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 * * * * *