By: Oliveira H.B. No. 4613
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to the creation, operations and financing of tax increment
  reinvestment zones.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 311.002(1), Tax Code is amended as
  follows:
               (1)  "Project costs" means the expenditures made or
  estimated to be made and monetary obligations incurred or estimated
  to be incurred by the municipality or county establishing a
  reinvestment zone that are listed in the project plan as costs of
  public works or public improvements, programs, or other projects
  [in] benefitting the zone, plus other costs incidental to those
  expenditures and obligations.  "Project costs" include:
                     (A)  capital costs, including the actual costs of
  the acquisition and construction of public works, public
  improvements, new buildings, structures, and fixtures; the actual
  costs of the acquisition, demolition, alteration, remodeling,
  repair, or reconstruction of existing buildings, structures, and
  fixtures; the actual costs of the remediation of conditions that
  contaminate public or private land or buildings, the preservation
  of the facade of a private or public building, and the demolition of
  public or private buildings; and the actual costs of the
  acquisition of land and equipment and the clearing and grading of
  land;
                     (B)  financing costs, including all interest paid
  to holders of evidences of indebtedness or other obligations issued
  to pay for project costs and any premium paid over the principal
  amount of the obligations because of the redemption of the
  obligations before maturity;
                     (C)  real property assembly costs;
                     (D)  professional service costs, including those
  incurred for architectural, planning, engineering, and legal
  advice and services;
                     (E)  imputed administrative costs, including
  reasonable charges for the time spent by employees of the
  municipality or county in connection with the implementation of a
  project plan;
                     (F)  relocation costs;
                     (G)  organizational costs, including the costs of
  conducting environmental impact studies or other studies, the cost
  of publicizing the creation of the zone, and the cost of
  implementing the project plan for the zone;
                     (H)  interest before and during construction and
  for one year after completion of construction, whether or not
  capitalized;
                     (I)  the cost of operating the reinvestment zone
  and project facilities;
                     (J)  the amount of any contributions made by the
  municipality or county from general revenue for the implementation
  of the project plan; [and]
                     (K)  a program described in Section 311.310(h) of
  this chapter; and
                     (L)  payments made at the discretion of the
  governing body of the municipality or county that the governing
  body finds necessary or convenient to the creation of the zone or to
  the implementation of the project plans for the zone.
         SECTION 2.  Sections 311.003(a) and (b), Tax Code, are
  amended as follows:
         (a)  The governing body of a municipality by ordinance or the
  governing body of a county by order may designate a [contiguous]
  geographic area in the jurisdiction of the municipality or county
  to be a reinvestment zone to promote development or redevelopment
  of the area if the governing body determines that development or
  redevelopment would not occur solely through private investment in
  the reasonably foreseeable future.  The area need not be contiguous
  if the governing body finds that the areas are substantially
  related.
         (b)  Before adopting an ordinance or order providing for a
  reinvestment zone, the governing body of the municipality or county
  must prepare a preliminary reinvestment zone financing plan.  [As
  soon as the plan is completed, a copy of the plan must be sent to the
  governing body of each taxing unit that levies taxes on real
  property in the proposed zone.]
         SECTION 3.  Section 311.005(a) is amended to read as
  follows:
         (a)  To be designated as a reinvestment zone, an area must:
               (1) substantially arrest or impair the sound growth of
  the municipality or county creating the zone, retard the provision
  of housing accommodations, or constitute an economic or social
  liability and be a menace to the public health, safety, morals, or
  welfare in its present condition and use because of the presence of:
                     (A)  a substantial number of substandard, slum,
  deteriorated, or deteriorating structures;
                     (B)  the predominance of defective or inadequate
  sidewalk or street layout;
                     (C)  faulty lot layout in relation to size,
  adequacy, accessibility, or usefulness;
                     (D)  unsanitary or unsafe conditions;
                     (E)  the deterioration of site or other
  improvements;
                     (F)  tax or special assessment delinquency
  exceeding the fair value of the land;
                     (G)  defective or unusual conditions of title;
                     (H)  conditions that endanger life or property by
  fire or other cause; or
                     (I)  structures, other than single-family
  residential structures, less than 10 percent of the square footage
  of which has been used for commercial, industrial, or residential
  purposes during the preceding 12 years, if the municipality has a
  population of 100,000 or more;
               (2)  be predominantly open, undeveloped, or
  underdeveloped and, because of obsolete platting, deterioration of
  structures or site improvements, or other factors, substantially
  impair or arrest the sound growth of the municipality or county;
               (3)  be in a federally assisted new community located
  in the municipality or county or in an area immediately adjacent to
  a federally assisted new community; or
               (4)  be an area described in a petition requesting that
  the area be designated as a reinvestment zone, if the petition is
  submitted to the governing body of the municipality or county by the
  owners of property constituting at least 50 percent of the
  appraised value of the property in the area according to the most
  recent certified appraisal roll for the county in which the area is
  located.
