By: Otto H.B. No. 4015

A BILL TO BE ENTITLED

AN ACT

relating to the powers and duties of the East Montgomery County Improvement District; providing authority to impose a tax.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 16(c), Chapter 1316, Acts of the 75th Legislature, Regular Session, 1997, is amended to read as follows:

(c) Except as provided in Section 30 of this Act, the [The] district may not impose ad valorem taxes on property in the district.

SECTION 2. Chapter 1316, Acts of the 75th Legislature, Regular Session, 1997, is amended by adding Section 16A to read as follows:

Sec. 16A. GENERAL AUTHORITY TO IMPOSE TAXES. The district may impose for any district purpose any tax authorized by this Act.

SECTION 3. Section 22(a), Chapter 1316, Acts of the 75th Legislature, Regular Session, 1997, is amended to read as follows:

(a) The board by order may call an election to adopt, change the rate of, or abolish a sales and use tax, provided that the board may not call an election to abolish a sales and use tax or to reduce the rate of the sales and use tax below the amount pledged to secure payment of any outstanding district debt or contractual obligation while any district debt or contractual obligation remains outstanding. The election may be held at the same time and in conjunction with a confirmation or directors election.

SECTION 4. Section 23(a), Chapter 1316, Acts of the 75th Legislature, Regular Session, 1997, is amended to read as follows:

(a) Chapter 323, Tax Code, to the extent not inconsistent with this Act, governs the application, collection, and administration of the sales and use tax under this Act, except Sections 323.401 through 323.406, and 323.505, Tax Code, do not apply. Subtitles A and B, Title 2, and Chapter 151, Tax Code, govern the administration and enforcement of the sales and use taxes under this Act.

SECTION 5. Section 24, Chapter 1316, Acts of the 75th Legislature, Regular Session, 1997, is amended to read as follows:

Sec. 24. EFFECTIVE DATE OF TAX OR TAX CHANGE. The adoption of a sales and use tax rate or a change in the sales and use tax rate takes effect after the expiration of the first complete calendar quarter occurring after the date on which the comptroller receives a notice of the results of the election.

SECTION 6. Section 26, Chapter 1316, Acts of the 75th Legislature, Regular Session, 1997, is amended to read as follows:

Sec. 26. ABOLITION OF TAX RATE. (a) Except as provided by Subsection (b), the [The] board by order may abolish the local sales and use tax rate without an election.

(b) The board may not abolish the local sales and use tax while any district debt or contractual obligation remains outstanding if any sales and use tax revenue is pledged to secure payment of the outstanding debt or obligation.

SECTION 7. Chapter 1316, Acts of the 75th Legislature, Regular Session, 1997, is amended by adding Section 29 to read as follows:

Sec. 29. HOTEL OCCUPANCY TAX. (a) In this section, "hotel" has the meaning assigned by Section 156.001, Tax Code.

(b) For purposes of this section, a reference in Subchapter A, Chapter 352, Tax Code, to a county is a reference to the district and a reference in Subchapter A, Chapter 352, Tax Code, to the county's officers or governing body is a reference to the board.

(c) Chapter 352, Tax Code, governs a hotel occupancy tax authorized by this section, including the collection of the tax.

(d) The board by order may impose, repeal, increase, or decrease the rate of a tax on a person who, under a lease, concession, permit, right of access, license, contract, or agreement, pays for the use or possession or for the right to the use or possession of a room that:

(1) is in a hotel located wholly or partly in the district;

(2) costs $2 or more each day; and

(3) is ordinarily used for sleeping.

(e) The tax rate may not exceed the maximum rate allowed under Section 352.003, Tax Code.

(f) This section does not apply to a hotel located wholly or partly in the city of Splendora as the boundaries of that city existed on April 1, 2007.

SECTION 8. Chapter 1316, Acts of the 75th Legislature, Regular Session, 1997, is amended by adding Section 29A to read as follows:

Sec. 29A. USE OF HOTEL OCCUPANCY TAX. (a) The district may use the proceeds from a hotel occupancy tax imposed under Section 29 of this Act for any district purpose and for any purpose described by Section 351.101 or 352.1015, Tax Code, to the extent the board considers appropriate.

