By Gallegos S.B. No. 468 77R4754 MXM-F A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to the creation of commercial and industrial development 1-3 zones in certain populous counties; providing for taxes and the 1-4 issuance of bonds. 1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-6 SECTION 1. Subtitle B, Title 12, Local Government Code, is 1-7 amended by adding Chapter 386 to read as follows: 1-8 CHAPTER 386. COMMERCIAL AND INDUSTRIAL DEVELOPMENT ZONES 1-9 SUBCHAPTER A. GENERAL PROVISIONS 1-10 Sec. 386.001. DEFINITIONS. In this chapter: 1-11 (1) "Board" means a board of directors of a commercial 1-12 and industrial development zone. 1-13 (2) "Development zone" means an area designated as a 1-14 commercial and industrial development zone under this chapter. 1-15 Sec. 386.002. JURISDICTION OF MUNICIPALITY. For the 1-16 purposes of this chapter, territory in the extraterritorial 1-17 jurisdiction of a municipality is considered to be in the 1-18 jurisdiction of the municipality. 1-19 (Sections 386.003-386.030 reserved for expansion 1-20 SUBCHAPTER B. CREATION OF COMMERCIAL AND INDUSTRIAL 1-21 DEVELOPMENT ZONE 1-22 Sec. 386.031. CRITERIA FOR DEVELOPMENT ZONE CREATION. 1-23 (a) To be created as a development zone, an area must: 1-24 (1) have a continuous boundary; 2-1 (2) be at least 10 square miles but not larger than an 2-2 area that is equal to five percent of the area, excluding lakes, 2-3 waterways, and transportation arteries, of the municipality, 2-4 county, or combination of municipalities and the county nominating 2-5 the area as a development zone; 2-6 (3) be an area of pervasive poverty, unemployment, or 2-7 economic distress; 2-8 (4) be located in a county with a population of 2.5 2-9 million or more; 2-10 (5) be adjacent to major transportation nodes and 2-11 thoroughfares that may be used for exporting products to major 2-12 airports, railways, and ports; and 2-13 (6) be designated as a development zone by an 2-14 ordinance or order adopted by each creating body. 2-15 (b) A municipality may contain not more than three 2-16 development zones within its jurisdiction. 2-17 (c) A county may contain not more than three development 2-18 zones in its unincorporated areas. 2-19 (d) Creation of a development zone in a municipality or 2-20 county does not affect the number of enterprise zones that may be 2-21 designated in the municipality or county under Chapter 2303, 2-22 Government Code. 2-23 Sec. 386.032. AREA OF PERVASIVE POVERTY, UNEMPLOYMENT, OR 2-24 ECONOMIC DISTRESS. An area is an area of pervasive poverty, 2-25 unemployment, or economic distress for the purposes of Section 2-26 386.031 if: 2-27 (1) the average rate of unemployment in the area 3-1 during the most recent 12-month period for which data are available 3-2 was at least 1-1/2 times the state average for that period; 3-3 (2) the area is a low-income poverty area; 3-4 (3) the area is in a jurisdiction or pocket of 3-5 poverty, according to the most recent certification available from 3-6 the United States Department of Housing and Urban Development; or 3-7 (4) at least 70 percent of the residents or households 3-8 of the area have an income that is less than 80 percent of the 3-9 median income of the residents or households of the locality or 3-10 state, whichever is less. 3-11 Sec. 386.033. CREATION OF DEVELOPMENT ZONE. (a) A 3-12 development zone is created to promote and encourage: 3-13 (1) commercial development, including the development 3-14 of businesses in the technology field; 3-15 (2) workforce development; 3-16 (3) the improvement of competitiveness in education; 3-17 (4) public and private sector partnerships; and 3-18 (5) the revitalization of neighborhoods. 3-19 (b) The governing body of a municipality or county, 3-20 individually or in combination with other municipalities, by 3-21 ordinance or order may create as a development zone an area within 3-22 its jurisdiction that meets the criteria under Section 386.031. 3-23 (c) Each creating body must hold a public hearing before 3-24 adopting an ordinance or order under this section. 3-25 (d) The governing body of a county may not designate 3-26 territory in the jurisdiction of a municipality as part of a 3-27 proposed development zone unless the governing body of the 4-1 municipality also designates the territory. 