  The incentives or programs summarized under Subsection
2-41     (a)(3) must include:
2-42                 (1)  an incentive that does not apply to all businesses
2-43     located in the jurisdiction of a governmental entity that
2-44     designated the area as a development zone;
2-45                 (2)  an incentive or program designed to improve the
2-46     skills of the local labor pool; and
2-47                 (3)  an incentive or program designed to address
2-48     infrastructure, housing, or other elements essential to improving
2-49     quality of life.
2-50           (c)  This section does not prohibit a municipality or county
2-51     from extending additional incentives, including tax incentives, to
2-52     business enterprises in a development zone by a separate ordinance
2-53     or order.
2-54           Sec. 386.035.  TAX INCREMENT. (a)  A creating body may use
2-55     tax increment financing to fund a development zone, as provided by
2-56     Chapter 311, Tax Code, and as modified by this section.
2-57           (b)  On adoption of an order or ordinance by each creating
2-58     body, the fund may be used to pay salaries of employees of the
2-59     board and administrative expenses of the development zone.
2-60           (c)  For the purpose of tax increment financing under this
2-61     section, the board is considered the board of directors of the
2-62     reinvestment zone under Chapter 311, Tax Code.  Section 311.009,
2-63     Tax Code, does not apply to this chapter.
2-64           Sec. 386.036.  AMENDING BOUNDARIES.  (a)  A creating body by
2-65     ordinance or order may amend the boundary of a development zone
2-66     after a public hearing on the issue.
2-67           (b)  The amended boundary:
2-68                 (1)  must be continuous;
2-69                 (2)  may not exceed the original size requirement of
 3-1     Section 386.031; and
 3-2                 (3)  may not exclude any area originally included
 3-3     within the boundary of the development zone.
 3-4           (c)  The entire development zone with the amended boundary
 3-5     must continue to meet the unemployment or economic distress
 3-6     requirements of Section 386.031.
 3-7           (d)  A creating body may not make more than one boundary
 3-8     amendment for a development zone in a calendar year.
 3-9           (e)  If more than one body created the development zone, each
3-10     body must agree on the amendment by ordinance or order.
3-11              (Sections 386.037-386.060 reserved for expansion
3-12                      SUBCHAPTER C.  BOARD OF DIRECTORS
3-13           Sec. 386.061.  BOARD OF  DIRECTORS.  (a)  A development zone
3-14     is governed by a board of nine directors who serve two-year terms,
3-15     appointed as follows:
3-16                 (1)  the governing body of the municipality, if any,
3-17     that includes the greatest part of the zone's territory shall
3-18     appoint four directors;
3-19                 (2)  other municipalities, if any, any part of which
3-20     are included in the zone's territory, jointly shall appoint one
3-21     director;
3-22                 (3)  the commissioners court of the county in which the
3-23     zone is located shall appoint:
3-24                       (A)  nine directors, if the zone contains no
3-25     municipality; or
3-26                       (B)  four directors, if the zone contains one or
3-27     more municipalities; and
3-28                 (4)  if a development zone contains territory in only
3-29     one municipality, the municipality and the county in which the zone
3-30     is located jointly shall appoint one director.
3-31           (b)  The initial terms of directors may be staggered.
3-32           Sec. 386.062.  QUALIFICATIONS OF DIRECTORS.  To serve as a
3-33     director, a person must:
3-34                 (1)  be at least 21 years old; and
3-35                 (2)  be registered to vote in the county in which the
3-36     development zone is located.
3-37           Sec. 386.063.  DISQUALIFICATION OF DIRECTORS.  Section
3-38     49.052, Water Code, applies to directors of a development zone
3-39     created under this chapter as if the zone were a district governed
3-40     by that section.
3-41           Sec. 386.064.  BOARD VACANCIES.  A vacancy in the office of
3-42     director shall be filled by appointment by the entity that
3-43     appointed the vacating director.
3-44           Sec. 386.065.  REMOVAL OF DIRECTOR.  A majority of the board
3-45     may remove a director for misconduct or failure to carry out the
3-46     director's duties.
