BILL ANALYSIS
By: Otto
Committee Report (Substituted)
BACKGROUND AND PURPOSE
C.S.H.B. 4015 amends Chapter 1316, Acts of the 75th Legislature, Regular Session, 1997, as amended by Chapter 136, Acts of 76th Legislature, Regular Session 1999, and Chapter 1379, Acts of the 77th Legislature, Regular Session 2001, relating to the creation and administration of East Montgomery County Improvement District, by making certain changes concerning the administration, powers, and indebtedness of the District.
RULEMAKING AUTHORITY
It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.
ANALYSIS
SECTION 1. Under current law, the District is prohibited from imposing ad valorem taxes. This bill creates an exception to the general prohibition by allowing the District to impose ad valorem taxes in certain defined economic development zones upon approval of such tax at an election held within such defined zones. This section of the bill clarifies that the District is prohibited from imposing ad valorem taxes within the District, except as provided for within economic development zones created by the District.
SECTION 2. Under current law, the District is authorized to impose a limited sales and use tax up to a maximum of two percent within the District. The District desires to finance certain economic development projects and community improvement projects within its boundaries to promote the overall economic health of the region. This bill will give the District the power to impose a hotel occupancy tax, an event admissions tax, an event parking tax, and certain ad valorem and sales and use taxes within certain defined economic development zones within the District to finance such economic development projects and community improvement projects. This section provides that the District may impose, for any district purpose, any tax authorized by this act.
SECTION 3. Under current law, the District may not call an election to reduce the rate of or abolish a sales and use tax below the amount pledged to secure payment of any outstanding district debt. By this bill, the term "district debt" will be expanded to include any contractual financial obligation of the District to finance an economic development project or a community improvement project. This section of this bill will extend the prohibition to call an election to reduce the rate of or abolish a sales and use tax below the amount pledged to secure the payment of a contractual financial obligation of the District to finance an economic development project or a community improvement project.
SECTION 4. Under current law, the District has the power to impose only a sales and use tax. By this bill the District will take on the additional taxing powers described herein. This section clarifies that Chapter 323, Tax Code, governs only the sales and use tax authorized by Section 22 of the Act.
SECTION 5. This section of the bill clarifies that this section applies only to the sales and use tax authorized by Section 22 of the Act.
SECTION 6. Under current law, the District may abolish the local sales and use tax without an election or the District may call an election to abolish the sales and use tax. Current law provides that the District may not call an election to abolish the local sales and use tax as long as any District debt remains outstanding if any sales and use tax revenues are pledged to secure payment of same. This section clarifies that the sales and use tax may not be abolished by order of the District as long as any District debt or contractual obligation remains outstanding if any sales and use tax revenues are pledged to secure payment of same.
SECTION 7. This section gives the District the power to impose a hotel occupancy tax within the District, except for that portion of the District located within the corporate boundary of the City of Splendora. The rate of the proposed tax and the purposes for which the tax revenue may be used are generally as provided in Chapter 352, Tax Code.
SECTION 8. This section governs the use of the proposed hotel occupancy tax proceeds. The District may use the proceeds of the proposed tax to promote any of the District’s purposes or any purposes described in Sections 351.101 and 352.1015 of the Tax Code; however, during each interval of three years after the tax is imposed, the District may not use more than 10% of the amount of tax collected for the purposes other than: (1) the costs of advertising and promoting tourism, (2) the costs of business development and commerce related to implementing improvement projects for tourism, (3) the development of the arts, and (4) the restoration and/or preservation of history for the promotion of tourism.
SECTION 9. This section provides for the creation of certain economic development zones within the District to promote development or redevelopment of certain areas within the District. The board of directors of the District may designate certain areas consisting of at least 25 contiguous acres of land as economic development zones either upon board motion or upon petition of all landowners within the proposed zone. A confirmation election must be held within the boundaries of the economic development zone to confirm the creation of the economic development zone. A zone created pursuant to this section will have the power to issue bonds or notes in the name of the zone to finance the development of projects within the zones. Upon approval by voters within the development zone, the district may impose a sales tax not to exceed two percent less the amount of sales tax levied by the district on a district wide basis and by any other municipalities or political subdivisions levying a sales tax within the zone at the time of the initial levy of the sales tax by the development zone. Upon approval by voters within the development zone, the district may authorize an ad valorem tax not to exceed ten cents per one hundred dollars of assessed valuation within any development zone located wholly or partially within the boundaries of East Montgomery County Municipal Utility District Nos. 5, 6 or 7 or Valley Ranch Municipal Utility District No. 1. The District will appoint a governing body for the zone or may authorize that the board of directors of the District serve ex officio as the governing body of the zone.
