By: Jackson S.B. No. 77
(In the Senate - Filed July 7, 2005; July 8, 2005, read
first time and referred to Committee on Intergovernmental
Relations; July 14, 2005, reported adversely, with favorable
Committee Substitute by the following vote: Yeas 5, Nays 0;
July 14, 2005, sent to printer.)
COMMITTEE SUBSTITUTE FOR S.B. No. 77 By: Deuell
A BILL TO BE ENTITLED
AN ACT
relating to the creation of municipal management districts by
certain small municipalities; providing authority to impose an
assessment or sales and use tax, and to issue bonds.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subtitle A, Title 12, Local Government Code, is
amended by adding Chapter 375A to read as follows:
CHAPTER 375A. MUNICIPAL MANAGEMENT DISTRICTS IN CERTAIN SMALL
MUNICIPALITIES
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 375A.001. DEFINITIONS. In this chapter:
(1) "Board" means the board of directors of a
district.
(2) "County" means the county in which a district is
created.
(3) "District" means a district created under this
chapter.
(4) "Municipality" means the municipality that
created the district.
Sec. 375A.002. APPLICABILITY. This chapter applies only to
a home-rule or a Type A general-law municipality with a population
of 5,000 or less that is located in:
(1) a county with a population of 3.3 million or more;
or
(2) a county with a population of more than 800,000 and
less than one million.
Sec. 375A.003. CREATION; INITIAL DISTRICT NAME AND
TERRITORY. (a) The governing body of a municipality may adopt an
ordinance or resolution to create a district under this chapter.
(b) The ordinance or resolution must:
(1) name the district; and
(2) define the boundaries of the district to include
all or part of the incorporated territory or extraterritorial
jurisdiction of the municipality, except that the boundaries of a
district may not include single-family detached residences or
residential duplexes, triplexes, or fourplexes.
Sec. 375A.004. MISTAKE IN BOUNDARY DESCRIPTION. A mistake
in the field notes in the municipal ordinance or resolution
creating the district or in copying the field notes of district
boundaries does not in any way affect the district's:
(1) organization, existence, or validity;
(2) right to issue any type of bond for a purpose for
which the district is created or to pay the principal of and
interest on the bond;
(3) right to impose or collect an assessment or tax; or
(4) legality or operation.
Sec. 375A.005. ELIGIBILITY FOR INCLUSION IN SPECIAL ZONES.
All or any part of the area of the district is eligible to be
included in:
(1) a tax increment reinvestment zone created by a
municipality under Chapter 311, Tax Code;
(2) a tax abatement reinvestment zone created by a
municipality under Chapter 312, Tax Code; or
(3) an enterprise zone created by a municipality under
Chapter 2303, Government Code.
Sec. 375A.006. APPLICABILITY OF OTHER MUNICIPAL MANAGEMENT
DISTRICTS LAW. Except as otherwise provided by this chapter,
Subchapters A and C-N, Chapter 375, apply to a district.
[Sections 375A.007-375A.050 reserved for expansion]
SUBCHAPTER B. BOARD OF DIRECTORS
Sec. 375A.051. BOARD OF DIRECTORS; TERMS. (a) A district
is governed by a board of seven voting directors who serve staggered
terms of four years, with three or four directors' terms expiring
June 1 of each odd-numbered year.
(b) The governing body of the municipality may change the
number of voting directors on the board. The board may not consist
of fewer than five or more than 15 voting directors.
Sec. 375A.052. APPOINTMENT OF DIRECTORS. (a) The mayor
and members of the governing body of the municipality shall appoint
the district's voting directors. A person is appointed if a
majority of the members of the governing body, including the mayor,
vote to appoint that person.
(b) Section 375.063 does not apply to a district.
Sec. 375A.053. NONVOTING DIRECTORS. (a) The following
persons serve as a district's nonvoting directors:
(1) the presiding officer of the municipality's
planning and zoning commission;
(2) the municipality's director of public works; and
(3) the municipality's chief of police.
