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By: Homer, Laubenberg, Hegar H.B. No. 2912
A BILL TO BE ENTITLED
AN ACT
relating to industrial development corporations; providing a civil
penalty.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Sections 2(11)(A) and (C), Development
Corporation Act of 1979 (Article 5190.6, Vernon's Texas Civil
Statutes), are amended to read as follows:
(A) "Project" shall mean the land, buildings,
equipment, facilities, targeted infrastructure, and improvements
(one or more) that are [to promote new and expanded business
development or] found by the board of directors to be required or
suitable for the [promotion of] development, retention, or [and]
expansion of manufacturing and industrial facilities.
"Project" also includes[, job creation and
retention, job training, educational facilities,] research and
development facilities, transportation facilities (including but
not limited to airports, ports, mass commuting facilities, and
parking facilities), sewage or solid waste disposal facilities,
recycling facilities, air or water pollution control facilities,
[facilities for the furnishing of water to the general public,]
distribution centers, small warehouse facilities capable of
serving as decentralized storage and distribution centers, [and]
facilities for use by institutions of higher education, and
corporate headquarters facilities [for the promotion of
development or redevelopment and expansion, including costs of
administration and operation, of a military base closed or
realigned pursuant to recommendation of the Defense Closure and
Realignment Commission pursuant to the Defense Base Closure and
Realignment Act of 1990 (10 U.S.C. Section 2687 note) as amended,
and of facilities which are related to any of the foregoing, and in
furtherance of the public purposes of this Act, all as defined in
the rules of the department, irrespective of whether in existence
or required to be identified, acquired, or constructed thereafter].
"Project" also includes job training required or
suitable for the promotion of development and expansion of business
enterprises and other enterprises described by this Act, as
provided by Section 38 of this Act.
"Project" also includes expenditures found by the
board of directors to be required or suitable for infrastructure
necessary to promote or develop new or expanded business
enterprises that create or retain primary jobs, limited to streets
and roads, water and electric utilities, gas utilities, drainage
and related improvements, and telecommunications and Internet
improvements.
(C) As used in this Act, the term blighted or
economically depressed areas shall mean those areas and areas
immediately adjacent thereto within a city which by reason of the
presence of a substantial number of substandard, slum,
deteriorated, or deteriorating structures, or which suffer from a
high relative rate of unemployment, or which have been designated
and included in a tax incremental district created under Chapter
695, Acts of the 66th Legislature, Regular Session, 1979 (Article
1066d, Vernon's Texas Civil Statutes), or any combination of the
foregoing, the city finds and determines, after a hearing,
substantially impair or arrest the sound growth of the city, or
constitute an economic or social liability and are a menace to the
public health, safety, or welfare in their present condition and
use. The department shall adopt guidelines that describe the kinds
of areas that may be considered to be blighted or economically
depressed. The city shall consider these guidelines in making its
findings and determinations. Notice of the hearing at which the
city considers establishment of [a development area or] an
economically depressed or blighted area shall be posted at the city
hall before the hearing.
"Federally assisted new communities" shall mean
those federally assisted areas which have received or will receive
assistance in the form of loan guarantees under Title X of the
National Housing Act and a portion of the federally assisted area
has received grants under Section 107(a)(1) of the Housing and
Community Development Act of 1974, as amended.
SECTION 2. Section 2, Development Corporation Act of 1979
(Article 5190.6, Vernon's Texas Civil Statutes), is amended by
adding Subdivisions (17) and (18) to read as follows:
(17) "Primary job" means a job that is:
(A) available at a company for which a majority
of the products or services of that company are ultimately exported
to regional, statewide, national, or international markets
infusing new dollars into the local economy; and
(B) included in one of the following sectors of
the North American Industry Classification System (NAICS):NAICS Sector # Description
111 Crop Production
112 Animal Production
113 Forestry and Logging
11411 Commercial Fishing
115 Support Activities for Agriculture and
Forestry
211-213 Mining
221 Utilities
311-339 Manufacturing
42 Wholesale Trade
48-49 Transportation and Warehousing
51 (excluding 51213 Information (excluding movie theaters and
and 512132) drive-in theaters)
523-525 Securities, Commodity Contracts, and Other
Financial Investments and Related
Activities; Insurance Carriers and Related
Activities; Funds, Trusts, and Other
Financial Vehicles
5413, 5415, 5416, Scientific Research and Development
Services
5417, and 5419
551 Management of Companies and Enterprises
(18) "Corporate headquarters facilities" means
buildings proposed for construction and occupancy as the principal
office for a business enterprise's administrative and management
services.
