77R10794 ATP-F By Van de Putte, et al. S.B. No. 607 Substitute the following for S.B. No. 607: By McClendon C.S.S.B. No. 607 A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to the creation of a municipal development corporation to 1-3 provide educational and job training; authorizing the imposition of 1-4 certain local taxes; providing an administrative penalty. 1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-6 SECTION 1. Subtitle A, Title 12, Local Government Code, is 1-7 amended by adding Chapter 379A to read as follows: 1-8 CHAPTER 379A. MUNICIPAL DEVELOPMENT CORPORATIONS 1-9 SUBCHAPTER A. GENERAL PROVISIONS 1-10 Sec. 379A.001. SHORT TITLE. This chapter may be cited as the 1-11 Better Jobs Act. 1-12 Sec. 379A.002. FINDINGS AND PURPOSES. (a) The legislature 1-13 finds that: 1-14 (1) it is an appropriate role for a municipality to 1-15 foster economic opportunity, job generation, and capital investment 1-16 by promoting a favorable business climate, preparing the workforce 1-17 for productive employment, and supporting infrastructure 1-18 development; 1-19 (2) while some municipalities choose to meet that role 1-20 through the creation of economic development zones and reinvestment 1-21 zones, the core root of all economic development is a competent and 1-22 qualified workforce; and 1-23 (3) the programs designed to create a competent and 1-24 qualified workforce are essential both to the economic growth and 2-1 vitality of many municipalities in this state and to the 2-2 elimination of unemployment and underemployment in those 2-3 municipalities. 2-4 (b) The programs authorized by this chapter are in the 2-5 public interest, promote the economic welfare of this state, and 2-6 serve the state public purpose of developing and diversifying the 2-7 economy of this state and eliminating unemployment and 2-8 underemployment in this state. 2-9 (c) This chapter shall be liberally construed in conformity 2-10 with the findings and purposes stated in this section. 2-11 Sec. 379A.003. DEFINITIONS. In this chapter: 2-12 (1) "Board" means the board of directors of a 2-13 municipal development corporation. 2-14 (2) "Corporation" means a municipal development 2-15 corporation created under this chapter. 2-16 Sec. 379A.004. APPLICATION OF NON-PROFIT CORPORATION ACT. A 2-17 corporation created under this chapter is governed by the Texas 2-18 Non-Profit Corporation Act (Article 1396-1.01 et seq., Vernon's 2-19 Texas Civil Statutes), except to the extent inconsistent with this 2-20 chapter. 2-21 (Sections 379A.005-379A.010 reserved for expansion 2-22 SUBCHAPTER B. CREATION OF CORPORATION 2-23 Sec. 379A.011. CREATION. The governing body of a 2-24 municipality may create a municipal development corporation under 2-25 this chapter. 2-26 Sec. 379A.012. ARTICLES OF INCORPORATION. The articles of 2-27 incorporation of the corporation must state that the corporation is 3-1 governed by this chapter. 3-2 Sec. 379A.013. NUMBER OF CORPORATIONS. A municipality may 3-3 not create more than one corporation under this chapter. 3-4 Sec. 379A.014. ADOPTION AND APPROVAL OF BYLAWS. The initial 3-5 bylaws of a corporation shall be adopted by its board of directors 3-6 and approved by resolution of the governing body of the 3-7 municipality that created the corporation, and any subsequent 3-8 changes made to the bylaws must be approved by the governing body 3-9 of the municipality that created the corporation. 3-10 Sec. 379A.015. PERFORMANCE REVIEW AND ASSESSMENT. The 3-11 governing body of the municipality that creates the corporation 3-12 shall undertake a performance review and assessment of the 3-13 corporation once every five years. Based on the performance review 3-14 and assessment, the governing body of the municipality shall issue 3-15 a finding of whether the corporation is satisfying the objectives 3-16 set forth in this chapter. 3-17 (Sections 379A.016-379A.020 reserved for expansion 3-18 SUBCHAPTER C. BOARD OF DIRECTORS 3-19 Sec. 379A.021. COMPOSITION AND APPOINTMENT OF BOARD. (a) 3-20 Except as provided by Subsection (g), the corporation is governed 3-21 by a board of 5, 7, 9, 11, 13, or 15 directors, as determined by 3-22 the governing body of the municipality that created the 3-23 corporation. The number of directors may not exceed the number of 3-24 members, including the mayor, constituting the governing body of 3-25 the municipality. 