1-1     By:  Swinford, et al. (Senate Sponsor - Duncan)       H.B. No. 1880
 1-2           (In the Senate - Received from the House May 7, 2001;
 1-3     May 7, 2001, read first time and referred to Committee on Natural
 1-4     Resources; May 11, 2001, reported favorably by the following vote:
 1-5     Yeas 7, 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, operation, and administration of
 1-9     agricultural development districts and granting the power of
1-10     eminent domain and the authority to issue bonds.
1-11           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-12           SECTION 1. Title 4, Agriculture Code, is amended by adding
1-13     Chapter 60 to read as follows:
1-14            CHAPTER 60.  TEXAS AGRICULTURAL DEVELOPMENT DISTRICTS
1-15                      SUBCHAPTER A.  GENERAL PROVISIONS
1-16           Sec. 60.001.  SHORT TITLE. This chapter may be cited as the
1-17     Agricultural Development District Act.
1-18           Sec. 60.002.  LEGISLATIVE INTENT. This chapter furthers the
1-19     public purpose of improving the economy of this state by providing
1-20     incentives for the development of agricultural operations and
1-21     facilities.
1-22           Sec. 60.003.  FINDINGS. (a)  Agriculture is a critical
1-23     element in Texas' economic, cultural, and historical development
1-24     but is under considerable pressure as a result of market
1-25     concentration, competitive forces, adverse weather conditions,
1-26     urbanization, and other factors.
1-27           (b)  Agriculture is a vital component of a diversified state
1-28     economy, creates numerous economic opportunities, and serves to
1-29     renew the state's natural resources through the annual production
1-30     of crops and livestock and the use and reuse of agricultural
1-31     by-products.
1-32           (c)  The state must increase economic opportunities,
1-33     including value-added operations, to keep more agriculture-based
1-34     activity in the state and ensure that agriculture remains a vital
1-35     force in the economy.  In order to accomplish this goal, the state
1-36     must provide incentives to promote the development of agricultural
1-37     facilities.
1-38           (d)  The means and measures authorized by this chapter are in
1-39     the public interest and serve a public purpose of this state in
1-40     promoting the development of agricultural facilities and operations
1-41     by providing incentives for the development of projects that result
1-42     in employment and economic activity.
1-43           (e)  The creation of agricultural development districts is
1-44     essential to accomplish the purposes of Section 52-a, Article III,
1-45     Texas Constitution, and to accomplish the other public purposes
1-46     stated in this chapter and further serves the purposes of Section
1-47     59, Article XVI, and Section 52, Article III, Texas Constitution.
1-48           Sec. 60.004.  DEFINITIONS. In this chapter:
1-49                 (1)  "Assessment" means a charge levied against real
1-50     property located within a district's boundaries or against an
1-51     agricultural product produced on real property in the district to
1-52     pay the costs associated with the district's purposes, including a
1-53     reassessment or supplemental assessment.
1-54                 (2)  "Board" means the board of directors of a
1-55     district.
1-56                 (3)  "Bond" means an obligation issued by a district
1-57     under this chapter, including a bond, certificate, note, or other
1-58     evidence of indebtedness.
1-59                 (4)  "Director" means a member of the board of
1-60     directors of a district.
1-61                 (5)  "District" means a Texas Agricultural Development
1-62     District established under this chapter.
1-63                 (6)  "Project" means an agricultural project designated
1-64     under Section 60.054.
 2-1           Sec. 60.005.  GOVERNMENTAL AGENCY; TORT CLAIMS. A district is
 2-2     a governmental agency, a body politic and corporate, and a
 2-3     political subdivision of this state.  Section 375.004, Local
 2-4     Government Code, applies to a district.
 2-5           Sec. 60.006.  PURPOSE AND NATURE OF DISTRICT. (a)  A district
 2-6     is created as a conservation and reclamation district under Section
 2-7     59, Article XVI, Texas Constitution, to conserve and develop the
 2-8     natural resources of this state, including agricultural resources.
 2-9           (b)  A district created under this chapter exercises public
2-10     and essential governmental functions.
2-11           (c)  Chapter 49, Water Code, does not apply to a district,
2-12     except as provided by Section 60.061.
2-13           (d)  The creation of a district is essential to accomplish
2-14     the purposes of Section 52-a, Article III, Texas Constitution, and
2-15     other public purposes stated in this chapter.
2-16               (Sections 60.007-60.020 reserved for expansion
2-17                     SUBCHAPTER B.  CREATION OF DISTRICT
2-18           Sec. 60.021.  PETITION TO ESTABLISH DISTRICT. (a)  On
2-19     petition of at least 10 residents of a proposed district, five of
2-20     whom must own real property in the proposed district, the
2-21     commissioners court of a county in which an agricultural facility
2-22     of the proposed district is to be located may commence the creation
2-23     of a district.
2-24           (b)  The creation of the district is subject to a
2-25     confirmation election held as provided by this subchapter.
2-26           (c)  A district may consist of parcels of land that are:
2-27                 (1)  not contiguous; and
2-28                 (2)  located in one or more counties.
2-29           (d)  Not later than the 10th day following the date of
2-30     receipt of a petition, the commissioners court shall provide notice
2-31     of the receipt of the petition and a copy of the petition to:
2-32                 (1)  the commissioners court of each other county
2-33     located in whole or in part in the proposed district; and
2-34                 (2)  the governing body of each municipality located in
2-35     whole or in part in the proposed district.
