By Van de Putte S.B. No. 607 77R5202 ATP-D 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 and the issuance of local bonds; providing an 1-5 administrative penalty. 1-6 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-7 SECTION 1. Subtitle A, Title 12, Local Government Code, is 1-8 amended by adding Chapter 379A to read as follows: 1-9 CHAPTER 379A. MUNICIPAL DEVELOPMENT CORPORATIONS 1-10 SUBCHAPTER A. GENERAL PROVISIONS 1-11 Sec. 379A.001. SHORT TITLE. This chapter may be cited as the 1-12 Better Jobs Act. 1-13 Sec. 379A.002. FINDINGS AND PURPOSES. (a) The legislature 1-14 finds that: 1-15 (1) the right to gainful employment and the general 1-16 welfare of the people of this state require investment in the 1-17 development of a skilled workforce through job training programs, 1-18 early childhood education, after-school programs, scholarships for 1-19 higher education, and literacy programs; 1-20 (2) municipalities in this state have invested 1-21 substantial funds in those programs, but wish to develop additional 1-22 resources so that they can do more; and 1-23 (3) those programs are essential to the economic 1-24 growth and vitality of many municipalities in this state and to the 2-1 elimination of unemployment and underemployment in those 2-2 municipalities. 2-3 (b) The programs authorized by this chapter are in the 2-4 public interest, promote the economic welfare of this state, and 2-5 serve the state public purpose of developing and diversifying the 2-6 economy of this state and eliminating unemployment and 2-7 underemployment in this state. 2-8 (c) This chapter shall be liberally construed in conformity 2-9 with the findings and purposes stated in this section. 2-10 Sec. 379A.003. DEFINITIONS. In this chapter: 2-11 (1) "Board" means the board of directors of a 2-12 municipal development corporation. 2-13 (2) "Corporation" means a municipal development 2-14 corporation created under this chapter. 2-15 Sec. 379A.004. APPLICATION OF NON-PROFIT CORPORATION ACT. A 2-16 corporation created under this chapter is governed by the Texas 2-17 Non-Profit Corporation Act (Article 1396-1.01 et seq., Vernon's 2-18 Texas Civil Statutes), except to the extent inconsistent with this 2-19 chapter. 2-20 (Sections 379A.005-379A.010 reserved for expansion 2-21 SUBCHAPTER B. CREATION OF CORPORATION 2-22 Sec. 379A.011. CREATION. The governing body of a 2-23 municipality may create a municipal development corporation under 2-24 this chapter. 2-25 Sec. 379A.012. ARTICLES OF INCORPORATION. The articles of 2-26 incorporation of the corporation must state that the corporation is 2-27 governed by this chapter. 3-1 Sec. 379A.013. NUMBER OF CORPORATIONS. A municipality may 3-2 not create more than one corporation under this chapter. 3-3 (Sections 379A.014-379A.020 reserved for expansion 3-4 SUBCHAPTER C. BOARD OF DIRECTORS 3-5 Sec. 379A.021. COMPOSITION AND APPOINTMENT OF BOARD. (a) 3-6 The corporation is governed by a board of 5, 7, 9, or 11 directors, 3-7 as determined by the governing body of the municipality. 3-8 (b) The governing body of the municipality shall appoint the 3-9 members of the board. 3-10 (c) Directors serve staggered two-year terms, with as near 3-11 as possible to one-half of the members' terms expiring each year. 3-12 A director serves at the will of the governing body of the 3-13 municipality. Successor directors are appointed in the same manner 3-14 as the original appointees. 3-15 (d) Each director of a corporation created by a municipality 3-16 with a population of 20,000 or more must be a resident of the 3-17 municipality. Each director of a corporation created by a 3-18 municipality with a population of less than 20,000 must be a 3-19 resident of the municipality or the county in which the major part 3-20 of the area of the municipality is located. 3-21 (e) A person is not disqualified from serving as a director 3-22 because the person is an employee, officer, or member of the 3-23 governing body of the municipality. 