SECTION 3. Section 3(b), Development Corporation Act of
1979 (Article 5190.6, Vernon's Texas Civil Statutes), is amended to
read as follows:
(b) This Act shall be [liberally] construed in conformity
with the intention of the legislature herein expressed.
SECTION 4. Section 4A(t), Development Corporation Act of
1979 (Article 5190.6, Vernon's Texas Civil Statutes), is amended to
read as follows:
(t) The department, with the assistance of the Texas
[Natural Resource Conservation] Commission on Environmental
Quality, may encourage the cleanup of contaminated property by
corporations created under this section through the use of sales
and use tax proceeds. A corporation created under this section may
use proceeds from the sales and use tax to undertake the cleanup of
contaminated property only if the use of tax proceeds for that
purpose is authorized by a majority of the qualified voters of the
city voting in an election called and held for that purpose. The
ballot in an election held under this subsection shall be printed to
provide for voting for or against the proposition: "The use of
sales and use tax proceeds for the cleanup of contaminated
property."
SECTION 5. Section 4A, Development Corporation Act of 1979
(Article 5190.6, Vernon's Texas Civil Statutes), is amended by
adding Subsections (u) and (v) to read as follows:
(u)(1) In this subsection:
(A) "Base taxable value" means the taxable value
of property located in the defined area of a project as of January 1
of the year in which the agreement is entered into under this
subsection.
(B) "Corresponding taxing unit" means another
taxing unit of the same type of political subdivision as a taxing
unit that enters into an agreement under this subsection.
(C) "Taxing unit" has the meaning assigned by
Section 1.04, Tax Code.
(2) Before entering into an agreement under this
subsection, the corporation undertaking the project must designate
a defined area that includes the territory where the project is to
be located.
(3) A taxing unit other than a school district may
enter into an agreement with a corporation created under this
section to invest in a project that is undertaken by the corporation
and that is not located in the territory of the taxing unit. A
corporation may enter into an agreement under this subsection with
more than one taxing unit.
(4) An agreement entered into under this subsection
shall state the base taxable value of the property in the defined
area of the project.
(5) The agreement may provide that the taxing unit is
entitled to receive from the corporation, in exchange for the
investment, an amount equal to a specified percentage of the tax
revenue from taxes imposed by the corresponding taxing unit that
taxes property located in the defined area of the project on the
taxable value of the property in the defined area that exceeds the
base taxable value, for as long as the corresponding taxing unit
imposes taxes on that property.
(6) If a corporation enters into an agreement under
this subsection, the corporation shall enter into an agreement with
a corresponding taxing unit that taxes property located in the
defined area of the project to recover the amount paid by the
corporation to a taxing unit as provided by Subdivision (5) of this
subsection.
(v)(1) In this subsection, "base taxable value" has the
meaning assigned by Subsection (u) of this section.
(2) Before entering into an agreement under this
subsection, the corporation undertaking the project must designate
a defined area that includes the territory where the project is to
be located.
(3) A corporation created under this section may enter
into an agreement with another corporation created under this
section to invest in a project undertaken by the other corporation.
(4) An agreement entered into under this subsection
shall state the base taxable value of the property in the defined
area that is taxable by the city that created the corporation
undertaking the project.
(5) The agreement may provide that the corporation
making the investment is entitled to receive from the city that
created the corporation undertaking the project, in exchange for
the investment, an amount equal to a specified percentage of the tax
revenue from taxes imposed by the city on the taxable value of the
defined area of the project that exceeds the base taxable value, for
as long as the city imposes taxes on that property.