(b) During each interval of three calendar years following the date on which a hotel occupancy tax imposed under Section 29 of this Act is initially collected, the board may not apply an annual average of more than 10 percent of the amount of tax collected under that section, excluding any interest earnings or investment profits and after a deduction for the costs of imposing and collecting the taxes, for the administrative expenses of the district or a district purpose other than the costs of:

(1) advertising and promoting tourism;

(2) business development and commerce, including the costs of planning, designing, constructing, acquiring, leasing, financing, owning, operating, maintaining, managing, improving, repairing, rehabilitating, or reconstructing improvement projects for:

(A) conferences, conventions, and exhibitions;

(B) manufacturer, consumer, or trade shows; and

(C) civic, community, or institutional events;

(3) encouraging and promoting the arts, including instrumental and vocal music, dance, drama, folk art, creative writing, architecture, design and related fields, painting, sculpture, photography, graphic arts and crafts, motion pictures, radio, television, tape and sound recording, and other arts related to the presentation, performance, execution, and exhibition of these major art forms;

(4) historical restoration and preservation projects; and

(5) activities, advertising, solicitations, and promotional programs to encourage tourists to visit preserved historic sites or museums.

(c) For purposes of this section, a reference:

(1) in Subchapter B, Chapter 351, Tax Code, to a municipality is a reference to the district and a reference to the municipality's officers or governing body is a reference to the board; and

(2) in Subchapter B, Chapter 352, Tax Code, to a county is a reference to the district and a reference to the county's officers or governing body is a reference to the board.

SECTION 9. Chapter 1316, Acts of the 75th Legislature, Regular Session, 1997, is amended by adding Section 30 to read as follows:

Sec. 30. ECONOMIC DEVELOPMENT ZONES. (a) As used in this section:

(1) "Development zone" means an economic development zone created by the district under this section.

(2) "Governing body" means the board of directors of a development zone.

(3) "Project" means the development or construction of a building, structure, facility, or other improvement on a parcel or tract in a development zone, or an expansion, enlargement, replacement, or relocation of a building, structure, facility, or other improvement in a development zone. The term includes a contractual obligation to reimburse a developer for money spent by the developer in the construction, development, expansion, enlargement, replacement, or relocation of a building, structure, facility, or other improvement in a development zone.

(b) The board, on its own motion or on receipt of a petition signed by the owners of all real property in a defined area of the district consisting of 25 or more contiguous acres of land, by resolution may create, designate, describe, assign a name to, and appoint the governing body for a development zone in the district to promote development or redevelopment of the area, if the board finds that the creation of the zone will further the public purposes of:

(1) the development and diversification of the economy of the district and the state;

(2) the elimination of unemployment or underemployment in the district and the state;

(3) the development or expansion of transportation or commerce in the district and the state; or

(4) the promotion and stimulation of business, commercial, and economic activity in the district and the state.

(c) Before designating a development zone, the board must prepare a preliminary financing plan for the zone that includes:

(1) estimated project costs, including administrative expenses;

(2) a description of the kind, number, and location of all proposed improvement projects in the zone;

(3) the estimated amount of:

(A) bonded indebtedness to be incurred; or

(B) the financial obligation of any other contractual obligation to be incurred;

(4) a description of the methods of financing and expected sources of revenue to pay for the costs of proposed improvement projects; and

(5) the projected duration of the zone.

(d) A development zone may not be created if more than 10 percent of the property in the proposed zone, other than property that is publicly owned, is used or planned for use for residential purposes. For purposes of this subsection, property is used for residential purposes if the property is occupied by a house that has fewer than five living units.

(e) A resolution designating an area as a development zone must:

(1) describe the boundaries of the zone sufficiently to identify with reasonable certainty the territory included;

(2) provide an effective date for the creation of the zone;

(3) provide a date for termination of the zone;

(4) assign a number to the name of the zone, which must be "East Montgomery County Improvement District Economic Development Zone No. ___";

(5) adopt a preliminary financing plan for the zone;

(6) provide the number of directors of the governing body of the zone, which must be at least five; and

(7) appoint the governing body for the zone or authorize the board to serve ex officio as the governing body of the zone.

(f) Upon approval by the board of a resolution designating an area as a development zone, the district shall call a confirmation election to confirm the establishment of the zone in the manner prescribed by Section 49.102, Water Code.