2-36           (e)  No part of a proposed district may be located within the
2-37     corporate boundaries of a municipality unless, prior to the
2-38     formation of the district, the governing body of the municipality
2-39     consents in writing to the formation of the district within the
2-40     municipality.
2-41           Sec. 60.022.  CONTENTS OF PETITION. A petition filed under
2-42     Section 60.021 must:
2-43                 (1)  describe the boundaries of the proposed district
2-44     by metes and bounds or by lot and block number, if there is a
2-45     recorded map or plat and survey of the area;
2-46                 (2)  include a name for the proposed district, which
2-47     must include the term "Agricultural Development District";
2-48                 (3)  be signed by the landowners of any land to be
2-49     included within the proposed district and provide an acknowledgment
2-50     consistent with Section 121.001, Civil Practice and Remedies Code,
2-51     that the landowners desire the land to be included in the district;
2-52                 (4)  include the names of at least five persons who are
2-53     willing and qualified to serve as temporary directors of the
2-54     district;
2-55                 (5)  name each county in which any agricultural
2-56     facilities to be owned by the district are to be located;
2-57                 (6)  name each municipality in which any part of the
2-58     district is to be located;
2-59                 (7)  state the general nature of the proposed
2-60     development and the cost of the development as then estimated by
2-61     the petitioners;
2-62                 (8)  state the necessity and feasibility of the
2-63     proposed district and whether the district will serve the public
2-64     purpose of furthering agricultural interests;
2-65                 (9)  include a pledge that the district will make
2-66     payments in lieu of taxes to any school district and county in
2-67     which any real property to be owned by the district is located, as
2-68     follows:
2-69                       (A)  annual payments to each entity equal to the
 3-1     amount of taxes imposed on the real property by the entity in the
 3-2     year of the district's creation; and
 3-3                       (B)  a payment to each entity equal to the amount
 3-4     that would be due under Section 23.55, Tax Code, on the district's
 3-5     date of creation; and
 3-6                 (10)  include a pledge that, if the district employs
 3-7     more than 50 persons, the district will make payments in lieu of
 3-8     taxes to any school district, in addition to those made under
 3-9     Subdivision (9), in an amount negotiated between the district and
3-10     the school district.
3-11           Sec. 60.023.  COMMISSIONERS COURT TO CALL PUBLIC HEARING.
3-12     Before the 30th day after the date a petition is received, the
3-13     commissioners court shall call a public hearing at which the
3-14     petition will be considered.  The notice of the hearing must state
3-15     that any person may appear and present evidence or testify for or
3-16     against the creation of the district.
3-17           Sec. 60.024.  ADDITIONAL NOTICE OF PUBLIC HEARING. In
3-18     addition to other notice required by law, before the 14th day
3-19     before the date of the public hearing, notice of the hearing shall
3-20     be mailed to the persons who signed the petition and be published
3-21     in a newspaper with general circulation in the county with the most
3-22     land within the proposed district.
3-23           Sec. 60.025.  PUBLIC HEARING. (a)  At the public hearing, the
3-24     commissioners court shall examine the petition to ascertain its
3-25     sufficiency.
3-26           (b)  Any interested person may appear at the public hearing
3-27     to offer evidence or testimony on the sufficiency of the petition
3-28     and whether the district should be created.
3-29           Sec. 60.026.  ACTION ON PETITION.  (a)  After the hearing, if
3-30     the commissioners court finds that the petition conforms to the
3-31     requirements of Section 60.022 and that the creation of the
3-32     district and the proposed development is feasible and necessary and
3-33     would serve the public purpose of economic development in the
3-34     counties to be included in the district, the commissioners court
3-35     shall make that finding and enter an order granting the petition
3-36     and creating the district.
3-37           (b)  The order may specify the cost of publishing notice and
3-38     conducting hearings for the creation of the district together with
3-39     the cost of conducting the confirmation election.  A county may
3-40     require the petitioners to pay the county the appropriate amounts
3-41     specified in the order creating the district at the time the order
3-42     becomes final.
3-43           (c)  If the commissioners court finds that the petition does
3-44     not conform to the requirements of Section 60.022 or that the
3-45     creation of the district and the proposed project is not feasible
3-46     and necessary and would not serve the public purpose of economic
3-47     development in the counties to be included in the district, the
3-48     commissioners court shall make that finding in an order and deny
3-49     the petition.
3-50           Sec. 60.027.  TEMPORARY DIRECTORS; VACANCY IN OFFICE.  (a)
3-51     If the commissioners court grants the petition, it shall appoint as
3-52     temporary directors of the district five persons who are qualified
3-53     under this chapter to serve as directors.
3-54           (b)  A vacancy in the office of temporary directors shall be
3-55     filled by appointment by the commissioners court.
3-56           Sec. 60.028.  QUALIFICATION AND BOND OF TEMPORARY DIRECTORS.
3-57     Each temporary director shall execute a bond in accordance with
3-58     Section 60.087 and shall take the oath of office.
3-59           Sec. 60.029.  ELECTION TO CONFIRM DISTRICT AND INITIAL
3-60     PERMANENT DIRECTORS.  The temporary board of directors shall
3-61     conduct an election in the district to confirm the creation of the
3-62     district and to confirm the initial permanent directors.
3-63           Sec. 60.030.  ELECTION ORDER.  An order calling an election
3-64     under Section 60.029 must state:
3-65                 (1)  the nature of the election, the proposition to
3-66     appear on the ballot, and the names of at least five persons to
3-67     serve as the initial permanent members of the board of directors;
3-68                 (2)  the number and terms of directors on the board and
3-69     the manner of selection of board members;
 4-1                 (3)  the date of the election;
 4-2                 (4)  the hours during which the polls will be open; and
 4-3                 (5)  the location of the polling places.
