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 * * * * *