C.S.S.B. 1565 78(R)    BILL ANALYSIS


C.S.S.B. 1565
By: Madla
Local Government Ways and Means
Committee Report (Substituted)


BACKGROUND AND PURPOSE 

Currently, Texas law provides for the creation of municipal management
districts to include 
areas within the corporate limits of a municipality. In the years since
the passage of the Defense 
Base Realignment and Closure Act, areas in and around former defense bases
have faced 
considerable challenges to economic development. For a municipality that
plans to annex such 
an area, the creation of a defense adjustment management authority with
the power to develop 
infrastructure and other projects, will advance the economic development
of the area and provide 
for a better transition to annexation. C.S.S.B. 1565 lays out certain
findings of the legislature 
and provides for the creation, governance, and dissolution of a defense
adjustment management 
authority (authority). This bill also creates a structure to address
issues, including taxation, 
annexation, and elections, within the authority.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any
additional rulemaking authority to a state officer, department, agency, or
institution. 

ANALYSIS

SECTION 1. Amends Chapter 375, Local Government Code, by adding Subchapter
O, as 
follows:

SUBCHAPTER O. DEFENSE ADJUSTMENT MANAGEMENT AUTHORITY

Sec. 375.301. LEGISLATIVE FINDINGS; PURPOSES. (a) Sets forth certain
findings 
of the legislature.

(b) Provides that the programs authorized by this subchapter are in the
public 
interest, promote the state's economic welfare, and serve the public
purpose of 
developing and diversifying the economy of this state and eliminating
unemployment and underemployment in this state.

Sec. 375.302. CONSTRUCTION OF SUBCHAPTER. (a) Requires this subchapter to
be liberally construed in conformity with the findings and purposes stated
in Section 
375.301.

(b) Provides that except as provided by this subchapter, the other
provisions of 
this chapter apply to an authority created under this subchapter.

Sec. 375.303. DEFINITIONS. Defines "authority" and "eligible project."

Sec. 375.304. ELIGIBILITY FOR CREATION BY MUNICIPALITY. (a) Authorizes
the governing body of a municipality, by resolution or ordinance, to
create a defense 
adjustment management authority (authority) in an area that meets certain
criteria. 

(b) Provides that Subchapter B (Creation of District), Local Government
Code, 
and Sections 375.041 (Commission Order) and 375.042 (Mistake in Boundary
Description), Local Government Code, do not apply to this subchapter.

 Sec. 375.305. HEARING ON CREATION OF AUTHORITY. (a) Requires the
governing body of a municipality to hold two public hearings to consider
the creation of 
the proposed authority, not earlier than the 60th day or later than the
30th day before the 
date the governing body of a municipality creates the authority. Requires
the 
municipality to publish notice of each public hearing in a newspaper of
general 
circulation in the area of the proposed authority at least seven days
before each public 
hearing.

(b) Sets forth the required content of the notice required by Subsection
(a). 

Sec. 375.306. BOARD OF DIRECTORS. (a) Provides that the board consists of
15 
directors.

(b) Requires the municipality to appoint six members of the board.

(c) Requires the county in which the municipality is primarily located to
appoint 
six members of the board.

(d) Requires school districts whose boundaries overlap with an authority to
collectively appoint three members of the board.

(e) Provides that directors are appointed for two-year terms. Authorizes
the terms 
to be staggered and directors to serve successive terms.

(f) Provides that a vacancy on the board is filled for the unexpired term
by the 
governing body of the entity that appointed the director who served in the
vacant 
position.

(g) Requires the mayor of the municipality and the county judge of the
county in 
which the authority is primarily located to appoint, alternately, one
director to 
serve as presiding officer, with the first appointment to be made by the
mayor of 
the municipality. Requires the presiding officers to serve a four-year
term, 
beginning on January 1 of the year following the appointment. Authorizes
the 
board to elect an assistant presiding officer to preside in the presiding
officer's 
absence, or when there is a vacancy in that office. Authorizes the board
to elect 
other officers as it considers appropriate.

(h) Provides that Sections 375.061 (Number of Directors; Terms), 375.066
(Board 
Vacancy), and 375.068 (Officers), and the limitations of Section 375.072
(c) 
(Participation in Voting), Local Government Code, do not apply to this
subchapter.

Sec. 375.307. QUALIFICATIONS OF DIRECTORS. (a) Provides that except as
provided by Subsection (b), a majority of the directors of an authority
must meet the 
qualifications of Section 375.063 (Qualifications of Director), Local
Government Code. 

(b) Authorizes representatives or agents of a school district whose
boundaries 
overlap with an authority, or of an institution of higher education that
operates 
facilities within an authority, to serve on the board.

Sec. 375.308. POWERS OF THE AUTHORITY; MUNICIPALITY. (a) Sets forth the
powers of an authority.

(b) Prohibits an authority from taking certain actions.

(c) Prohibits a municipality from seeking a charter for or operating an
openenrollment 
charter school authorized by Subchapter D, Chapter 12 (Open-
Enrollment Charter School), Education Code, within the boundaries of the
authority.
 
Sec. 375.309. MUNICIPAL ANNEXATION OF AREA IN AN AUTHORITY. (a)
Authorizes a municipality that creates an authority under this subchapter
to annex all or 
part of the territory located in the authority under Chapter 43 (Municipal
Annexation), 
Local Government Code.
(b) Provides that annexation of territory located in the authority does
not affect the 
operation of the authority.