 4-4           Sec. 60.031.  NOTICE.  In addition to other notice required
 4-5     by law, the temporary directors shall give notice of the election
 4-6     by publishing the substance of the election order in a newspaper
 4-7     with general circulation in the county in which the most land
 4-8     within the proposed district is located.  The notice must be
 4-9     published before the 14th day before the date set for the election.
4-10           Sec. 60.032.  CONDUCT OF ELECTION. (a)  The election shall be
4-11     held in accordance with the Election Code, to the extent not
4-12     inconsistent with this chapter.
4-13           (b)  The ballot shall be printed to permit:
4-14                 (1)  voting for or against the proposition:  "The
4-15     creation of __________ Agricultural Development District and
4-16     confirmation of the initial permanent directors of the district";
4-17     and
4-18                 (2)  naming of the proposed initial permanent
4-19     directors.
4-20           Sec. 60.033.  ELECTION RESULTS.  (a)  After the election, the
4-21     presiding judge shall make returns of the result to the temporary
4-22     board of directors.  The temporary board of directors shall canvass
4-23     the returns and declare the results.
4-24           (b)  If a majority of the votes cast in the election favor
4-25     the creation of the district, the temporary board shall order the
4-26     district to be created and the persons named on the ballot to serve
4-27     as the initial permanent directors and shall enter the order in its
4-28     minutes.  If a majority of the votes cast in the election do not
4-29     favor the creation of the district, the temporary board shall
4-30     declare the proposition to create the district as defeated and
4-31     enter the result in its minutes.
4-32           (c)  A certified copy of the temporary board's order creating
4-33     the district or of the declaration that the proposition to create
4-34     the district was defeated shall be sent to the commissioners court
4-35     of each county included in the district by certified or registered
4-36     mail.  The board shall include with the order or declaration the
4-37     date of the election, the ballot proposition, and the number of
4-38     votes cast for or against the proposition. A certified copy of the
4-39     order creating the district shall be filed in the real property
4-40     records in the county in which the district is located and shall
4-41     include the legal description of the district.
4-42           (d)  In the event 10 or fewer votes are cast in the election,
4-43     not later than the 90th day following the date of the order
4-44     canvassing the election, the temporary board shall submit the
4-45     proceedings of the election, including voter affidavits as to
4-46     residency and qualification to vote, to the attorney general.
4-47               (Sections 60.034-60.050 reserved for expansion
4-48                  SUBCHAPTER C.  DISTRICT POWERS AND DUTIES
4-49           Sec. 60.051.  GENERAL POWERS AND DUTIES.  (a)  A district has
4-50     the powers and duties that are prescribed by this chapter and that
4-51     are necessary or desirable to carry out a power or duty expressly
4-52     or implicitly granted to the district under this chapter.
4-53           (b)  A district may own or implement more than one project
4-54     under this chapter.
4-55           (c)  A district may merge with another district or districts
4-56     provided that the board of each district agrees to the merger.
4-57           (d)  A district may perform acts necessary to carry out the
4-58     purposes of this chapter.
4-59           (e)  A district may not impose an ad valorem tax.
4-60           (f)  A district may make payments in lieu of taxes to a
4-61     school district or county in the manner provided by Sections
4-62     60.022(9) and (10).
4-63           (g)  To the extent consistent with the purposes of this
4-64     chapter, a district may enter into an installment purchase contract
4-65     to acquire goods or services for the district.
4-66           Sec. 60.052.  ECONOMIC DEVELOPMENT.  A district may encourage
4-67     the economic development of the area in which the district is
4-68     located by:
4-69                 (1)  fostering the growth of agricultural enterprises;
 5-1                 (2)  stimulating innovation in agricultural
 5-2     enterprises;
 5-3                 (3)  seeking to eliminate unemployment or
 5-4     underemployment in the state; and
 5-5                 (4)  developing or expanding transportation resources
 5-6     for agricultural purposes.
 5-7           Sec. 60.053.  AGRICULTURAL DEVELOPMENT.  (a)  A district may:
 5-8                 (1)  promote all agricultural enterprises, facilities,
 5-9     and services of the district;
5-10                 (2)  encourage the maintenance and conservation of soil
5-11     and water in the district;
5-12                 (3)  acquire, design, construct, and operate an
5-13     agricultural enterprise; and
5-14                 (4)  expand, develop, and diversify production,
5-15     processing, marketing, and export of Texas agricultural products.
5-16           (b)  A district may acquire property as necessary, including
5-17     vehicles, farm equipment, and other machinery and related
5-18     facilities for the harvesting, processing, storage, packaging,
5-19     distribution, and transportation of agricultural products or
5-20     by-products.
5-21           Sec. 60.054.  AGRICULTURAL PROJECTS; NOTICE.  (a)  The
5-22     district shall designate as an agricultural project a project that
5-23     relates to the development of agriculture in the district and
5-24     surrounding areas and the preservation and conservation of the soil
5-25     and water in the district for agricultural purposes.
5-26           (b)  Each project designated under Subsection (a) must be
5-27     approved by:
5-28                 (1)  the department; and
5-29                 (2)  the county commissioners court of the county in
5-30     which the project is to be located.
5-31           (c)  The cost of a project, including interest during
5-32     construction and costs of issuance of bonds, may be paid from any
5-33     source, including proceeds of district bonds.
