2005S0430-1 03/03/05
By: West S.B. No. 1358
A BILL TO BE ENTITLED
AN ACT
relating to the creation of a public redevelopment agency by
certain municipalities; granting the power to allocate ad valorem
tax revenue, the authority to issue bonds, and the power of eminent
domain.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subtitle A, Title 2, Local Government Code, is
amended by adding Chapter 374A to read as follows:
CHAPTER 374A. REDEVELOPMENT IN MUNICIPALITIES
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 374.001. SHORT TITLE. This chapter may be cited as the
Texas Redevelopment Act.
Sec. 374.002. LEGISLATIVE FINDINGS; INTENT. (a) The
legislature finds that blighted areas exist in the largest
municipalities in this state and that those areas:
(1) are a serious and growing menace that is injurious
and inimical to the public health, safety, morals, and welfare of
the residents of this state;
(2) contribute substantially and increasingly to the
spread of disease and crime, requiring excessive and
disproportionate expenditures of public funds for the preservation
of the public health and safety and for crime prevention,
correctional facilities, prosecution and punishment, treatment of
juvenile delinquency, and the maintenance of adequate police, fire,
and accident protection and other public services and facilities;
and
(3) constitute an economic and social liability,
substantially impair the sound growth of affected municipalities,
and retard the provision of housing accommodations.
(b) For these reasons, prevention and elimination of
blighted areas are matters of state policy and concern that may be
best addressed by the combined action of private enterprise,
municipal regulation, and other public action through approved
redevelopment plans. The legislature further finds that the repair
and rehabilitation of buildings and other improvements in affected
areas, the public acquisition of real property, the demolition of
buildings and other improvements as necessary to eliminate blighted
conditions or to prevent the spread of those conditions, the
disposition of property acquired in affected areas and incidental
to the purposes stated by this subsection, and other public
assistance to eliminate those conditions are public purposes for
which public money may be spent and the power of eminent domain
exercised.
(c) It is the intent of the legislature that private
enterprise be encouraged to participate in accomplishing the
objectives of urban redevelopment to the extent of its capacity and
with governmental assistance as provided by this chapter.
Sec. 374A.003. APPLICATION. This chapter applies only to a
municipality with a population of more than 500,000.
Sec. 374A.004. DEFINITIONS. In this chapter:
(1) "Agency" means a public redevelopment agency
created under this chapter.
(2) "Area of operation" means the area within the
corporate boundaries of a municipality.
(3) "Blighted area" means an area that, because of
deteriorating, obsolete, or vacant buildings, structures, land, or
other improvements; defective or inadequate streets, street
layout, or accessibility; unsanitary conditions; land or building
use which is incompatible with or harmful to adjoining properties
and the redevelopment of which is necessary for sound community
growth; or other hazardous conditions, adversely affects the public
health, safety, morals, or welfare of the municipality and its
residents, substantially retards the provision of a sound and
healthful housing environment, or results in an economic or social
liability to the municipality.
(4) "Board" means a board, commission, department,
division, office, body, or other municipal unit through which a
municipality elects to perform redevelopment powers, duties, or
other functions.
(5) "Bond" means a bond, refunding bond, note, interim
certificate, certificate of indebtedness, debenture, or other
obligation.
(6) "Captured market value" means the amount by which
the current market value of property within the boundaries of a
redevelopment project area exceeds its market value at the time the
redevelopment project is designated under this chapter.
(7) "Conservation" means preserving and protecting an
area from blight and includes preventing an area susceptible to
blight from becoming blighted.
(8) "Clerk" means the municipal clerk or other
municipal officer who is the custodian of the official municipal
records.
(9) "Deterioration" means impairment of quality,
character, value, or safety due to use, wear and tear, or other
physical causes.
(10) "Federal government" means the United States, an
agency of the United States, or a corporate or other
instrumentality of the United States.
(11) "Obligee" includes a bondholder, an agent or
trustee for a bondholder, a lessor who demises property used in
connection with a redevelopment project to the municipality, an
assignee of any part of the lessor's interest, and the federal
government as a party to a contract with the municipality.
(12) "Planning commission" means a municipal planning
commission established under law or charter.
(13) "Public body" means the state, any political
subdivision of the state, or a department, agency, or
instrumentality of the state or of a political subdivision of the
state.
(14) "Real property" includes land, improvements and
fixtures on land, property of any nature that is appurtenant to or
used in connection with land, and every legal or equitable estate,
interest, right, or use in land, including terms for years and
liens.
(15) "Redevelopment activities" include clearance,
redevelopment, rehabilitation, and conservation activities to
prevent further deterioration of an area that is tending to become a
blighted area. The term includes:
(A) the acquisition of all or part of a blighted
area or the acquisition of land that is predominantly open and that,
because of obsolete platting, diversity of ownership,
deterioration or vacancy of structures or site improvements, or for
other reasons, substantially impairs or arrests the sound growth of
the community;
(B) the demolition, removal, or renovation of
buildings and improvements;
(C) the installation, construction, or
reconstruction of streets, utilities, parks, playgrounds, and
other improvements necessary to fulfill redevelopment objectives
in accordance with a redevelopment plan;
(D) the disposition by the municipality of
property acquired in a redevelopment area for use in accordance
with a redevelopment plan, including the sale or initial lease of
the property at its fair value or the retention of the property;
(E) the implementation of plans for a program of
voluntary repair and rehabilitation of buildings or improvements in
accordance with a redevelopment plan; and
(F) the acquisition of real property in a
redevelopment area as necessary to remove or prevent the spread of
blight or deterioration or to provide land for needed public
facilities.