SECTION 6. Section 4B(a)(2), Development Corporation Act of
1979 (Article 5190.6, Vernon's Texas Civil Statutes), is amended to
read as follows:
(2) "Project" means land, buildings, equipment,
facilities, expenditures, and improvements included in the
definition of that term under Section 2 of this Act, and includes
job training as provided by Section 38 of this Act. For purposes of
this section, the term includes recycling facilities, and land,
buildings, equipment, facilities, and improvements found by the
board of directors to:
(A) be required or suitable for use for
professional and amateur (including children's) sports, athletic,
entertainment, tourist, convention, and public park purposes and
events, including stadiums, ball parks, auditoriums,
amphitheaters, concert halls, [learning centers,] parks and park
facilities, open space improvements, [municipal buildings,]
museums, exhibition facilities, and related store, restaurant,
concession, and automobile parking facilities, related area
transportation facilities, and related roads, streets, and water
and sewer facilities, and other related improvements that enhance
any of those items;
(B) promote or develop new or expanded business
enterprises that create or retain primary jobs, including a project
to provide public safety facilities, streets and roads, drainage
and related improvements, demolition of existing structures,
general municipally owned improvements, as well as any improvements
or facilities that are related to any of those projects and any
other project that the board in its discretion determines promotes
or develops new or expanded business enterprises that create or
retain primary jobs;
(C) be required or suitable for the promotion of
development and expansion of affordable housing, as defined by 42
U.S.C. Section 12745;
(D) be required or suitable for the development
or improvement of water supply facilities, including dams,
transmission lines, well field developments, and other water supply
alternatives; [or]
(E) be required or suitable for the development
and institution of water conservation programs, including
incentives to install water-saving plumbing fixtures, educational
programs, brush control programs, and programs to replace
malfunctioning or leaking water lines and other water facilities;
(F) be required or suitable for infrastructure
necessary to promote or develop new or expanded business
enterprises, including streets and roads, water and electric
utilities, drainage and related improvements, and
telecommunications and Internet improvements; or
(G) be required for job training that is suitable
for job creation and retention.
SECTION 7. Section 4B(a-1), Development Corporation Act of
1979 (Article 5190.6, Vernon's Texas Civil Statutes), is amended to
read as follows:
(a-1)(1) A corporation may undertake a project under this
section other than a project described by Subsection (a)(2)(G) of
this section unless within 60 days after first publishing notice of
a specific project or type of general project other than a project
described by Subsection (a)(2)(G) of this section the governing
body of the city receives a petition from more than 10 percent of
the registered voters of the city where the petition requests that
an election be held before that specific project or that general
type of project is undertaken. An election is not required to be
held after the submission of a petition under this subdivision if
the qualified citizens of the city have previously approved the
undertaking of a specific project or that general type of project
that is the subject of the petition at an election called for that
purpose by the governing body of the city or in conjunction with
another election required to be held under this section.
(2) A corporation may not undertake a project
described by Subsection (a)(2)(G) of this section unless the
governing body of the city creating the corporation under this
section orders an election on the question of undertaking the
project and the majority of the votes cast at the election are in
favor of the undertaking.
SECTION 8. Section 4B(a-5), Development Corporation Act of
1979 (Article 5190.6, Vernon's Texas Civil Statutes), is amended to
read as follows:
(a-5) Notwithstanding any other provision of this section,
a corporation created under this section may use proceeds from the
sales and use tax to undertake a project described by Subsection
(a)(2)(D) or (E) of this section only if the use of tax proceeds for
that purpose is authorized by a majority of the qualified voters of
the city voting in an election called and held for that purpose.
The ballot in an [proposition at the] election held under this
subsection shall be printed to provide for voting for or against the
proposition: "The use of sales and use tax proceeds for
infrastructure relating to _______ (insert water supply
facilities or water conservation programs, as appropriate)." [to
adopt a sales and use tax under Subsection (d) of this section must
clearly describe the project to be undertaken by the corporation if
the project is described by Subsection (a)(2)(D) or (E) of this
section].
SECTION 9. Section 4B, Development Corporation Act of 1979
(Article 5190.6, Vernon's Texas Civil Statutes), is amended by
adding Subsection (a-6) to read as follows:
(a-6)(1) In this subsection, "land-locked community" means
a city that has within its city limits and extraterritorial
jurisdiction less than 500 acres that can be used for the
development of manufacturing or industrial facilities in
accordance with the zoning laws or land use restrictions of the
city.
(2) For a land-locked community that creates or has
created a corporation governed by this section, "project" also
includes expenditures found by the board of directors to be
required for the promotion of new or expanded business enterprises
and commercial activity within the land-locked community.
(3) A corporation may not undertake a project
described by Subdivision (2) of this subsection unless the
governing body of the land-locked community creating the
corporation under this section orders an election on the question
of undertaking the project and the majority of the votes cast at the
election are in favor of the undertaking.