5-34           (d)  The implementation of a project is a governmental
5-35     function or service for purposes of Chapter 791, Government Code.
5-36           (e)  Before the 14th day preceding the date the county
5-37     commissioners court considers approval of a project not included in
5-38     the district's creation order, the district shall notify by mail
5-39     each person who owns land that is immediately adjacent to the
5-40     proposed project.
5-41           Sec. 60.055.  TRANSPORTATION DEVELOPMENT; NAVIGATION
5-42     DISTRICTS.  (a)  The district may encourage the transportation and
5-43     distribution of the district's agricultural products through the
5-44     development and operation of transportation structures necessary to
5-45     further the purposes of this chapter, including railroads, toll
5-46     roads, and private roads.
5-47           (b)  The district may cooperate and contract with any
5-48     navigation district on any area of mutual interest.
5-49           Sec. 60.056.  AGREEMENTS; DONATIONS.  (a)  The district may:
5-50                 (1)  make an agreement with any person for any district
5-51     purpose, including an agreement:
5-52                       (A)  to acquire, construct, operate, or maintain
5-53     an agricultural enterprise;
5-54                       (B)  with a municipality or county to provide law
5-55     enforcement services in the district on a fee basis; or
5-56                       (C)  under a qualified management contract for
5-57     the operation of an agricultural facility; and
5-58                 (2)  accept a donation, grant, or loan from any person.
5-59           (b)  The district, a county, and any other political
5-60     subdivision may contract to implement a district project or assist
5-61     the district in providing a service authorized by this chapter.  A
5-62     contract under this subsection may provide:
5-63                 (1)  for payment from a district assessment or other
5-64     revenue; or
5-65                 (2)  that an assessment or other revenue collected from
5-66     a district project, or from a person using or purchasing a
5-67     commodity or service from a district project, may be paid or
5-68     rebated to the district.
5-69           Sec. 60.057.  PROPERTY. The district may acquire or dispose
 6-1     of property in any manner, including by:
 6-2                 (1)  conveyance;
 6-3                 (2)  mortgage; or
 6-4                 (3)  lease, as lessor or lessee.
 6-5           Sec. 60.058.  EMINENT DOMAIN. The district may exercise the
 6-6     power of eminent domain for the purpose of acquiring an
 6-7     agricultural facility in order to own, operate, or maintain its
 6-8     functional capabilities or the land on which an agricultural
 6-9     facility is to be built, if the land will be owned by the district.
6-10     The use of the land may be the subject of a lease agreement entered
6-11     into by the district.
6-12           Sec. 60.059.  RESEARCH. The district may conduct or pay for
6-13     research for agricultural purposes.
6-14           Sec. 60.060.  SUITS. (a)  The district may sue and be sued.
6-15           (b)  In a suit against the district, process may be served on
6-16     a director or registered agent.
6-17           (c)  The district may not be required to give a bond on an
6-18     appeal or writ of error in a civil case that the district is
6-19     prosecuting or defending.
6-20           (d)  The district may indemnify a director or district
6-21     employee or a former director or district employee for reasonable
6-22     expenses and costs, including attorney's fees, incurred by that
6-23     person in connection with a claim asserted against that person if:
6-24                 (1)  the claim relates to an act or omission of the
6-25     person when acting in the scope of the person's board membership or
6-26     district employment; and
6-27                 (2)  the person has not been found liable or guilty on
6-28     the claim.
6-29           Sec. 60.061.  ANNEXATION; EXCLUDING TERRITORY. (a)  The
6-30     district may annex land as provided by Section 49.301 or 49.302,
6-31     Water Code, except that the references in those sections related to
6-32     taxes do not apply.  As provided by those sections, the district
6-33     may annex land that is not adjacent or contiguous to the district.
6-34           (b)  A district may not annex territory within the corporate
6-35     limits of a municipality unless the governing body of the
6-36     municipality consents in writing to the annexation.
6-37           (c)  The board on its own motion may call a hearing on the
6-38     question of the exclusion of land from the district in the manner
6-39     provided by Section 49.304 or 49.307, Water Code, if the proposed
6-40     exclusion is practicable, just, or desirable.
6-41           (d)  The board shall call a hearing on the exclusion of land
6-42     or other property from the district in the manner provided by
6-43     Section 49.304 or 49.307, Water Code, if a property owner in the
6-44     district files with the board secretary a written petition
6-45     requesting the hearing before the district issues any bonds.
6-46           (e)  The district may annex land only with the written
6-47     consent of the owner of the land to be annexed.  The consent must
6-48     include a statement that the owner of the land to be annexed
6-49     understands that the land, once included in the district, will be
6-50     subject to assessments imposed by the district.
6-51           Sec. 60.062.  POWERS BEYOND DISTRICT TERRITORY. The district
6-52     may exercise any of its powers outside the boundaries of the
6-53     district, except the power to impose assessments and the power of
6-54     eminent domain, if the board determines that there is a benefit to
6-55     the district in exercising that power.
6-56           Sec. 60.063.  NOTICE TO PURCHASERS. (a)  Any person who
6-57     proposes to sell or convey real property located in a district must
6-58     first give to the purchaser written notice that the property is
6-59     located in the district.  The notice must be given to the
6-60     prospective purchaser prior to execution of a binding contract of
6-61     sale and purchase either separately or as an addendum or paragraph
6-62     of a purchase contract. The purchaser shall sign the notice as
6-63     evidence of receipt.
