By Carona                                             S.B. No. 1044
         77R4026 ATP-D                           
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to the ability of a development corporation to receive
 1-3     funding from a municipality.
 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-5           SECTION 1.  Section 380.002, Local Government Code, is
 1-6     amended by amending Subsection (b) and adding Subsection (c) to
 1-7     read as follows:
 1-8           (b)  A home-rule municipality with a population of more than
 1-9     100,000 may, under a contract with a development corporation
1-10     created by the municipality under the Development Corporation Act
1-11     of 1979 (Article 5190.6, Vernon's Texas Civil Statutes), grant
1-12     public money to the corporation.  The development corporation may
1-13     use the grant money for the development and diversification of the
1-14     economy of the state, elimination of unemployment or
1-15     underemployment in the state, and development and expansion of
1-16     commerce in the state.
1-17           (c)  The funds granted by the municipality under this section
1-18     shall be derived from any source lawfully available to the
1-19     municipality under its charter or other law, other than from the
1-20     proceeds of bonds or other obligations of the municipality payable
1-21     from ad valorem taxes.
1-22           SECTION 2.  Sections 21 and 22, Development Corporation Act
1-23     of 1979 (Article 5190.6, Vernon's Texas Civil Statutes), are
1-24     amended to read as follows:
 2-1           Sec. 21. Every unit is hereby authorized to utilize a
 2-2     corporation to issue bonds on its behalf to finance the cost of
 2-3     projects, including projects in federally designated empowerment
 2-4     zones and enterprise communities or enterprise zones designated
 2-5     under the Texas Enterprise Zone Act, to promote and develop new and
 2-6     expanded business enterprises to promote and encourage employment
 2-7     and the public welfare.  No unit is or shall be authorized to lend
 2-8     its credit or grant any public money or thing of value in aid of a
 2-9     corporation, except that a city may grant public money to a
2-10     corporation under a contract authorized by Section 380.002, Local
2-11     Government Code.  The unit will approve all programs and
2-12     expenditures of the corporation and annually review any financial
2-13     statements of the corporation, and at all times the unit will have
2-14     access to the books and records of the corporation.
2-15           Sec. 22. Bonds issued under the provisions of this Act shall
2-16     be deemed not to constitute a debt of the state, of the unit, or of
2-17     any other political corporation, subdivision, or agency of this
2-18     state or a pledge of the faith and credit of any of them, but such
2-19     bonds shall be payable solely from the funds herein provided
2-20     therefor from revenues.  All such revenue bonds shall contain on
2-21     the face thereof a statement to the effect that neither the state,
2-22     the unit, nor any political corporation, subdivision, or agency of
2-23     the state shall be obligated to pay the same or the interest
2-24     thereon and that neither the faith and credit nor the taxing power
2-25     of the state, the unit, or any other political corporation,
2-26     subdivision, or agency thereof is pledged to the payment of the
2-27     principal of or the interest on such bonds. The corporation shall
 3-1     not be authorized to incur financial obligations which cannot be
 3-2     paid from proceeds of the bonds, [or] from revenues realized from
 3-3     the lease or sale of a project or realized from a loan made by the
 3-4     corporation to finance or refinance in whole or in part a project,
 3-5     or from revenues from a contract with a city under Section 380.002,
 3-6     Local Government Code.  The corporation when established and
 3-7     created pursuant to the terms of the Act shall be a constituted
 3-8     authority and an instrumentality (within the meaning of those terms
 3-9     in the regulations of the treasury and the rulings of the Internal
3-10     Revenue Service prescribed and promulgated pursuant to Section 103
3-11     of the Internal Revenue Code of 1954, as amended) and shall be
3-12     authorized to act on behalf of the unit under whose auspices it is
3-13     created for the specific public purpose or purposes authorized by
3-14     such unit; but the corporation is not intended to be and shall not
3-15     be a political subdivision or a political corporation within the
3-16     meaning of the constitution and the laws of the state, including
3-17     without limitation Article III, Section 52, of the Texas
3-18     Constitution, and a unit shall never delegate to a corporation any
3-19     of such unit's attributes of sovereignty, including the power to
3-20     tax, the power of eminent domain, and the police power.
3-21           SECTION 3.  This Act takes effect immediately if it receives
3-22     a vote of two-thirds of all the members elected to each house, as
3-23     provided by Section 39, Article III, Texas Constitution.  If this
3-24     Act does not receive the vote necessary for immediate effect, this
3-25     Act takes effect September 1, 2001.