1-1     By:  Thompson, Menendez                               H.B. No. 3172
 1-2          (Senate Sponsor - Van de Putte)
 1-3           (In the Senate - Received from the House April 23, 2001;
 1-4     April 24, 2001, read first time and referred to Committee on
 1-5     Intergovernmental Relations; May 11, 2001, reported favorably, as
 1-6     amended, by the following vote:  Yeas 5, Nays 0; May 11, 2001, sent
 1-7     to printer.)
 1-8     COMMITTEE AMENDMENT NO. 1                              By:  Lindsay
 1-9     Add the following language in Section 12 of HB 3172:
1-10     Amend Section 372.014(a), Local Government Code to read as follows:
1-11           (a)  An assessment Plan must provide that at least 10% of the
1-12     cost of an improvement be paid by special assessments against
1-13     property in the improvement district.  The assessment plan must be
1-14     included in the annual service plan.
1-15     Amend Section 16 by inserting the following sentence just prior to
1-16     the final sentence of Section 16:
1-17           "Delinquent installments of the assessment shall incur
1-18     interest, penalties and attorneys' fees in the same manner as
1-19     delinquent ad valorem taxes."
1-20     COMMITTEE AMENDMENT NO. 2                              By:  Lindsay
1-21     Add the following language in Section 372.003(d), Local Government
1-22     Code of HB 3172:
1-23     A county may establish a public improvement district unless within
1-24     30 days of a county's action to approve such a district, a home
1-25     rule municipality objects to its establishment within the
1-26     municipality's corporate limits or extraterritorial jurisdiction.
1-27                            A BILL TO BE ENTITLED
1-28                                   AN ACT
1-29     relating to the authority of a county to establish public
1-30     improvement districts.
1-31           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-32           SECTION 1. The heading to Chapter 372, Local Government Code,
1-33     is amended to read as follows:
1-34             CHAPTER 372.  IMPROVEMENT DISTRICTS IN MUNICIPALITIES AND
1-35                                  COUNTIES
1-36           SECTION 2. Section 372.002, Local Government Code, is amended
1-37     to read as follows:
1-38           Sec. 372.002.  EXERCISE OF POWERS. Powers granted under this
1-39     subchapter may be exercised by a municipality or county in which
1-40     the governing body of the municipality or county initiates or
1-41     receives a petition requesting the establishment of a public
1-42     improvement district.  A petition must comply with the requirements
1-43     of Section 372.005.
1-44           SECTION 3. Section 372.003(a), Local Government Code, is
1-45     amended to read as follows:
1-46           (a)  If the governing body of a municipality or county finds
1-47     that it promotes the interests of the municipality or county, the
1-48     governing body may undertake an improvement project that confers a
1-49     special benefit on a definable part of the municipality or county
1-50     or the municipality's extraterritorial jurisdiction.  A project may
1-51     be undertaken in the municipality or county or the municipality's
1-52     extraterritorial jurisdiction.
1-53           SECTION 4. Section 372.005(a), Local Government Code, is
1-54     amended to read as follows:
1-55           (a)  A petition for the establishment of a public improvement
1-56     district must state:
1-57                 (1)  the general nature of the proposed improvement;
1-58                 (2)  the estimated cost of the improvement;
1-59                 (3)  the boundaries of the proposed assessment
 2-1     district;
 2-2                 (4)  the proposed method of assessment, which may
 2-3     specify included or excluded classes of assessable property;
 2-4                 (5)  the proposed apportionment of cost between the
 2-5     public improvement district and the municipality or county as a
 2-6     whole;
 2-7                 (6)  whether the management of the district is to be by
 2-8     the municipality or county, the private sector, or a partnership
 2-9     between the municipality or county and the private sector;
2-10                 (7)  that the persons signing the petition request or
2-11     concur with the establishment of the district; and
2-12                 (8)  that an advisory body may be established to
2-13     develop and recommend an improvement plan to the governing body of
2-14     the municipality or county.