6-64           (b)  At the closing of the purchase and sale, a separate copy
6-65     of the notice with current information about the district and its
6-66     right to impose assessments on land within its boundaries, which
6-67     conveys with the land, shall be executed by the seller and
6-68     purchaser and recorded in the deed records of the county in which
6-69     the property is located.
 7-1           (c)  If notice is given at closing, a purchaser or the
 7-2     purchaser's heirs, successors, or assigns may not maintain any
 7-3     action for damages or maintain any action against the seller, title
 7-4     insurance company, real estate brokers, or lienholder, or any
 7-5     agent, representative, or person acting in their behalf, by reason
 7-6     of the imposition of fees or assessments by the district authorized
 7-7     by this chapter. Notice is not required to be given pursuant to
 7-8     this paragraph unless a certified copy of the order creating the
 7-9     district has been recorded in the real property records in the
7-10     county in which the land is located and such order contains the
7-11     legal description of the district.  A purchaser, seller, lender,
7-12     real estate broker, title insurance company, and title insurance
7-13     agent may conclusively rely on the recorded certified copy of the
7-14     order.
7-15           Sec. 60.064.  OFFICIAL SEAL. The district may adopt an
7-16     official seal for the district.
7-17           Sec. 60.065.  LIMIT ON DISTRICT POWERS. The district may not
7-18     exercise a power unless it furthers the purposes of this chapter.
7-19               (Sections 60.066-60.080 reserved for expansion
7-20                      SUBCHAPTER D. BOARD OF DIRECTORS
7-21           Sec. 60.081.  BOARD OF DIRECTORS. (a)  The district is
7-22     governed by a board of directors selected in the manner provided by
7-23     the order issued under Section 60.030.  On approval of the county
7-24     commissioners court of each county in which the district is
7-25     located, the board may increase or decrease the number of directors
7-26     on the board by resolution if the board finds that to do so is in
7-27     the best interest of the district.
7-28           (b)  The directors serve terms as provided by the order
7-29     issued under Section 60.030.
7-30           (c)  To serve as a director, a person must be at least 18
7-31     years old and:
7-32                 (1)  reside in the district; or
7-33                 (2)  own real property in the district.
7-34           (d)  The board shall elect from among its members a
7-35     president, vice president, and secretary. The board by rule may
7-36     provide for the election of other officers.
7-37           Sec. 60.082.  VACANCIES. The remaining directors shall fill
7-38     by appointment for the unexpired term a vacancy in the office of
7-39     director.
7-40           Sec. 60.083.  BOARD MEETINGS. The board shall meet at least
7-41     once every three months and at the call of the presiding officer or
7-42     a majority of the directors.
7-43           Sec. 60.084.  MANAGEMENT OF DISTRICT. (a)  The board has
7-44     control over and shall manage the affairs of the district and may
7-45     employ any person, firm, partnership, or corporation the board
7-46     considers necessary for conducting the affairs of the district,
7-47     including engineers, attorneys, financial advisors, a general
7-48     manager, operations personnel, auditors, and secretaries.
7-49           (b)  The board may require an officer or employee to execute
7-50     a bond payable to the district and conditioned on the faithful
7-51     performance of the person's duties.
7-52           (c)  The board may remove any district employee.
7-53           (d)  The board may adopt rules necessary or convenient to
7-54     carry out district powers and duties to govern its affairs.
7-55           (e)  The board may adopt rules to preserve the public health
7-56     and welfare concerning the agricultural products submitted to the
7-57     district for harvesting, processing, distributing, or transporting.
7-58           (f)  The board may adopt rules on the priority of the use of
7-59     district property and services, including the payment of fees.
7-60           Sec. 60.085.  HEARINGS. (a)  The board may conduct hearings
7-61     and take evidence on any matter before the board.
7-62           (b)  The board may appoint a hearings examiner to conduct a
7-63     hearing called by the board. The hearings examiner may be a
7-64     district employee or director.
7-65           Sec. 60.086.  COMPENSATION AND EXPENSES. A director serves
7-66     without compensation but is entitled to be reimbursed by the
7-67     district for a reasonable and necessary expense incurred in
7-68     performing an official duty.
7-69           Sec. 60.087.  DIRECTOR'S BOND. (a)  As soon as practicable
 8-1     after a director is appointed or elected, the director shall
 8-2     execute a $10,000 bond payable to the district and conditioned on
 8-3     the faithful performance of the director's duties.
 8-4           (b)  Each director's bond must be approved by the board.
 8-5           (c)  The bond shall be filed with and retained by the
 8-6     district.
 8-7           Sec. 60.088.  CONFLICTS OF INTEREST; AFFIDAVIT OF INTEREST.
 8-8     (a) Except as provided in this section:
 8-9                 (1)  a director may participate in all board votes and
8-10     decisions; and
8-11                 (2)  Chapter 171, Local Government Code, governs
8-12     conflicts of interest for directors.
8-13           (b)  Section 171.004, Local Government Code, does not apply
8-14     to the district.  A director who has a substantial interest in a
8-15     business or charitable entity that will receive a pecuniary benefit
8-16     from a board action shall file a one-time affidavit declaring the
8-17     interest.  An additional affidavit is not required if the
8-18     director's interest changes.  After the affidavit is filed with the
8-19     board secretary, the director may participate in a discussion or
8-20     vote on that action if:
8-21                 (1)  a majority of the directors have similar interests
8-22     in the same entity; or
8-23                 (2)  all similar business or charitable entities in the
8-24     district will receive a similar pecuniary benefit.
