1-1     By:  Van de Putte, et al.                              S.B. No. 607
 1-2           (In the Senate - Filed February 8, 2001; February 12, 2001,
 1-3     read first time and referred to Committee on Intergovernmental
 1-4     Relations; March 12, 2001, reported adversely, with favorable
 1-5     Committee Substitute by the following vote:  Yeas 6, Nays 0;
 1-6     March 12, 2001, sent to printer.)
 1-7     COMMITTEE SUBSTITUTE FOR S.B. No. 607                    By:  Madla
 1-8                            A BILL TO BE ENTITLED
 1-9                                   AN ACT
1-10     relating to the creation of a municipal development corporation to
1-11     provide educational and job training; authorizing the imposition of
1-12     certain local taxes; providing an administrative penalty.
1-13           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-14           SECTION 1.  Subtitle A, Title 12, Local Government Code, is
1-15     amended by adding Chapter 379A to read as follows:
1-16              CHAPTER 379A.  MUNICIPAL DEVELOPMENT CORPORATIONS
1-17                      SUBCHAPTER A.  GENERAL PROVISIONS
1-18           Sec. 379A.001.  SHORT TITLE.  This chapter may be cited as
1-19     the Better Jobs Act.
1-20           Sec. 379A.002.  FINDINGS AND PURPOSES.  (a)  The legislature
1-21     finds that:
1-22                 (1)  the right to gainful employment and the general
1-23     welfare of the people of this state require investment in the
1-24     development of a skilled workforce through job training programs,
1-25     early childhood development, after-school programs, scholarships
1-26     for higher education, and literacy programs;
1-27                 (2)  municipalities in this state have invested
1-28     substantial funds in those programs, but wish to develop additional
1-29     resources so that they can do more; and
1-30                 (3)  those programs are essential to the economic
1-31     growth and vitality of many municipalities in this state and to the
1-32     elimination of unemployment and underemployment in those
1-33     municipalities.
1-34           (b)  The programs authorized by this chapter are in the
1-35     public interest, promote the economic welfare of this state, and
1-36     serve the state public purpose of developing and diversifying the
1-37     economy of this state and eliminating unemployment and
1-38     underemployment in this state.
1-39           (c)  This chapter shall be liberally construed in conformity
1-40     with the findings and purposes stated in this section.
1-41           Sec. 379A.003.  DEFINITIONS.  In this chapter:
1-42                 (1)  "Board" means the board of directors of a
1-43     municipal development corporation.
1-44                 (2)  "Corporation" means a municipal development
1-45     corporation created under this chapter.
1-46           Sec. 379A.004.  APPLICATION OF NON-PROFIT CORPORATION ACT.  A
1-47     corporation created under this chapter is governed by the Texas
1-48     Non-Profit Corporation Act (Article 1396-1.01 et seq., Vernon's
1-49     Texas Civil Statutes), except to the extent inconsistent with this
1-50     chapter.
1-51             (Sections 379A.005-379A.010 reserved for expansion
1-52                   SUBCHAPTER B.  CREATION OF CORPORATION
1-53           Sec. 379A.011.  CREATION.  The governing body of a
1-54     municipality may create a municipal development corporation under
1-55     this chapter.
1-56           Sec. 379A.012.  ARTICLES OF INCORPORATION.  The articles of
1-57     incorporation of the corporation must state that the corporation is
1-58     governed by this chapter.
1-59           Sec. 379A.013.  NUMBER OF CORPORATIONS.  A municipality may
1-60     not create more than one corporation under this chapter.
1-61           Sec. 379A.014.  ADOPTION AND APPROVAL OF BYLAWS.  The initial
1-62     bylaws of a corporation shall be adopted by its board of directors
1-63     and approved by resolution of the governing body of the
1-64     municipality that created the corporation, and any subsequent
 2-1     changes made to the bylaws must be approved by the governing body
 2-2     of the municipality that created the corporation.
 2-3             (Sections 379A.015-379A.020 reserved for expansion
 2-4                      SUBCHAPTER C.  BOARD OF DIRECTORS
 2-5           Sec. 379A.021.  COMPOSITION AND APPOINTMENT OF BOARD.
 2-6     (a)  Except as provided by Subsection (g), the corporation is
 2-7     governed by a board of 5, 7, 9, 11, 13, or 15 directors, as
 2-8     determined by the governing body of the municipality that created
 2-9     the corporation.  The number of directors may not exceed the number
2-10     of members, including the mayor, constituting the governing body of
2-11     the municipality.
2-12           (b)  The governing body of the municipality that created the
2-13     corporation shall appoint the members of the board.
2-14           (c)  Directors serve staggered two-year terms, with as near
2-15     as possible to one-half of the members' terms expiring each year.