4-2 (e) A development zone created under this section is a: 4-3 (1) political subdivision of the state; and 4-4 (2) special district. 4-5 Sec. 386.034. DESIGNATING ORDINANCE OR ORDER. (a) An 4-6 ordinance or order designating an area as a development zone must: 4-7 (1) describe precisely the area to be included in the 4-8 zone by a legal description or by reference to roadways, lakes, 4-9 waterways, or municipal or county boundaries; 4-10 (2) state a finding that the area meets the 4-11 requirements of this chapter; 4-12 (3) summarize briefly the: 4-13 (A) incentives, including tax incentives, that 4-14 the designating body chooses to apply to businesses in the area; or 4-15 (B) programs to be developed to affect 4-16 businesses in the area; and 4-17 (4) designate the area as a development zone. 4-18 (b) The incentives or programs summarized under Subsection 4-19 (a)(3) must include: 4-20 (1) an incentive that does not apply to all businesses 4-21 located in the jurisdiction of a governmental entity that 4-22 designated the area as a development zone; 4-23 (2) an incentive or program designed to improve the 4-24 skills of the local labor pool; and 4-25 (3) an incentive or program designed to address 4-26 infrastructure, housing, or other elements essential to improving 4-27 quality of life. 5-1 (c) This section does not prohibit a municipality or county 5-2 from extending additional incentives, including tax incentives, to 5-3 business enterprises in a development zone by a separate ordinance 5-4 or order. 5-5 Sec. 386.035. TAX INCREMENT. A creating body may allow one 5-6 quarter of one percent of a local property tax increment to fund a 5-7 development zone, as provided by Chapter 311, Tax Code. On 5-8 adoption of an order or ordinance by each creating body, the fund 5-9 may be used to pay salaries of employees of the board and 5-10 administrative expenses of the development zone. 5-11 Sec. 386.036. AMENDING BOUNDARIES. (a) A creating body by 5-12 ordinance or order may amend the boundary of a development zone 5-13 after a public hearing on the issue. 5-14 (b) The amended boundary: 5-15 (1) must be continuous; 5-16 (2) may not exceed the original size requirement of 5-17 Section 386.031; and 5-18 (3) may not exclude any area originally included 5-19 within the boundary of the development zone. 5-20 (c) The entire development zone with the amended boundary 5-21 must continue to meet the unemployment or economic distress 5-22 requirements of Section 386.031. 5-23 (d) A creating body may not make more than one boundary 5-24 amendment for a development zone in a calendar year. 5-25 (e) If more than one body created the development zone, each 5-26 body must agree on the amendment by ordinance or order. 6-1 (Sections 386.037-386.060 reserved for expansion 6-2 SUBCHAPTER C. BOARD OF DIRECTORS 6-3 Sec. 386.061. BOARD OF DIRECTORS. (a) A development zone 6-4 is governed by a board of nine directors who serve two-year terms, 6-5 appointed as follows: 6-6 (1) the governing body of the municipality, if any, 6-7 that includes the greatest part of the zone's territory shall 6-8 appoint four directors; 6-9 (2) other municipalities, if any, any part of which 6-10 are included in the zone's territory, jointly shall appoint one 6-11 director; 6-12 (3) the commissioners court of the county in which the 6-13 zone is located shall appoint: 6-14 (A) nine directors, if the zone contains no 6-15 municipality; or 6-16 (B) four directors, if the zone contains one or 6-17 more municipalities; and 6-18 (4) if a development zone contains territory in only 6-19 one municipality, the municipality and the county in which the zone 6-20 is located jointly shall appoint one director. 6-21 (b) The initial terms of directors may be staggered. 6-22 Sec. 386.062. QUALIFICATIONS OF DIRECTORS. To serve as a 6-23 director, a person must: 6-24 (1) be at least 21 years old; and 6-25 (2) be registered to vote in the county in which the 6-26 development zone is located. 6-27 Sec. 386.063. DISQUALIFICATION OF DIRECTORS. Section 7-1 49.052, Water Code, applies to directors of a development zone 7-2 created under this chapter as if the zone were a district governed 7-3 by that section. 