         SECTION 4.  Section 311.007, Tax Code, is amended as
  follows:
         § 311.007.  CHANGING BOUNDARIES OR TERM OF EXISTING ZONE.  
  (a)  [Subject to the limitations provided by Section 311.006, if
  applicable, the] The boundaries of an existing reinvestment zone
  may be reduced or enlarged by ordinance or resolution of the
  governing body of the municipality or by order or resolution of the
  governing body of the county that created the zone.
         (b)  The governing body of the municipality or county may
  that created an existing reinvestment zone may by ordinance or
  resolution extend the term of the zone after notice and hearing in
  the same manner as provided for the creation of the zone; provided
  that no other taxing entity shall be required to participate in the
  zone for the extended term except by written agreement. [enlarge an
  existing reinvestment zone to include an area described in a
  petition requesting that the area be included in the zone if the
  petition is submitted to the governing body of the municipality or
  county by the owners of property constituting at least 50 percent of
  the appraised value of the property in the area according to the
  most recent certified appraisal roll for the county in which the
  area is located.   The composition of the board of directors of the
  zone continues to be governed by Section 311.009(a) or (b),
  whichever applied to the zone immediately before the enlargement of
  the zone, except that the membership of the board must conform to
  the requirements of the applicable subsection of Section 311.009 as
  applied to the zone after its enlargement.   The provision of Section
  311.006(b) relating to the amount of property used for residential
  purposes that may be included in the zone does not apply to the
  enlargement of a zone under this subsection.]
         SECTION 5.  Section 311.008(b)(2), Tax Code is amended to
  read as follows:
               (2)  acquire real property by purchase, condemnation,
  or other means [to implement project plans] and sell real [that]
  property, on the terms and conditions and in the manner it considers
  advisable to implement the project plans;
         SECTION 6.  Section 311.009(a), (b), and (e), Tax Code, are
  amended to read as follows:
         (a)  Except as provided by Subsection (b), the board of
  directors of a reinvestment zone consists of at least five and not
  more than 15 members, unless more than 15 members are required to
  satisfy the requirements of this subsection.  Each taxing unit
  other than the municipality or county that created the zone that
  levies taxes on real property in the zone may appoint one member of
  the board if the taxing unit has approved the payment of all or part
  of the tax increment produced by the unit into the tax increment
  fund.  A unit may waive its right to appoint a director.  The
  governing body of the municipality or county that created the zone
  may appoint not more than 10 directors to the board; except that if
  there are fewer than five directors appointed by taxing units other
  than the municipality or county, the governing body of the
  municipality or county may appoint more than 10 members as long as
  the total membership of the board does not exceed 15.
         (b)  If the zone was designated under Section 311.005(a)(4),
  the board of directors of the zone consists of nine members.  Each
  taxing unit [school district, county, or municipality,] other than
  the municipality or county that created the zone, that levies taxes
  on real property in the zone may appoint one member of the board if
  the taxing unit [school district, county, or municipality] has
  approved the payment of all or part of the tax increment produced by
  the unit into the tax increment fund.  The member of the state
  senate in whose district the zone is located is a member of the
  board, and the member of the state house of representatives in whose
  district the zone is located is a member of the board, except that
  either may designate another individual to serve in the member's
  place at the pleasure of the member.  If the zone is located in more
  than one senate or house district, this subsection applies only to
  the senator or representative in whose district a larger portion of
  the zone is located than any other senate or house district, as
  applicable.  The remaining members of the board are appointed by the
  governing body of the municipality or county that created the zone.
         (e)  To be eligible for appointment to the board by the
  governing body of the municipality or county that created the zone,
  an individual must:
               (1)  if the board is covered by Subsection (a):
                     (A)  be a resident citizen of the State of Texas 
  [qualified voter of the municipality or county, as applicable]; and
  [or]
                     (B)  be at least 18 years of age [and own real
  property in the zone, whether or not the individual resides in the
  municipality or county]; or
               (2)  if the board is covered by Subsection (b):
                     (A)  be at least 18 years of age; and
                     (B)  own real property in the zone or be an
  employee, tenant, or agent of a person that owns real property in
  the zone.
