By: Wentworth S.B. No. 1879
(In the Senate - Filed April 21, 2005; April 25, 2005, read
first time and referred to Committee on Intergovernmental
Relations; April 29, 2005, reported favorably by the following
vote: Yeas 5, Nays 0; April 29, 2005, sent to printer.)
A BILL TO BE ENTITLED
AN ACT
relating to the creation of special districts for improvements in
certain counties, including authority to acquire, construct, and
improve water, wastewater, and drainage improvements; providing
authority to impose a tax and issue bonds.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 372, Local Government Code, is amended
by adding Subchapter C to read as follows:
SUBCHAPTER C. IMPROVEMENT DISTRICTS IN CERTAIN COUNTIES
Sec. 372.101. DEFINITIONS. In this subchapter:
(1) "Board" means the board of directors of a
district.
(2) "Commissioners court" means the governing body of
the county in which a district is located.
(3) "County" means the county in which the district is
located.
(4) "District" means an improvement district created
under this subchapter.
(5) "Hotel" has the meaning assigned by Section
156.001, Tax Code, and includes a timeshare, casita, or condominium
during the time the timeshare, casita, or condominium is rented by a
person who is not the owner of the timeshare, casita, or
condominium.
(6) "Municipality" means the municipality in which the
district is located.
Sec. 372.102. PURPOSE. By enacting this subchapter, the
legislature has created a program for economic development as
provided in Section 52-a, Article III, Texas Constitution. A
district created under this subchapter is created to serve a public
use and benefit.
Sec. 372.103. NATURE OF DISTRICT. A district created under
this subchapter is a political subdivision of this state.
Sec. 372.104. APPLICABILITY; CONFLICT OF LAWS. In the
event of a conflict between this subchapter and Subchapter A, this
subchapter controls.
Sec. 372.105. CREATION OF DISTRICT. (a) After a county
with a population of one million or more receives a petition
satisfying the requirements of Section 372.005, the commissioners
court of that county may by order create a district located in the
extraterritorial jurisdiction of a municipality in that county.
(b) The order must:
(1) describe the district's territory;
(2) specifically authorize the district to exercise
the powers of this subchapter; and
(3) state whether the petition provides for
improvements to be financed and paid for with taxes authorized by
this subchapter instead of or in addition to assessments.
Sec. 372.106. GOVERNING BODY; TERMS. A district is
governed by a board of five directors who serve staggered terms of
two years, with two or three directors' terms expiring June 1 of
each year.
Sec. 372.107. ELIGIBILITY. (a) A director must be at
least 18 years old.
(b) If the population of the district is more than 1,000, a
director must be 18 years old and:
(1) a resident of the district;
(2) an owner of property in the district;
(3) an owner of stock, whether beneficial or
otherwise, of a corporate owner of property in the district;
(4) an owner of a beneficial interest in a trust that
owns property in the district; or
(5) an agent, employee, or tenant of a person
described by Subdivision (2), (3), or (4).
Sec. 372.108. APPOINTMENT OF DIRECTORS. Directors are
appointed by position as follows:
(1) the county judge shall appoint three directors;
and
(2) the commissioners court shall appoint two
directors.
Sec. 372.109. VACANCIES; QUORUM. (a) A board vacancy is
filled in the same manner as the original appointment.
(b) A vacant board position is not counted for the purposes
of establishing a quorum of the board.
Sec. 372.110. CONFLICTS OF INTEREST; ONE-TIME AFFIDAVIT.
(a) Except as provided by this section:
(1) a director may participate in all board votes and
decisions; and
(2) Chapter 171 governs conflicts of interest for
directors.
(b) Section 171.004 does not apply to the district. A
director who has a substantial interest in a business or charitable
entity that will receive a pecuniary benefit from a board action
shall file a one-time affidavit declaring the interest. An
additional affidavit is not required if the director's interest
changes. After the affidavit is filed with the board secretary, the
director may participate in a discussion or vote on that action if:
(1) a majority of the directors have a similar
interest in the same entity;
(2) all other similar business or charitable entities
in the district will receive a similar pecuniary benefit; or
(3) the director owns property in the district.
(c) For purposes of this section, a director has a
substantial interest in a charitable entity in the same manner that
a person would have a substantial interest in a business entity
under Section 171.002.
Sec. 372.111. COMPENSATION. (a) In this section,
"performs the duties of a director" means substantial performance
of the management of the district's business, including
participation in board and committee meetings and other activities
involving the substantive deliberation of district business and in
pertinent educational programs, but does not include routine or
ministerial activities such as the execution of documents or
self-preparation for meetings.