(g) A member of the governing body who is not a district director shall be appointed for a term of two years, except that the appointment of the initial members of the governing body may provide for some terms to be limited to one year in order to achieve staggered terms of office. The district by appointment shall fill a vacancy on the governing body of the zone for the unexpired portion of the term. A member who is also a district director shall serve a term concurrent with the director's term on the district board.

(h) A member of a governing body must be at least 18 years of age, a citizen of the state, and a person described in Section 12(b) of this Act. A member of the board of directors of the district may be appointed to the governing body. Each member must qualify for office by subscribing to the constitutional oath of office for public officers and furnishing a fidelity bond issued by a responsible surety in the amount of $10,000 in favor of the development zone to secure faithful performance of the member's duties.

(i) Following appointment and qualification, the governing body of the development zone shall meet and organize by electing a president, a vice president, a secretary-treasurer, and other officers the governing body considers appropriate. If the governing body of the development zone is composed entirely of directors of the district, each director of the development zone holds the same office the director holds as a director of the district.

(j) The boundaries of a development zone may be reduced or enlarged in the manner provided by this section for creation of a zone, except that the boundaries may not be reduced to less than 25 contiguous acres. A confirmation election is not required for an enlargement if:

(1) all landowners of the area proposed to be added consent to the enlargement and the tax authorization in the zone; and

(2) the enlarged area does not have any registered voters who reside in the area.

(k) A development zone created by the district under this section is a political and corporate body and a political subdivision of the state, separate from the district. The governing body of the zone may exercise, or by order may delegate to the district, any powers and duties relating to the financing and implementation of the project plan for the zone, including the power and authority to:

(1) issue bonds or notes in the name of the zone in the same manner as Chapter 375, Local Government Code, provides for a municipal management district;

(2) impose an ad valorem tax, assessment, or other charge in the zone, in the same manner as Chapter 375, Local Government Code, provides for a municipal management district, and as authorized by Subsection (o) of this section if the ad valorem tax has been approved by the voters in the development zone at an election held for that purpose; and

(3) impose a sales and use tax, as authorized by Subsection (n) of this section, if the sales and use tax has been approved by the voters in the development zone at an election held for that purpose.

(l) The board and the governing body each may enter into any agreement considered necessary or convenient to implement a project plan and development zone financing plan and achieve their purposes. An agreement may provide for the regulation or restriction of the use of land by imposing conditions, restrictions, or covenants that run with the land. An agreement may provide that a restriction adopted by the governing body continues in effect after the termination of the development zone. The district and the development zone may agree that the district will provide administration, management, investment, accounting, and other services for the zone in consideration for an administrative fee not to exceed five percent of the gross revenues of the development zone and for the benefits received by the district through the implementation of the project plan for the zone. The district may pledge all or part of the proceeds of its sales and use tax to secure and pay any bonds or other financial obligations of a development zone on approval of the board subject to Section 30A of this Act.

(m) Subject to approval by resolution of the district board, the governing body shall prepare and adopt, and may amend, a project plan and a development zone financing plan for the development zone.

(n) If approved at an election by a majority of the voters in the development zone voting in an election held for that purpose, the governing body may adopt or repeal a sales and use tax of not more than two percent less the amount of the sales and use tax approved by the district voters under Section 21 of this Act. An election on the adoption or repeal of the maximum rate of sales and use tax may be held by the governing body as provided by Section 22 of this Act as applied to a development zone. An election to adopt the sales and use tax authorized by this section may be held in conjunction with the confirmation election described by Subsection (f) of this section. After adoption at an election, the governing body may impose any portion of the sales and use tax, in increments of not less than one-eighth of one percent, for the benefit of the zone, by order of the governing body. The sales and use tax is in addition to the limited sales and use tax authorized and imposed by the district under Section 21 of this Act. If a political subdivision, including a municipality, imposes a sales and use tax in the development zone, the sales and use tax authorized by this section is reduced as of the date the development zone authorized the sales and use tax so that the combined total of all local sales and use taxes imposed in the development zone does not exceed two percent. The sales and use tax becomes effective on the first day of the calendar quarter following the date the comptroller receives written notice of the imposition of the tax.