2-16     A director serves at the will of the governing body of the
2-17     municipality that created the corporation.  Successor directors are
2-18     appointed in the same manner as the original appointees.
2-19           (d)  Each director of a corporation created by a municipality
2-20     that has a population of 20,000 or more must be a resident of the
2-21     municipality.  Each director of a corporation created by a
2-22     municipality that has a population of less than 20,000 must be a
2-23     resident of the municipality or the county in which the major part
2-24     of the area of the municipality is located.
2-25           (e)  A person is disqualified from serving as a director if
2-26     the person is an employee, officer, or member of the governing body
2-27     of the municipality that created the corporation.
2-28           (f)  A director may not have a personal interest in a
2-29     contract executed by the corporation.
2-30           (g)  In a municipality that has a population of more than one
2-31     million and that creates a corporation under this chapter, the
2-32     board of the corporation is composed of persons appointed to the
2-33     board as required by this subsection.  The governing body of the
2-34     municipality shall appoint one director to the board of the
2-35     corporation from each district that elects a member to the
2-36     governing body of the municipality.
2-37           Sec. 379A.022.  COMPENSATION.  A board member is not entitled
2-38     to compensation, but is entitled to reimbursement for actual and
2-39     necessary expenses incurred in serving as a director.
2-40           Sec. 379A.023.  MEETINGS.  The board shall conduct its
2-41     meetings in the municipality that created the corporation.
2-42           Sec. 379A.024.  OFFICERS.  The board shall appoint from its
2-43     members a presiding officer, a secretary, and other officers of the
2-44     corporation that the governing body of the municipality that
2-45     created the corporation considers necessary.
2-46           Sec. 379A.025.  ADOPTION AND APPROVAL OF BUDGET; REVIEW OF
2-47     CORPORATE FINANCES.  (a)  The board shall prepare an annual budget
2-48     for the corporation.  To be effective, the budget must be approved
2-49     by the board and presented to and approved by the governing body of
2-50     the municipality that created the corporation.  The corporation may
2-51     not make any expenditure authorized by this chapter until the
2-52     budget has been approved as provided by this section.  An amendment
2-53     of the budget must be approved in the same manner as the budget.
2-54           (b)  The governing body of the municipality that created the
2-55     corporation may amend the corporation's budget with the approval of
2-56     at least two-thirds of the members of the governing body.
2-57           (c)  The budget presented to the governing body of the
2-58     municipality that created the corporation must provide a detailed
2-59     description of the proposed expenditures for the corporation's
2-60     fiscal year, including expenditures for each program authorized by
2-61     Subchapter D.
2-62           (d)  The board shall annually prepare and present financial
2-63     statements from the preceding fiscal year to the governing body of
2-64     the municipality that created the corporation.
2-65           (e)  The governing body of the municipality that created the
2-66     corporation is entitled, at all times, to access to the books and
2-67     records of the corporation.
2-68             (Sections 379A.026-379A.050 reserved for expansion
 3-1                    SUBCHAPTER D.  POWERS OF CORPORATION
 3-2           Sec. 379A.051.  PROGRAMS.  (a)  A corporation may develop and
 3-3     implement programs for:
 3-4                 (1)  job training, including long-term job training and
 3-5     in-training support service grants;
 3-6                 (2)  early childhood development;
 3-7                 (3)  after-school programs for primary and secondary
 3-8     schools;
 3-9                 (4)  the provision of funding to institutions of higher
3-10     education to be used to award scholarships;
3-11                 (5)  the promotion of literacy; and
3-12                 (6)  any other undertaking that the board determines
3-13     will directly facilitate the development of a skilled workforce.
3-14           (b)  A corporation may accept donated property, may develop
3-15     or use land, buildings, equipment, facilities, and other
3-16     improvements in connection with a program described by Subsection
3-17     (a), or may dispose of property or an interest in property under
3-18     terms determined by the corporation.
3-19           (c)  A municipality may contract with a community nonprofit
3-20     organization that sponsors job training, long-term job training,
3-21     and related support services.
3-22           Sec. 379A.052.  GENERAL POWERS OF CORPORATION.  The
3-23     corporation may:
3-24                 (1)  own or operate a program authorized by this
3-25     chapter;
3-26                 (2)  perform any act necessary to the full exercise of
3-27     the corporation's powers;
3-28                 (3)  accept a grant or loan from a:
3-29                       (A)  department or agency of the United States;
3-30                       (B)  department, agency, or political subdivision
3-31     of this state; or
3-32                       (C)  public or private person;
3-33                 (4)  employ any necessary personnel, who shall be
3-34     employees of the municipality;
3-35                 (5)  adopt rules to govern the operation of the
3-36     corporation and its employees and property; and
3-37                 (6)  contract or enter into a memorandum of
3-38     understanding or a similar agreement with a public or private
3-39     person, including local workforce development boards or any
3-40     political subdivision, in connection with a program authorized by
3-41     this chapter.
