81R6901 E

By: Miklos H.B. No. 3341

A BILL TO BE ENTITLED

AN ACT

relating to the creation of a transportation development corporation in certain municipalities; authorizing local option elections for funding mass transit projects.

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

SECTION 1. Subtitle C1, Title 12, Local Government Code, as effective April 1, 2009, is amended by adding Chapter 508 to read as follows:

CHAPTER 508. TRANSPORTATION DEVELOPMENT CORPORATIONS

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 508.001. DEFINITIONS. In this chapter:

(1) "Authorizing municipality" means a municipality that authorizes the creation of a transportation development corporation.

(2) "Complementary transportation services" includes:

(A) special transportation services for a person who is elderly or has a disability;

(B) medical transportation services;

(C) assistance in street modifications as necessary to accommodate the public transportation system;

(D) construction of new general aviation facilities or renovation or purchase of existing facilities not served by certificated air carriers to relieve air traffic congestion at existing facilities; and

(E) any other service that complements the public transportation system, including providing parking garages.

(3) "Merged corporation" means a transportation development corporation formed under Section 508.004 and governed by this chapter.

(4) "Public transportation" means the conveyance of passengers and hand-carried packages or baggage of a passenger by any means of transit services made available to the public.

(5) "Public transportation system" means:

(A) all property owned or held by a transportation development corporation for public transportation or complementary transportation service purposes, including vehicle parking areas and facilities and other facilities necessary or convenient for the beneficial use of, and the access of persons and vehicles to, public transportation;

(B) real property, facilities, and equipment for the protection and environmental enhancement of all the facilities; and

(C) property held:

(i) in accordance with a contract with the owner making the property subject to the control of or regulation by the corporation; and

(ii) for public transportation or complementary transportation service purposes.

(6) "Transportation development corporation" means a corporation governed by this chapter.

Sec. 508.002. APPLICABILITY OF CHAPTER. This chapter applies only to a municipality that is located in a county:

(1) with a population of 1.4 million or more but less than 3.4 million; or

(2) adjacent to a county with a population of 1.4 million or more but less than 3.4 million.

Sec. 508.003. AUTHORITY TO CREATE CORPORATION. (a) A municipality may authorize the creation under this subtitle of a transportation development corporation.

(b) A municipality may not authorize the creation of more than one transportation development corporation in the municipality.

Sec. 508.004. MERGER OF CORPORATIONS. (a) Two or more but not more than nine transportation development corporations formed under this chapter may merge and combine their assets, liabilities, obligations, authority, and operations into one transportation development corporation if:

(1) the board of directors of each corporation that is a party to the merger adopts a plan of merger that states the terms and conditions of the merger and includes the certificate of formation of the corporation to be created by the plan of merger;

(2) the governing body of each authorizing municipality approves the merger;

(3) the sales and use taxes imposed for the benefit of each of the merging corporations are of an equal rate; and

(4) the merger would not impair the obligation of a contract of a merging corporation that created debt for which the proceeds of a sales and use tax imposed for the benefit of the merging corporation were pledged wholly or partly for its payment.

(b) A merged corporation is a political subdivision solely for purposes of imposing a sales and use tax for the benefit of the merged corporation.

(c) When a merger takes effect, the separate existence of each transportation development corporation that is a party to the merger ceases.

Sec. 508.005. CONTENTS OF CERTIFICATE OF FORMATION. The certificate of formation of a transportation development corporation must state that the corporation is governed by this chapter.

Sec. 508.006. CORPORATION NOT SUBJECT TO CERTAIN PROVISIONS. Sections 501.203, 501.205, 501.251-501.254, 501.255(a) and (b), 501.256, and 501.257 do not apply to a corporation under this chapter.

[Sections 508.007-508.050 reserved for expansion]

SUBCHAPTER B. GOVERNANCE OF CORPORATION

Sec. 508.051. BOARD OF DIRECTORS. (a) The board of directors of a transportation development corporation created by a single authorizing municipality consists of at least five directors.

