78R1093 MXM-D
By: Bailey H.B. No. 2181
A BILL TO BE ENTITLED
AN ACT
relating to municipal development districts; providing civil and
criminal penalties.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. (a) Section 377.021, Local Government Code, is
amended by adding Subsection (h) to read as follows:
(h) The municipality shall file an order canvassing the
results of the election with the district records and with the
county clerk of each county in which the municipality is located.
The order must describe the district's boundaries. The county
clerk shall record the order.
(b) The changes made by this section to Section 377.021,
Local Government Code, apply only to an election that occurs on or
after the effective date of this section. An election that occurs
before the effective date of this section is governed by the law
applicable to the election immediately before the effective date of
this section, and that law is continued in effect for that purpose.
SECTION 2. (a) Subchapter B, Chapter 377, Local Government
Code, is amended by adding Section 377.023 to read as follows:
Sec. 377.023. POSTING SIGNS IN DISTRICT. (a) Not later
than the 30th day after the date the district is created, the
district shall post signs indicating the district's existence at
two principal entrances to the district.
(b) The board shall determine the information on and the
size and exact location of the signs.
(b) Section 377.023, Local Government Code, as added by this
section, takes effect September 1, 2003.
(c) A municipal development district created under Chapter
377, Local Government Code, before the effective date of this
section shall comply with Section 377.023, Local Government Code,
as added by this section, not later than January 1, 2004.
SECTION 3. Section 377.053, Local Government Code, is
amended to read as follows:
Sec. 377.053. BOARD MEETING PLACES; NOTICE [MEETINGS]. (a)
The board may designate one or more places inside or outside the
district for conducting board meetings.
(b) On written request of at least 25 qualified voters who
reside in the district, the board may meet only in the district for
the year after the date on which the board received the request.
(c) The board shall give notice of any meeting place outside
the district by filing a resolution establishing the location of
the meeting place with the governing body of the municipality in
which the district is located and by publishing notice of the
location in a newspaper of general circulation in the district. If
the location of a meeting place outside the district changes, the
board shall give notice in the same manner [shall conduct its
meetings in the municipality in which the district is located].
SECTION 4. (a) Chapter 377, Local Government Code, is
amended by adding Subchapter F to read as follows:
SUBCHAPTER F. AUDIT OF DISTRICT ACCOUNTS AND RECORDS
Sec. 377.151. DUTY TO AUDIT. (a) The board shall have the
district's fiscal accounts and records audited annually at the
expense of the district.
(b) The audit must be performed by a certified public
accountant or public accountant certified or licensed under Chapter
901, Occupations Code.
(c) The audit must be completed not later than the 120th day
after the last day of the district's fiscal year.
Sec. 377.152. FORM OF AUDIT. The audit shall be performed
according to the generally accepted auditing standards adopted by
the American Institute of Certified Public Accountants as of
January 1, 2003, or later standards adopted by the board under this
section. Financial statements shall be prepared in accordance with
the generally accepted accounting principles adopted by the
American Institute of Certified Public Accountants as of January 1,
2003, or later principles adopted by the board under this section.
The board shall consider later changes to the standards or
principles adopted by the institute and may adopt a standard or
principle if the board considers it reasonable.
Sec. 377.153. FINANCIAL REPORTS. (a) Any depository,
treasurer, or bookkeeper who receives or has control over any
district money shall keep a full and itemized account of that money.
(b) The depository, treasurer, and bookkeeper shall make
the itemized accounts available for audit.
Sec. 377.154. FILING OF AUDITS, AFFIDAVITS, AND FINANCIAL
REPORTS. (a) After the board approves the audit and not later than
the 135th day after the last day of the district's fiscal year, the
board shall file a copy of the audit report with the governing body
of the municipality in which the district is located and the
comptroller.