(b) A director is entitled to compensation of $50 a day for
each day that the director actually performs the duties of a
director.
Sec. 372.112. OATH AND BOND; BUSINESS. As soon as
practicable, a board member shall give the bond and take the oath of
office prescribed by Section 375.067, and the board shall elect
officers and conduct business in accordance with Subchapter D,
Chapter 375.
Sec. 372.113. POWERS AND DUTIES. (a) A district has the
powers and duties of:
(1) a county development district under Chapter 383;
(2) a road district under Section 52, Article III,
Texas Constitution, and Chapter 257, Transportation Code; and
(3) a municipality or county under this subchapter or
Chapters 380 and 381, including the acquisition, construction, or
improvement of water, wastewater, or drainage facilities or
improvements under Section 372.003(b)(9).
(b) A district may not exercise the powers and duties of a
road district under this section unless the municipality consents
by resolution.
Sec. 372.114. DEVELOPMENT AGREEMENTS. A district may enter
into a development agreement with owners of land in the district.
The agreement may be amended by the parties.
Sec. 372.115. ECONOMIC DEVELOPMENT AGREEMENT; ELECTION;
TAXES. (a) A district may enter into an agreement, on terms and
conditions the board considers advisable, to make a grant or loan of
public money to promote state or local economic development and to
stimulate business and commercial activity in the district,
including a grant or loan to induce the construction of a tourist
destination or attraction in accordance with Chapter 380 or 381.
(b) If the grant or loan agreement has been approved by the
voters of the district at an election held in the district for that
purpose, the grant or loan may be payable over a term of years and be
binding and enforceable on the district in accordance with the
terms of the agreement and the conditions of the election, which may
include the irrevocable obligation to impose an ad valorem tax,
sales and use tax, or hotel occupancy tax over a term of years not to
exceed 30 years, and if authorized at the election, the district may
contract and covenant to pay the taxes to the recipient of the grant
or loan in accordance with the agreement.
Sec. 372.116. CONTRACTS; GENERAL. (a) A district may
contract with any person, including the municipality or county, on
the terms and conditions and for a period of time the board
determines, to:
(1) accomplish any district purpose, including a
contract to pay, repay, or reimburse from tax proceeds or another
specified source of money any costs, including reasonable carrying
costs, incurred by a person on the district's behalf, including all
or part of the costs of an improvement project; and
(2) receive, administer, and perform the district's
duties and obligations under a gift, grant, loan, conveyance, or
other financial assistance arrangement relating to the
investigation, planning, analysis, study, design, acquisition,
construction, improvement, completion, implementation, or
operation by the district or another person of an improvement
project or proposed improvement project.
(b) A state agency, municipality, county, other political
subdivision, corporation, or other person may contract with the
district to carry out the purposes of this subchapter without
further authorization.
Sec. 372.117. PROCUREMENT CONTRACTS. A district may
contract for materials, supplies, and construction:
(1) in accordance with the laws applicable to
counties; or
(2) in the same manner that a county local government
corporation created pursuant to Chapter 431, Transportation Code,
is authorized to contract.
Sec. 372.118. RULES; ENFORCEMENT. The board may adopt
rules:
(1) to administer and operate the district;
(2) for the use, enjoyment, availability, protection,
security, and maintenance of the district's property and
facilities; or
(3) to provide for public safety and security in the
district.
Sec. 372.119. FEES. A district may establish, revise,
repeal, enforce, collect, and apply the proceeds from user fees or
charges for the enjoyment, sale, rental, or other use of the
district's facilities or other property, or for services or
improvement projects.
Sec. 372.120. ELECTIONS. A district may hold an election on
any date.
Sec. 372.121. RULES; REGULATION OF ROADS AND OTHER PUBLIC
AREAS. (a) A board may adopt rules to regulate the private use of
public roadways, open spaces, parks, sidewalks, and similar public
areas in the area of the district.
(b) To the extent rules adopted under this section conflict
with a rule, order, ordinance, or regulation of the county or
municipality, the county or municipality rule, order, ordinance, or
regulation controls.
(c) A rule adopted under this section may provide for the
safe and orderly use of public roadways, open spaces, parks,
sidewalks, and similar public areas in the area of the district.
Sec. 372.122. SERVICE PLAN REQUIRED. A district must
annually prepare and present to the commissioners court a service
plan, as provided for by Section 372.013, for the commissioners
court's review and approval.