8-25           (c)  A director who is also an officer or employee of another
8-26     public entity may not participate in the discussion of or vote on a
8-27     matter regarding a contract with that other public entity.
8-28           (d)  For purposes of this section, a director has a
8-29     substantial interest in a business or charitable entity in the same
8-30     manner that a person would have a substantial interest in a
8-31     business entity under Section 171.002, Local Government Code.
8-32               (Sections 60.089-60.100 reserved for expansion
8-33                        SUBCHAPTER E. FINANCES; BONDS
8-34           Sec. 60.101.  MISCELLANEOUS FINANCIAL POWERS AND DUTIES. (a)
8-35     The district may:
8-36                 (1)  impose a charge for using land, a facility, or a
8-37     service the district provides;
8-38                 (2)  issue bonds as provided by this subchapter;
8-39                 (3)  borrow money for any corporate purpose or
8-40     combination of purposes;
8-41                 (4)  loan money;
8-42                 (5)  invest money under its control in an investment
8-43     permitted by Chapter 2256, Government Code;
8-44                 (6)  select a depositor;
8-45                 (7)  establish a system of accounts for the district;
8-46     and
8-47                 (8)  set the fiscal year for the district.
8-48           (b)  The board by rule shall establish the procedure and
8-49     number of directors' signatures required to disburse or transfer
8-50     district money.
8-51           Sec. 60.102.  REPAYMENT OF ORGANIZATIONAL EXPENSES. The
8-52     directors may pay:
8-53                 (1)  all costs and expenses necessarily incurred in the
8-54     creation and organization of the district;
8-55                 (2)  the cost of investigation and making plans,
8-56     including the cost of feasibility analyses, engineering reports,
8-57     design fees, and other necessary costs; and
8-58                 (3)  legal fees.
8-59           Sec. 60.103.  BONDS. (a)  The district may issue any type of
8-60     bond, including an anticipation note or refunding bond, for any
8-61     district purpose.  A bond may be issued under Chapter 1371,
8-62     Government Code.
8-63           (b)  When authorizing the issuance of a bond, the district
8-64     may also authorize the later issuance of a parity or subordinate
8-65     lien bond.
8-66           (c)  A district bond must:
8-67                 (1)  mature not later than 40 years after its date of
8-68     issuance; and
8-69                 (2)  state on its face that the bond is not an
 9-1     obligation of the state.
 9-2           (d)  A district bond may be payable from or secured by:
 9-3                 (1)  any source of money, including district revenue,
 9-4     loans, or assessments; or
 9-5                 (2)  a lien, pledge, mortgage, or other security
 9-6     interest on district revenue or property.
 9-7           (e)  The district may use bond proceeds for any purpose,
 9-8     including to pay:
 9-9                 (1)  into a reserve fund for debt service;
9-10                 (2)  for the acquisition, design, construction, repair,
9-11     maintenance, or replacement of property, including buildings and
9-12     equipment;
9-13                 (3)  administrative and operating expenses;
9-14                 (4)  all expenses incurred or that will be incurred in
9-15     the issuance, sale, and delivery of the bonds;
9-16                 (5)  the principal of and interest on bonds; or
9-17                 (6)  for the operation of an agricultural enterprise.
9-18           (f)  The district may contract with a bondholder to impose an
9-19     assessment to pay for the operation of an agricultural enterprise.
9-20           Sec. 60.104.  APPROVAL OF ASSESSMENT BONDS. A bond secured by
9-21     an assessment may not be issued unless the district receives a
9-22     written petition  signed by each owner of the property being
9-23     assessed requesting the assessment and the issuance of bonds.
9-24           Sec. 60.105.  AGRICULTURAL FINANCE AUTHORITY BONDS. (a)  A
9-25     district may apply for and receive financial assistance from the
9-26     Texas Agricultural Finance Authority.  The assistance may be
9-27     funding derived from the proceeds of general obligation or revenue
9-28     bonds issued by the authority or may be loans, loan guaranties,
9-29     insurance, or any other benefit offered by the authority for the
9-30     purposes of expansion, development, and diversification of
9-31     production, processing, marketing, and export of Texas agricultural
9-32     products.
9-33           (b)  A district's proposal under this section is subject to
9-34     Chapter 58.  If a district project involves a value-added
9-35     agricultural operation, it shall receive preference as provided by
9-36     Section 58.0211(b).
9-37           Sec. 60.106.  TAX INCREMENT FINANCING. (a)  A district may
9-38     use tax increment financing under Chapter 311, Tax Code, in the
9-39     manner provided by that chapter for a municipality and as modified
9-40     by this section.
9-41           (b)  A county commissioners court may establish a
9-42     reinvestment zone including property located in the district and
9-43     enter into a contract with the directors of the district on terms
9-44     mutually acceptable to the two entities to allow the district to
9-45     use tax increment financing as provided by Chapter 311, Tax Code.
9-46           (c)  Property within the corporate limits of a municipality
9-47     is not eligible for tax increment financing under this section.
9-48           (d)  Before using tax increment financing, a district must:
9-49                 (1)  obtain the approval of the county commissioners
9-50     court that issued the district's creation order; and
9-51                 (2)  comply with Section 311.003, Tax Code, as that
9-52     section applies to a municipality.
9-53           (e)  For the purpose of tax increment financing under this
9-54     section, the district board of directors is the board of directors
9-55     of the reinvestment zone.  Section 311.009, Tax Code, does not
9-56     apply to this chapter.