(16) "Redevelopment area" means a blighted area that
the governing body of a municipality designates as appropriate for
a redevelopment project.
(17) "Redevelopment plan" means a plan for a
redevelopment project that:
(A) conforms to the general municipal plan; and
(B) includes:
(i) any zoning and planning changes;
(ii) building requirements;
(iii) land uses;
(iv) maximum densities;
(v) land acquisition;
(vi) redevelopment;
(vii) rehabilitation;
(viii) demolition and removal of
structures; and
(ix) a description of the plan's
relationship to local objectives relating to public
transportation, traffic conditions, public utilities, recreational
and community facilities, and other improvements.
(18) "Redevelopment project" includes any of the
following activities undertaken in accordance with a redevelopment
plan:
(A) municipal activities in a redevelopment area
that are designed to eliminate or to prevent the development or
spread of blighted areas;
(B) blight clearance and redevelopment in a
redevelopment area;
(C) rehabilitation or conservation in a
redevelopment area;
(D) development of open land that, because of
location or situation, is necessary for sound community growth; or
(E) any combination or part of the activities
described by Paragraphs (A)-(D).
(19) "Rehabilitate" means to restore to a former state
of solvency or efficiency or to a similar better state.
(20) "Rehabilitation" means the restoration of
buildings or other structures to prevent deterioration of an area
that is tending to become a blighted area.
(21) "Tax assessor-collector" means the tax
assessor-collector of a municipality.
(22) "Tax increment" means the amount of property
taxes levied and collected each year on real property in a
redevelopment project area in excess of the amount levied and
collected on that property during the year preceding the date of the
adoption of the redevelopment plan.
(23) "Tax increment base" means the aggregate market
value of all taxable real property in a redevelopment project area
on the date of approval of the redevelopment plan.
(24) "Taxable real property" does not include personal
property or intangible property.
(25) "Taxing entity" means a governmental unit that is
authorized by law to levy taxes on property located in a
redevelopment project area. The term includes the state and a
political subdivision of the state, but does not include a
municipality.
[Sections 374A.005 - 374A.050 reserved for expansion]
SUBCHAPTER B. MUNICIPAL POWERS AND DUTIES RELATING TO
REDEVELOPMENT
Sec. 374A.051. RESOLUTION. A municipality may not exercise
a power granted under this chapter unless the governing body of the
municipality adopts a resolution that finds that a blighted area
exists in the municipality and that the rehabilitation, the
conservation, or the clearance and redevelopment of the area is
necessary for the public health, safety, morals, or welfare of the
residents of the municipality.
Sec. 374A.052. USE OF PUBLIC OR PRIVATE RESOURCES. (a) To
further the redevelopment objectives of this chapter, a
municipality may formulate a workable program to use appropriate
private and public resources, including the resources specified by
Subsection (b), to encourage urban rehabilitation, to provide for
the redevelopment of blighted areas, or to undertake those
activities or other feasible municipal activities as may be
suitably employed to achieve the objective of the program. The
program must specifically include provisions relating to:
(1) prevention, through diligent enforcement of
housing and occupancy controls and standards, of the expansion of
blight into areas of the municipality that are free from blight; and
(2) rehabilitation or conservation of blighted areas
as far as practicable to create areas that are free from blight
through replanning, removing congestion, providing parks,
playgrounds, and other public improvements, encouraging voluntary
rehabilitation, and requiring the repair and rehabilitation of
deteriorated or deteriorating structures and the clearance and
redevelopment of blighted areas.
(b) Each municipality, to the greatest extent determined to
be feasible, shall afford the maximum opportunity, consistent with
the needs of the municipality as a whole, for the rehabilitation or
redevelopment of the redevelopment area by private enterprise. A
municipality shall consider this objective in exercising powers
under this chapter, including:
(1) formulation of a workable program for
redevelopment under Subsection (a);
(2) approval of redevelopment plans consistent with
the general plan of the municipality;
(3) exercise of zoning power;
(4) enforcement of other laws, codes, and regulations
relating to land use, the use and occupancy of buildings and
improvements, and the disposition of any property acquired; and
(5) provision of necessary public improvements.
Sec. 374A.053. MUNICIPAL REDEVELOPMENT PLAN. (a) A
municipality may not prepare a redevelopment plan for an area
unless the governing body of the municipality has, by resolution,
declared the area to be a blighted area and has designated the area
as appropriate for a redevelopment project. The governing body may
not approve a redevelopment plan until a general plan has been
prepared for the municipality. A municipality may not acquire real
property for a redevelopment project until the governing body has
approved the redevelopment plan as provided by Subsection (c).
(b) The governing body must hold a public hearing on the
proposed redevelopment plan before it may approve the redevelopment
plan.
(c) After the hearing, the governing body may approve a
redevelopment plan if the governing body finds that:
(1) a feasible method exists for the relocation, in
decent, safe, affordable, and sanitary accommodations, of families
or individuals who will be displaced from the redevelopment area,
without undue hardship to those persons;
(2) the redevelopment plan conforms to the general
plan for municipal development; and
(3) the redevelopment plan offers the maximum
opportunity, consistent with the needs of the municipality as a
whole, for the rehabilitation or redevelopment of the redevelopment
area by private enterprise.