(o) If approved at an election by a majority of the voters in the development zone voting in an election held for that purpose, the governing body may authorize a tax on all taxable property in a development zone created wholly or partly in the boundaries of East Montgomery County Utility District No. 5, 6, or 7, or Valley Ranch Municipal Utility District No. 1 at a rate not to exceed 10 cents on each $100 valuation as determined by the Montgomery County Appraisal District. The election may be held in conjunction with the confirmation election held under Subsection (f) of this section.

SECTION 10. Section 30A(b), Chapter 1316, Acts of the 75th Legislature, Regular Session, 1997, is amended to read as follows:

(b) In addition to the sources described in Subchapter J, Chapter 375, Local Government Code, the bonds issued by the district may be secured and made payable, wholly or partly, by a pledge of all or [any] part of the net proceeds the district receives from:

(1) a specified portion of not more than 75 percent [one-half] of the maximum sales and use tax amount authorized and approved by voters of the district under Section 22 of this Act;

(2) a specified portion of not more than 90 percent of the maximum sales and use tax imposed by a development zone;

(3) an ad valorem tax imposed by a development zone;

(4) a hotel occupancy tax;

(5) an event admissions tax;

(6) an event parking tax; and

(7) any other district revenue.

SECTION 11. Chapter 1316, Acts of the 75th Legislature, Regular Session, 1997, is amended by adding Section 33 to read as follows:

Sec. 33. COMMUNITY VENUES. (a) In this section and Sections 33A and 33B of this Act:

(1) "Venue" means a convention center facility or related improvement such as a convention center, civic center, civic center building, civic center hotel, auditorium, theater, opera house, music hall, exhibition hall, rehearsal hall, park, zoological park, museum, aquarium, or plaza.

(2) "Community venue project" or "venue project" means a venue and related infrastructure that is planned, acquired, established, developed, constructed, or renovated under this section.

(b) The district by resolution may provide for the planning, acquisition, establishment, development, construction, or renovation of a venue project.

(c) The resolution must designate each venue project and each method of financing authorized by this Act that the district intends to use to finance a project. A resolution may designate more than one method of financing.

(d) The district may contract with a public or private person to plan, acquire, establish, develop, construct, or renovate a venue project.

(e) The district shall establish by resolution a fund known as the community venue project fund. The district shall establish separate accounts in the fund for the various revenue sources.

(f) The district shall deposit into the community venue project fund:

(1) the proceeds of any tax imposed by the district under Sections 33A and 33B of this Act;

(2) all revenue from the sale of bonds or other obligations by the district under this Act; and

(3) any other money required by law to be deposited in the fund.

(g) The district may use money in the community venue project fund to:

(1) reimburse or pay the costs of planning, acquiring, establishing, developing, constructing, or renovating one or more venue projects in the district;

(2) pay the principal of, interest on, and other costs relating to bonds or other obligations issued by the district to refund bonds, notes, or other obligations;

(3) pay the costs of operating or maintaining one or more venue projects; or

(4) pay the administrative costs of the district associated with the operation and administration of one or more venue projects.

(h) Money deposited into the community venue project fund is the property of the district.

(i) The district may issue bonds, including revenue bonds and refunding bonds, or other obligations to pay the costs of the venue project.

SECTION 12. Chapter 1316, Acts of the 75th Legislature, Regular Session, 1997, is amended by adding Section 33A to read as follows:

Sec. 33A. EVENT ADMISSIONS TAX. (a) The district by order may impose a tax on each ticket sold as admission to an event held at a venue project in the district for which the district has issued bonds or undertaken a contractual obligation to reimburse costs expended to plan, acquire, establish, develop, construct, or renovate the venue project.

(b) The district may not impose the tax under this section for admission to an event at a venue that is not a community venue project or for which the district has not issued bonds or entered into a contractual obligation to reimburse costs expended to plan, acquire, establish, develop, construct, or renovate the venue project.

(c) The district may impose a tax under this section only if a venue project is or will be located in the district.

(d) The tax authorized by this section is imposed at the tax rate on each ticket sold as admission to an event held at a venue.

(e) The amount of the tax may be imposed at any uniform percentage not to exceed 10 percent of the price of the ticket sold as admission to an event held at a venue.

(f) The district by order may increase, repeal, or decrease the rate of the tax imposed under this section.