(b) If a department described by Subsection (a) is
consolidated, renamed, or changed, a board may appoint a director
of the consolidated, renamed, or changed department as a nonvoting
director. If a department described by Subsection (a) is
abolished, the board may appoint a representative of another
department that performs duties comparable to those performed by
the abolished department.
Sec. 375A.054. QUORUM. For purposes of determining the
requirements for a quorum, the following are not counted:
(1) a board position vacant for any reason, including
death, resignation, or disqualification;
(2) a director who is abstaining from participation in
a vote because of a conflict of interest; or
(3) a nonvoting director.
Sec. 375A.055. INITIAL VOTING DIRECTORS. (a) The mayor
and members of the governing body of the municipality shall appoint
the district's initial seven voting directors by position.
(b) Of the initial voting directors, the terms of directors
appointed for positions 1 through 4 expire the first June 1 of an
odd-numbered year following the appointment, regardless of whether
the appointment occurred in an odd-numbered year, and the terms of
directors appointed for positions 5 through 7 expire June 1 of the
next odd-numbered year.
[Sections 375A.056-375A.100 reserved for expansion]
SUBCHAPTER C. POWERS AND DUTIES
Sec. 375A.101. ADDITIONAL POWERS OF DISTRICT. A district
may exercise the powers given to:
(1) a corporation under Section 4B, Development
Corporation Act of 1979 (Article 5190.6, Vernon's Texas Civil
Statutes), including the power to own, operate, acquire, construct,
lease, improve, or maintain a project described by that section;
and
(2) a housing finance corporation under Chapter 394,
Local Government Code, to provide housing or residential
development projects in the district.
Sec. 375A.102. NONPROFIT CORPORATION. (a) A board by
resolution may authorize the creation of a nonprofit corporation to
assist and act for the district in implementing a project or
providing a service authorized by this chapter.
(b) The nonprofit corporation:
(1) has each power of and is considered for purposes of
this chapter to be a local government corporation created under
Chapter 431, Transportation Code; and
(2) may implement any project and provide any service
authorized by this chapter.
(c) The board shall appoint the board of directors of the
nonprofit corporation. A director of the corporation is not
required to reside in the district.
(d) The board of directors of the nonprofit corporation
shall serve in the same manner as the board of directors of a local
government corporation created under Chapter 431, Transportation
Code.
Sec. 375A.103. AGREEMENTS; GRANTS. (a) A district may
make an agreement with or accept a gift, grant, or loan from any
person.
(b) The implementation of a project is a governmental
function or service for the purposes of Chapter 791, Government
Code.
Sec. 375A.104. AUTHORITY TO CONTRACT FOR LAW ENFORCEMENT.
To protect the public interest, a district may contract with a
qualified provider, including a county or municipality, to provide
law enforcement services in the district for a fee.
Sec. 375A.105. APPROVAL BY MUNICIPALITY. (a) Except as
provided by Subsection (c), a district must obtain the approval of
the municipality's governing body for:
(1) the issuance of bonds for an improvement project;
(2) the imposition of a sales and use tax;
(3) the plans and specifications of an improvement
project financed by the bonds; and
(4) the plans and specifications of an improvement
project related to the use of land owned by the municipality, an
easement granted by the municipality, or a right-of-way of a
street, road, or highway.
(b) The approval obtained under Subsection (a)(1) or (2)
must be a resolution by the municipality. The approval obtained
under Subsection (a)(3) or (4) must be a permit issued by the
municipality.
(c) If the district obtains the approval of the
municipality's governing body for a capital improvements budget for
a period not to exceed five years, the district may finance the
capital improvements and issue bonds specified in the budget
without further approval from the municipality.
(d) The municipality and the district may agree on
conditions for obtaining the approval of the municipality under
this section, including an agreement for the approval of a sales and
use tax that requires the district to abolish or decrease the rate
of the tax if the rate, when combined with other local sales and use
taxes, results in a combined tax rate of more than two percent in
any location in the district.