3-24 (f) A director may not have a personal interest in a 3-25 contract executed by the corporation. 3-26 Sec. 379A.022. COMPENSATION. A board member is not entitled 3-27 to compensation, but is entitled to reimbursement for actual and 4-1 necessary expenses incurred in serving as a director. 4-2 Sec. 379A.023. MEETINGS. The board shall conduct its 4-3 meetings in the municipality that created the corporation. 4-4 Sec. 379A.024. OFFICERS. The board shall appoint from its 4-5 members a presiding officer, a secretary, and other officers of 4-6 the corporation that the governing body of the municipality 4-7 considers necessary. 4-8 (Sections 379A.025-379A.050 reserved for expansion 4-9 SUBCHAPTER D. POWERS OF CORPORATION 4-10 Sec. 379A.051. PROGRAMS. (a) A corporation may develop and 4-11 implement programs for: 4-12 (1) job training; 4-13 (2) early childhood education; 4-14 (3) after-school programs for primary and secondary 4-15 schools; 4-16 (4) the provision of funding to institutions of higher 4-17 education to be used to award scholarships; 4-18 (5) the promotion of literacy; and 4-19 (6) any other undertaking that the board determines 4-20 will directly facilitate the development of a skilled workforce. 4-21 (b) A corporation may acquire, develop, or use land, 4-22 buildings, equipment, facilities, and other improvements in 4-23 connection with a program described by Subsection (a). 4-24 Sec. 379A.052. GENERAL POWERS OF CORPORATION. The 4-25 corporation may: 4-26 (1) own or operate a program authorized by this 4-27 chapter; 5-1 (2) perform any act necessary to the full exercise of 5-2 the corporation's powers; 5-3 (3) accept a grant or loan from a: 5-4 (A) department or agency of the United States; 5-5 (B) department, agency, or political subdivision 5-6 of this state; or 5-7 (C) public or private person; 5-8 (4) acquire, sell, lease, convey, or otherwise dispose 5-9 of property or an interest in property under terms determined by 5-10 the corporation; 5-11 (5) employ necessary personnel; 5-12 (6) adopt rules to govern the operation of the 5-13 corporation and its employees and property; and 5-14 (7) contract or enter into a memorandum of 5-15 understanding or a similar agreement with a public or private 5-16 person, including local workforce development boards or any 5-17 political subdivision, in connection with a program authorized by 5-18 this chapter. 5-19 Sec. 379A.053. BONDS AND OTHER OBLIGATIONS. (a) The 5-20 corporation may issue revenue bonds on behalf of the municipality, 5-21 including refunding bonds, or other obligations to pay the costs of 5-22 an authorized program or to refund bonds or other obligations. 5-23 (b) The bonds or other obligations and the proceedings 5-24 authorizing the bonds or other obligations shall be submitted to 5-25 the attorney general for review and approval as required by Section 5-26 1202.003, Government Code. 5-27 (c) The bonds or other obligations must be payable from and 6-1 secured by the revenues of the corporation. 6-2 (d) The bonds or other obligations may mature serially or 6-3 otherwise not more than 30 years after the date of issuance. 6-4 (e) The bonds or other obligations are not a debt of and do 6-5 not create a claim for payment against the revenue or property of 6-6 the municipality other than a program for which the bonds are 6-7 issued. 6-8 Sec. 379A.054. NATURE OF CORPORATE PROPERTY. (a) The 6-9 legislature finds for all constitutional and statutory purposes 6-10 that the corporation owns, uses, and holds its property for public 6-11 purposes. 6-12 (b) Section 25.07(a), Tax Code, does not apply to a 6-13 leasehold or other possessory interest granted by the corporation. 6-14 (c) Property owned by the corporation is exempt from 6-15 taxation under Section 11.11, Tax Code, while the corporation owns 6-16 the property. 