3-47           Sec. 386.066.  ORGANIZATION OF BOARD.  (a)  Except as
3-48     provided by Subsection (b), after each appointment and
3-49     qualification of directors by the appointing entities, the board
3-50     shall organize by electing a president, a vice president, a
3-51     secretary, and any other officers the board considers necessary.
3-52           (b)  If a director is appointed under Section 386.061(a)(4),
3-53     that director shall serve as board president.
3-54           Sec. 386.067.  QUORUM; DIRECTOR'S DUTIES; MANAGEMENT OF ZONE.
3-55     Sections 49.053, 49.057, and 49.058, Water Code, apply to the board
3-56     of directors of a development zone created under this chapter as if
3-57     the zone were a district governed by those sections.
3-58           Sec. 386.068.  MEETINGS AND NOTICE.  (a)  The board shall
3-59     designate and establish a development zone office in the county.
3-60           (b)  The board may establish regular meetings to conduct
3-61     development zone business and may hold special meetings at other
3-62     times as the business of a zone requires.
3-63           (c)  Notice of the time, place, and purpose of any meeting of
3-64     the board shall be given by posting a notice containing that
3-65     information at a place convenient to the public within the
3-66     development zone.  A copy of the notice shall be furnished to the
3-67     clerk or clerks of the county in which the zone is located, who
3-68     shall post the notice on a bulletin board in the county courthouse
3-69     used for that purpose.
 4-1           Sec. 386.069.  DIRECTOR'S COMPENSATION; BOND AND OATH OF
 4-2     OFFICE.  Sections 375.067, 375.069, and 375.070 apply to directors
 4-3     of a development zone created under this chapter as if the zone
 4-4     were a municipal management district.
 4-5              (Sections 386.070-386.100 reserved for expansion
 4-6                      SUBCHAPTER D.  POWERS AND DUTIES
 4-7           Sec. 386.101.  GENERAL POWERS.  (a)  A development zone may
 4-8     acquire and dispose of projects and has the powers, authority,
 4-9     rights, and duties that are necessary to permit the accomplishment
4-10     of purposes for which the zone was created.
4-11           (b)  A development zone may provide for general promotion of
4-12     and tourist advertising regarding the zone and its vicinity and for
4-13     a marketing program to attract visitors.  The zone may conduct
4-14     those activities under contracts for professional services with
4-15     persons or organizations the zone selects.
4-16           (c)  A development zone may enter into a memorandum of
4-17     understanding with any state agency, including an institution of
4-18     higher education, to further the economic development of the zone.
4-19           (d)  To the extent not inconsistent with this chapter, a
4-20     development zone has the powers of:
4-21                 (1)  a municipal management district created under
4-22     Chapter 375; and
4-23                 (2)  a county commissioners court under Section
4-24     381.004.
4-25           Sec. 386.102.  DUTY TO EVALUATE AVAILABLE FINANCING OPTIONS.
4-26     The board shall evaluate all options available to the development
4-27     zone as alternatives to imposing a tax under Section 386.035,
4-28     including:
4-29                 (1)  regional grants from federal and state agencies;
4-30                 (2)  local money from a creating body;
4-31                 (3)  money from charities;
4-32                 (4)  sales taxes for economic development in the
4-33     development zone;
4-34                 (5)  use or impact fees on affected business entities;
4-35                 (6)  incentives for business entities that may benefit
4-36     from the development zone;
4-37                 (7)  money provided by local governmental entities; and
4-38                 (8)  in-kind contributions.
4-39           Sec. 386.103.  LIMIT ON DEVELOPMENT ZONE POWERS; OTHER LAWS
4-40     SUPERSEDE.  (a)  For purposes of this section, "district or zone"
4-41     means:
4-42                 (1)  a federal enterprise zone;
4-43                 (2)  a state enterprise zone;
4-44                 (3)  a municipal management district; or
4-45                 (4)  any other special district, other than a
4-46     development zone.
4-47           (b)  This section applies only to a district or zone that
4-48     contains territory included in the development zone's territory.
4-49           (c)  The authority granted to a development zone under this
4-50     chapter is not intended to duplicate the authority granted to a
4-51     district or zone.
4-52           (d)  This chapter does not limit the authority or
4-53     jurisdiction of any district or zone.