2-15           SECTION 5. Section 372.006, Local Government Code, is amended
2-16     to read as follows:
2-17           Sec. 372.006.  FINDINGS. If a petition that complies with
2-18     this subchapter is filed, the governing body of the municipality or
2-19     county may make findings by resolution as to the advisability of
2-20     the proposed improvement, its estimated cost, the method of
2-21     assessment, and the apportionment of cost between the proposed
2-22     improvement district and the municipality or county as a whole.
2-23           SECTION 6. Section 372.007(a), Local Government Code, is
2-24     amended to read as follows:
2-25           (a)  Before holding the hearing required by Section 372.009,
2-26     the governing body of the municipality may use the services of
2-27     municipal employees, the governing body of the county may use the
2-28     services of county employees, or the governing body of the
2-29     municipality or county may employ consultants to prepare a report
2-30     to determine whether an improvement should be made as proposed by
2-31     petition or otherwise or whether the improvement should be made in
2-32     combination with other improvements authorized under this
2-33     subchapter.  The governing body may also require that a preliminary
2-34     estimate of the cost of the improvement or combination of
2-35     improvements be made.
2-36           SECTION 7. Section 372.008(a), Local Government Code, is
2-37     amended to read as follows:
2-38           (a)  After receiving a petition that complies with Section
2-39     372.005, the governing body of the municipality or county may
2-40     appoint an advisory body with the responsibility of developing and
2-41     recommending an improvement plan to the governing body.
2-42           SECTION 8. Sections 372.009(a)-(c), Local Government Code,
2-43     are amended to read as follows:
2-44           (a)  A public improvement district may be established and
2-45     improvements provided by the district may be financed under this
2-46     subchapter only after the governing body of the municipality or
2-47     county holds a public hearing on the advisability of the
2-48     improvement.
2-49           (b)  The hearing may be adjourned from time to time until the
2-50     governing body makes findings by resolution as to:
2-51                 (1)  the advisability of the improvement;
2-52                 (2)  the nature of the improvement;
2-53                 (3)  the estimated cost of the improvement;
2-54                 (4)  the boundaries of the public improvement district;
2-55                 (5)  the method of assessment; and
2-56                 (6)  the apportionment of costs between the district
2-57     and the municipality or county as a whole.
2-58           (c)  Notice of the hearing must be given in a newspaper of
2-59     general circulation in the municipality or county.  If any part of
2-60     the improvement district is to be located in the municipality's
2-61     extraterritorial jurisdiction or if any part of the improvements is
2-62     to be undertaken in the municipality's extraterritorial
2-63     jurisdiction, the notice must also be given in a newspaper of
2-64     general circulation in the part of the extraterritorial
2-65     jurisdiction in which the district is to be located or in which the
2-66     improvements are to be undertaken. The final publication of notice
2-67     must be made before the 15th day before the date of the hearing.
2-68     The notice must state:
2-69                 (1)  the time and place of the hearing;
 3-1                 (2)  the general nature of the proposed improvement;
 3-2                 (3)  the estimated cost of the improvement;
 3-3                 (4)  the boundaries of the proposed assessment
 3-4     district;
 3-5                 (5)  the proposed method of assessment; and
 3-6                 (6)  the proposed apportionment of cost between the
 3-7     improvement district and the municipality or county as a whole.
 3-8           SECTION 9. Section 372.010, Local Government Code, is amended
 3-9     to read as follows:
3-10           Sec. 372.010.  IMPROVEMENT ORDER. (a)  During the six-month
3-11     period after the date of the final adjournment of the hearing under
3-12     Section 372.009, the governing body of the municipality or county
3-13     may authorize an improvement district if, by majority vote of all
3-14     members of the governing body, the members adopt a resolution
3-15     authorizing the district in accordance with its finding as to the
3-16     advisability of the improvement.