6-17 Sec. 379A.055. OPEN RECORDS AND MEETINGS. The board is 6-18 treated as a governmental body for the purposes of Chapters 551 and 6-19 552, Government Code. 6-20 Sec. 379A.056. ADMINISTRATION OF SCHOLARSHIP FUND. (a) In 6-21 providing funds to an institution of higher education to be used 6-22 for scholarships as authorized by Section 379A.051, the corporation 6-23 by agreement with the institution shall ensure that: 6-24 (1) the funds are distributed to individuals as 6-25 scholarships connected with the institution; and 6-26 (2) no more than a maximum amount, as set by the 6-27 corporation, of the funds are spent on administering the award of 7-1 the scholarship. 7-2 (b) An institution of higher education receiving the funds 7-3 for scholarships shall develop, in consultation with the 7-4 corporation, a plan for awarding scholarships with the goal of 7-5 having an eventual beneficial effect on the economic growth and 7-6 vitality of and the elimination of unemployment and underemployment 7-7 in the municipality that created the corporation. 7-8 (Sections 379A.057-379A.080 reserved for expansion 7-9 SUBCHAPTER E. SALES AND USE TAX 7-10 Sec. 379A.081. SALES AND USE TAX. (a) A municipality may 7-11 levy a sales and use tax for the benefit of the corporation if the 7-12 tax is authorized by a majority of the voters of the municipality 7-13 voting at an election called for that purpose. 7-14 (b) The ballot for an election to impose the tax shall be 7-15 printed to permit voting for or against the proposition: "Adoption 7-16 of a sales and use tax at the rate of ____ of one percent (insert 7-17 one-eighth, one-fourth, three-eighths, or one-half, as appropriate) 7-18 for the purpose of financing authorized programs of the ____ 7-19 Municipal Development Corporation (insert the name of the 7-20 corporation)." 7-21 (c) The adoption of the tax may be limited on the ballot to 7-22 any specific program, or the tax may be adopted with general 7-23 language permitting the use of the tax for any purposes authorized 7-24 by this chapter. 7-25 (d) If a sales and use tax is levied, it may be adopted for 7-26 a maximum of 20 years, but may then be reauthorized, subject to a 7-27 payment of indebtedness. The tax may be authorized for a shorter 8-1 period of time or limited to the time necessary to pay any 8-2 indebtedness. 8-3 (e) The rate of a tax adopted under this section must be 8-4 one-eighth, one-fourth, three-eighths, or one-half of one 8-5 percent. A municipality may not adopt a sales and use tax under 8-6 this chapter if the adoption of the tax under this chapter would 8-7 result in a combined tax rate of all local sales and use taxes of 8-8 more than two percent in any location in the municipality. 8-9 (f) Chapter 321, Tax Code, governs a municipality's 8-10 imposition, computation, administration, collection, and remittance 8-11 of a tax authorized by this section except as inconsistent with 8-12 this chapter. 8-13 Sec. 379A.082. ELECTION TO CHANGE RATE OF TAX. (a) A 8-14 municipality that has adopted a sales and use tax under this 8-15 chapter at a rate of less than one-half of one percent may increase 8-16 or decrease the rate of the tax if the increase or decrease is 8-17 approved by a majority of the voters of the municipality voting at 8-18 an election called and held for that purpose. 8-19 (b) The tax may be increased or decreased under this section 8-20 in one or more increments of one-eighth of one percent, but a 8-21 maximum of one-half of one percent is permitted. 8-22 (c) The ballot for an election to increase or decrease the 8-23 tax shall be printed to permit voting for or against the 8-24 proposition: "The ________ (increase or decrease, as appropriate) 8-25 of a sales and use tax to the rate of ____ of one percent (insert 8-26 one-eighth, one-fourth, three-eighths, or one-half, as appropriate) 8-27 for the purpose of financing authorized programs of the ________ 9-1 Municipal Development Corporation (insert the name of the 9-2 corporation)." 