(b) If the board refuses to approve the audit report, the
board shall file a copy of the report with the governing body of the
municipality in which the district is located and the comptroller
not later than the 135th day after the last day of the district's
fiscal year. The report must be accompanied by a statement from the
board explaining the reasons for its failure to approve the report.
(c) A district shall file a copy of each audit report in the
district office.
(d) When the audit report is filed with the comptroller
under Subsection (a), the board shall file with the comptroller an
annual filing affidavit in a format prescribed by the comptroller.
The affidavit must be executed by an authorized representative of
the board and must state that all copies of the audit report have
been filed as required by this section.
Sec. 377.155. NONCOMPLIANCE; DUTY OF COMPTROLLER. The
comptroller shall file with the attorney general the names of any
districts that do not comply with this subchapter.
(b) A municipal development district shall have an annual
audit performed as required by Subchapter F, Chapter 377, Local
Government Code, as added by this section, only for each fiscal year
that begins on or after the effective date of this section.
SECTION 5. (a) Chapter 377, Local Government Code, is
amended by adding Subchapter G to read as follows:
SUBCHAPTER G. NOTICE OF DISTRICT TO PURCHASERS OF REAL PROPERTY;
FILING OF INFORMATION
Sec. 377.201. NOTICE TO PURCHASERS. (a) If a person
proposes to sell real property located in a district that is
acquiring or planning to acquire a project that has been financed or
is proposed to be financed with district bonds payable wholly or
partly from district taxes, the person must give to the purchaser
written notice as prescribed by this section. An executory
contract that has a performance period of more than six months is
considered a sale of real property under this section.
(b) This section does not apply to a transfer of title:
(1) under any type of lien foreclosure;
(2) by deed in cancellation of indebtedness secured by
a lien on the property conveyed;
(3) by reason of a will or probate proceedings; or
(4) to a governmental entity.
(c) The notice must be executed by the seller and read:
"The real property, described below, that you are about to
purchase is located in the ______ District. The district has taxing
authority separate from any other taxing authority and may, subject
to voter approval, issue an unlimited amount of bonds and impose a
sales and use tax in payment of such bonds. As of this date, the
rate of the sales and use tax imposed by the district is _______
(one-eighth of one percent, one-fourth of one percent,
three-eighths of one percent, or one-half of one percent, as
applicable). If the district has not yet imposed taxes, the most
recent projected rate of tax, as of this date, is ______ (one-eighth
of one percent, one-fourth of one percent, three-eighths of one
percent, or one-half of one percent, as applicable). The total
amount of bonds, excluding refunding bonds and any bonds or any
portion of bonds issued that are payable solely from revenues
received or expected to be received under a contract with a
governmental entity, approved by the voters and that have been or
may be issued at this date is $__________, and the aggregate initial
principal amounts of all bonds issued for one or more of the
projects of the district and payable wholly or partly from sales and
use taxes is $__________.
"The district is located in the corporate boundaries of
_________. The taxpayers of the district are subject to the taxes
imposed by the municipality and by the district until the district
is dissolved.
"The purpose of this district is to undertake development
projects beneficial to the district through the issuance of bonds
payable wholly or partly from sales and use taxes. The cost of the
facilities built or maintained for this purpose is not included in
the purchase price of the property you are purchasing, and these
facilities are owned or to be owned by the district. The legal
description of the property you are purchasing is:
_______________(date)
________________________________________Signature of Seller
"PURCHASER IS ADVISED THAT THE INFORMATION SHOWN ON THIS FORM
IS SUBJECT TO CHANGE BY THE DISTRICT AT ANY TIME. THE DISTRICT
ROUTINELY ESTABLISHES TAX RATES DURING THE MONTHS OF SEPTEMBER
THROUGH DECEMBER OF EACH YEAR, EFFECTIVE FOR THE YEAR IN WHICH THE
TAX RATES ARE APPROVED BY THE DISTRICT. PURCHASER IS ADVISED TO
CONTACT THE DISTRICT TO DETERMINE THE STATUS OF ANY CURRENT OR
PROPOSED CHANGES TO THE INFORMATION SHOWN ON THIS FORM.