3-17           (b)  An authorization takes effect when it has been published
3-18     one time in a newspaper of general circulation in the municipality
3-19     or county.  If any part of the improvement district is located in
3-20     the municipality's extraterritorial jurisdiction or if any part of
3-21     the improvements is to be undertaken in the municipality's
3-22     extraterritorial jurisdiction, the authorization does not take
3-23     effect until the notice is also given one time in a newspaper of
3-24     general circulation in the part of the extraterritorial
3-25     jurisdiction in which the district is located or in which the
3-26     improvements are to be undertaken.
3-27           (c)  Actual construction of an improvement may not begin
3-28     until after the 20th day after the date the authorization takes
3-29     effect and may not begin if during that 20-day period written
3-30     protests signed by at least two-thirds of the owners of record of
3-31     property within the improvement district or by the owners of record
3-32     of property comprising at least two-thirds of the total area of the
3-33     district are filed with the municipal or county secretary or other
3-34     officer performing the duties of the municipal or county secretary.
3-35     A person whose name appears on a protest may withdraw the name from
3-36     the protest at any time before the governing body of the
3-37     municipality or county convenes to determine the sufficiency of the
3-38     protest.
3-39           SECTION 10. Section 372.012, Local Government Code, is
3-40     amended to read as follows:
3-41           Sec. 372.012.  AREA OF DISTRICT. The area of a public
3-42     improvement district to be assessed according to the findings of
3-43     the governing body of the municipality or county may be less than
3-44     the area described in the proposed boundaries stated by the notice
3-45     under Section 372.009.  The area to be assessed may not include
3-46     property not described by the notice as being within the proposed
3-47     boundaries of the district unless a hearing is held to include the
3-48     property and notice for the hearing is given in the same manner as
3-49     notice under Section 372.009.
3-50           SECTION 11. Section 372.013(a), Local Government Code, is
3-51     amended to read as follows:
3-52           (a)  The advisory body shall prepare an ongoing service plan
3-53     and present the plan to the governing body of the municipality or
3-54     county for review and approval.  The governing body may assign
3-55     responsibility for the plan to another entity in the absence of an
3-56     advisory body.
3-57           SECTION 12. Section 372.014(b), Local Government Code, is
3-58     amended to read as follows:
3-59           (b)  The municipality or county is responsible for payment of
3-60     assessments against exempt municipal or county property in the
3-61     district.  Payment of assessments by other exempt jurisdictions
3-62     must be established by contract.  An assessment paid by the
3-63     municipality or county under this subsection is considered to have
3-64     been paid by special assessment for the purposes of Subsection (a).
3-65           SECTION 13. Sections 372.015(a) and (c), Local Government
3-66     Code, are amended to read as follows:
3-67           (a)  The governing body of the municipality or county shall
3-68     apportion the cost of an improvement to be assessed against
3-69     property in an improvement district.  The apportionment shall be
 4-1     made on the basis of special benefits accruing to the property
 4-2     because of the improvement.
 4-3           (c)  The governing body may establish by ordinance or order:
 4-4                 (1)  reasonable classifications and formulas for the
 4-5     apportionment of the cost between the municipality or county and
 4-6     the area to be assessed; and
 4-7                 (2)  the methods of assessing the special benefits for
 4-8     various classes of improvements.
 4-9           SECTION 14. Sections 372.016(a) and (b), Local Government
4-10     Code, are amended to read as follows:
4-11           (a)  After the total cost of an improvement is determined,
4-12     the governing body of the municipality or county shall prepare a
4-13     proposed assessment roll.  The roll must state the assessment
4-14     against each parcel of land in the district, as determined by the
4-15     method of assessment chosen by the municipality or county under
4-16     this subchapter.
4-17           (b)  The governing body shall file the proposed assessment
4-18     roll with the municipal secretary or other officer performing the
4-19     functions of the municipal secretary or in a district formed by a
4-20     county, the county tax assessor-collector.  The proposed assessment
4-21     roll is subject to public inspection.  The governing body shall
4-22     require the municipal secretary or other officer or county tax
4-23     assessor-collector to publish notice of the governing body's
4-24     intention to consider the proposed assessments at a public hearing.