Sec. 375A.106. MEMBERSHIP IN CHARITABLE ORGANIZATIONS. A
district may join and pay dues to an organization that:
(1) enjoys tax-exempt status under Section 501(c)(3),
(4), or (6), Internal Revenue Code of 1986; and
(2) performs a service or provides an activity
consistent with the furtherance of a district purpose.
Sec. 375A.107. ECONOMIC DEVELOPMENT PROGRAMS AND OTHER
POWERS RELATED TO PLANNING AND DEVELOPMENT. (a) A district may
establish and provide for the administration of one or more
programs to promote state or local economic development and to
stimulate business and commercial activity in the district,
including programs to:
(1) make loans and grants of public money; and
(2) provide district personnel and services.
(b) A district has all of the powers of a municipality under
Chapter 380.
Sec. 375A.108. ANNEXATION. In addition to the authority to
annex territory under Subchapter J, Chapter 49, Water Code, a
district may annex territory if the municipality's governing body
by ordinance or resolution consents to the annexation.
Sec. 375A.109. NO EMINENT DOMAIN. A district may not
exercise the power of eminent domain.
[Sections 375A.110-375A.150 reserved for expansion]
SUBCHAPTER D. FINANCIAL PROVISIONS
Sec. 375A.151. DISBURSEMENTS AND TRANSFERS OF MONEY. A
board by resolution shall establish the number of directors'
signatures and the procedure required for a disbursement or
transfer of the district's money.
Sec. 375A.152. MONEY USED FOR IMPROVEMENTS OR SERVICES. A
district may acquire, construct, finance, operate, or maintain any
improvement or service authorized under this chapter or Chapter 375
using any money available to the district.
Sec. 375A.153. PETITION REQUIRED FOR FINANCING SERVICES AND
IMPROVEMENTS WITH ASSESSMENTS. (a) A board may not finance a
service or improvement project with assessments under this chapter
unless a written petition requesting that service or improvement
has been filed with the board.
(b) A petition filed under Subsection (a) must be signed by:
(1) the owners of a majority of the assessed value of
real property in the district subject to assessment according to
the most recent certified tax appraisal roll for the county;
(2) at least 25 persons who own real property in the
district, if more than 25 persons own real property in the district
according to the most recent certified tax appraisal roll for the
county;
(3) the owners of a majority of the surface area of
real property in the district subject to assessment as determined
by the board; or
(4) the owners of a majority of the number of platted
lots of real property subject to assessment as determined by the
board.
Sec. 375A.154. METHOD OF NOTICE FOR HEARING. A district may
mail the notice required by Section 375.115(c) by certified United
States mail or an equivalent service that can provide a record of
mailing or other delivery.
Sec. 375A.155. ASSESSMENTS; LIENS FOR ASSESSMENTS. (a) A
board by resolution may impose and collect an assessment for any
purpose authorized by this chapter in all or any part of the
district.
(b) An assessment, a reassessment, or an assessment
resulting from an addition to or correction of the assessment roll
by a district, penalties and interest on an assessment or
reassessment, an expense of collection, and reasonable attorney's
fees incurred by the district:
(1) are a first and prior lien against the property
assessed;
(2) are superior to any other lien or claim other than
a lien or claim for county, school district, or municipal ad valorem
taxes; and
(3) are the personal liability of and a charge against
the owners of the property even if the owners are not named in the
assessment proceedings.
(c) The lien is effective from the date of the board's
resolution imposing the assessment until the date the assessment is
paid. The board may enforce the lien in the same manner that the
board may enforce an ad valorem tax lien against real property.
(d) The board may make a correction to or deletion from the
assessment roll that does not increase the amount of assessment of
any parcel of land without providing notice and holding a hearing in
the manner required for additional assessments.
Sec. 375A.156. UTILITY PROPERTY EXEMPT FROM IMPACT FEES AND
ASSESSMENTS. A district may not impose an impact fee or assessment
on the property, including the equipment, rights-of-way,
facilities, or improvements, of:
(1) an electric utility or a power generation company
as defined by Section 31.002, Utilities Code;
(2) a gas utility as defined by Section 101.003 or
121.001, Utilities Code;
(3) a telecommunications provider as defined by
Section 51.002, Utilities Code; or
(4) a person who provides to the public cable
television or advanced telecommunications services.