         SECTION 7.  Section 311.010(h), Tax Code, is amended to read
  as follows:
         (h)  Subject to the approval of the governing body of the
  municipality or county that created the zone, the board of
  directors of a reinvestment zone, as necessary or convenient to
  implement the project plan and reinvestment zone financing plan and
  achieve their purposes, may establish and provide for the
  administration of one or more programs for the public purposes of
  developing and diversifying the economy of the zone, eliminating
  unemployment and underemployment in the zone, and developing or
  expanding transportation, business, and commercial activity in the
  zone, including programs to make grants and loans [from the tax
  increment fund of the zone in an aggregate amount not to exceed the
  amount of the tax increment produced by the municipality and paid
  into the tax increment fund for the zone] for activities that
  benefit the zone and stimulate business and commercial activity in
  the zone. For purposes of this subsection, on approval of the
  municipality or county, the board of directors of the zone has all
  the powers of a municipality under Chapter 380, Local Government
  Code.  The approval required by this subsection may be granted in an
  ordinance or order approving a project plan and reinvestment zone
  financing plan or an amendment to a project plan and reinvestment
  zone financing plan.
         SECTION 8.  Section 311.011, Tax Code, is amended by
  amending subsections (a), (b), (c), (d) and (g) and adding a new
  subsection (h) as follows:
         § 311.011.  PROJECT AND FINANCING PLANS.  (a)  The board of
  directors of a reinvestment zone shall prepare and adopt a project
  plan and a reinvestment zone financing plan for the zone and submit
  the plans to the governing body of the municipality or county that
  created the zone. [The plans must be as consistent as possible with
  the preliminary plans developed for the zone before the creation of
  the board.]
         (b)  The project plan must include:
               (1)  a [map showing] description of existing uses and
  conditions of real property in the zone and [a map showing] proposed
  [improvements to and proposed] uses of that property;
               (2)  proposed changes of zoning ordinances, [the master
  plan of the municipality,] building codes, other municipal
  ordinances, and subdivision rules and regulations, if any, of the
  municipality or the county, if applicable; and
               (3)  [a list of estimated nonproject costs; and
               [(4)] a statement of a method of relocating persons to
  be displaced, if any, as a result of implementing the plan.
         (c)  The reinvestment zone financing plan must include:
               (1)  a detailed list describing the estimated project
  costs of the zone, including administrative expenses;
               (2)  a statement listing the proposed kind, number, and
  location of all [proposed] public works or public improvements to
  be financed by [in] the zone;
               (3)  a finding that the zone is economically feasible
  [an economic feasibility study];
               (4)  the estimated amount of bonded indebtedness to be
  incurred;
               (5)  the estimated time when related costs or monetary
  obligations are to be incurred;
               (6)  a description of the methods of financing all
  estimated project costs and the expected sources of revenue to
  finance or pay project costs, including the percentage of tax
  increment to be derived from the property taxes of each taxing unit
  anticipated to participate in the zone financing that levies taxes
  on real property in the zone;
               (7)  the current total appraised value of taxable real
  property in the zone;
               (8)  the estimated captured appraised value of the zone
  during each year of its existence; and
               (9)  the duration of the zone.
         (d)  The governing body of the municipality or county that
  created the zone must approve a project plan or reinvestment zone
  financing plan after its adoption by the board.  The approval must
  be by ordinance, in the case of a municipality, or by order, in the
  case of a county, that finds that the plan is feasible [and conforms
  to the master plan, if any, of the municipality or to subdivision
  rules and regulations, if any, of the county].
         (g)  [An amendment to the project plan or the reinvestment
  zone financing plan for a zone does not apply to a] A school
  district that participates in a [the] zone is not required to
  increase the percentage or amount of the tax increment to be
  contributed by the school district due to an amendment to the
  project plan or reinvestment zone financing plan for the zone 
  unless the governing body of the school district by official action
  approves the amendment[, if the amendment:
               (1)     has the effect of directly or indirectly
  increasing the percentage or amount of the tax increment to be
  contributed by the school district; or
               (2)     requires or authorizes the municipality or county
  creating the zone to issue additional tax increment bonds or
  notes].
         (h)  Unless specifically provided otherwise in the project
  plan and reinvestment zone financing plan, all figures contained in
  the plan shall be considered estimates, and shall not act as a
  limitation on the described items, including without limitation
  expenditures relating to project costs and participation by taxing
  units.