4-25     The notice must be published in a newspaper of general circulation
4-26     in the municipality or county before the 10th day before the date
4-27     of the hearing.  If any part of the improvement district is located
4-28     in the municipality's extraterritorial jurisdiction or if any part
4-29     of the improvements is to be undertaken in the municipality's
4-30     extraterritorial jurisdiction, the notice must also be published,
4-31     before the 10th day before the date of the hearing, in a newspaper
4-32     of general circulation in the part of the extraterritorial
4-33     jurisdiction in which the district is located or in which the
4-34     improvements are to be undertaken.  The notice must state:
4-35                 (1)  the date, time, and place of the hearing;
4-36                 (2)  the general nature of the improvement;
4-37                 (3)  the cost of the improvement;
4-38                 (4)  the boundaries of the assessment district; and
4-39                 (5)  that written or oral objections will be considered
4-40     at the hearing.
4-41           SECTION 15. Section 372.017, Local Government Code, is
4-42     amended to read as follows:
4-43           Sec. 372.017.  LEVY OF ASSESSMENT. (a)  At or on the
4-44     adjournment of the hearing referred to by Section 372.016 on
4-45     proposed assessments, the governing body of the municipality or
4-46     county must hear and pass on any objection to a proposed
4-47     assessment.  The governing body may amend a proposed assessment on
4-48     any parcel.
4-49           (b)  After all objections have been heard and the governing
4-50     body has passed on the objections, the governing body by ordinance
4-51     or order shall levy the assessment as a special assessment on the
4-52     property.  The governing body by ordinance or order shall specify
4-53     the method of payment of the assessment.  The governing body may
4-54     provide that assessments be paid in periodic installments.  The
4-55     installments must be in amounts necessary to meet annual costs for
4-56     improvements and must continue for a period necessary to retire the
4-57     indebtedness on the improvements.
4-58           SECTION 16. Section 372.018, Local Government Code, is
4-59     amended to read as follows:
4-60           Sec. 372.018.  INTEREST ON ASSESSMENT; LIEN. (a)  An
4-61     assessment bears interest at the rate specified by the governing
4-62     body of the municipality or county, but may not exceed a rate that
4-63     is one-half of one percent higher than the actual interest rate
4-64     paid on the public debt used to finance the improvement.  Interest
4-65     on the assessment between the effective date of the ordinance or
4-66     order levying the assessment and the date the first installment is
4-67     payable shall be added to the first installment. The interest on
4-68     any delinquent installment shall be added to each subsequent
4-69     installment until all delinquent installments are paid.
 5-1           (b)  An assessment or reassessment, with interest, the
 5-2     expense of collection, and reasonable attorney's fees, if incurred,
 5-3     is a first and prior lien against the property assessed, superior
 5-4     to all other liens and claims except liens or claims for state,
 5-5     county, school district, or municipality ad valorem taxes, and is a
 5-6     personal liability of and charge against the owners of the property
 5-7     regardless of whether the owners are named.  The lien is effective
 5-8     from the date of the ordinance or order levying the assessment
 5-9     until the assessment is paid and may be enforced by the governing
5-10     body in the same manner that an ad valorem tax lien against real
5-11     property may be enforced by the governing body.  The owner of
5-12     assessed property may pay at any time the entire assessment, with
5-13     interest that has accrued on the assessment, on any lot or parcel.
5-14           SECTION 17. Section 372.019, Local Government Code, is
5-15     amended to read as follows:
5-16           Sec. 372.019.  SUPPLEMENTAL ASSESSMENTS. After notice and a
5-17     hearing, the governing body of the municipality or county may make
5-18     supplemental assessments to correct omissions or mistakes in the
5-19     assessment relating to the total cost of the improvement.  Notice
5-20     must be given and the hearing held under this section in the same
5-21     manner as required by Sections 372.016 and 372.017.