"The undersigned purchaser acknowledges receipt of this
notice at or before the execution of the contract to purchase the
real property described in the notice or at closing of purchase of
the real property.
_______________(date)
____________________________________Signature of Purchaser
"(Note: Correct district name, tax rate, bond amounts, and
legal description are to be placed in the appropriate space.)
Except for notices included as an addendum or paragraph of a
purchase contract, the notice shall be executed by the seller and
purchaser, as indicated. If the district has not yet imposed taxes,
a statement of the district's most recent projected rate of tax is
to be placed in the appropriate space. For the purposes of the
notice form required to be given to the prospective purchaser
before execution of the contract, a seller and any agent,
representative, or person acting on the seller's behalf may modify
the notice by substitution of the words 'January 1, ___' for the
words 'this date' and place the correct calendar year in the
appropriate space."
(d) If the law relating to district dissolution is amended
and causes inaccuracies in the content of the notice prescribed by
this section, the district shall revise the content of the notices
to accurately reflect the changes in the law.
Sec. 377.202. TIMING OF NOTICE. (a) The notice required by
Section 377.201 must be given to the prospective purchaser before
the execution of the contract. The notice may be given separately
or as an addendum or paragraph to the contract.
(b) If the seller fails to provide the notice required by
Section 377.201, the purchaser may terminate the contract.
(c) If the seller provides the notice at or before the
closing of the contract and the purchaser elects to close even
though the notice was not timely provided before the execution of
the contract, it is conclusively presumed that the purchaser has
waived all rights to terminate the contract and recover damages or
pursue other remedies or rights under this subchapter.
Sec. 377.203. SIGNATURE OF PURCHASER. The purchaser shall
sign the notice required by Section 377.201 or the contract that
includes the notice to evidence the purchaser's receipt of the
notice.
Sec. 377.204. RECORDING OF NOTICE. (a) At the closing of
the contract, the seller and purchaser shall execute and
acknowledge a separate copy of the notice required by Section
377.201 containing information that is accurate at the time of the
closing and shall record the copy of the notice in the deed records
of each county in which the property is located.
(b) In completing the notice to be executed by the seller
and purchaser at the closing of the contract, a seller, title
company, real estate broker, or examining attorney, and any agent,
representative, or person acting on behalf of the seller, company,
broker, or attorney, may rely on the accuracy of the information
form and map or plat that is last filed by the district under
Section 377.210.
(c) Any information taken from the information form and map
or plat filed by the district under Section 377.210 is conclusively
presumed to be correct as a matter of law for purposes of this
section.
Sec. 377.205. MODIFICATION OF NOTICE. (a) A seller and any
agent, representative, or person acting on the seller's behalf may
modify the notice prescribed by Section 377.201 by substituting the
words "January 1, ___" for the words "this date" and placing the
correct calendar year in the appropriate space.
(b) Except as otherwise provided in Section 377.204, any
information taken from the information form and map or plat filed by
the district in effect as of January 1 of each year is conclusively
presumed as a matter of law to be correct for the period beginning
January 1 and ending December 31 of the same calendar year, for
purposes of the notice to be given to the prospective purchaser
before the execution of the contract.
(c) A seller and any person completing the prescribed notice
on the seller's behalf may provide on the prescribed notice form any
available information that is more recent than the information
contained in the information form and map or plat filed of record by
the district under Section 377.210 in effect as of January 1 of each
year.
(d) Subsection (c) does not create an affirmative duty on
the part of a seller or any person completing the prescribed notice
on the seller's behalf to provide on the prescribed notice form more
recent information than the information taken from the information
form and map or plat filed of record by the district in effect as of
January 1 of each year.