3-42           Sec. 379A.053.  NATURE OF CORPORATE PROPERTY.  (a)  The
3-43     legislature finds for all constitutional and statutory purposes
3-44     that the corporation owns, uses, and holds its property for public
3-45     purposes.
3-46           (b)  Section 25.07(a), Tax Code, does not apply to a
3-47     leasehold or other possessory interest granted by the corporation.
3-48           (c)  Property owned by the corporation is exempt from
3-49     taxation under Section 11.11, Tax Code, while the corporation owns
3-50     the property.
3-51           Sec. 379A.054.  OPEN RECORDS AND MEETINGS.  The board is
3-52     treated as a governmental body for the purposes of Chapters 551 and
3-53     552, Government Code.
3-54           Sec. 379A.055.  ADMINISTRATION OF SCHOLARSHIP FUND.  (a)  In
3-55     providing funds to an institution of higher education to be used
3-56     for scholarships as authorized by Section 379A.051, the corporation
3-57     by agreement with the institution shall ensure that:
3-58                 (1)  the funds are distributed to individuals as
3-59     scholarships connected with the institution; and
3-60                 (2)  no more than a maximum amount, as set by the
3-61     corporation, of the funds are spent on administering the award of
3-62     the scholarship.
3-63           (b)  An institution of higher education receiving the funds
3-64     for scholarships shall develop, in consultation with the
3-65     corporation, a plan for awarding scholarships with the goal of
3-66     having an eventual beneficial effect on the economic growth and
3-67     vitality of and the elimination of unemployment and underemployment
3-68     in the municipality that created the corporation.
3-69           (c)  If the municipality that created the corporation has
 4-1     established an education partnership composed of community-based
 4-2     organizations, school districts, public or private sector entities,
 4-3     or postsecondary institutions for the purpose of distributing
 4-4     scholarships to students of local schools, the corporation may
 4-5     provide funds to the education partnership to enable the
 4-6     partnership to award scholarships to directly facilitate the
 4-7     development of a skilled workforce.
 4-8             (Sections 379A.056-379A.080 reserved for expansion
 4-9                      SUBCHAPTER E.  SALES AND USE TAX
4-10           Sec. 379A.081.  SALES AND USE TAX.  (a)  A municipality may
4-11     levy a sales and use tax for the benefit of the corporation if the
4-12     tax is authorized by a majority of the voters of the municipality
4-13     voting at an election called for that purpose.
4-14           (b)  The ballot for an election to impose the tax shall be
4-15     printed to permit voting for or against the proposition:  "Adoption
4-16     of a sales and use tax at the rate of ____ of one percent (insert
4-17     one-eighth, one-fourth, three-eighths, or one-half, as appropriate)
4-18     for the purpose of financing authorized programs of the ____
4-19     Municipal Development Corporation (insert the name of the
4-20     corporation)."
4-21           (c)  The adoption of the tax may be limited on the ballot to
4-22     any specific program, or the tax may be adopted with general
4-23     language permitting the use of the tax for any purposes authorized
4-24     by this chapter.
4-25           (d)  If a sales and use tax is levied, it may be adopted for
4-26     a maximum of 20 years, but may then be reauthorized, subject to a
4-27     payment of indebtedness.  The tax may be authorized for a shorter
4-28     period of time or limited to the time necessary to pay any
4-29     indebtedness.
4-30           (e)  The rate of a tax adopted under this section must be
4-31     one-eighth, one-fourth, three-eighths, or one-half of one
4-32     percent.  A municipality may not adopt a sales and use tax under
4-33     this chapter if the adoption of the tax under this chapter would
4-34     result in a combined tax rate of all local sales and use taxes of
4-35     more than two percent in any location in the municipality.
4-36           (f)  Chapter 321, Tax Code, governs a municipality's
4-37     imposition, computation, administration, collection, and remittance
4-38     of a tax authorized by this section except as inconsistent with
4-39     this chapter.
4-40           Sec. 379A.082.  ELECTION TO CHANGE RATE OF TAX.  (a)  A
4-41     municipality that has adopted a sales and use tax under this
4-42     chapter at a rate of less than one-half of one percent may increase
4-43     or decrease the rate of the tax if the increase or decrease is
4-44     approved by a majority of the voters of the municipality voting at
4-45     an election called and held for that purpose.