(d) A redevelopment plan may be modified at any time. If
modified after the lease or sale by the municipality of real
property within the redevelopment project area, the modification is
subject to the rights at law or in equity of the lessee or purchaser
or that person's successor in interest.
(e) After the municipality approves a redevelopment plan,
the provisions of the plan that relate to the future use of the
affected property and the building requirements applicable to the
property control with respect to that property.
Sec. 374A.054. GENERAL MUNICIPAL POWERS RELATING TO
REDEVELOPMENT. (a) A municipality may exercise all powers
necessary or convenient to carry out the purposes of this chapter,
including the power to:
(1) conduct preliminary surveys to determine whether
undertaking a redevelopment is feasible;
(2) conduct redevelopment projects within its area of
operation;
(3) execute contracts and other instruments necessary
or convenient to the exercise of its powers under this chapter;
(4) provide, arrange, or contract for the furnishing
or repair by any person of services, privileges, works, streets,
roads, public utilities, or other facilities in connection with a
redevelopment project, including installation, construction, and
reconstruction of streets, utilities, parks, playgrounds, and
other public improvements necessary to carry out a redevelopment
project;
(5) acquire any real property, including
improvements, and any personal property necessary for
administrative purposes, that is necessary or incidental to a
redevelopment project; hold, improve, clear, or prepare the
property for redevelopment; mortgage or otherwise encumber or
dispose of the real property; insure or provide for the insurance of
real or personal property or municipal operations against any risk
or hazard and to pay premiums on that insurance; and enter any
necessary contracts;
(6) invest redevelopment project funds held in
reserves or sinking funds, or not required for immediate
disbursement, in property or securities in which banks may legally
invest funds subject to their control, redeem bonds issued under
Section 374A.151 at the redemption price established in the bond,
or purchase those bonds at less than the redemption price, and
cancel the bonds redeemed or purchased;
(7) borrow money and apply for and accept advances,
loans, grants, contributions, and other forms of financial
assistance from the federal, state, or county government, other
public body, or other public or private sources for the purposes of
this chapter, give any required security, and make and carry out any
contracts in connection with the financial assistance;
(8) make plans necessary to carry out this chapter in
its area of operation, contract with any person in making and
carrying out the plans, and adopt, approve, modify, or amend the
plans;
(9) develop, test, and report methods and techniques
for the prevention of slums and urban blight, conduct
demonstrations and other activities in connection with those
methods and techniques, and apply for, accept, and use federal
grants made for those purposes;
(10) prepare plans and provide reasonable assistance
for the relocation of persons displaced from a redevelopment
project area, including families, business concerns, and others, as
necessary to acquire possession of and to clear the area in order to
conduct the redevelopment project;
(11) appropriate funds and make expenditures as
necessary to implement this chapter and levy taxes and assessments
for that purpose;
(12) close, vacate, plan, or replan streets, roads,
sidewalks, ways, or other places; plan, replan, zone, or rezone any
part of the municipality and make exceptions from building
regulations; and enter agreements with a redevelopment agency
vested with redevelopment powers under Subchapter C, which may
extend over any period, restricting action to be taken by the
municipality under any of the powers granted under this chapter;
(13) organize, coordinate, and direct the
administration of this chapter within the area of operation as
those provisions apply to the municipality to most effectively
promote and achieve the purposes of this chapter and establish new
municipal offices or reorganize existing offices as necessary to
most effectively implement those purposes; and
(14) issue tax increment bonds.
(b) A municipality may include in a contract made with the
federal government for financial assistance for a redevelopment
project the provisions and conditions imposed by federal law that
the municipality considers reasonable, appropriate, and consistent
with the purposes of this chapter.
(c) Except as provided by Section 374A.055, a municipality
may acquire by condemnation any interest in real property,
including a fee simple interest, that the municipality considers
necessary for or in connection with a redevelopment project.
Property dedicated to a public use may be acquired in that manner,
except that property belonging to the state or to a political
subdivision of the state may not be acquired without the consent of
the state or political subdivision.
Sec. 374A.055. BLIGHT CLEARANCE. (a) In this section,
"redevelopment section" means any substantial contiguous part of a
redevelopment area that a municipality proposes to acquire and
redevelop or clear of all buildings, structures, and other
improvements for redevelopment and reuse in accordance with the
redevelopment plan.
(b) If a redevelopment project includes a redevelopment
section that the municipality proposes to use for other than public
use, the municipality may not use condemnation to acquire that
property unless the municipality determines by resolution that the
rehabilitation or clearance of that property without condemnation
would be impractical and ineffective. If structures and
improvements are to be cleared, that determination must be based on
a finding that the structures in the redevelopment section are
beyond the point of feasible rehabilitation or are otherwise unfit
for rehabilitation and that there exist other blighting
characteristics, such as overcrowding of structures on the land,
mixed uses of structures, deficient streets, or deficiencies in
public utilities or recreational and community facilities. If a
structure and improvements are to be redeveloped or rehabilitated,
that determination must be based on a finding that the structure has
been vacant or substantially vacant for more than five years and
that the continued vacancy of that structure is not in the best
interest of the public good. A municipality may exercise eminent
domain authority as provided by Chapter 21, Property Code.