9-57               (Sections 60.107-60.120 reserved for expansion
9-58                         SUBCHAPTER F.  ASSESSMENTS
9-59           Sec. 60.121.  GENERAL POWERS. (a)  A district may impose an
9-60     assessment:
9-61                 (1)  for a district expense;
9-62                 (2)  to finance a project or district service; or
9-63                 (3)  for any other purpose authorized by this chapter.
9-64           (b)  Money derived from an assessment for one purpose may not
9-65     be borrowed or otherwise used for a purpose other than the purpose
9-66     for which the assessment is imposed, except as provided by
9-67     Subsection (c).
9-68           (c)  The board shall establish a procedure for the
9-69     distribution or use of money derived from an assessment that
 10-1    exceeds the amount of money necessary to accomplish the purpose for
 10-2    which the assessment was collected.
 10-3          Sec. 60.122.  LIMITS ON ASSESSMENTS.  (a)  A district may
 10-4    impose an assessment only on real property or on an agricultural
 10-5    product produced on real property included in a petition for
 10-6    assessment.
 10-7          (b)  The owner of an improvement constructed in the district
 10-8    may waive the right to notice and an assessment hearing and may
 10-9    agree to the imposition of the assessment on the improvement or
10-10    land and payment of the assessment at an agreed rate.
10-11          (c)  The district may not impose an assessment on property
10-12    owned by a utility.  For purposes of this subsection, "utility"
10-13    means a person that provides to the public gas, electricity,
10-14    telephone, wastewater, or water service.
10-15          (d)  A district assessment on real property runs with the
10-16    land and successor landowners are bound to pay district assessments
10-17    as they are imposed on the land within the district, providing that
10-18    notice to purchasers was provided to a successor landowner under
10-19    Section 60.063.
10-20          Sec. 60.123.  HEARING AND PETITION REQUIRED. A district may
10-21    impose an assessment only if:
10-22                (1)  a written petition has been filed with the board
10-23    that:
10-24                      (A)  requests the assessment;
10-25                      (B)  states the specific purpose of the
10-26    assessment; and
10-27                      (C)  is signed by each owner of the real property
10-28    to be assessed or, for an assessment on an agricultural product, by
10-29    each owner of real property on which the agricultural product
10-30    subject to the assessment may be produced;
10-31                (2)  two-thirds of the members of the board vote to
10-32    impose the assessment;
10-33                (3)  the board provides notice of a hearing on the
10-34    proposal under Section 60.129; and
10-35                (4)  the board holds a hearing on the advisability of
10-36    the assessment under Section 60.130.
10-37          Sec. 60.124.  APPORTIONMENT OF COST. The board shall
10-38    apportion the cost of an assessment according to the special
10-39    benefits accruing to the real property or product because of the
10-40    project or service to be financed by the assessment.  The cost may
10-41    be assessed on real property or on an agricultural product produced
10-42    on real property, as appropriate:
10-43                (1)  equally by front foot or by square foot of the
10-44    land area of the real property;
10-45                (2)  equally by acreage of the real property;
10-46                (3)  according to the value of the real property or
10-47    agricultural product as determined by the board, which may consider
10-48    the value of a structure or improvement on real property;
10-49                (4)  based upon the productivity of land subject to the
10-50    assessment or on which the agricultural product subject to the
10-51    assessment is produced;
10-52                (5)  in proportion to the value of the agricultural
10-53    product produced on the real property for the year preceding the
10-54    year of the assessment; or
10-55                (6)  according to any other reasonable assessment plan
10-56    that imposes a fair share of the cost on property or agricultural
10-57    products similarly benefited.
10-58          Sec. 60.125.  ASSESSMENT TO FINANCE A PROJECT OR SERVICE. If
10-59    the board determines the total cost of an assessment to finance a
10-60    project or service, the board shall impose the assessment against
10-61    each parcel of land or against the agricultural product against
10-62    which an assessment may be imposed in the district.  The board may
10-63    impose an annual assessment for a service.  The amount of an annual
10-64    assessment may vary from year to year, but may not exceed the
10-65    amount necessary to pay the costs and debts of a project to be
10-66    financed by the assessment.
10-67          Sec. 60.126.  ASSESSMENT ROLL. (a)  The board shall prepare
10-68    and maintain an assessment roll showing the assessment against each
10-69    parcel of real property and against all applicable agricultural
 11-1    products and the board's basis for the assessment.
 11-2          (b)  The board shall allow the public to inspect the
 11-3    assessment roll.
 11-4          Sec. 60.127.  INTEREST ON ASSESSMENTS; LIEN. (a)  An
 11-5    assessment, including an assessment resulting from an addition or
 11-6    correction to the assessment roll, penalties and interest on an
 11-7    assessment, assessment collection expenses, and reasonable
 11-8    attorney's fees incurred by the district in collecting an
 11-9    assessment are:
11-10                (1)  a first and prior lien against the property or
11-11    agricultural product assessed;
11-12                (2)  superior to any other lien or claim other than a
11-13    lien or claim for county, school district, or municipal ad valorem
11-14    taxes; and
11-15                (3)  the personal liability of and charge against the
11-16    owners of the property or the agricultural product when the
11-17    assessment was made, even if the owners are not named in an
11-18    assessment proceeding.
11-19          (b)  The lien is effective from the date of the order
11-20    imposing the assessment until the assessment and any related
11-21    penalties, interest, collection expenses, or attorney's fees are
11-22    paid.