(c) Provides that creation of an authority does not affect certain
functions in or of 
a municipality.

Sec. 375.310. AUTHORITY MASTER PLAN. (a) Authorizes an authority only to
develop or construct public improvements of eligible projects in areas
designated in an 
authority master plan approved by the board and the governing body of the
municipality 
that created the authority.

(b) Requires the authority master plan to include information required for
a 
municipal reinvestment zone under Sections 311.011(b) and (c) (Project and
Financing Plans), Tax Code, for the area of the authority. Provides that
for the 
purposes of applying those sections, the area of the authority affected
constitutes a 
zone.

(c) Requires the authority to generate the authority master plan based on
economic 
development needs of the property owners and constituents in the authority.

(d) Requires the authority, after approval by the board, to submit the
authority 
master plan to the municipality for approval. Requires the municipality,
before 
taking action to approve or reject the authority master plan, to make a
copy of the 
proposed authority master plan available to the public and hold hearings
and 
publish notice of the hearings in the manner required by Section 375.305.
Requires the notice of the public hearings to state where a copy of the
proposed 
authority master plan is available for inspection.

(e) Authorizes the board to amend and submit the approved authority master
plan 
to the governing body of the municipality for approval.

(f) Requires the municipality, before approving the authority's master
plan, to 
publish notice and hold hearings as required by Subsection (d).

(g) Requires the municipality to approve the authority master plan before
granting powers under Chapter 311 or Chapter 312, Tax Code.   A county
making appointments under Section 375.306 may not exercise the powers
granted under Chapter 312, Tax Code, until the municipality approves the
authority master plan.   

Sec. 375.311. SALES AND USE TAX. (a) Authorizes an authority to impose a
sales 
and use tax to support or finance public infrastructure projects and
eligible projects 
authorized under this subchapter if the tax is authorized by a majority of
the qualified 
voters of the authority voting at an election held for that purpose in the
manner provided 
by Sections 375.241 (Time of Election) and 375.242 (Election Called by
Board), Local 
Government Code.

(b) Provides that if an authority adopts the tax authorized by Subsection
(a), a tax 
is imposed on the receipts from the retail sale of taxable items within
the authority 
at the rate approved by the voters. Requires the rate to be equal to
one-eighth, 
one-fourth, three-eighths, or one-half of one percent.

(c) Provides that Chapter 321 (Municipal Sales and Use Tax Act), Tax Code,
governs the imposition, computation, administration, governance, and
abolition of 
a tax imposed under this section.

 (d) Provides that if any territory in the authority is annexed by the
municipality, 
the municipality's sales and use tax applies in the annexed area. Provides
that if 
the authority's sales and use tax rate, when combined with any other sales
and use 
tax applicable in the authority exceeds two percent, then the authority's
sales and 
use tax is abolished upon annexation.

Sec. 375.312. ZONING AND PLANNING. (a) Provides that an authority created
under 
this subchapter has the power of a municipality under Chapters 211
(Municipal Zoning 
Authority) and 212 (Municipal Regulation of Subdivisions and Property
Development), 
Local Government Code, in an area of the authority that is in the
boundaries of the 
municipality's limited purpose jurisdiction. Provides that on a
municipality's annexation 
of an area of the authority, the authority's power to regulate the area
under Chapters 211 
(Municipal Zoning Authority) and 212 (Municipal Regulation of Subdivisions
and 
Property Development), Local Government Code, expires.

(b) Authorizes the board to divide the authority into distinct areas as
provided by 
Section 211.005 (Districts), Local Government Code, to accomplish the
purposes 
of this chapter and Chapter 211 (Municipal Zoning Authority), Local
Government 
Code.

Sec. 375.313. REGIONAL DEVELOPMENT AGREEMENTS. (a) Authorizes an
authority to enter into regional development agreements with certain
entities for certain 
purposes.

(b) Authorizes certain entities, whose boundary overlaps with a portion of
an 
authority, to enter into certain agreements.

(c) Requires any agreement entered into with a school district under this
section to 
be designed to require that the school district funding under Title 2
(Public 
Education), Education Code, not be less than the school district would have
received had the school district not entered into the agreement.
Authorizes a 
school district board of trustees to waive this provision by specific
action 
suspending the provisions of this subsection.

Sec. 375.314. DISSOLUTION OF THE AUTHORITY. (a) Authorizes the governing
body of the municipality that created an authority under this subchapter
to dissolve the 
authority.

(b) Requires the municipality to publish notice and hold public hearings
on the 
proposed dissolution, before dissolution, as provided in Section 375.305.

(c) Requires the municipality to assume the assets, debts, and other
obligations of 
the authority, upon dissolution.

(d) Provides that Subchapter M (Dissolution), Local Government Code, does
not 
apply to this subchapter.

SECTION 2. Effective date: upon passage or September 1, 2003.

EFFECTIVE DATE

Upon passage or September 1, 2003.

COMPARISON OF ORIGINAL TO SUBSTITUTE

The substitute requires the municipality to approve the authority master
plan before granting powers under  Chapter 311 or Chapter 312, Tax Code.
A county making appointments under Section 375.306 may not exercise the
powers granted under Chapter 312, Tax Code, until the municipality
approves the authority master plan.