(b) A director is appointed by the governing body of the authorizing municipality. A director serves at the pleasure of the governing body that appointed the director and may be removed by that governing body at any time without cause.

(c) The governing body of the authorizing municipality shall determine the number of directors and the length of each director's term.

(d) The governing bodies of the authorizing municipalities of a merged corporation shall determine by written agreement the number of directors, the apportionment of directors for each municipality, and the length of each director's term. The board shall consist of as many directors as necessary so that each authorizing municipality is represented by at least one director.

(e) The length of a director's term may not exceed six years.

Sec. 508.052. OFFICERS. The board of directors of a transportation development corporation shall appoint:

(1) a president;

(2) a secretary; and

(3) other officers of the corporation that:

(A) the governing body of the authorizing municipality considers necessary; or

(B) the governing bodies of the authorizing municipalities of a merged corporation authorize by written agreement.

Sec. 508.053. QUORUM. A majority of the entire membership of the board of directors of a transportation development corporation is a quorum.

Sec. 508.054. LOCATION OF BOARD MEETINGS. (a) The board of directors of a transportation development corporation shall conduct each board meeting within the boundaries of the authorizing municipality.

(b) The board of directors of a merged corporation shall conduct each board meeting within the combined boundaries of each authorizing municipality of the merged corporation.

Sec. 508.055. RESTRICTIONS ON REGISTERED AGENT AND OFFICE. (a) The registered agent of a transportation development corporation must be an individual who is a resident of this state.

(b) The registered office of a transportation development corporation must be located within the boundaries of the authorizing municipality.

(c) The registered office of a merged corporation must be located within the combined boundaries of each authorizing municipality of the merged corporation.

[Sections 508.056-508.100 reserved for expansion]

SUBCHAPTER C. GENERAL POWERS AND DUTIES

Sec. 508.101. APPLICABILITY OF OTHER LAW; CONFLICTS. A transportation development corporation has the powers and is subject to the limitations of a corporation created under another provision of this subtitle outside of this chapter. To the extent of a conflict between this chapter and another provision of this subtitle, this chapter prevails.

Sec. 508.102. AUTHORITY OF CORPORATION TO OPERATE PUBLIC TRANSPORTATION SYSTEM. A transportation development corporation has:

(1) the same authority as a municipality to operate a public transportation system; and

(2) the powers provided to a regional transportation authority under Chapter 452, Transportation Code.

Sec. 508.103. CONTRACTS. A transportation development corporation may contract with any person to:

(1) carry out a transportation development project or objective; or

(2) assist with the development or operation of a transportation development project or objective consistent with the purposes of and duties provided by this subtitle.

Sec. 508.104. LIMITATION ON USE OF REVENUES FOR PROMOTIONAL PURPOSE. A transportation development corporation may spend not more than 10 percent of the corporate revenues for promotional purposes.

Sec. 508.105. BOND REPAYMENT. (a) Bonds or other obligations that mature in 30 years or less and that are issued to pay the costs of projects may be made payable from any source of funds available to the transportation development corporation, including the proceeds of a sales and use tax imposed under this chapter.

(b) Bonds or other obligations that by their terms are payable from the tax proceeds:

(1) may not be paid wholly or partly from any property taxes imposed or to be imposed by an authorizing municipality; and

(2) are not a debt of and do not give rise to a claim for payment against an authorizing municipality, except as to sales and use tax revenue held by the municipality and required under this chapter to be delivered to the transportation development corporation.

Sec. 508.106. EMINENT DOMAIN. A transportation development corporation may exercise the power of eminent domain inside and outside the corporate limits of an authorizing municipality or municipalities.

Sec. 508.107. LIABILITY. (a) The following are not liable for damages arising from the performance of a governmental function of a transportation development corporation or an authorizing municipality:

(1) the corporation;

(2) a director of the corporation;

(3) the municipality;

(4) a member of the governing body of the municipality; or

(5) an employee of the corporation or municipality.