5-22           SECTION 18. Section 372.020, Local Government Code, is
5-23     amended to read as follows:
5-24           Sec. 372.020.  REASSESSMENT. The governing body of the
5-25     municipality or county may make a reassessment or new assessment of
5-26     a parcel of land if:
5-27                 (1)  a court of competent jurisdiction sets aside an
5-28     assessment against the parcel;
5-29                 (2)  the governing body determines that the original
5-30     assessment is excessive; or
5-31                 (3)  on the written advice of counsel, the governing
5-32     body determines that the original assessment is invalid.
5-33           SECTION 19. Section 372.021, Local Government Code, is
5-34     amended to read as follows:
5-35           Sec. 372.021.  SPECIAL IMPROVEMENT DISTRICT FUND. (a)  A
5-36     municipality or county that intends to create a public improvement
5-37     district may by ordinance or order establish a special improvement
5-38     district fund in the municipal or county treasury.
5-39           (b)  The municipality or county annually may levy a tax to
5-40     support the fund.
5-41           (c)  The fund may be used to:
5-42                 (1)  pay the costs of planning, administration, and an
5-43     improvement authorized by this subchapter;
5-44                 (2)  prepare preliminary plans, studies, and
5-45     engineering reports to determine the feasibility of an improvement;
5-46     and
5-47                 (3)  if ordered by the governing body of the
5-48     municipality or county, pay the initial cost of the improvement
5-49     until temporary notes, time warrants, or improvement bonds have
5-50     been issued and sold.
5-51           (d)  The fund is not required to be budgeted for expenditure
5-52     during any year, but the amount of the fund must be stated in the
5-53     municipality's or county's annual budget.  The amount of the fund
5-54     must be based on an annual service plan that describes the public
5-55     improvements for the fiscal year.
5-56           (e)  A grant-in-aid or contribution made to the municipality
5-57     or county for the planning and preparation of plans for an
5-58     improvement authorized under this subchapter may be credited to the
5-59     special improvement district fund.
5-60           SECTION 20. Section 372.022, Local Government Code, is
5-61     amended to read as follows:
5-62           Sec. 372.022.  SEPARATE FUNDS. A separate public improvement
5-63     district fund shall be created in the municipal or county treasury
5-64     for each district.  Proceeds from the sale of bonds, temporary
5-65     notes, and time warrants, and other sums appropriated to the fund
5-66     by the governing body of the municipality or county shall be
5-67     credited to the fund.  The fund may be used solely to pay costs
5-68     incurred in making an improvement.  When an improvement is
5-69     completed, the balance of the part of the assessment that is for
 6-1     improvements shall be transferred to the fund established for the
 6-2     retirement of bonds.
 6-3           SECTION 21. Sections 372.023(b), (d), and (e), Local
 6-4     Government Code, are amended to read as follows:
 6-5           (b)  A cost payable by the municipality or county as a whole
 6-6     may be paid from general funds available for the purpose or other
 6-7     available general funds.
 6-8           (d)  A cost payable from a special assessment that is to be
 6-9     paid in installments and a cost payable by the municipality or
6-10     county as a whole but not payable from available general funds or
6-11     other available general improvement funds shall be paid by the
6-12     issuance and sale of revenue or general obligation bonds.
6-13           (e)  While an improvement is in progress, the governing body
6-14     of the municipality or county may issue temporary notes or time
6-15     warrants to pay for the costs of the improvement and, on completion
6-16     of the improvement, issue revenue or general obligation bonds.
6-17           SECTION 22. Section 372.025, Local Government Code, is
6-18     amended to read as follows:
6-19           Sec. 372.025.  TERMS AND CONDITIONS OF BONDS. (a)  Revenue
6-20     bonds may be issued to mature serially or in any other manner but
6-21     must mature not later than 40 years after their date.  A provision
6-22     may be made for the subsequent issuance of additional parity bonds
6-23     or subordinate lien bonds under terms and conditions specified in
6-24     the ordinance or order authorizing the issuance of the bonds.