3-26 (b) The governing body of the municipality that created the 3-27 corporation shall appoint the members of the board. 4-1 (c) Directors serve staggered two-year terms, with as near 4-2 as possible to one-half of the members' terms expiring each year. 4-3 A director serves at the will of the governing body of the 4-4 municipality that created the corporation. Successor directors are 4-5 appointed in the same manner as the original appointees. 4-6 (d) Each director of a corporation created by a municipality 4-7 that has a population of 20,000 or more must be a resident of the 4-8 municipality. Each director of a corporation created by a 4-9 municipality that has a population of less than 20,000 must be a 4-10 resident of the municipality or the county in which the major part 4-11 of the area of the municipality is located. 4-12 (e) A person is disqualified from serving as a director if 4-13 the person is an employee, officer, or member of the governing body 4-14 of the municipality that created the corporation. 4-15 (f) A director may not have a personal interest in a 4-16 contract executed by the corporation. 4-17 (g) In a municipality that has a population of more than one 4-18 million and that creates a corporation under this chapter, the 4-19 board of the corporation is composed of persons appointed to the 4-20 board as required by this subsection. The governing body of the 4-21 municipality shall appoint one director to the board of the 4-22 corporation from each district that elects a member to the 4-23 governing body of the municipality. 4-24 Sec. 379A.022. COMPENSATION. A board member is not entitled 4-25 to compensation, but is entitled to reimbursement for actual and 4-26 necessary expenses incurred in serving as a director. 4-27 Sec. 379A.023. MEETINGS. The board shall conduct its 5-1 meetings in the municipality that created the corporation. 5-2 Sec. 379A.024. OFFICERS. The board shall appoint from its 5-3 members a presiding officer, a secretary, and other officers of 5-4 the corporation that the governing body of the municipality that 5-5 created the corporation considers necessary. 5-6 Sec. 379A.025. ADOPTION AND APPROVAL OF BUDGET; REVIEW OF 5-7 CORPORATE FINANCES. (a) The board shall prepare an annual budget 5-8 for the corporation. To be effective, the budget must be approved 5-9 by the board and presented to and approved by the governing body of 5-10 the municipality that created the corporation. The corporation may 5-11 not make any expenditure authorized by this chapter until the 5-12 budget has been approved as provided by this section. An amendment 5-13 of the budget must be approved in the same manner as the budget. 5-14 (b) The governing body of the municipality that created the 5-15 corporation may amend the corporation's budget with the approval of 5-16 at least two-thirds of the members of the governing body. 5-17 (c) The budget presented to the governing body of the 5-18 municipality that created the corporation must provide a detailed 5-19 description of the proposed expenditures for the corporation's 5-20 fiscal year, including expenditures for each program authorized by 5-21 Subchapter D. 5-22 (d) The board shall annually prepare and present financial 5-23 statements from the preceding fiscal year to the governing body of 5-24 the municipality that created the corporation. 5-25 (e) The governing body of the municipality that created the 5-26 corporation is entitled, at all times, to access to the books and 5-27 records of the corporation. 