(b) For purposes of Chapter 101, Civil Practice and Remedies Code, a transportation development corporation is a governmental unit and the corporation's actions are governmental functions.

Sec. 508.108. CALLING OF ELECTIONS. (a) The board of the transportation development corporation may call an election on the issue of authorizing a tax under Section 508.251 for one or more public transportation system projects.

(b) The corporation shall call an election on the issue described by Subsection (a) on receipt of a petition requesting that the election be called signed by a number of registered voters in one or more authorizing municipalities equal to at least 10 percent of the total number of votes cast in the municipality or municipalities for all candidates for governor in the most recent gubernatorial general election.

(c) The corporation may adopt an order under this section only after holding a public hearing on the issue.

[Sections 508.109-508.150 reserved for expansion]

SUBCHAPTER D. AUTHORIZED PROJECTS

Sec. 508.151. AUTHORIZED PROJECTS. (a) In this chapter, "project" means land, buildings, equipment, facilities, expenditures, and improvements found by the board of directors to be required or suitable for use for the acquisition, construction, creation, operation, or maintenance of a public transportation system.

(b) A corporation may finance and undertake one or more projects.

Sec. 508.152. PUBLIC PURPOSE DESIGNATION; EXEMPTION FROM TAXATION. (a) The legislature finds for all constitutional and statutory purposes that:

(1) a project under this chapter is owned, used, and held for a public purpose for and on behalf of an authorizing municipality or municipalities or a merged corporation, as appropriate; and

(2) except as otherwise provided by this section, Section 501.160 of this subtitle and Section 25.07(a), Tax Code, do not apply to a leasehold or other possessory interest granted by a transportation development corporation during the period the corporation owns projects on behalf of an authorizing municipality or municipalities or a merged corporation, as appropriate.

(b) A project is exempt from ad valorem taxation under Section 11.11, Tax Code, for the period described by Subsection (a)(2) of this section.

(c) This subsection applies only if the voters of an authorizing municipality of a transportation development corporation or the authorizing municipalities of a merged corporation have not approved the adoption of a sales and use tax for the benefit of the corporation under Section 508.251. An ownership, leasehold, or other possessory interest of a person other than the corporation in real property constituting a project of the corporation described by this section is subject to ad valorem taxation under Section 25.07(a), Tax Code.

Sec. 508.153. HEARING REQUIRED TO UNDERTAKE PROJECT. A transportation development corporation shall hold at least one public hearing on a proposed project before spending money to undertake the project.

[Sections 508.154-508.250 reserved for expansion]

SUBCHAPTER E. SALES AND USE TAX

Sec. 508.251. TAX AUTHORIZED. (a) An authorizing municipality may adopt a sales and use tax for the benefit of a transportation development corporation if the tax is approved by a majority of the voters of the municipality voting at an election held for that purpose.

(b) Except as provided by Subsection (c), a merged corporation may adopt a sales and use tax under this subchapter only if a majority of voters of each authorizing municipality approve the tax in an election held in each municipality.

(c) If the imposition of a sales and use tax was previously approved at an election held by the authorizing municipality of each corporation included in a merged corporation, the previous elections are considered as an election to approve the imposition of the tax for use by the merged corporation and an additional election under Subsection (b) is not required.

(d) Each authorizing municipality of a merged corporation shall receive for the benefit of the corporation the revenue from the tax imposed by the corporation within the municipality.

Sec. 508.252. SALES TAX. (a) If an authorizing municipality or merged corporation adopts the tax under Section 508.251, a tax is imposed on the receipts from the sale at retail of taxable items within the municipality or merged corporation at the rate approved by the voters.

(b) The rate of the tax imposed under Subsection (a) must be equal to one-eighth, one-fourth, three-eighths, one-half, five-eighths, three-fourths, or seven-eighths of one percent or one percent.

Sec. 508.253. USE TAX. (a) If an authorizing municipality or merged corporation adopts the tax under Section 508.251, an excise tax is imposed on the use, storage, or other consumption within the municipality or corporation of taxable items purchased, leased, or rented from a retailer during the period that the tax is effective within the municipality or corporation.