11-23          Sec. 60.128.  MISTAKES. After notice and hearing in the
11-24    manner required for an original assessment, the board may impose an
11-25    assessment to correct a mistake in the assessment:
11-26                (1)  relating to the total cost of the assessment; or
11-27                (2)  covering a delinquency or collection costs.
11-28          Sec. 60.129.  NOTICE OF HEARING. (a)  In addition to other
11-29    notice required by law, the board shall provide notice of an
11-30    assessment hearing in a newspaper with general circulation in the
11-31    district.  The publication must be made not later than the 14th day
11-32    before the date of the hearing.
11-33          (b)  The notice must include the:
11-34                (1)  time and place of the hearing;
11-35                (2)  purpose of the proposed assessment;
11-36                (3)  estimated cost of the purpose for which the
11-37    assessment is proposed, including interest during construction and
11-38    associated financing costs; and
11-39                (4)  proposed assessment method.
11-40          Sec. 60.130.  CONDUCT OF HEARING. (a)  A hearing on a
11-41    proposed assessment may be adjourned from time to time.
11-42          (b)  If a hearings examiner conducts the hearing, the
11-43    examiner shall file with the board a report on the examiner's
11-44    findings under Subsection (d).
11-45          (c)  The board or hearings examiner shall hear and rule on
11-46    all objections to a proposed assessment raised at the hearing by an
11-47    owner of real property that would be subject to the assessment or
11-48    on which agricultural products subject to the assessment are
11-49    produced.
11-50          (d)  The board or hearings examiner shall make findings
11-51    relating to the:
11-52                (1)  advisability of the assessment, including the
11-53    purpose of the assessment;
11-54                (2)  estimated cost of the assessment;
11-55                (3)  area benefited by the assessment;
11-56                (4)  method of assessment; and
11-57                (5)  method and time for payment of the assessment.
11-58          (e)  After receiving or issuing the findings required by
11-59    Subsection (d), the board by order:
11-60                (1)  shall:
11-61                      (A)  impose the assessment as a special
11-62    assessment on the property or on the agricultural products; and
11-63                      (B)  specify the method of payment on the
11-64    assessment; and
11-65                (2)  may:
11-66                      (A)  amend a proposed assessment;
11-67                      (B)  require an assessment to be paid in periodic
11-68    installments, including interest;
11-69                      (C)  require an interest charge or penalty for a
 12-1    failure to make timely payment; or
 12-2                      (D)  charge an amount to cover a delinquency or
 12-3    collection expense.
 12-4          (f)  If the board orders that an assessment may be paid in
 12-5    periodic installments, the installments must:
 12-6                (1)  be in amounts sufficient to meet the annual costs
 12-7    of the project or service for which the assessment is imposed; and
 12-8                (2)  continue for the number of years required to
 12-9    retire the indebtedness or pay for the project or service for which
12-10    the assessment is imposed.
12-11          Sec. 60.131.  REHEARING. On petition of a property owner
12-12    contesting an assessment of the owner's real property or
12-13    agricultural products received not later than the 30th day after
12-14    the date the assessment order is issued, the board may hold an
12-15    additional hearing to consider the assessment order.
12-16          Sec. 60.132.  FILING OF NOTICE OF ASSESSMENT. Not later than
12-17    the 30th day after the date on which an assessment order is issued,
12-18    the district shall file a notice of the assessment in the deed
12-19    records of the county in which the real property to be assessed, or
12-20    on which the agricultural product to be assessed is produced, is
12-21    located.  The notice must:
12-22                (1)  provide a description of the real property or the
12-23    agricultural products that are subject to the assessment;
12-24                (2)  state the name of the owner of the real property
12-25    or the agricultural products subject to the assessment; and
12-26                (3)  describe how to contact the district for further
12-27    information about the assessment.
12-28          Sec. 60.133.  APPEAL OF INDIVIDUAL ASSESSMENT. (a)  A real
12-29    property owner or a person who owns an agricultural product against
12-30    which an assessment is imposed may appeal the assessment to a
12-31    district court in the county in which the real property assessed,
12-32    or on which the agricultural product is produced, is located.
12-33          (b)  The owner must file the notice of appeal with the court
12-34    not later than the 30th day after the person receives a bill or
12-35    other notice of the assessment.
12-36          (c)  The court shall review the appeal by trial de novo.
12-37          Sec. 60.134.  ASSESSMENT AFTER APPEAL. If the court holds
12-38    that an assessment is invalid, the board may impose a new
12-39    assessment in accordance with this subchapter.
12-40              (Sections 60.135-60.150 reserved for expansion
12-41                        SUBCHAPTER G.  DISSOLUTION
12-42          Sec. 60.151.  DISSOLUTION. The district dissolves if:
12-43                (1)  a majority of the board votes for dissolution; and
12-44                (2)  all district debts and obligations have been
12-45    discharged.
12-46          Sec. 60.152.  DISPOSITION OF PROPERTY OF DISSOLVED DISTRICT.
12-47    Prior to dissolution, the board may sell its property.  If the
12-48    purchaser of any district property is not a governmental entity,
12-49    purchase by the person renders the agricultural facility or other
12-50    property ineligible to issue tax-exempt securities, to impose
12-51    assessments, or to be eligible for tax-exempt status.
12-52          SECTION 2.  This Act takes effect immediately if it receives
12-53    a vote of two-thirds of all the members elected to each house, as
12-54    provided by Section 39, Article III, Texas Constitution.  If this
12-55    Act does not receive the vote necessary for immediate effect, this
12-56    Act takes effect September 1, 2001.
12-57                                 * * * * *