Sec. 377.206. RELIANCE ON INFORMATION FORM AND MAP OR PLAT
FILED BY DISTRICT. (a) In completing the notice required to be
given to a prospective purchaser before the execution of the
contract, a seller, title insurance company, examining attorney,
vendor of property and tax information, real estate broker, or
lienholder, and any agent, representative, or person acting on
behalf of the seller, company, attorney, vendor, broker, or
lienholder, may rely on the information contained in the
information form and map or plat filed of record by the district in
effect as of January 1 of each year. Any seller, purchaser, title
insurance company, real estate broker, examining attorney, or
lienholder may rely on the information form and map or plat filed by
the district.
(b) If the notice is given at closing as provided by this
subchapter, a purchaser, or the purchaser's heirs, successors, or
assigns, may not maintain an action, including an action for
damages, against a seller, title insurance company, real estate
broker, or lienholder, or any agent, representative, or person
acting on behalf of the seller, company, broker, or lienholder,
because of the seller's use of the information filed of record by
the district or the seller's reliance on the filed plat and filed
legal description of the district to determine whether the property
to be purchased is in the district.
(c) An action may not be maintained against a title company
for the failure to disclose that the described real property is
included in a district if the district did not file for record the
information form and map or plat with the county clerk.
Sec. 377.207. WAIVER OF DAMAGES. A purchaser who purchases
real property in a district and who later sells the property is
conclusively considered on the closing of the sale to have waived
any prior right to damages under this subchapter.
Sec. 377.208. SUIT FOR DAMAGES. (a) Except as otherwise
provided in Section 377.209, if a sale of real property in a
district fails to comply with this subchapter, the purchaser may
file a suit for:
(1) the amount of all costs related to the purchase of
the property plus interest and reasonable attorney's fees; or
(2) an amount not to exceed $5,000 plus reasonable
attorney's fees.
(b) A suit for damages under Subsection (a)(1) may be filed
jointly or severally against the individual or entity that sold the
property to the purchaser. Following the recovery of damages under
Subsection (a)(1), the amount of the damages shall be paid first to
satisfy all unpaid obligations on each outstanding lien on the
property and the remainder of the damage amount shall be paid to the
purchaser. On payment of all damages recovered under Subsection
(a)(1) to each lienholder and the purchaser, the purchaser shall
reconvey the property to the seller.
(c) A purchaser may not recover damages under both
Subsections (a)(1) and (a)(2). An entry of a final decision
awarding damages to the purchaser under either Subsection (a)(1) or
(a)(2) precludes the purchaser from recovering damages under the
other subsection.
(d) The relief provided under Subsection (a) provides the
exclusive remedies for a purchaser aggrieved by the seller's
failure to comply with this subchapter.
(e) An action for damages under this section does not apply
to change the validity of any existing vendor's lien, mechanic's
lien, or deed of trust lien on the property.
(f) A suit for damages under this section must be filed on or
before the fourth anniversary of the date on which the property is
sold to the purchaser. If a purchaser does not bring suit on or
before that anniversary, the purchaser may not recover damages
under this section.
(g) A purchaser may not recover damages under this section
if the person:
(1) purchases an equity interest in real property and,
in conjunction with the purchase, assumes any liens, including a
purchase money lien; and
(2) does not require proof of title by abstract, title
policy, or any other proof of title.
Sec. 377.209. EXEMPTION FROM DAMAGES. A seller, title
company, real estate broker, or examining attorney, and an agent,
representative, or person acting on behalf of the seller, company,
broker, or attorney, is not liable for damages under Section
377.208 or liable for any other damages to any person for:
(1) failing to provide the notice required by Section
377.201 to a purchaser before the execution of the contract, or at
or before the closing of the contract, if the district did not file
the information form and map or plat as required under Section
377.210; or
(2) unintentionally providing a notice required by
Section 377.201 that is incorrect under the circumstances before
the execution of the contract or at or before the closing of the
contract.
Sec. 377.210. FILING INFORMATION; PENALTIES. (a) The
board shall file with the county clerk of each county in which the
district is located an affirmed and acknowledged information form
that includes the information required in Subsection (b) and a
complete map or plat that describes the district boundaries.