6-25           (b)  The bonds shall be executed and the bonds and interest
6-26     coupons appertaining to them are negotiable instruments within the
6-27     meaning and for all purposes of the Uniform Commercial Code
6-28     (Section 1.101 et seq., Business & Commerce Code).  The ordinance
6-29     or order authorizing the issuance of the bonds must specify:
6-30                 (1)  whether the bonds are issued registrable as to
6-31     principal alone or as to both principal and interest;
6-32                 (2)  whether the bonds are redeemable before maturity;
6-33                 (3)  the form, denomination, and manner of issuance;
6-34                 (4)  the terms, conditions, and other details applying
6-35     to the bonds including the price, terms, and interest rates on the
6-36     bonds; and
6-37                 (5)  the manner of sale of the bonds.
6-38           (c)  The ordinance or order authorizing the issuance of the
6-39     bonds may specify that the proceeds from the sale of the bonds:
6-40                 (1)  be used to pay interest on the bonds during and
6-41     after the period of acquisition or construction of an improvement
6-42     financed through the sale of the bonds;
6-43                 (2)  be used for creating a reserve fund for payment of
6-44     the principal of and interest on the bonds and for creating other
6-45     funds; and
6-46                 (3)  may be placed in time deposit or invested, until
6-47     needed.
6-48           SECTION 23. Sections 372.026(a), (b), and (c), Local
6-49     Government Code, are amended to read as follows:
6-50           (a)  For the payment of bonds issued under this subchapter
6-51     and the payment of principal, interest, and any other amounts
6-52     required or permitted in connection with the bonds, the governing
6-53     body of the municipality or county may pledge all or part of the
6-54     income from improvements financed under this subchapter, including
6-55     income received in installment payments under Section 372.023.
6-56           (b)  Pledged income must be fixed and collected in amounts
6-57     sufficient, with other pledged resources, to pay principal,
6-58     interest, and other expenses related to the bonds, and to the
6-59     extent required by the ordinance or order authorizing the bonds, to
6-60     pay for the operation, maintenance, and other expenses related to
6-61     improvements authorized by this subchapter.
6-62           (c)  The bonds may also be secured by mortgages or deeds of
6-63     trust on any real property related to the facilities authorized
6-64     under this subchapter that are owned or are to be acquired by the
6-65     municipality or county and by chattel mortgages, liens, or security
6-66     interests on any personal property appurtenant to that real
6-67     property.  The governing body may authorize the execution of trust
6-68     indentures, mortgages, deeds of trust, or other forms of
6-69     encumbrances as evidence of the indebtedness.
 7-1           SECTION 24. Sections 372.027(a) and (b), Local Government
 7-2     Code, are amended to read as follows:
 7-3           (a)  Revenue bonds issued under this subchapter may be
 7-4     refunded or refinanced by the issuance of refunding bonds, under
 7-5     terms or conditions set forth in ordinances or orders of the
 7-6     municipality or county issuing the bonds.  The provisions of this
 7-7     subchapter applying generally to revenue bonds, including
 7-8     provisions related to the issuance of those bonds, apply to
 7-9     refunding bonds authorized by this section.  The refunding bonds
7-10     may be sold and delivered in amounts necessary for the principal,
7-11     interest, and any redemption premium of the bonds to be refunded,
7-12     on the date of the maturity of the bond or any redemption date of
7-13     the bond.
7-14           (b)  Refunding bonds may be issued for exchange with the
7-15     bonds they are refunding.  The comptroller of public accounts shall
7-16     register refunding bonds described by this subsection and deliver
7-17     the bonds to holders of bonds being refunded in accordance with the
7-18     ordinance or order authorizing the issuance of refunding bonds. The
7-19     exchange may be made in one delivery or several installment
7-20     deliveries.
7-21           SECTION 25. This Act takes effect immediately if it receives
7-22     a vote of two-thirds of all the members elected to each house, as
7-23     provided by Section 39, Article III, Texas Constitution.  If this
7-24     Act does not receive the vote necessary for immediate effect, this
7-25     Act takes effect September 1, 2001.
7-26                                  * * * * *