BILL ANALYSIS

H.B. 3222

By: Hancock

Ways & Means

Committee Report (Unamended)

BACKGROUND AND PURPOSE

Under current law, a municipality can create a tax increment financing district (TIF) to finance a redevelopment project in a distressed or underdeveloped area.  A TIF district relies on future gains in tax collections to finance current infrastructure improvements.  When a public improvement project is carried out, it often attracts private development which generates increased value of surrounding real estate and can lead to new investment.  This increased real estate value generates increased incremental tax revenues.  The incremental revenue is then dedicated to finance the debt issued to pay for the initial improvement project.

Despite certain situations in which cities would mutually benefit from the creation of a joint TIF, multiple cities are not authorized to jointly create a TIF district.  For example, a road or highway may be split between two cities with part of an intersection located in each city.  Currently such an improvement requires each city to create an independent TIF district or the improvement project might never occur.

H.B. 3222 authorizes multiple municipalities with contiguous borders to jointly create and financially participate in a TIF 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

H.B. 3222 amends the Tax Code to authorize the governing bodies of two or more municipalities by ordinance adopted by each municipality to designate a contiguous area in the jurisdiction of each of the municipalities to be a joint reinvestment zone.  The bill requires each of the municipalities, except as otherwise provided, to follow the procedures provided for creating a reinvestment zone for such a designation.  The bill requires the ordinances adopted by all of the municipalities designating an area as a joint reinvestment zone to contain the same terms and to describe the boundaries of the zone with sufficient definiteness to identify with ordinary and reasonable certainty the territory included in the zone. The bill also requires the ordinances to create a board of directors and specify certain information relating to the board; provide that the zone takes effect immediately on adoption of the ordinance by the last of the municipalities in the jurisdiction of which the area contained in the zone is located; provide a termination date for the zone; assign a name to the zone for identification purposes, which may include the name of one or more of the designating municipalities and may contain a number; establish a tax increment fund for the zone; contain findings that improvements in the zone will significantly enhance the value of all taxable real property in the zone and will be of general benefit to the municipalities; and contain findings that the area meets certain requirements prescribed as criteria for a reinvestment zone.  The bill specifies that the ordinances are not required to identify the specific parcels of real property to be enhanced in value, for purposes of finding that improvements in the zone will significantly enhance the value of all taxable real property in the zone and will be of general benefit to the municipalities. 

H.B. 3222 specifies that the restrictions applicable to the composition of certain reinvestment zones apply to a joint reinvestment zone designated under these provisions.  The bill authorizes the boundaries of a joint reinvestment zone to be enlarged or reduced by ordinance of the governing bodies of the municipalities that designated the zone, subject to the restrictions in those provisions.  The bill authorizes the municipalities designating a joint reinvestment zone to exercise any power necessary and convenient to carry out the bill's provisions and other provisions relating to tax increment financing, including the powers prescribed in provisions relating to the powers of a municipality or county. 

H.B. 3222 specifies that, except as otherwise provided by its provisions, the board of directors of a joint reinvestment zone has the same powers and duties and is subject to the same limitations as the board of directors of a reinvestment zone designated by a single municipality.  The bill makes applicable to the municipalities designating a joint reinvestment zone provisions relating to project and financing plans, the determination of the amount of tax increment, a sales tax increment, the collection and deposit of tax increments, a tax increment fund, an annual report by a municipality or county and by the comptroller of public accounts, and conflicts between state law and a municipal charter, except that a reference in those provisions to a municipality means all of the municipalities designating a joint reinvestment zone and an action required of a municipality under those provisions is considered to be required of all of the municipalities designating a joint reinvestment zone.  The bill authorizes expenditures from tax increment financing funds or bonds secured by tax increment financing to be made without regard to the location from which the funds were derived or the location within the joint reinvestment zone at which the funds are spent but only if those expenditures are authorized as required by the state's tax increment financing laws.

EFFECTIVE DATE

On passage, or, if the act does not receive the necessary vote, the act takes effect September 1, 2009.