6-1 (Sections 379A.026-379A.050 reserved for expansion 6-2 SUBCHAPTER D. POWERS OF CORPORATION 6-3 Sec. 379A.051. PROGRAMS. (a) A corporation may develop and 6-4 implement programs for: 6-5 (1) job training, including long-term job training and 6-6 in-training support service grants; 6-7 (2) early childhood development that prepare each 6-8 child to enter school and make each child ready to learn after 6-9 completing the program and that provide educational services that 6-10 must include services designed to enable a child to: 6-11 (A) develop phonemic, print, and numeracy 6-12 awareness, including the ability to: 6-13 (i) recognize that letters of the alphabet 6-14 are a special category of visual graphics that can be individually 6-15 named; 6-16 (ii) recognize a word as a unit of print; 6-17 (iii) identify at least 10 letters of the 6-18 alphabet; and 6-19 (iv) associate sounds with written words; 6-20 (B) understand and use language to communicate 6-21 for various purposes; 6-22 (C) understand and use an increasingly complex 6-23 and varied vocabulary; 6-24 (D) develop and demonstrate an appreciation of 6-25 books; and 6-26 (E) progress toward mastery of the English 6-27 language, if the child's primary language is a language other than 7-1 English; 7-2 (3) after-school programs for primary and secondary 7-3 schools; 7-4 (4) the provision of funding to accredited 7-5 postsecondary educational institutions, including public and 7-6 private junior colleges, public and private institutions of higher 7-7 education, and public and private technical institutions, to be 7-8 used to award scholarships; 7-9 (5) the promotion of literacy; and 7-10 (6) any other undertaking that the board determines 7-11 will directly facilitate the development of a skilled workforce. 7-12 (b) A corporation may accept donated property, may develop 7-13 or use land, buildings, equipment, facilities, and other 7-14 improvements in connection with a program described by Subsection 7-15 (a), or may dispose of property or an interest in property under 7-16 terms determined by the corporation. 7-17 (c) A municipality may contract with a community nonprofit 7-18 organization that sponsors long-term job training and related 7-19 support services. 7-20 Sec. 379A.052. GENERAL POWERS OF CORPORATION. The 7-21 corporation may: 7-22 (1) own or operate a program authorized by this 7-23 chapter; 7-24 (2) perform any act necessary to the full exercise of 7-25 the corporation's powers; 7-26 (3) accept a grant or loan from a: 7-27 (A) department or agency of the United States; 8-1 (B) department, agency, or political subdivision 8-2 of this state; or 8-3 (C) public or private person; 8-4 (4) employ any necessary personnel, who shall be 8-5 employees of the municipality; 8-6 (5) adopt rules to govern the operation of the 8-7 corporation and its employees and property; and 8-8 (6) contract or enter into a memorandum of 8-9 understanding or a similar agreement with a public or private 8-10 person, including local workforce development boards or any 8-11 political subdivision, in connection with a program authorized by 8-12 this chapter. 8-13 Sec. 379A.053. NATURE OF CORPORATE PROPERTY. (a) The 8-14 legislature finds for all constitutional and statutory purposes 8-15 that the corporation owns, uses, and holds its property for public 8-16 purposes. 8-17 (b) Section 25.07(a), Tax Code, does not apply to a 8-18 leasehold or other possessory interest granted by the corporation. 8-19 (c) Property owned by the corporation is exempt from 8-20 taxation under Section 11.11, Tax Code, while the corporation owns 8-21 the property. 8-22 Sec. 379A.054. OPEN RECORDS AND MEETINGS. The board is 8-23 treated as a governmental body for the purposes of Chapters 551 and 8-24 552, Government Code. 8-25 Sec. 379A.055. ADMINISTRATION OF SCHOLARSHIP FUND. (a) In 8-26 providing funds to an accredited postsecondary educational 8-27 institution to be used for scholarships as authorized by Section 9-1 379A.051, the corporation by agreement with the institution shall 9-2 ensure that: 9-3 (1) the funds are distributed to individuals as 9-4 scholarships connected with the institution; and 9-5 (2) no more than a maximum amount, as set by the 9-6 corporation, of the funds are spent on administering the award of 9-7 the scholarship. 