(b) The rate of the excise tax is the same as the rate of the sales tax portion of the sales and use tax and is applied to the sales price of the taxable items.

Sec. 508.254. SALES AND USE TAXES NOT COUNTED IN COMBINED LOCAL TAX RATE. Notwithstanding any other law, the rate of a sales and use tax imposed by a municipality or merged corporation under this chapter may not be considered in determining the combined or overlapping rate of sales and use taxes imposed in the municipality or corporation for any purpose other than as provided by Section 328.004, Tax Code.

Sec. 508.255. APPLICABILITY OF TAX CODE. (a) Chapter 321, Tax Code, governs an election to approve the adoption of the sales and use tax under this chapter and governs the imposition, computation, administration, governance, use, and abolition of the tax except as inconsistent with this chapter.

(b) Except as provided by this subsection, the tax imposed under this chapter takes effect as provided by Section 321.102(a), Tax Code. If an election is held under this chapter at the same time an election is held to impose or change the rate of the additional municipal sales and use tax, the tax under this chapter and the imposition or change in rate of the additional municipal sales and use tax take effect as provided by Section 321.102(b), Tax Code.

(c) After the effective date of the taxes imposed under this chapter, the adoption of a sales and use tax or the attempted adoption of a sales and use tax by an authorizing municipality or a merged corporation or another taxing jurisdiction having territory in the municipality or corporation does not impair the taxes imposed under this chapter.

Sec. 508.256. BALLOT. In an election to adopt the sales and use tax under this chapter, the ballot shall be printed to provide for voting for or against the proposition: "The adoption of a sales and use tax for the acquisition, construction, creation, operation, or maintenance of a public transportation system at the rate of __________" (one-eighth, one-fourth, three-eighths, one-half, five-eighths, three-fourths, or seven-eighths of one percent or one percent to be inserted as appropriate).

Sec. 508.257. LIMITATION ON DURATION OF TAX. (a) At an election held under Section 508.251, an authorizing municipality or merged corporation may also allow the voters to vote on a ballot proposition to limit the period for imposition of a sales and use tax.

(b) An authorizing municipality or merged corporation that has imposed a tax for a limited time under this section may extend the period of the tax's imposition or reimpose the tax only if the extension or reimposition is approved by a majority of the voters of the municipality or corporation voting at an election held for that purpose in the same manner as an election held under Section 504.257.

Sec. 508.258. LIMITED SALES AND USE TAX FOR SPECIFIC PROJECT. (a) At an election held under Section 508.251, an authorizing municipality or merged corporation may also allow the voters to vote on a ballot proposition to limit the use of the sales and use tax to a specific project.

(b) A transportation development corporation created to perform a specific project as provided by this section may retain its corporate existence and perform any other project approved by the voters of an authorizing municipality or merged corporation at an election held for that purpose in the same manner as Section 504.260 provides for an election held under Section 504.251. Before spending money to undertake a project, a transportation development corporation shall hold a public hearing as otherwise provided by this chapter.

Sec. 508.259. ELECTIONS AFFECTING MERGED CORPORATIONS. (a) A ballot proposition under Section 508.257 affecting a merged corporation is approved only if a majority of the voters of each authorizing municipality approves the same proposition at an election held in each municipality for that purpose in the same manner as an election held under Section 504.257.

(b) A ballot proposition under Section 508.258 affecting a merged corporation is approved only if a majority of the voters of each authorizing municipality approves the same proposition at an election held in each municipality for that purpose in the same manner as Section 504.260 provides for an election held under Section 504.251.

Sec. 508.260. CESSATION OF COLLECTION OF TAXES. A sales and use tax imposed under this chapter may not be collected after the last day of the first calendar quarter that occurs after the transportation development corporation notifies the comptroller that:

(1) all bonds or other obligations of the corporation, including any refunding bonds, payable wholly or partly from the proceeds of the sales and use tax imposed under this chapter, have been paid in full; or

(2) the total amount, exclusive of guaranteed interest, necessary to pay in full the bonds and other obligations has been set aside in a trust account dedicated to the payment of the bonds and other obligations.