(b) The information form filed by a district under this
section shall include:
(1) the district name;
(2) the complete legal description of the district
boundaries;
(3) the most recent rate of sales and use taxes imposed
by the district;
(4) the total amount of bonds that have been approved
by the voters and that may be issued by the district, excluding
refunding bonds and any bonds or portion of bonds payable solely
from revenues received or expected to be received under a contract
with a governmental entity;
(5) the aggregate initial principal amount of all
bonds of the district payable wholly or partly from taxes,
excluding refunding bonds and any bonds or portion of bonds payable
solely from revenues received or expected to be received under a
contract with a governmental entity, that have been previously
issued;
(6) the date on which the election to confirm the
creation of the district was held;
(7) a statement of the functions performed or to be
performed by the district; and
(8) the notice to purchasers form required by Section
377.201 to be furnished by a seller to a purchaser of real property
in the district, completed by the district with all the information
required to be furnished by the district.
(c) If a district has not imposed taxes when the district
files the information form under this section, the district shall
substitute for Subsections (b)(3) and (b)(5) a statement that the
district has not imposed taxes at the time of filing that includes
the district's most recent projected rate of debt service tax.
(d) The information form and map or plat required by this
section must be signed by a majority of the directors and affirmed
and acknowledged by each director who signed the form and map or
plat before it is filed with the county clerk. Each amendment made
to an information form, map, or plat must be signed by the directors
and affirmed and acknowledged by each director who signed the form
and map or plat before it is filed with the county clerk.
(e) The information form required by this section must be
filed with the county clerk not later than the second day after the
date on which the results of the confirmation election are
declared.
(f) If there is a change in any of the information contained
in the district information form, map, or plat, the district shall
file an amendment to the information form, map, or plat setting
forth the changes made not later than the seventh day after the
change in information.
(g) A person commits an offense if the person affirms the
accuracy of and acknowledges an information form, map, or plat, or
any amendment to an information form, map, or plat that includes
inaccurate information. An offense under this subsection is a
Class C misdemeanor.
(h) If a district fails to timely file the information
required by this section, the attorney general or the district or
county attorney of a county in which the district is located may
seek a writ of mandamus to require the board to prepare and file the
necessary information.
(i) A director commits an offense if the director wilfully
fails to join in filing an information form, map, or plat or an
amendment to an information form, map, or plat under this section.
An offense under this subsection is a Class C misdemeanor. A
director is presumed to have wilfully failed to join in the filing
of an information form, map, or plat or an amendment to an
information form, map, or plat if that director was present at the
meeting at which the information included in the information form,
map, or plat or amendment to the information form, map, or plat was
adopted and the director did not sign the information form, map, or
plat, or amendment to the information form, map, or plat.
Sec. 377.211. ADDITIONAL FILING ON DISSOLUTION. (a) If a
district is dissolved or is consolidated with another district, the
board shall file with the information form a statement that the
district is being dissolved or consolidated that includes the
effective date of the dissolution or consolidation.
(b) After a district is dissolved and the statement is filed
under this section, a person who sells property in the dissolved
district is not required to give notice under this subchapter.
(b) The change in law made by Subchapter G, Chapter 377,
Local Government Code, as added by this section, applies only to a
transfer of property that occurs on or after the effective date of
this section. For purposes of this subsection, a transfer of
property occurs before the effective date of this section if the
contract of purchase and sale binding the purchaser to purchase the
property was executed before that date. Property transferred
before the effective date of this section is covered by the law in
effect when the property was transferred, and the former law is
continued in effect for that purpose.
(c) A municipal development district created before the
effective date of this section shall file an information form as
required by Section 377.210, Local Government Code, as added by
this section, not later than September 3, 2003.
SECTION 6. This Act takes effect immediately if it receives
a vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect September 1, 2003.