Sec. 374A.056. DISPOSITION OF PROPERTY. (a) Subject to
the covenants, conditions, and restrictions, including covenants
running with the land, that the municipality considers to be in the
public interest or necessary to implement this chapter and that are
written into the instrument transferring or conveying title, and
after the governing body of the municipality approves the
redevelopment plan, the municipality may:
(1) sell, lease, or otherwise transfer real property
or an interest in real property in a redevelopment area for
residential, recreational, commercial, industrial, or other uses,
including a public use, and enter into contracts relating to the
transfer; or
(2) retain the property or interest for public use in
accordance with the redevelopment plan.
(b) The purchaser or lessee of property transferred under
this section, and a successor in interest to such a person,
including an assignee, must devote the property to the uses
specified in the redevelopment plan and may be obligated to comply
with conditions specified in the deed of conveyance, including the
requirement to begin any improvements required by the redevelopment
plan within a reasonable time.
(c) Real property or an interest in real property subject to
this section may only be sold, leased, or otherwise transferred or
retained at not less than the fair value of the property for uses in
accordance with the redevelopment plan. In determining the fair
value, the municipality shall consider:
(1) the uses provided in the redevelopment plan;
(2) any restrictions on and any covenants, conditions,
and obligations assumed by the purchaser, lessee, or municipality
in retaining the property;
(3) the objectives of the plan for the prevention of
the recurrence of blighted areas; and
(4) any other matters that the municipality specifies
as appropriate.
(d) The municipality or redevelopment agency may provide in
an instrument of conveyance to a private purchaser or lessee that
the purchaser or lessee may sell any or all of the unimproved
property without profit to the seller. After improving a parcel of
real property in accordance with the redevelopment plan adopted for
the area, the purchaser may sell the parcel before completion of the
development of the area or tract purchased, but the sale does not
relieve that purchaser from the obligation of completing the
development of that area or tract. The purchaser may sell a parcel
of land purchased for redevelopment to another person who is
obligated to improve the parcel as provided by the development plan
for that project if the resale is without profit to the seller and
if any subsequent purchaser is required to improve the property as
provided by the redevelopment plan and by the conditions contained
in the deed of conveyance.
(e) A municipality shall sell real property acquired by the
municipality that is to be sold to private developers in accordance
with the redevelopment plan as rapidly as is feasible in the public
interest and consistent with the goals of the redevelopment plan.
An instrument executed by a municipality or by a redevelopment
agency that purports to convey any right, title, or interest in any
property under this chapter is presumed to be executed in
compliance with this chapter with respect to the title or interest
of any bona fide lessee, transferee, or purchaser of the property.
(f) The municipality may temporarily lease any real
property acquired in a redevelopment area, except property that is
not fit for human habitation or that is declared substandard by any
governmental agency. The lease must provide for a right of
cancellation that permits the municipality to sell or dispose of
the property for the purposes of this chapter.
(g) Any purchaser or lessee who is a private developer of
any part of the real property acquired under this chapter may use
that property as security to finance the development of the
property. The purchaser or lessee may execute and deliver to a
lender notes, deeds of trust with powers of sale, mortgages, and
other instruments required in connection with obtaining and
securing the repayment of the loan. The purchaser or lessee has all
the rights, titles, and incidents of ownership available to a
purchaser or lessee of land generally, and the person is entitled to
mortgage and encumber the property for either the purchase price or
for improvements in accordance with the objectives of this chapter.
Any subsequent owner or lessee who acquires title through
foreclosure of a lien given to secure the indebtedness or through a
conveyance or assignment in satisfaction of debt takes title
subject only to the restrictive covenants related to the use and
improvement of the land that are contained in the original
conveyance from the municipality. The owner's or lessee's interest
is not subject to any condition precedent or condition subsequent
that would result in reverter or forfeiture of title or to any
restraint as to the amount for which the property may be resold or
leased.
(h) Notwithstanding any other provision of this chapter or
of any other law relating to competitive bid requirements, a
municipality or redevelopment agency may sell redevelopment land
for uses in accordance with a redevelopment plan to a public or
private nonprofit corporation or foundation for less than the fair
market value of the land.
[Sections 374A.057 - 374A.100 reserved for expansion]
SUBCHAPTER C. REDEVELOPMENT AGENCY
Sec. 374A.101. EXERCISE OF REDEVELOPMENT PROJECT POWERS.
(a) A municipality may exercise redevelopment project powers
through a board or through municipal officers selected by the
governing body of the municipality by resolution. The municipality
may exercise those powers through a redevelopment agency created
under this subchapter if the governing body by resolution
determines that the creation of a redevelopment agency is in the
public interest. Except as provided in Subsection (b), a
redevelopment agency created under this subchapter may exercise all
the redevelopment project powers of the municipality.
(b) In this section, "redevelopment project powers"
includes the rights, powers, functions, and duties of a
municipality under this chapter. The term does not include the
power to:
(1) determine an area as a blighted area and to
designate that area as appropriate for a redevelopment project;
(2) approve and amend redevelopment plans and hold
public hearings relating to those plans;
(3) establish a general plan for the locality as a
whole;
(4) establish a workable program under Section
374A.052;
(5) make determinations and findings under Section
374A.051, 374A.052(b), or 374A.053(c);
(6) issue general obligation bonds;
(7) appropriate funds, levy taxes and assessments, and
exercise other functions under Section 374A.054(a)(11) and (12);
and
(8) exercise eminent domain authority.