7-4 Sec. 386.064. BOARD VACANCIES. A vacancy in the office of 7-5 director shall be filled by appointment by the entity that 7-6 appointed the vacating director. 7-7 Sec. 386.065. REMOVAL OF DIRECTOR. A majority of the board 7-8 may remove a director for misconduct or failure to carry out the 7-9 director's duties. 7-10 Sec. 386.066. ORGANIZATION OF BOARD. (a) Except as 7-11 provided by Subsection (b), after each appointment and 7-12 qualification of directors by the appointing entities, the board 7-13 shall organize by electing a president, a vice president, a 7-14 secretary, and any other officers the board considers necessary. 7-15 (b) If a director is appointed under Section 386.061(a)(4), 7-16 that director shall serve as board president. 7-17 Sec. 386.067. QUORUM; DIRECTOR'S DUTIES; MANAGEMENT OF ZONE. 7-18 Sections 49.053, 49.057, and 49.058, Water Code, apply to the board 7-19 of directors of a development zone created under this chapter as if 7-20 the zone were a district governed by those sections. 7-21 Sec. 386.068. MEETINGS AND NOTICE. (a) The board shall 7-22 designate and establish a development zone office in the county. 7-23 (b) The board may establish regular meetings to conduct 7-24 development zone business and may hold special meetings at other 7-25 times as the business of a zone requires. 7-26 (c) Notice of the time, place, and purpose of any meeting of 7-27 the board shall be given by posting a notice containing that 8-1 information at a place convenient to the public within the 8-2 development zone. A copy of the notice shall be furnished to the 8-3 clerk or clerks of the county in which the zone is located, who 8-4 shall post the notice on a bulletin board in the county courthouse 8-5 used for that purpose. 8-6 Sec. 386.069. DIRECTOR'S COMPENSATION; BOND AND OATH OF 8-7 OFFICE. Sections 375.067, 375.069, and 375.070 apply to directors 8-8 of a development zone created under this chapter as if the zone 8-9 were a municipal management district. 8-10 (Sections 386.070-386.100 reserved for expansion 8-11 SUBCHAPTER D. POWERS AND DUTIES 8-12 Sec. 386.101. GENERAL POWERS. (a) A development zone may 8-13 acquire and dispose of projects and has the powers, authority, 8-14 rights, and duties that are necessary to permit the accomplishment 8-15 of purposes for which the zone was created. 8-16 (b) A development zone may provide for general promotion of 8-17 and tourist advertising regarding the zone and its vicinity and for 8-18 a marketing program to attract visitors. The zone may conduct 8-19 those activities under contracts for professional services with 8-20 persons or organizations the zone selects. 8-21 (c) A development zone may enter into a memorandum of 8-22 understanding with any state agency, including an institution of 8-23 higher education, to further the economic development of the zone. 8-24 (d) To the extent not inconsistent with this chapter, a 8-25 development zone has the powers of: 8-26 (1) a municipal management district created under 8-27 Chapter 375; and 9-1 (2) a county commissioners court under Section 9-2 381.004. 9-3 Sec. 386.102. DUTY TO EVALUATE AVAILABLE FINANCING OPTIONS. 9-4 The board shall evaluate all options available to the development 9-5 zone as alternatives to imposing a tax under Section 386.035, 9-6 including: 9-7 (1) regional grants from federal and state agencies; 9-8 (2) local money from a creating body; 9-9 (3) money from charities; 9-10 (4) sales taxes for economic development in the 9-11 development zone; 9-12 (5) use or impact fees on affected business entities; 9-13 (6) incentives for business entities that may benefit 9-14 from the development zone; 9-15 (7) money provided by local governmental entities; and 9-16 (8) in-kind contributions. 9-17 Sec. 386.103. LIMIT ON DEVELOPMENT ZONE POWERS; OTHER LAWS 9-18 SUPERSEDE. (a) For purposes of this section, "district or zone" 9-19 means: 9-20 (1) a federal enterprise zone; 9-21 (2) a state enterprise zone; 9-22 (3) a municipal management district; or 9-23 (4) any other special district, other than a 9-24 development zone. 9-25 (b) This section applies only to a district or zone that 9-26 contains territory included in the development zone's territory. 