SECTION 10. Section 4B(c), Development Corporation Act of
1979 (Article 5190.6, Vernon's Texas Civil Statutes), is amended to
read as follows:
(c) The board of directors of a corporation under this
section consists of seven directors who are appointed by the
governing body of the eligible city for two-year terms of office. A
director may be removed by the governing body of the eligible city
at any time without cause. Each director of a corporation created
by an eligible city with a population of 20,000 or more must be a
resident of the eligible city. Each director of a corporation
created by an eligible city with a population of less than 20,000
must be a resident of the eligible city, be a resident of [or] the
county in which the major part of the area of the eligible city is
located, or reside at a place that is within 10 miles of the
eligible city's boundaries and is in a county bordering the county
in which the major part of the area of the eligible city is located.
Three directors shall be persons who are not employees, officers,
or members of the governing body of the eligible city. A majority
of the entire membership of the board is a quorum. The board shall
conduct all meetings within the boundaries of the eligible city.
The board shall appoint a president, a secretary, and other
officers of the corporation that the governing body of the eligible
city considers necessary. The corporation's registered agent must
be an individual resident of the state and the corporation's
registered office must be within the boundaries of the eligible
city.
SECTION 11. Section 4B(p), Development Corporation Act of
1979 (Article 5190.6, Vernon's Texas Civil Statutes), is amended to
read as follows:
(p) The department, with the assistance of the Texas
[Natural Resource Conservation] Commission on Environmental
Quality, may encourage the cleanup of contaminated property by
corporations created under this section through the use of sales
and use tax proceeds. Notwithstanding any other provision of this
section, a corporation created under this section may use proceeds
from the sales and use tax to undertake the cleanup of contaminated
property only if the use of tax proceeds for that purpose is
authorized by a majority of the qualified voters of the city voting
in an election called and held for that purpose. The ballot in an
election held under this subsection shall be printed to provide for
voting for or against the proposition: "The use of sales and use
tax proceeds for the cleanup of contaminated property."
SECTION 12. The Development Corporation Act of 1979
(Article 5190.6, Vernon's Texas Civil Statutes) is amended by
adding Sections 40 and 41 to read as follows:
Sec. 40. DIRECT INCENTIVE PROVIDED TO BUSINESS ENTERPRISE.
(a) A corporation created under this Act may not provide a direct
incentive to or make an expenditure on behalf of a business
enterprise under a project as defined by Section 2 or 4B(a)(2) of
this Act unless the corporation enters into a performance agreement
with the business enterprise.
(b) A performance agreement between a corporation and
business enterprise, at a minimum, must provide for a schedule of
jobs and capital investment to be made or created as consideration
for any direct incentives provided or expenditures made by the
corporation under the agreement. The performance agreement must
also specify the terms under which repayment must be made if the
business enterprise fails to meet the performance requirements
specified in the agreement.
Sec. 41. REQUIREMENT FOR THIRD-PARTY CONTRACT FOR BUSINESS
RECRUITMENT OR DEVELOPMENT. (a) This section does not apply to a
payment to an employee of the corporation.
(b) A corporation organized under Section 4A or 4B of this
Act must enter into a written contract approved by the
corporation's board of directors in connection with the payment of
a commission, fee, or other compensation or thing of value to a
broker, agent, or other third party who is involved in business
recruitment or development.
(c) A corporation that violates Subsection (b) of this
section is liable to the state for a civil penalty in an amount not
to exceed $10,000.
(d) The attorney general may bring an action to recover the
civil penalty in a district court in Travis County or the county in
which the violation occurred.
SECTION 13. Section 2(11)(B), Development Corporation Act
of 1979 (Article 5190.6, Vernon's Texas Civil Statutes), is
repealed.
SECTION 14. The changes in law made by Sections 2 and
4B(a)(2), Development Corporation Act of 1979 (Article 5190.6,
Vernon's Texas Civil Statutes), as amended by this Act, apply only
to a project that is undertaken or approved, by an election or
otherwise, on or after the effective date of this Act. A project
that is undertaken or approved before the effective date of this Act
is governed by the law in effect on the date the project is
undertaken or approved, and the former law is continued in effect
for that purpose.
SECTION 15. 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.