         SECTION 9.  Section 311.012(c), Tax Code, is amended as
  follows:
         (c)  The tax increment base of a taxing unit is the total
  [appraised] taxable value of all real property taxable by the unit
  and located in a reinvestment zone for the year in which the zone
  was designated under this chapter.  The base year for any land
  annexed into the zone is the year in which such land was annexed.
         SECTION 10.  Sections 311.013(f) and (l), Tax Code, is
  amended as follows:
         (f)  A taxing unit is not required to pay into the tax
  increment fund any of its tax increment produced from property
  located in a reinvestment zone designated under Section 311.005(a)
  or in an area added to a reinvestment zone under Section 311.007
  unless the taxing unit enters into an agreement to do so with the
  governing body of the municipality or county that created the zone.  
  A taxing unit may enter into an agreement under this subsection at
  any time before or after the zone is created or enlarged.  The
  agreement may include conditions for payment of that tax increment
  into the fund and must specify the portion of the tax increment to
  be paid into the fund and the years for which that tax increment is
  to be paid into the fund.  The agreement may specify that the taxing
  unit's participation may be computed with respect to a base year
  later than the original base year of the zone. The agreement and
  the conditions in the agreement are binding on the taxing unit, the
  municipality or county, and the board of directors of the zone.
         (l)  The governing body of a municipality or a county that
  designates an area as a reinvestment zone may determine, in the
  designating ordinance or order adopted under Section 311.003 or in
  the ordinance or order adopted under Section 311.011 approving the
  reinvestment zone financing plan for the zone, the portion of the
  tax increment produced by the municipality or the county that the
  municipality or the county is required to pay into the tax increment
  fund for the zone. If a municipality or a county does not determine
  the portion of the tax increment produced by the municipality or the
  county that the municipality or the county is required to pay into
  the tax increment fund for a reinvestment zone, the municipality or
  the county is required to pay into the fund for the zone the entire
  tax increment produced by the municipality or the county, except as
  provided by Subsection (b)(1).
         SECTION 11.  Section 311.014(b), Tax Code, is amended to
  read as follows:
         (b)  Money may be disbursed from the fund only to satisfy
  claims of holders of tax increment bonds or notes issued for the
  zone, to pay project costs for the zone, to make payments pursuant
  to an agreement made under Section 311.010(b) or a program under
  Section 311.010(h) dedicating revenue from the tax increment fund,
  or to repay other obligations incurred for the zone.
         SECTION 12.  Sections 311.015(a) and (l), Tax Code, are
  amended as follows:
         (a)  A municipality creating a reinvestment zone may issue
  tax increment bonds or notes, the proceeds of which may be used to
  make payments pursuant to agreements made under Section 311.010(b),
  to make payments pursuant to programs under Section 311.010(h), and
  to pay project costs for the reinvestment zone on behalf of which
  the bonds or notes were issued, or to satisfy claims of holders of
  the bonds or notes.  The municipality may issue refunding bonds or
  notes for the payment or retirement of tax increment bonds or notes
  previously issued by it.
         (l)  A tax increment bond or note must mature within 20 years
  of the date of issueon or before the date by which the final
  payments of tax increment into the tax increment fund are due.
         SECTION 13.  Section 311.016(a), Tax Code, is amended to
  read as follows:
         (a)  On or before the 150th [90th] day following the end of
  the fiscal year of the municipality or county, the governing body of
  a municipality or county shall submit to the chief executive
  officer of each taxing unit that levies property taxes on real
  property in a reinvestment zone created by the municipality or
  county a report on the status of the zone.  The report must include:
               (1)  the amount and source of revenue in the tax
  increment fund established for the zone;
               (2)  the amount and purpose of expenditures from the
  fund;
               (3)  the amount of principal and interest due on
  outstanding bonded indebtedness;
               (4)  the tax increment base and current captured
  appraised value retained by the zone; and
               (5)  the captured appraised value shared by the
  municipality or county and other taxing units, the total amount of
  tax increments received, and any additional information necessary
  to demonstrate compliance with the tax increment financing plan
  adopted by the governing body of the municipality or county.