[Sections 508.261-508.300 reserved for expansion]

SUBCHAPTER F. USE OF TAX PROCEEDS

Sec. 508.301. DELIVERY OF TAX PROCEEDS. On an authorizing municipality's receipt from the comptroller of the proceeds of the sales and use tax imposed under this chapter, the municipality shall deliver the proceeds to the transportation development corporation.

Sec. 508.302. PAYMENT OF PROJECT COSTS, BONDS, OR OTHER OBLIGATIONS. The proceeds of the sales and use tax imposed under this chapter may be used to:

(1) pay the costs of projects authorized by Section 508.151; or

(2) pay the principal of, interest on, and other costs relating to bonds or other obligations issued by the transportation development corporation to:

(A) pay the costs of projects; or

(B) refund bonds or other obligations issued to pay the costs of projects.

[Sections 508.303-508.350 reserved for expansion]

SUBCHAPTER G. WITHDRAWAL FROM MERGED CORPORATION

Sec. 508.351. WITHDRAWAL FROM MERGED CORPORATION. (a) A municipality may withdraw from a merged corporation if all of the municipality's obligations and entitlements relating to the merged corporation have been properly settled.

(b) The municipality withdrawing from the merged corporation may not receive any assets, including money or other property, of the merged corporation until the existence of the merged corporation is terminated as provided by Section 508.354.

Sec. 508.352. DISTRIBUTION OF NET EARNINGS. If the board of directors of a merged corporation determines that sufficient provisions have been made to pay the corporation's expenses, bonds, and other obligations, any net earnings may be distributed among the authorizing municipalities of the corporation as a percentage of the per capita contributions made by each of the municipalities during the corporation's existence, including sales and use tax delivered to the corporation.

Sec. 508.353. EFFECT OF WITHDRAWAL OF MUNICIPALITY. A merged corporation may not terminate its existence as a result of the withdrawal of a municipality from the merged corporation if at least two authorizing municipalities remain in the corporation.

Sec. 508.354. DISTRIBUTION OF ASSETS. (a) Subject to Subsection (b), on termination of the existence of a merged corporation, any assets of the corporation remaining after all the corporation's obligations have been met shall be distributed among the authorizing municipalities as a percentage of the per capita contributions made by each of the municipalities during the corporation's existence, including sales and use tax delivered to the corporation.

(b) A municipality that withdraws from a merged corporation is entitled to receive a distribution under Subsection (a) that is reduced by one percent for each year the merged corporation operated without the municipality's membership in the corporation.

[Sections 508.355-508.400 reserved for expansion]

SUBCHAPTER H. TERMINATION OF CORPORATION

Sec. 508.401. APPLICATION OF SUBCHAPTER. This subchapter applies to a transportation development corporation or to a merged corporation with one remaining authorizing municipality.

Sec. 508.402. ELECTION TO TERMINATE EXISTENCE OF CORPORATION ON PETITION. (a) The governing body of an authorizing municipality shall order an election on the termination of the existence of the transportation development corporation on receipt of a petition requesting the election that is signed by at least 10 percent of the registered voters of the municipality.

(b) The authorizing municipality shall hold the election on the first available uniform election date that occurs after the time required by Section 3.005, Election Code.

Sec. 508.403. BALLOT. The ballot for an election held under Section 508.402 shall be printed to permit voting for or against the proposition: "Termination of the __________ (name of corporation)."

Sec. 508.404. TERMINATION OF EXISTENCE OF CORPORATION. (a) If a majority of the votes cast at an election held under Section 508.402 approve the termination, the transportation development corporation shall:

(1) continue operations only as necessary to meet the obligations the corporation incurred before the date of the election, including paying the principal of and interest on the corporation's bonds; and

(2) liquidate the corporation's assets and apply the proceeds to satisfy the corporation's obligations, to the extent practicable.