(g) The district by order may require the owner or lessee of a venue project in the district to collect the tax for the benefit of the district.

(h) An owner or lessee required to collect the tax under this section shall add the tax to the admissions price, and the tax is a part of the admissions price, a debt owed to the owner or lessee of a venue project by the person admitted, and recoverable at law in the same manner as the admissions price.

(i) The tax imposed by this section is not an occupation tax imposed on the owner or lessee of the venue project.

(j) A tax imposed under this section or a change in a tax rate takes effect on the date prescribed by the order imposing the tax or changing the rate.

(k) Except as provided by Subsection (l), the district may impose a tax under this section only if the district issues bonds or enters into a contractual obligation under Section 33 of this Act.

(l) The district may continue to impose the tax after any financial obligations have been fulfilled if the tax revenue is used as authorized by Section 6(c) or 33(g) of this Act.

(m) A person required to collect a tax imposed under this section shall report and send the taxes to the district as provided by the district.

(n) The district by order may prescribe penalties, including interest charges, for failure to keep records required by the district, to report when required, or to pay the tax when due. The district may bring suit against a person who fails to collect a tax under this section and to pay it over to the district as required.

(o) The district by order may permit a person who is required to collect a tax under this section to retain a percentage of the amount collected and required to be reported as reimbursement to the person for the costs of collecting the tax. The district may provide that the person may retain the amount only if the person pays the tax and files reports as required by the district.

SECTION 13. Chapter 1316, Acts of the 75th Legislature, Regular Session, 1997, is amended by adding Section 33B to read as follows:

Sec. 33B. EVENT PARKING TAX. (a) The district by order may impose a tax on each motor vehicle parking in a parking facility of a community venue project.

(b) The district may impose the tax during any time the parking facility is being used.

(c) The district by order may provide that the tax is imposed at a flat amount on each parked motor vehicle or is imposed as a percentage of the amount charged for event parking by the owner or lessee of the parking facility.

(d) Regardless of the method of imposition, the amount of the tax may not exceed the amount allowed by Section 334.202(b), Local Government Code.

(e) The district by order may increase, repeal, or decrease the rate of the tax imposed under this section.

(f) The district by order may require the owner or lessee of a parking facility to collect the tax for the benefit of the district.

(g) An owner or lessee required to collect the tax under this section shall add the tax to the parking charge, and the tax is a part of the parking charge, a debt owed to the parking facility owner or lessee by the person parking, and recoverable at law in the same manner as the parking charge.

(h) The tax imposed by this section is not an occupation tax imposed on the owner or lessee of the parking facility.

(i) A tax imposed under this section or a change in the tax rate takes effect on the date prescribed by the order imposing the tax or changing the rate.

(j) Except as provided by Subsection (k), the district may impose a tax under this section only if the district issues bonds or enters into other contractual obligations under Section 33 of this Act.

(k) The district may continue to impose the tax after any financial obligations have been fulfilled if the tax revenue is used as authorized by Section 6(c) or 33(g) of this Act.

(l) A person required to collect a tax imposed under this section shall report and send the taxes to the district as provided by the district.

(m) The district by order may prescribe penalties, including interest charges, for failure to keep records required by the district, to report when required, or to pay the tax when due. The district may bring suit against a person who fails to collect a tax under this section and to pay it over to the district as required.

(n) The district by order may permit a person who is required to collect a tax under this section to retain a percentage of the amount collected and required to be reported as reimbursement to the person for the costs of collecting the tax. The district may provide that the person may retain the amount only if the person pays the tax and files reports as required by the district.

SECTION 14. Section 22(b), Chapter 1316, Acts of the 75th Legislature, Regular Session, 1997, is repealed.

SECTION 15. The legislature finds that:

(1) proper and legal notice of the intention to introduce this Act, setting out the general substance of this Act, has been published as provided by law, and the notice and a copy of this Act have been furnished to all persons, agencies, officials, or entities to which they are required to be furnished by the constitution and other laws of this state, including to the governor, who has submitted the notice and this Act to the commission; and

(2) all requirements of the constitution and laws of this state and the rules and procedures of the legislature with respect to notice, introduction, and passage of this Act are fulfilled and accomplished.

SECTION 16. 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, 2007.