Sec. 374A.102. CREATION OF REDEVELOPMENT AGENCY. (a) A
redevelopment agency created in a municipality is a public body
corporate and politic.
(b) A redevelopment agency may not transact business or
exercise any powers under this chapter until the governing body of
the municipality:
(1) adopts a resolution as provided by Section
374A.051; and
(2) elects to exercise redevelopment project power
through a redevelopment agency as provided by Section 374A.101(a).
Sec. 374A.103. BOARD OF COMMISSIONERS. (a) If a
redevelopment agency is created by a municipality, the mayor of the
municipality, with the advice and consent of the governing body of
the municipality, shall appoint a board of commissioners for the
redevelopment agency.
(b) The board of commissioners must be composed of at least
five but not more than 15 members. A member serves a two-year term.
The commissioners shall designate one member to serve as chairman
and one to serve as vice-chairman for one-year terms. A member of
the board must be a resident of the municipality and a real property
owner. The number of commissioners shall be determined by the
governing body at the time of the appointment of the commissioners
and may not be changed more than once every two years. At the time
of the initial appointments, a simple majority of the commissioners
shall be designated to serve for a one-year term and the remaining
members for two-year terms. If a vacancy occurs, the governing body
shall fill the vacancy for the unexpired term in the same manner as
the initial appointment.
(c) A commissioner serves without compensation but is
entitled to necessary expenses incurred in the performance of
official duties, including travel expenses.
(d) A certificate of appointment, which is conclusive
evidence of the proper appointment of each commissioner, must be
filed with the clerk of the municipality.
(e) To be valid, any action by the board of commissioners
must be adopted or rejected by a majority of the total number of the
commissioners.
(f) The governing body of the municipality may remove a
commissioner for inefficiency, neglect of duty, or misconduct in
office after notice of the charges and a hearing. The commissioner
must receive a copy of the charges before the 10th day before the
date of the hearing and must have the opportunity to be heard either
in person or by counsel.
Sec. 374A.104. AGENCY PERSONNEL; REPORT. (a) A
redevelopment agency may employ an executive director, technical
experts, and other agents and employees as it determines necessary
and may determine the qualifications, duties, and compensation of
those personnel. An agency may employ or retain its own counsel and
legal staff to perform required legal services.
(b) On or before March 31 of each year, a redevelopment
agency shall file with the municipality a report of its activities
for the preceding calendar year. If requested by the governing body
of the municipality, the agency shall file a quarterly report. The
report must include a complete financial statement by the agency
that shows its assets, liabilities, income, and operating expenses
as of the end of the reporting period.
Sec. 374A.105. APPROVAL REQUIREMENT. A redevelopment
agency created under this subchapter may not undertake a
redevelopment or rehabilitation project until the area proposed as
a redevelopment or rehabilitation area and the plan of improvement
for the project area are approved by the governing body of the
municipality.
[Sections 374A.106-374A.150 reserved for expansion]
SUBCHAPTER D. REDEVELOPMENT BONDS
Sec. 374A.151. REDEVELOPMENT BONDS. (a) A municipality
may issue bonds from time to time to finance a redevelopment
project, including the payment of principal and interest on any
advances for surveys and plans. The municipality may also issue
refunding bonds for the payment or retirement of bonds previously
issued.
(b) Bonds issued under this section must be made payable,
both as to principal and interest, only from the income, proceeds,
revenues, and funds of the redevelopment project that are derived
from or held in connection with the conduct of redevelopment
projects. Payment of the principal of and interest on the bonds may
be further secured by a pledge of any loan, grant, or contribution
from the federal government, or from any other source, in aid of a
project, or by a mortgage of such a project if title is held by the
municipality or the redevelopment agency.
(c) A bond issued under this section is not an indebtedness
of the state or of a political subdivision of the state other than
the issuing municipality and is not subject to any other law
relating to the authorization, issuance, or sale of bonds.
(d) A bond issued under this section is issued for an
essential public and governmental purpose and is, along with the
interest on the bond and the income from it, exempt from taxes.
(e) A bond issued under this section must be authorized by a
resolution or ordinance of the municipality and may be issued in one
or more series. The bond must bear the date, be payable on demand or
mature at a time or times, bear interest at a rate, be in a
denomination or denominations, be in either coupon or registered
form, carry conversion or registration privileges, have a rank or
priority, have a manner of execution, be payable in a medium of
payment and at a place or places of payment, be subject to terms of
redemption, with or without premium, be secured in a manner, and
have any other characteristics as provided by the resolution, trust
indenture, or mortgage issued in relation to the bond.
(f) A bond issued under this section may be sold at not less
than par at a public sale held after notice is published in a
newspaper of general circulation in the area of operation and in any
other medium of publication determined by the municipality and may
also be exchanged for other bonds on a par basis. A bond issued
under this section is fully negotiable.
(g) A bond issued under this section may be sold to the
federal government at not less than par at a private sale. If less
than all of the authorized principal amount of the bonds is sold to
the federal government, the balance may be sold at a private sale at
not less than par at an interest cost to the municipality that does
not exceed the interest cost to the municipality of the part of the
bonds sold to the federal government.