9-3 Sec. 379A.083. IMPOSITION OF TAX. (a) If the municipality 9-4 adopts the tax, a tax is imposed on the receipts from the sale at 9-5 retail of taxable items in the municipality at the rate approved at 9-6 the election, and an excise tax is imposed on the use, storage, or 9-7 other consumption in the municipality of tangible personal property 9-8 purchased, leased, or rented from a retailer during the period that 9-9 the tax is effective in the municipality. The rate of the excise 9-10 tax is the same as the rate of the sales tax portion of the tax and 9-11 is applied to the sale price of the tangible personal property. 9-12 (b) The adoption of the tax or the change of the tax rate 9-13 takes effect on the first day of the first calendar quarter 9-14 occurring after the expiration of the first complete quarter 9-15 occurring after the date the comptroller receives a notice of the 9-16 results of the election adopting, increasing, or decreasing the 9-17 tax. 9-18 (Sections 379A.084-379A.100 reserved for expansion 9-19 SUBCHAPTER F. REPORT TO COMPTROLLER 9-20 Sec. 379A.101. REPORT REQUIRED. (a) Not later than February 9-21 1 of each year, the board of directors of the corporation shall 9-22 submit to the comptroller a report in the form required by the 9-23 comptroller. 9-24 (b) The reporting form may not exceed one page in length and 9-25 must include: 9-26 (1) a statement of the corporation's primary 9-27 objectives; 10-1 (2) a statement of the corporation's total revenues 10-2 during the preceding fiscal year; 10-3 (3) a statement of the corporation's total 10-4 expenditures during the preceding fiscal year; 10-5 (4) a statement of the corporation's total 10-6 expenditures during the preceding fiscal year in each of the 10-7 following categories: 10-8 (A) administration; 10-9 (B) personnel; 10-10 (C) marketing or promotion; 10-11 (D) direct business incentives; 10-12 (E) job training for the corporation's 10-13 personnel; 10-14 (F) debt service; 10-15 (G) capital costs; 10-16 (H) programs authorized by this chapter; and 10-17 (I) payments to taxing units, including school 10-18 districts; 10-19 (5) a list of the corporation's capital assets, 10-20 including land and buildings; and 10-21 (6) any other information the comptroller requires to 10-22 determine the use of the sales and use tax imposed under this 10-23 chapter. 10-24 Sec. 379A.102. FAILURE TO FILE REPORT; ADMINISTRATIVE 10-25 PENALTY. (a) If the corporation fails to file a report in 10-26 accordance with this subchapter or fails to include sufficient 10-27 information in the report, the comptroller shall provide to the 11-1 corporation a written notice of the failure. The written notice 11-2 must include information on how to correct the failure. 11-3 (b) The comptroller may impose an administrative penalty 11-4 against the corporation if the corporation does not correct the 11-5 failure before the 31st day after the date the corporation receives 11-6 the written notice under Subsection (a). The amount of the penalty 11-7 is $200 a day for each day the filing of the report is delinquent. 11-8 (c) The comptroller by rule shall prescribe the procedures 11-9 for the imposition of an administrative penalty under this section. 11-10 The rules must protect the due process rights of the corporation. 11-11 Sec. 379A.103. COMPTROLLER'S REPORT TO LEGISLATURE. (a) Not 11-12 later than November 1 of each even-numbered year, the comptroller 11-13 shall submit to the legislature a report on the use of the sales 11-14 and use tax imposed under this chapter. 11-15 (b) On request, the comptroller shall provide without charge 11-16 a copy of the report required by Subsection (a) to the corporation 11-17 created under this chapter. 11-18 SECTION 2. This Act takes effect immediately if it receives 11-19 a vote of two-thirds of all the members elected to each house, as 11-20 provided by Section 39, Article III, Texas Constitution. If this 11-21 Act does not receive the vote necessary for immediate effect, this 11-22 Act takes effect September 1, 2001.