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.