9-8 (b) An accredited postsecondary educational institution 9-9 receiving the funds for scholarships shall develop, in consultation 9-10 with the corporation, a plan for awarding scholarships that will 9-11 have the goal of having an eventual beneficial effect on the 9-12 economic growth and vitality of and the elimination of unemployment 9-13 and underemployment in the municipality that created the 9-14 corporation and that will ensure that the recipient: 9-15 (1) meets financial need requirements as defined by 9-16 the corporation; 9-17 (2) is enrolled in an undergraduate degree or 9-18 certificate program; 9-19 (3) is enrolled for at least three-fourths of a full 9-20 course load for an undergraduate student, as determined by the 9-21 corporation; 9-22 (4) makes satisfactory academic progress toward an 9-23 undergraduate degree or certificate; and 9-24 (5) complies with any additional nonacademic 9-25 requirement adopted by the corporation. 9-26 (c) If the municipality that created the corporation has 9-27 established an education partnership composed of community-based 10-1 organizations, school districts, public or private sector entities, 10-2 or postsecondary institutions for the purpose of distributing 10-3 scholarships to students of local schools, the corporation may 10-4 provide funds to the education partnership to enable the 10-5 partnership to award scholarships to directly facilitate the 10-6 development of a skilled workforce. 10-7 (Sections 379A.056-379A.080 reserved for expansion 10-8 SUBCHAPTER E. SALES AND USE TAX 10-9 Sec. 379A.081. SALES AND USE TAX. (a) A municipality may 10-10 levy a sales and use tax for the benefit of the corporation if the 10-11 tax is authorized by a majority of the voters of the municipality 10-12 voting at an election called for that purpose. 10-13 (b) The ballot for an election to impose the tax shall be 10-14 printed to permit voting for or against the proposition: "Adoption 10-15 of a sales and use tax at the rate of ____ of one percent (insert 10-16 one-eighth, one-fourth, three-eighths, or one-half, as appropriate) 10-17 for the purpose of financing authorized programs of the ____ 10-18 Municipal Development Corporation (insert the name of the 10-19 corporation)." 10-20 (c) The adoption of the tax may be limited on the ballot to 10-21 any specific program, or the tax may be adopted with general 10-22 language permitting the use of the tax for any purposes authorized 10-23 by this chapter. 10-24 (d) If a sales and use tax is levied, it may be adopted for 10-25 a maximum of 20 years, but may then be reauthorized, subject to a 10-26 payment of indebtedness. The tax may be authorized for a shorter 10-27 period of time or limited to the time necessary to pay any 11-1 indebtedness. 11-2 (e) The rate of a tax adopted under this section must be 11-3 one-eighth, one-fourth, three-eighths, or one-half of one 11-4 percent. A municipality may not adopt a sales and use tax under 11-5 this chapter if the adoption of the tax under this chapter would 11-6 result in a combined tax rate of all local sales and use taxes of 11-7 more than two percent in any location in the municipality. 11-8 (f) Chapter 321, Tax Code, governs a municipality's 11-9 imposition, computation, administration, collection, and remittance 11-10 of a tax authorized by this section except as inconsistent with 11-11 this chapter. 11-12 Sec. 379A.082. ELECTION TO CHANGE RATE OF TAX. (a) A 11-13 municipality that has adopted a sales and use tax under this 11-14 chapter at a rate of less than one-half of one percent may increase 11-15 or decrease the rate of the tax if the increase or decrease is 11-16 approved by a majority of the voters of the municipality voting at 11-17 an election called and held for that purpose. 11-18 (b) The tax may be increased or decreased under this section 11-19 in one or more increments of one-eighth of one percent, but a 11-20 maximum of one-half of one percent is permitted. 11-21 (c) The ballot for an election to increase or decrease the 11-22 tax shall be printed to permit voting for or against the 11-23 proposition: "The ________ (increase or decrease, as appropriate) 11-24 of a sales and use tax to the rate of ____ of one percent (insert 11-25 one-eighth, one-fourth, three-eighths, or one-half, as appropriate) 11-26 for the purpose of financing authorized programs of the ________ 11-27 Municipal Development Corporation (insert the name of the 12-1 corporation)." 