SECTION 10. Under current law, the bonds issued by the District may be secured by a pledge of any part of the net proceeds the District receives from a specified portion of not more than one-half of the maximum sales and use tax authorized by Section 22 of this Act and by voters within the District. By this bill, the District will be allowed to pledge up to seventy-five percent of the net proceeds of the sales and use tax authorized in Section 22 to secure payment of bonds issued by the District. Additionally, the District will be authorized to pledge up to ninety percent of the net proceeds of the sales and use tax levied in an economic development zone to secure payment of bonds issued by the District. This section of the bill will further authorize the District to secure payment of bonds issued by a development zone or the District on behalf of a zone with an ad valorem tax levied by an economic development zone and bonds issued by the District with a hotel occupancy tax, an event admissions tax, a parking tax, and any other District revenue.
SECTION 11. This section provides that the District may, by resolution, provide for the development of certain community venue projects within the District. Such projects may include the planning, acquisition, establishment, development, construction, or renovation of a convention center facility, civic center facility, civic center hotel, auditorium, theater, opera house, music hall, exhibition hall, rehearsal hall, park, zoological park, museum, aquarium, or plaza. This section gives the District the power to issue bonds or other obligations to pay the costs associated with such community venue projects.
SECTION 12. This section gives the District the power to impose an event admissions tax on any ticket sold as admission to an event held at a community venue project for which the District has issued bonds or undertaken other contractual obligations to develop the community venue project. The amount of the tax may not exceed ten percent of the ticket price. The proceeds of the tax will be place into the community venue projects fund to pay the costs associated with such community venue projects.
SECTION 13. This section gives the District the power to impose an event parking tax on each motor vehicle parking in a parking facility of a community venue project for which the District has issued bonds or undertaken other contractual obligations to develop the community venue project. The tax is limited to the maximum amount allowed under Section 334.202 of the Local Government Code. The proceeds of the tax will be placed into the community venue projects fund to pay the costs associated with such community venue projects.
SECTION 14. This section repeals Section 22(b), Chapter 1316, Acts of the 75th Legislature, Regular Session, 1997, relating to the date on which an election to adopt a sales and use tax must be held.
SECTION 15. This section contains a finding that all required notices for introduction to the bill have been given.
SECTION 16. Upon passage, or, if the Act does not receive the necessary vote, the Act takes effect September 1, 2007.
EFFECTIVE DATE
Upon passage, or, if the Act does not receive the necessary vote, the Act takes effect September 1, 2007.
COMPARISON OF ORIGINAL TO SUBSTITUTE
The Committee Substitute for H.B. 4015 imposes a restriction on the hotel occupancy tax wherein the tax may not be imposed on any hotel located within the corporate boundary of the City of Splendora as it existed on April 1, 2007. Section 352.003 of the Tax Code currently limits the hotel occupancy tax to seven percent of the price paid for the hotel room. H.B. 4015 provides for the same limit. In the event that the hotel occupancy tax limit authorized by Section 352.003 Tax Code should be increased or decreased in the future, the Committee Substitute provides that the hotel occupancy tax authorized by this bill not exceed the amount authorized under Section 352.003 Tax Code.
The Committee Substitute removes the requirement that the District establish a tax increment fund for each economic development zone, as this district has no tax increment funding.
H.B. 4051 requires that the district appoint the governing body of each economic development zone. The Committee Substitute adds the requirement that the district designate at least five directors to serve as the governing body of each zone. Additionally, if the board of the development zone is composed entirely of directors of the District, the Committee Substitute requires that each director of the development zone hold the same office as they hold as director of the District.
H.B. 4051 allows for the enlargement or reduction of boundaries of economic development zones. The Substitute prohibits reducing the boundaries of any zone to fewer than twenty five contiguous acres. Additionally, the Substitute requires that all landowners within the area proposed to be added to a zone consent to the tax authorization within the zone.
H.B. 4051 allows the District to impose a sales and use tax and a limited ad valorem tax within certain economic development zones upon approval by voters within the District. The Substitute allows for the imposition of such taxes upon approval by voters within the defined economic development zones in which such taxes will be imposed and allows for such elections to be held in conjunction with the confirmation election required by H.B. 4051. The sales and use tax authorized by this bill is in addition to the sales and use tax authorized by Chapter 1316, Acts of the 75th Legislature, as amended. The Substitute bill adds language to clarify that, if another political subdivision or municipality imposes a sales and use tax within the area of an economic development zone on the date that such sales and use tax is authorized by the development zone, the sales and use tax authorized by this bill shall be reduced so that the combined local sales and use tax within a zone shall not exceed two percent.
The Substitute bill restricts the imposition of ad valorem taxes by the District to those economic development zones which may be created wholly or partially within the boundaries of East Montgomery County Municipal Utility District Nos. 5, 6, or 7 or Valley Ranch Municipal Utility District No. 1. Other economic development zones which may be created within the district but outside the boundaries of East Montgomery County Municipal Utility District Nos. 5, 6 or 7 or Valley Ranch municipal Utility District No. 1 shall not have the authority to adopt or levy an ad valorem tax.