(b) After the transportation development corporation has satisfied all of the corporation's obligations, any remaining assets of the corporation shall be transferred to the authorizing municipality, and the existence of the corporation is terminated.

(c) The authorizing municipality shall promptly notify the comptroller and the secretary of state of the date the existence of a transportation development corporation is terminated under this subchapter.

(d) A tax imposed under this chapter may not be collected after the last day of the first calendar quarter that begins after the authorizing municipality provides notice under Subsection (c).

Sec. 508.405. ELECTION REJECTING TERMINATION. If less than a majority of the votes cast at an election held under Section 508.402 approve the termination, Section 508.404 has no effect.

SECTION 2. Subtitle C, Title 3, Tax Code, is amended by adding Chapter 328 to read as follows:

CHAPTER 328. SALES AND USE TAX FOR TRANSPORTATION IN CERTAIN

MUNICIPALITIES

Sec. 328.001. DEFINITIONS. In this chapter:

(1) "Transit development district" means the territory of one or more authorizing municipalities of a transportation development corporation created under Chapter 508, Local Government Code.

(2) "Transit sales and use tax" means a sales and use tax imposed for the support of a transit development district or for the support of transportation services authorized under the Transportation Code.

Sec. 328.002. APPLICABILITY OF CHAPTER. This chapter applies only to a transit development district located in a county:

(1) with a population of 1.4 million or more but less than 3.4 million; or

(2) adjacent to a county with a population of 1.4 million or more but less than 3.4 million.

Sec. 328.003. TRANSIT SALES AND USE TAX NOT COUNTED IN COMBINED LOCAL TAX RATE. Notwithstanding any other law, the rate of a transit sales and use tax imposed within the territory of a transit development district to which this chapter applies or a municipality that is included within the boundaries of a rapid transit authority created under Chapter 451 or 452, Transportation Code, may not be considered in determining the combined or overlapping rate of local sales and use taxes in the district for any purpose other than as provided in Section 328.004.

Sec. 328.004. LIMITATION FOR TRANSIT SALES AND USE TAXES. Notwithstanding any other law, the rate of all transit sales and use taxes imposed within the territory of a transportation development district to which this chapter applies or a municipality that is included within the boundaries of a rapid transit authority created under Chapter 451 or 452, Transportation Code, may not exceed one percent at any location in the district.

SECTION 3. Sections 321.101(b) and (e), Tax Code, are amended to read as follows:

(b) A municipality that is not disqualified may, by a majority vote of the qualified voters of the municipality voting at an election held for that purpose, adopt an additional sales and use tax for the benefit of the municipality in accordance with this chapter. A municipality, other than a municipality included in a transportation development district to which Chapter 328 applies, is disqualified from adopting the additional sales and use tax if the municipality:

(1) is included within the boundaries of a rapid transit authority created under Chapter 451, Transportation Code;

(2) is included within the boundaries of a regional transportation authority created under Chapter 452, Transportation Code, by a principal municipality having a population of less than 800,000, unless the municipality has a population of 400,000 or more and is located in more than one county;

(3) is wholly or partly located in a county that contains territory within the boundaries of a regional transportation authority created under Chapter 452, Transportation Code, by a principal municipality having a population in excess of 800,000, unless:

(A) the municipality is a contiguous municipality; or

(B) the municipality is not included within the boundaries of the authority and is located wholly or partly in a county in which fewer than 250 persons are residents of both the county and the authority according to the most recent federal census; or

(C) the municipality is not and on January 1, 1993, was not included within the boundaries of the authority; or

(4) imposes a tax authorized by Chapter 453, Transportation Code.

(e) An authority created under Chapter 451 or 452, Transportation Code, is prohibited from imposing the tax provided for by those chapters if within the boundaries of the authority there is a municipality, other than a municipality included in a transportation development district to which Chapter 328 applies, that has adopted the additional sales and use tax provided for by this section.

SECTION 4. This Act takes effect October 1, 2009.