12-2 Sec. 379A.083. IMPOSITION OF TAX. (a) If the municipality 12-3 adopts the tax, a tax is imposed on the receipts from the sale at 12-4 retail of taxable items in the municipality at the rate approved at 12-5 the election, and an excise tax is imposed on the use, storage, or 12-6 other consumption in the municipality of tangible personal property 12-7 purchased, leased, or rented from a retailer during the period that 12-8 the tax is effective in the municipality. The rate of the excise 12-9 tax is the same as the rate of the sales tax portion of the tax and 12-10 is applied to the sale price of the tangible personal property. 12-11 (b) The adoption of the tax or the change of the tax rate 12-12 takes effect on the first day of the first calendar quarter 12-13 occurring after the expiration of the first complete quarter 12-14 occurring after the date the comptroller receives a notice of the 12-15 results of the election adopting, increasing, or decreasing the 12-16 tax. 12-17 (Sections 379A.084-379A.100 reserved for expansion 12-18 SUBCHAPTER F. REPORT TO COMPTROLLER 12-19 Sec. 379A.101. REPORT REQUIRED. (a) Not later than February 12-20 1 of each year, the board of directors of the corporation shall 12-21 submit to the comptroller a report in the form required by the 12-22 comptroller. 12-23 (b) The reporting form may not exceed one page in length and 12-24 must include: 12-25 (1) a statement of the corporation's primary 12-26 objectives; 12-27 (2) a statement of the corporation's total revenues 13-1 during the preceding fiscal year; 13-2 (3) a statement of the corporation's total 13-3 expenditures during the preceding fiscal year; 13-4 (4) a statement of the corporation's total 13-5 expenditures during the preceding fiscal year in each of the 13-6 following categories: 13-7 (A) administration; 13-8 (B) personnel; 13-9 (C) marketing or promotion; 13-10 (D) direct business incentives; 13-11 (E) job training for the corporation's 13-12 personnel; 13-13 (F) debt service; 13-14 (G) capital costs; 13-15 (H) programs authorized by this chapter; and 13-16 (I) payments to taxing units, including school 13-17 districts; 13-18 (5) a list of the corporation's capital assets, 13-19 including land and buildings; and 13-20 (6) any other information the comptroller requires to 13-21 determine the use of the sales and use tax imposed under this 13-22 chapter. 13-23 Sec. 379A.102. FAILURE TO FILE REPORT; ADMINISTRATIVE 13-24 PENALTY. (a) If the corporation fails to file a report in 13-25 accordance with this subchapter or fails to include sufficient 13-26 information in the report, the comptroller shall provide to the 13-27 corporation a written notice of the failure. The written notice 14-1 must include information on how to correct the failure. 14-2 (b) The comptroller may impose an administrative penalty 14-3 against the corporation if the corporation does not correct the 14-4 failure before the 31st day after the date the corporation receives 14-5 the written notice under Subsection (a). The amount of the penalty 14-6 is $200 a day for each day the filing of the report is delinquent. 14-7 (c) The comptroller by rule shall prescribe the procedures 14-8 for the imposition of an administrative penalty under this section. 14-9 The rules must protect the due process rights of the corporation. 14-10 Sec. 379A.103. COMPTROLLER'S REPORT TO LEGISLATURE. (a) Not 14-11 later than November 1 of each even-numbered year, the comptroller 14-12 shall submit to the legislature a report on the use of the sales 14-13 and use tax imposed under this chapter. 14-14 (b) On request, the comptroller shall provide without charge 14-15 a copy of the report required by Subsection (a) to the corporation 14-16 created under this chapter. 14-17 SECTION 2. This Act takes effect immediately if it receives 14-18 a vote of two-thirds of all the members elected to each house, as 14-19 provided by Section 39, Article III, Texas Constitution. If this 14-20 Act does not receive the vote necessary for immediate effect, this 14-21 Act takes effect September 1, 2001.