(h) If the officials whose signatures appear on bonds or
coupons issued under this section cease to be officials of the
municipality before the delivery of the bonds, their signatures are
valid for all purposes as if they had remained in office until
delivery.
(i) In an action involving the validity or enforceability of
a bond issued under this section or the security for such a bond, a
bond that recites in substance that it was issued by a municipality
in connection with a redevelopment project is conclusively
considered to have been issued for those purposes and the project is
conclusively considered to have been conducted in accordance with
this chapter.
(j) A bank, trust company, banker, savings bank and
institution, savings and loan association, investment company, and
other person conducting a banking or investment business; an
insurance company, insurance association, and other person
conducting an insurance business; and an executor, administrator,
curator, trustee, and other fiduciary may invest a sinking fund,
money, or other fund belonging to it, or in its control, in any
bonds or obligations issued by a municipality under this section.
Those bonds or other obligations must be secured by an agreement
between the issuer and the federal government in which the issuer
agrees to borrow from the federal government and the federal
government agrees to lend to the issuer, before the maturity of the
bonds or other obligations, money in an amount that, together with
any other money irrevocably committed to the payment of interest on
the bonds or other obligations, is sufficient to pay the principal
of the bonds or other obligations with interest to maturity. Under
the terms of the agreement the money must be used to pay the
principal of and interest on the bonds or other obligations at
maturity. Those bonds and other obligations are authorized
security for a public deposit. Any person may use funds owned or
controlled by the person to purchase those bonds or obligations.
This subsection does not relieve a person of a duty to exercise
reasonable care in selecting securities.
[Sections 374A.152-374A.200 reserved for expansion]
SUBCHAPTER E. TAX INCREMENT FINANCING FOR REDEVELOPMENT PROJECTS
Sec. 374A.201. TAX INCREMENT FUND. On approval of a
redevelopment plan by the governing body of a municipality, the
governing body by resolution may establish a fund known as the tax
increment fund.
Sec. 374A.202. COMPUTATION OF TAX INCREMENTS. (a) A tax
increment is computed by multiplying the total in property taxes
levied and collected by the municipality and all other
participating taxing entities on the taxable real property in a
redevelopment project area in a year by a fraction, the numerator of
which is equal to that year's market value of all taxable real
property in the area minus the tax increment base and the
denominator of which is equal to that year's market value of all
taxable real property in the area.
(b) For the purposes of this chapter, only the tax
assessor-collector determines the market value of property located
in a redevelopment project area during the time that the project
exists. A property owner who is aggrieved by a determination of the
tax assessor-collector has the same right of appeal as that
provided by law to owners of property not affected by this chapter.
(c) At the time a redevelopment project is designated by the
governing body of a municipality, the tax assessor-collector shall
certify to the governing body the market value of property within
the boundaries of the redevelopment project area. The tax
assessor-collector shall include at its most recently determined
market value any property that is taxable at the time that the
redevelopment project is designated and shall include at zero any
property that is exempt from taxation at the time the project is
designated.
(d) The tax assessor-collector shall annually certify to
the governing body the amount of the captured market value of
property within the boundaries of the redevelopment project area
and the amount of tax increments produced from that captured market
value. The tax assessor-collector shall make the initial
certification not later than one year from the date on which a
redevelopment project is designated.
Sec. 374A.203. ALLOCATION OF TAX COLLECTIONS AND TAX
INCREMENTS; TAX INCREMENT FUND. (a) For the purposes of this
chapter, the tax assessor-collector has the sole authority and the
duty to collect the taxes levied by the municipality and all other
taxing entities on property located within a redevelopment project
area and to allocate taxes and tax increments in the manner required
by this chapter.
(b) Beginning with the first payment of taxes levied by the
municipality or other taxing entity after the time a redevelopment
project is designated, the receipts from those taxes shall be
allocated and paid as provided by this subsection. The receipts
from the property taxes collected that are produced from the tax
increment base shall first be allocated and paid to the
municipality or appropriate taxing entity. All tax increments
produced from the captured market value of the property located
within the redevelopment project area shall then be deposited into
the tax increment fund established for the project.
Sec. 374A.204. TAX INCREMENT BONDS. (a) A municipality
may issue tax increment bonds, the proceeds of which may be used to
pay redevelopment costs relating to the redevelopment project for
which the bonds were issued or to satisfy claims of holders of those
bonds. The municipality may also issue refunding bonds for the
payment or retirement of tax increment bonds previously issued by
the municipality. The tax increment bonds may be made payable, both
as to principal and interest, only from:
(1) tax increments allocated to and paid into the tax
increment fund established by the municipality under Section
374A.201;
(2) private sources;
(3) contributions or other financial assistance from
this state or the United States; or
(4) a combination of those methods.
(b) A tax increment bond issued under this section, along
with the interest and income from the bond, is exempt from taxation.
The period of maturity of a tax increment bond is limited to a
maximum of 20 years from the date of issuance. Bonds issued under
this section must be authorized by a resolution or ordinance of the
governing body of the municipality and may be issued in one or more
series. The bond must have the characteristics prescribed by
Section 374A.151(e) as provided by the resolution, trust indenture,
or mortgage issued in relation to the bond.