         SECTION 14.  Section 311.017, Tax Code, is amended by
  amending Subsection (a) and adding new Subsections (a-1), (c), and
  (d) to read as follows:
         (a)  A reinvestment zone terminates on the earlier of:
               (1)  the termination date designated in the ordinance
  or order, as applicable, creating the zone or an earlier or later
  termination date designated by an ordinance or order adopted
  [subsequent to the ordinance or order creating the zone] under
  Section 311.007(b); or
               (2)  the date on which all project costs, tax increment
  bonds and interest on those bonds, and other obligations have been
  paid in full.
         (a-1)  Notwithstanding the designation of a later
  termination date under Section 311.007(b), a taxing unit that taxes
  real property located in the zone, other than the municipality or
  county that created the zone, is not required to pay any of its tax
  increment into the tax increment fund for the zone after the
  termination date designated in the ordinance or order creating the
  zone unless the governing body of the taxing unit enters into an
  agreement to do so with the governing body of the municipality or
  county that created the zone.
         (c)  With respect to a zone established under Section
  311.0031, the zone shall terminate on the date on which all project
  costs, tax increment bonds and interest on those bonds, and other
  obligations have been paid in full, notwithstanding the expiration
  of the designation of the area under the specified law.
         (d)  If tax increment bonds or obligations of the zone are
  outstanding when the zone is terminated, the zone shall remain in
  existence solely for the purpose of fully paying its obligations or
  the tax increment bonds.  The termination is effective when all zone
  obligations or tax increment bonds have been fully paid.
         SECTION 15.  Chapter 311, Tax Code, is amended by adding a
  new Section 311.021, as follows:
         Sec. 311.021.  ACT OR PROCEEDING PRESUMED VALID.  (a)  A
  governmental act or proceeding relating to the designation,
  operation, or administration of a reinvestment zone or
  implementation of a project plan or reinvestment zone financing
  plan under this chapter of a municipality or county, zone board, or
  an entity acting pursuant to Section 311.010(f), is conclusively
  presumed, as of the date it occurred, valid and to have occurred in
  accordance with all applicable statutes and rules if:
               (1)  the second anniversary of the effective date of
  the act or proceeding has expired; and
               (2)  a lawsuit to annul or invalidate the act or
  proceeding has not been filed on or before that second anniversary.
         (b)  This section does not apply to:
               (1)  an act or proceeding that was void at the time it
  occurred;
               (2)  an act or proceeding that, under a statute of this
  state or the United States, was a misdemeanor or felony at the time
  the act or proceeding occurred;
               (3)  a rule that, at the time it was passed, was
  preempted by a statute of this state or the United States, including
  Section 1.06 or 109.57, Alcoholic Beverage Code; or
               (4)  a matter that on the effective date of this
  section:
                     (A)  is involved in litigation if the litigation
  ultimately results in the matter being held invalid by a final
  judgment of a court; or
                     (B)  has been held invalid by a final judgment of a
  court.
         SECTION 16.  The following provisions of the Tax Code are
  repealed:
               (1)  Section 311.003(e), (f), and (g);
               (2)  Section 311.006;
               (3)  Section 311.01005;
               (4)  Section 311.007(b);
               (5)  Sections 311.013(d) and (e); and
               (6)  Section 311.016(b) as amended by Acts 2005, 79th
  Leg., R.S., Ch. 977, Sec.2.
         SECTION 17.  Section 42.2516, Education Code, is amended to
  designate existing subsections (k) and (l) as (l) and (m),
  respectively, and to add a new subsection (k), as follows:
         (k)  In computing the local revenue per student available to
  a school district there shall be deducted from the local revenue
  available to the school district the amount of taxes paid by the
  school district into a tax increment reinvestment zone under
  Chapter 311, Tax Code.
         SECTION 18.  (a)  The legislature validates and confirms all
  governmental acts and proceedings that were taken before the
  effective date of this Act and relate to or are associated with the
  designation, operation, or administration of a reinvestment zone or
  implementation of a project plan or reinvestment zone financing
  plan under Chapter 311, Tax Code, of a municipality or county, zone
  board, or an entity acting pursuant to Section 311.010(f),
  including the extension of the term of a reinvestment zone, as of
  the dates on which they occurred. The acts and proceedings may not
  be held invalid because they were not in accordance with Chapter
  311, Tax Code, or other law.
         (b)  Subsection (a) of this section does not apply to any
  matter that on the effective date of this Act:
               (1)  is involved in litigation if the litigation
  ultimately results in the matter being held invalid by a final
  judgment of a court; or
               (2)  has been held invalid by a final judgment of a
  court.
         SECTION 19.  EFFECTIVE DATE.  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, 2009.