4-46           (b)  The tax may be increased or decreased under this section
4-47     in one or more increments of one-eighth of one percent, but a
4-48     maximum of one-half of one percent is permitted.
4-49           (c)  The ballot for an election to increase or decrease the
4-50     tax shall be printed to permit voting for or against the
4-51     proposition:  "The ________ (increase or decrease, as appropriate)
4-52     of a sales and use tax to the rate of ____ of one percent (insert
4-53     one-eighth, one-fourth, three-eighths, or one-half, as appropriate)
4-54     for the purpose of financing authorized programs of the ________
4-55     Municipal Development Corporation (insert the name of the
4-56     corporation)."
4-57           Sec. 379A.083.  IMPOSITION OF TAX.  (a)  If the municipality
4-58     adopts the tax, a tax is imposed on the receipts from the sale at
4-59     retail of taxable items in the municipality at the rate approved at
4-60     the election, and an excise tax is imposed on the use, storage, or
4-61     other consumption in the municipality of tangible personal property
4-62     purchased, leased, or rented from a retailer during the period that
4-63     the tax is effective in the municipality.  The rate of the excise
4-64     tax is the same as the rate of the sales tax portion of the tax and
4-65     is applied to the sale price of the tangible personal property.
4-66           (b)  The adoption of the tax or the change of the tax rate
4-67     takes effect on the first day of the first calendar quarter
4-68     occurring after the expiration of the first complete quarter
4-69     occurring after the date the comptroller receives a notice of the
 5-1     results of the election adopting, increasing, or decreasing the
 5-2     tax.
 5-3             (Sections 379A.084-379A.100 reserved for expansion
 5-4                    SUBCHAPTER F.  REPORT TO COMPTROLLER
 5-5           Sec. 379A.101.  REPORT REQUIRED.  (a)  Not later than
 5-6     February 1 of each year, the board of directors of the corporation
 5-7     shall submit to the comptroller a report in the form required by
 5-8     the comptroller.
 5-9           (b)  The reporting form may not exceed one page in length and
5-10     must include:
5-11                 (1)  a statement of the corporation's primary
5-12     objectives;
5-13                 (2)  a statement of the corporation's total revenues
5-14     during the preceding fiscal year;
5-15                 (3)  a statement of the corporation's total
5-16     expenditures during the preceding fiscal year;
5-17                 (4)  a statement of the corporation's total
5-18     expenditures during the preceding fiscal year in each of the
5-19     following categories:
5-20                       (A)  administration;
5-21                       (B)  personnel;
5-22                       (C)  marketing or promotion;
5-23                       (D)  direct business incentives;
5-24                       (E)  job training for the corporation's
5-25     personnel;
5-26                       (F)  debt service;
5-27                       (G)  capital costs;
5-28                       (H)  programs authorized by this chapter; and
5-29                       (I)  payments to taxing units, including school
5-30     districts;
5-31                 (5)  a list of the corporation's capital assets,
5-32     including land and buildings; and
5-33                 (6)  any other information the comptroller requires to
5-34     determine the use of the sales and use tax imposed under this
5-35     chapter.
5-36           Sec. 379A.102.  FAILURE TO FILE REPORT; ADMINISTRATIVE
5-37     PENALTY.  (a)  If the corporation fails to file a report in
5-38     accordance with this subchapter or fails to include sufficient
5-39     information in the report, the comptroller shall provide to the
5-40     corporation a written notice of the failure.  The written notice
5-41     must include information on how to correct the failure.
5-42           (b)  The comptroller may impose an administrative penalty
5-43     against the corporation if the corporation does not correct the
5-44     failure before the 31st day after the date the corporation receives
5-45     the written notice under Subsection (a).  The amount of the penalty
5-46     is $200 a day for each day the filing of the report is delinquent.
5-47           (c)  The comptroller by rule shall prescribe the procedures
5-48     for the imposition of an administrative penalty under this section.
5-49     The rules must protect the due process rights of the corporation.
5-50           Sec. 379A.103.  COMPTROLLER'S REPORT TO LEGISLATURE.
5-51     (a)  Not later than November 1 of each even-numbered year, the
5-52     comptroller shall submit to the legislature a report on the use of
5-53     the sales and use tax imposed under this chapter.
5-54           (b)  On request, the comptroller shall provide without charge
5-55     a copy of the report required by Subsection (a)  to the corporation
5-56     created under this chapter.
5-57           SECTION 2.  This Act takes effect immediately if it receives
5-58     a vote of two-thirds of all the members elected to each house, as
5-59     provided by Section 39, Article III, Texas Constitution.  If this
5-60     Act does not receive the vote necessary for immediate effect, this
5-61     Act takes effect September 1, 2001.
5-62                                  * * * * *