(c) A bond issued under this section may be sold at not less
than par at a public sale after notice published in a newspaper of
general circulation in the municipality and in any other medium of
publication determined by the governing body of the municipality or
may be exchanged for other bonds on a par basis. A bond issued under
this section is fully negotiable.
(d) In an action or proceeding involving the validity or
enforceability of a bond issued under this section or the security
for such a bond, a bond that recites in substance that it is issued
by the municipality in connection with a redevelopment project is
conclusively considered to have been issued for those purposes and
the redevelopment project is conclusively considered to have been
planned, located, and carried out in accordance with this chapter.
(e) A bank, trust company, banker, savings bank and
institution, savings and loan association, investment company, and
other person conducting a banking or investment business; an
insurance company, insurance association, and other person
conducting an insurance business; and an executor, administrator,
curator, trustee, and other fiduciary may invest a sinking fund,
money, or other fund belonging to it, or in its control, in any tax
increment bonds issued by a municipality under this section. The
bond is an authorized security for a public deposit. Any person may
use funds owned or controlled by the person to purchase those bonds.
This subsection does not relieve a person of a duty to exercise
reasonable care in selecting securities.
(f) Tax increment bonds may be paid only out of the tax
increment fund established under Section 374A.201. The governing
body of the municipality may irrevocably pledge all or part of the
fund to the payment of those bonds. The fund or the designated part
of the fund may only be used for the payment of those bonds and
interest on those bonds until they have been fully paid. A holder
of those bonds or coupons relating to the bonds has a lien against
the fund for the payment of the bonds and the interest on them and
may protect and enforce that lien by an action at law or in equity.
(g) To increase the security and marketability of tax
increment bonds, the municipality, according to its best judgment,
may:
(1) create a lien for the benefit of the bondholders on
a public improvement or public work financed by the bonds or on the
revenue from the public improvement or public work; or
(2) make covenants and take other action as necessary,
convenient, or desirable to additionally secure the bonds or make
the bonds more marketable.
(h) A tax increment bond issued under this section is not a
general obligation of the municipality, is not a charge against its
general credit or taxing powers, and is not payable other than as
provided by this chapter. The tax increment bond must state those
limitations on its face.
(i) A tax increment bond issued under this section may not
be included in computing the debt of the issuing municipality.
(j) Tax increment bonds may not be issued in an amount
exceeding the aggregate costs of implementing the redevelopment
plan for the redevelopment project for which they were issued.
Sec. 374A.205. DISBURSEMENTS FROM TAX INCREMENT FUND.
(a) Money may be disbursed from a tax increment fund only to
satisfy the claims of holders of tax increment bonds issued in aid
of the redevelopment project with respect to which the fund was
established or to pay project costs. In this section, "project
costs" means any expenditure made or estimated to be made, or
monetary obligations incurred or estimated to be incurred, by the
municipality that are listed in a redevelopment project, plus any
incidental costs, less any income or revenues other than tax
increments, received or reasonably expected to be received by the
municipality in connection with the implementation of the
redevelopment plan. Those project costs include:
(1) capital costs, including:
(A) the actual costs of the construction of
public works or improvements, new buildings, structures, and
fixtures;
(B) the costs of demolition, alteration,
remodeling, repair, or reconstruction of existing buildings,
structures, and fixtures;
(C) the costs of acquisition of equipment; and
(D) the costs of clearing and grading land;
(2) financing costs, including interest paid to
holders of tax increment bonds issued to pay for project costs and
any premium paid over the principal amount because of the
redemption of the obligation before maturity;
(3) professional service costs, including costs
incurred for architectural, planning, engineering, or legal
services;
(4) imputed administrative costs, including
reasonable charges for the time spent by municipal employees in
connection with the implementation of a redevelopment plan; and
(5) organizational costs, including the cost of
conducting studies and the cost of informing the public with
respect to the creation of redevelopment projects and the
implementation of project plans.
(b) Subject to any agreement with holders of tax increment
bonds, money in a tax increment fund may be temporarily invested in
the same manner as other municipal funds.
(c) After project costs and tax increment bonds issued with
respect to a redevelopment project have been paid or payment has
been arranged, and subject to any agreement with bondholders, any
money remaining in a tax increment fund shall be paid over to the
municipality and to other taxing entities levying taxes on property
within the project in amounts belonging to each entity.
[Sections 374A.206-374A.900 reserved for expansion]
SUBCHAPTER Z. MISCELLANEOUS PROVISIONS
Sec. 374A.901. MUNICIPAL PROPERTY EXEMPT FROM LEVY AND
EXECUTION. (a) All municipal property, including funds, owned or
held for the municipality for the purposes of this chapter is exempt
from levy and sale by execution. An execution or other judicial
proceeding may not issue against the property, and a judgment
against the municipality may not be a charge or lien on that
property. This subsection does not apply to or limit the right of
an obligee to pursue any remedies for the enforcement of any pledge
or lien given under this chapter by a municipality on its rents,
fees, grants, or revenues from redevelopment projects.
(b) If real property in the redevelopment project area is
acquired and is owned as part of the project by a municipality or a
redevelopment agency and the project is not subject to ad valorem
taxes because of Subsection (a), the gross project cost may include
reasonable payments in lieu of taxes.