Sec. 372.123. NO EMINENT DOMAIN. A district does not have
the power of eminent domain.
Sec. 372.124. BONDS; NOTES. (a) A district may issue
bonds.
(b) A district may issue a negotiable promissory note or
notes.
(c) Bonds, notes, and other district obligations may be
secured by district revenue or any type of district taxes or
assessments.
Sec. 372.125. AUTHORITY TO IMPOSE ASSESSMENTS AND AD
VALOREM, SALES AND USE, AND HOTEL OCCUPANCY TAXES; ELECTION.
(a) A district may accomplish its purposes and pay the cost of
services and improvements by:
(1) imposing an assessment;
(2) levying an ad valorem tax;
(3) imposing a sales and use tax; or
(4) imposing a hotel occupancy tax.
(b) If approved at an election called by the board, a
district may impose an ad valorem tax, hotel occupancy tax, and
sales and use tax to accomplish the economic development purposes
prescribed by Section 52-a, Article III, Texas Constitution.
(c) The rate at which the district imposes a hotel occupancy
tax, sales and use tax, or ad valorem tax must be approved by the
commissioners court. A tax rate approved by the commissioners
court and pledged to secure bonds, notes, grant agreements, or
development agreements may not be reduced until the obligations of
those instruments have been satisfied.
Sec. 372.126. USE OF REVENUE FROM TAXES. A tax imposed
under this subchapter may be used to accomplish any improvement
project or provide any service authorized by:
(1) this chapter;
(2) Chapter 381;
(3) Chapter 383; or
(4) Chapter 257, Transportation Code.
Sec. 372.127. HOTEL OCCUPANCY TAX. (a) A district may
impose a hotel occupancy tax on a person who pays for the use or
possession of or for the right to the use or possession of a room
that is ordinarily used for sleeping in a hotel in the district.
(b) The district shall impose a hotel occupancy tax as
provided by Chapter 383, Local Government Code, and Section
352.107, Tax Code, except that a hotel occupancy tax:
(1) may be used for any district purpose; and
(2) is imposed by the district.
(c) The hotel occupancy tax rate is the greater of nine
percent or the rate imposed by the municipality.
Sec. 372.128. SALES AND USE TAX. (a) A district may impose
a sales and use tax in increments of one-eighth of one percent up to
a rate of two percent.
(b) Except as otherwise provided in this subchapter, a sales
and use tax must be imposed in accordance with Chapter 383, Local
Government Code, and Chapter 323, Tax Code.
Sec. 372.129. AD VALOREM TAX. (a) A district may impose an
ad valorem tax on property in the district in accordance with
Chapter 257, Transportation Code.
(b) Before imposing an ad valorem tax for district
operations or to pay bonds, notes, or other obligations, the
district must obtain the approval of the commissioners court.
Sec. 372.130. BORROWING. A district may borrow money for
any district purpose, including for a development agreement that
authorizes the district to borrow money.
Sec. 372.131. REPAYMENT OF COSTS. A district may, by a
lease, lease-purchase agreement, installment purchase contract, or
other agreement, or by the imposition or assessment of a tax, user
fee, concession, rental, or other revenue or resource of the
district, provide for or secure the payment or repayment of:
(1) the costs and expenses of the establishment,
administration, and operation of the district;
(2) the district's costs or share of costs of an
improvement project; or
(3) the district's contractual obligations or
indebtedness.
Sec. 372.132. LIABILITIES; ASSUMPTION OF ASSETS AFTER
COMPLETE ANNEXATION. (a) If the municipality annexes the entire
district territory, the municipality shall succeed to the
district's assets but is not liable for the district's debt or other
obligations.
(b) If the district has debt or other obligations, the
district remains in existence after the territory is annexed by the
municipality solely for the purpose of satisfying any preexisting
district debt or other obligations. After the debt or other
obligations have been discharged or two years have expired since
the date of the annexation, the district is dissolved.
Sec. 372.133. AUTHORITY TO IMPOSE TAXES OR ASSESSMENTS
AFTER PARTIAL OR COMPLETE ANNEXATION. (a) After a district has
been annexed by a municipality wholly or partly for general
purposes, the district may not impose an ad valorem tax, hotel
occupancy tax, or sales and use tax, or collect an assessment in the
area that the municipality overlaps the district, except as
provided by Section 372.132(b).
(b) A district may continue to impose a tax in an area that
the municipality annexes for limited purposes and in which the
municipality does not impose taxes, including a tax that the
municipality does not impose if the municipality imposes other
taxes in the area.
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 September 1, 2005.
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