4-54           (e)  To the extent the laws of this chapter conflict with the
4-55     laws of any other district or zone, the laws of the other district
4-56     or zone shall control over this chapter.
4-57           Sec. 386.104.  MONITORING.  (a)  The board shall monitor each
4-58     person in a development zone that receives benefits available under
4-59     this chapter.
4-60           (b)  On the board's request, the Texas Workforce Commission
4-61     or the comptroller's office shall provide to the board tax records
4-62     of a person that receives benefits under this chapter.
4-63           Sec. 386.105.  NEIGHBORHOOD REDEVELOPMENT ZONES.  (a)  The
4-64     board may designate an area as a neighborhood redevelopment zone if
4-65     the area is:
4-66                 (1)  adjacent to the development zone; and
4-67                 (2)  eligible for inclusion in the development zone
4-68     under Sections 386.036(b) and (c).
4-69           (b)  A development zone may exercise the powers available to
 5-1     it in an area designated by the board under Subsection (a).
 5-2           Sec. 386.106.  SUITS. A development zone may, through its
 5-3     directors, sue and be sued in this state in the name of the
 5-4     development zone.  Service of process in a suit may be had by
 5-5     serving a director.
 5-6              (Sections 386.107-386.200 reserved for expansion
 5-7                  SUBCHAPTER E.  GENERAL FISCAL PROVISIONS
 5-8           Sec. 386.201.  EXPENDITURES.  A development zone's money may
 5-9     be disbursed only by check, draft, order, or other instrument
5-10     signed by at least three directors.  The general manager,
5-11     treasurer, or other employee of the development zone, if authorized
5-12     by resolution of the board, may sign checks, drafts, orders, or
5-13     other instruments on any development zone operation account on
5-14     behalf of the board.
5-15           Sec. 386.202.  COMPETITIVE BIDDING; CONTRACT AWARD.
5-16     Subchapter K, Chapter 375, applies to a development zone created
5-17     under this chapter as if the zone were a municipal management
5-18     district.
5-19              (Sections 386.203-386.300 reserved for expansion
5-20                         SUBCHAPTER F.  DISSOLUTION
5-21           Sec. 386.301.  DISSOLUTION OF DEVELOPMENT ZONE BY CREATING
5-22     BODY.  (a)  After a hearing, a creating body may dissolve a
5-23     development zone if:
5-24                 (1)  the area no longer meets the criteria for
5-25     designation under this chapter;
5-26                 (2)  the best interests of the creating body and the
5-27     owners of property and interests in property in the zone will be
5-28     served by dissolving the zone; and
5-29                 (3)  each creating body agrees by ordinance or order on
5-30     the:
5-31                       (A)  proposition that the zone should be
5-32     dissolved;
5-33                       (B)  disposition of zone assets; and
5-34                       (C)  assumption of liabilities by the creating
5-35     bodies.
5-36           (b)  The dissolution of a development zone does not affect
5-37     the validity of a:
5-38                 (1)  tax incentive or regulatory relief granted or
5-39     accrued before the removal; or
5-40                 (2)  bond issued under this chapter.
5-41           Sec. 386.302.  DISSOLUTION BY BOARD REQUEST.  A board may
5-42     petition a creating body to dissolve the development zone under
5-43     Section 386.301 if a majority of the board finds at any time:
5-44                 (1)  before the authorization of bonds or the final
5-45     lending of its credit that the continuation of the development zone
5-46     is impracticable or cannot be successfully and beneficially
5-47     accomplished; or
5-48                 (2)  that all bonds of the development zone or other
5-49     debts of the zone have been paid and the purposes of the zone have
5-50     been accomplished.
5-51           Sec. 386.303.  TAXES.  On dissolution of a development zone,
5-52     any taxes levied on behalf of the zone are abolished.
5-53           SECTION 2.  This Act takes effect immediately if it receives
5-54     a vote of two-thirds of all the members elected to each house, as
5-55     provided by Section 39, Article III, Texas Constitution.  If this
5-56     Act does not receive the vote necessary for immediate effect, this
5-57     Act takes effect September 1, 2001.
5-58                                  * * * * *