Sec. 375A.157. BONDS AND OTHER OBLIGATIONS. (a) A
district may issue by competitive bid or negotiated sale bonds or
other obligations payable wholly or partly from sales and use
taxes, assessments, impact fees, revenue, grants, or other money of
the district, or any combination of those sources of money, to pay
for any authorized purpose of the district.
(b) A district may issue a bond or other obligation in the
form of a bond, note, certificate of participation or other
instrument evidencing a proportionate interest in payments to be
made by the district, or other type of obligation.
(c) Section 375.243 does not apply to the district.
Sec. 375A.158. MUNICIPALITY NOT REQUIRED TO PAY DISTRICT
OBLIGATIONS. Except as provided by Section 375.263, the
municipality is not required to pay a bond, note, or other
obligation of a district.
Sec. 375A.159. COMPETITIVE BIDDING. Section 375.221
applies to a district only for a contract that has a value greater
than $25,000.
Sec. 375A.160. TAX AND ASSESSMENT ABATEMENTS. A district
may grant in the manner authorized by Chapter 312, Tax Code, an
abatement for a tax or assessment owed to the district.
[Sections 375A.161-375A.200 reserved for expansion]
SUBCHAPTER E. SALES AND USE TAX
Sec. 375A.201. MEANINGS OF WORDS AND PHRASES. Words and
phrases used in this subchapter that are defined by Chapters 151 and
321, Tax Code, have the meanings assigned by Chapters 151 and 321,
Tax Code.
Sec. 375A.202. APPLICABILITY OF CERTAIN TAX CODE
PROVISIONS. (a) Except as otherwise provided by this subchapter,
Subtitles A and B, Title 2, Tax Code, and Chapter 151, Tax Code,
apply to taxes imposed under this subchapter and to the
administration and enforcement of those taxes in the same manner
that those laws apply to state taxes.
(b) The provisions of Subchapters B, C, and D, Chapter 321,
Tax Code, relating to municipal sales and use taxes apply to the
application, collection, change, and administration of a sales and
use tax imposed under this subchapter to the extent consistent with
this chapter, as if references in Chapter 321, Tax Code, to a
municipality referred to a district and references to a governing
body referred to a board.
(c) Sections 321.401-321.406 and Subchapter F, Chapter 321,
Tax Code, do not apply to a tax imposed under this subchapter.
Sec. 375A.203. AUTHORIZATION. A district may adopt a sales
and use tax for the benefit of the district. The board is not
required to call an election to adopt the tax.
Sec. 375A.204. ABOLISHING SALES AND USE TAX. (a) Except
as provided in Subsection (b), a board, with the consent of the
governing body of the municipality, may abolish the sales and use
tax without an election.
(b) A board may not abolish the sales and use tax if the
district has outstanding debt secured by the tax.
Sec. 375A.205. SALES AND USE TAX RATE. (a) On adoption of
the tax authorized by this subchapter, there is imposed a tax at the
rate authorized by a district on the receipts from the sale at
retail of taxable items within the district, and an excise tax on
the use, storage, or other consumption within the district of
taxable items purchased, leased, or rented from a retailer within
the district during the period that the tax is in effect.
(b) The rate of the excise tax is the same as the rate of the
sales tax portion of the tax and is applied to the sales price of the
taxable item.
[Sections 375A.206-375A.250 reserved for expansion]
SUBCHAPTER F. DISSOLUTION
Sec. 375A.251. DISSOLUTION OF DISTRICT WITH OUTSTANDING
DEBT. (a) A board may dissolve the district regardless of whether
the district has debt. Section 375.264 does not apply to the
district.
(b) If a district has debt when it is dissolved, the
district shall remain in existence solely for the purpose of
discharging its debts. The dissolution is effective when all debts
have been discharged.
SECTION 2. 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 on the 91st day after the last day of the
legislative session.
* * * * *