Sec. 374A.902. POWERS OF PUBLIC BODY. (a) To aid in the
planning or implementation of a redevelopment project located
within the area in which it is authorized to act, any public body,
after determining that a project is beneficial to its residents and
after setting terms with or without consideration, may:
(1) dedicate, sell, convey, or lease any of its
interest in any redevelopment project or grant easements, licenses,
or other rights and privileges in the project to a municipality or
redevelopment agency;
(2) incur the entire expense of any public
improvements made by the public body in exercising the powers
granted under this section;
(3) do anything necessary to aid or cooperate in the
planning or implementation of a redevelopment plan;
(4) lend, grant, or contribute funds to a municipality
or a redevelopment agency;
(5) enter into agreements that may extend over any
period with a municipality, redevelopment agency, or other public
body relating to action to be taken by the public body under any of
the powers granted under this chapter, including furnishing funds
or other assistance in connection with a redevelopment project;
(6) furnish public buildings and public facilities,
including parks, playgrounds, recreational facilities, community
facilities, educational facilities, water, sewer, or drainage
facilities, or other public works;
(7) furnish, dedicate, pave, install, grade, regrade,
plan, or replan streets, roads, sidewalks, ways, or other places;
(8) plan, replan, zone, or rezone any part of the
public body or make exceptions from building regulations; or
(9) furnish administrative and other services to the
municipality or redevelopment agency.
(b) If title to or possession of any redevelopment project
is held by the federal government, the provisions of an agreement
under this section inure to and may be enforced by the federal
government.
(c) A sale, conveyance, lease, or agreement under this
section may be made by and between public bodies without appraisal,
public notice, advertisement, or public bidding.
(d) To aid in planning or conducting a redevelopment project
through a redevelopment agency under this chapter, a municipality
may perform all of the functions that a public body may perform
under Subsection (a), including furnishing financial and other
assistance.
(e) For the purposes of this section or to aid in the
planning or carrying out of a municipal redevelopment project, a
municipality may issue and sell general obligation bonds in
addition to bonds issued under Section 374A.151. Bonds issued
under this section must be issued in the manner and are subject to
the limitations generally provided by the laws of this state for the
issuance and authorization of municipal bonds for public purposes.
Sec. 374A.903. TITLE OF PURCHASER. An instrument executed
by a municipality or by a redevelopment agency that purports to
convey a right, title, or interest in property under this chapter is
conclusively presumed to have been executed in compliance with this
chapter as regards the title or other interest of a bona fide
purchaser, lessee, or transferee of the property.
Sec. 374A.904. CONFLICT OF INTEREST. (a) A public
official or employee of a municipality, including an official or
employee of a redevelopment agency that exercises redevelopment
project powers for a municipality under Subchapter C or of any other
municipal board or commission, may not voluntarily acquire any
direct or indirect interest in a redevelopment project, in any
property included or planned to be included in a redevelopment
project or plan, or in any contract, or contract proposed, in
connection with a redevelopment project.
(b) If the acquisition is not voluntary, the official or
employee shall immediately disclose the acquisition of the interest
in writing to the governing body of the municipality. The governing
body shall enter the disclosure on its minutes. Not later than
three months after the date on which the involuntary acquisition
occurs, the official or employee shall either resign the position
with the municipality or divest the interest.
(c) If the official or employee owns or controls any direct
or indirect interest in property that the person knows is included
or planned to be included in a redevelopment project or if the
official or employee owned or controlled any such interest at any
time during the two-year period preceding the inclusion or planned
inclusion of the property in a redevelopment project, the official
or employee shall immediately disclose that fact in writing to the
governing body of the municipality. The governing body shall enter
the disclosure on its minutes. The official or employee may not
participate in any action by the municipality or by the
redevelopment agency that affects the property.
(d) Any required disclosure made under this section to the
governing body of the municipality must also be made at the same
time to the redevelopment agency that exercises redevelopment
project powers under Section 374A.101. A commissioner or other
officer of a redevelopment agency or other board who exercises
powers under this chapter may not hold any other public office with
the municipality.
(e) A violation of this section is official misconduct.
Sec. 374A.905. JUDICIAL PROCEEDINGS. (a) An action
brought to review, modify, suspend, or satisfy a rule, order,
decision, or other act of the governing body of a municipality or
other agency shall be trial de novo as that term is used in an appeal
from a justice of the peace court to a county court. In the trial,
no presumptions in favor of the order or rule apply and evidence
relating to the validity or reasonableness of the order or rule may
not be heard. The determination of the action shall be made on the
facts as in other civil cases, and the procedure used and the
determination of orders and judgments to be entered in the trial
shall be under the rules of law, evidence, and procedure prescribed
under the constitution, statutes, and rules of procedure of this
state applicable to civil trials.
(b) The trial of an action brought under this section shall
be strictly de novo and the decision in the action shall be made on
the preponderance of the evidence presented at the trial,
independent of any administrative action taken by the board and
free from the application of the substantial evidence rule stated
by the courts relating to orders of other administrative or
quasi-judicial agencies.
Sec. 374A.906. EFFECT ON MUNICIPAL POWERS. (a) This
chapter does not repeal a charter provision adopted by a home-rule
municipality to accomplish the same purposes as this chapter. This
chapter is cumulative of municipal powers.
(b) The powers conferred by this chapter are supplemental to
the powers conferred on municipalities by the charters of home-rule
municipalities of this state.
SECTION 2. This Act takes effect September 1, 2005.