9-27 (c) The authority granted to a development zone under this 10-1 chapter is not intended to duplicate the authority granted to a 10-2 district or zone. 10-3 (d) This chapter does not limit the authority or 10-4 jurisdiction of any district or zone. 10-5 (e) To the extent the laws of this chapter conflict with the 10-6 laws of any other district or zone, the laws of the other district 10-7 or zone shall control over this chapter. 10-8 Sec. 386.104. MONITORING. (a) The board shall monitor each 10-9 person in a development zone that receives benefits available under 10-10 this chapter. 10-11 (b) On the board's request, the Texas Workforce Commission 10-12 or the comptroller's office shall provide to the board tax records 10-13 of a person that receives benefits under this chapter. 10-14 Sec. 386.105. NEIGHBORHOOD REDEVELOPMENT ZONES. (a) The 10-15 board may designate an area as a neighborhood redevelopment zone if 10-16 the area is: 10-17 (1) adjacent to the development zone; and 10-18 (2) eligible for inclusion in the development zone 10-19 under Sections 386.036(b) and (c). 10-20 (b) A development zone may exercise the powers available to 10-21 it in an area designated by the board under Subsection (a). 10-22 Sec. 386.106. SUITS. A development zone may, through its 10-23 directors, sue and be sued in this state in the name of the 10-24 development zone. Service of process in a suit may be had by 10-25 serving a director. 10-26 (Sections 386.107-386.200 reserved for expansion 10-27 SUBCHAPTER E. GENERAL FISCAL PROVISIONS 11-1 Sec. 386.201. EXPENDITURES. A development zone's money may 11-2 be disbursed only by check, draft, order, or other instrument 11-3 signed by at least three directors. The general manager, 11-4 treasurer, or other employee of the development zone, if authorized 11-5 by resolution of the board, may sign checks, drafts, orders, or 11-6 other instruments on any development zone operation account on 11-7 behalf of the board. 11-8 Sec. 386.202. COMPETITIVE BIDDING; CONTRACT AWARD. 11-9 Subchapter K, Chapter 375, applies to a development zone created 11-10 under this chapter as if the zone were a municipal management 11-11 district. 11-12 (Sections 386.203-386.300 reserved for expansion 11-13 SUBCHAPTER F. DISSOLUTION 11-14 Sec. 386.301. DISSOLUTION OF DEVELOPMENT ZONE BY CREATING 11-15 BODY. (a) After a hearing, a creating body may dissolve a 11-16 development zone if: 11-17 (1) the area no longer meets the criteria for 11-18 designation under this chapter; 11-19 (2) the best interests of the creating body and the 11-20 owners of property and interests in property in the zone will be 11-21 served by dissolving the zone; and 11-22 (3) each creating body agrees by ordinance or order on 11-23 the: 11-24 (A) proposition that the zone should be 11-25 dissolved; 11-26 (B) disposition of zone assets; and 11-27 (C) assumption of liabilities by the creating 12-1 bodies. 12-2 (b) The dissolution of a development zone does not affect 12-3 the validity of a: 12-4 (1) tax incentive or regulatory relief granted or 12-5 accrued before the removal; or 12-6 (2) bond issued under this chapter. 12-7 Sec. 386.302. DISSOLUTION BY BOARD REQUEST. A board may 12-8 petition a creating body to dissolve the development zone under 12-9 Section 386.301 if a majority of the board finds at any time: 12-10 (1) before the authorization of bonds or the final 12-11 lending of its credit that the continuation of the development zone 12-12 is impracticable or cannot be successfully and beneficially 12-13 accomplished; or 12-14 (2) that all bonds of the development zone or other 12-15 debts of the zone have been paid and the purposes of the zone have 12-16 been accomplished. 12-17 Sec. 386.303. TAXES. On dissolution of a development zone, 12-18 any taxes levied on behalf of the zone are abolished. 12-19 SECTION 2. This Act takes effect immediately if it receives 12-20 a vote of two-thirds of all the members elected to each house, as 12-21 provided by Section 39, Article III, Texas Constitution. If this 12-22 Act does not receive the vote necessary for immediate effect, this 12-23 Act takes effect September 1, 2001.