S.B. No. 978
 
 
 
 
AN ACT
  relating to the creation and financing of public improvement
  districts.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Subchapter A, Chapter 372, Local Government
  Code, is amended to read as follows:
  SUBCHAPTER A. PUBLIC IMPROVEMENT DISTRICTS
         Sec. 372.001.  SHORT TITLE. This subchapter may be cited as
  the Public Improvement District Assessment Act.
         Sec. 372.0015.  DEFINITIONS [DEFINITION]. In this
  subchapter:
               (1)  "Authorized instrumentality" means a public
  facility corporation created by the governing body of a
  municipality or county under Chapter 303 or a local government
  corporation created by the governing body of a municipality or
  county under Subchapter D, Chapter 431, Transportation Code.
               (2)  "Extraterritorial[, "extraterritorial]
  jurisdiction" means extraterritorial jurisdiction of a
  municipality as determined under Chapter 42.
               (3)  "Public improvement district" or "district" means
  an area defined by the governing body of a municipality or county
  that:
                     (A)  consists of one or more contiguous or
  noncontiguous tracts of land; and
                     (B)  will be specially benefited as determined by
  the municipality or county by any or all of the public improvements
  or services.
               (4)  "Qualified costs" means the costs and expenses
  incurred in establishing, administering, managing, and operating a
  public improvement district, including:
                     (A)  costs and expenses of or related to the
  construction of an improvement project;
                     (B)  financing of an improvement project by a
  municipality, county, or authorized instrumentality, including the
  debt service requirements owed or to be owed under installment
  purchase or reimbursement contracts, temporary notes, time
  warrants, revenue bonds, special assessment bonds, or certificates
  of obligation, including reserve funds and capitalized interest;
                     (C)  costs and expenses of or related to the
  negotiation, development, and execution of the obligations
  described by Paragraph (B);
                     (D)  costs and expenses of or related to credit
  and interest rate management agreements entered into under Chapter
  1371, Government Code;
                     (E)  costs of attorneys and other professional
  advisors, including consultants; and
                     (F)  costs related to the administrative
  oversight of public improvements, services, and operations of the
  public improvement district.
               (5)  "Revenue bonds" means bonds, notes, or other
  securities issued by a municipality, county, or authorized
  instrumentality that are payable from and secured by liens on all or
  part, or a combination of, the revenue derived from installment
  payments of special assessments plus any other revenues, donations,
  grants, or income described by Section 372.026(e).
               (6)  "Special assessment bonds" means bonds, notes, or
  other securities issued by a municipality, county, or authorized
  instrumentality that are payable solely from and secured by special
  assessments levied by the governing body of the municipality or
  county in a public improvement district.
               (7)  "Special district" means a political subdivision
  of this state with a limited geographic area created by local law or
  under general law for a special purpose.
         Sec. 372.002.  EXERCISE OF POWERS. (a)  A public
  improvement district is not a separate body politic or corporate
  from the municipality or county that created the district.
         (b)  Subject to Section 372.010(c), powers [Powers] granted
  under this subchapter in an area comprising a public improvement
  district may be exercised by a municipality or county on and after
  the date [in which] the governing body of the municipality or county
  [initiates or] receives a petition requesting the establishment of
  a public improvement district that complies[. A petition must
  comply] with the requirements of Section 372.005.
         (c)  The powers granted under this subchapter may be
  exercised by the governing body of any other political subdivision
  if the law creating or governing the political subdivision grants
  the political subdivision authority described by this subchapter.
  The governing body of the political subdivision has the same powers
  and is subject to the same limitations as are applicable to the
  governing body of a municipality or a county under this subchapter
  unless and except as modified by the law creating or governing the
  political subdivision.
         Sec. 372.003.  AUTHORIZED IMPROVEMENTS AND SERVICES.
  (a)  If the governing body of a municipality or county finds that it
  promotes the interests of the municipality or county, the governing
  body may create one or more public improvement districts under this
  subchapter and undertake one or more [an] improvement projects
  [project] that confer [confers] a special benefit on the property
  located in the public improvement district [a definable part of the
  municipality or county or the municipality's extraterritorial
  jurisdiction]. A project may be undertaken within or outside the
  district in the municipality or county or in the municipality's
  extraterritorial jurisdiction if the project benefits the
  district.
         (b)  A public improvement project may include:
               (1)  landscaping;
               (2)  erection of fountains, distinctive lighting, and
  signs;
               (3)  acquiring, constructing, improving, repairing,
  widening, narrowing, closing, or rerouting of sidewalks or of
  streets, roads, highways, bridges, culverts, water retention
  walls, [any other roadways,] or related [their] rights-of-way owned
  by or to be conveyed to the municipality, the county, the federal
  government, or another political subdivision or entity exercising
  powers granted under this subchapter;
               (4)  construction or improvement of pedestrian malls;
               (5)  acquisition and installation of pieces of art;
               (6)  acquisition, construction, or improvement of
  [libraries;
               [(7)  acquisition, construction, or improvement of]
  off-street parking facilities;
               (7) [(8)]  acquisition, construction, or improvement[,
  or rerouting] of mass transportation facilities, including light
  rail mass transit, streetcar, or similar systems, and related
  vehicle parking facilities;
               (8) [(9)]  acquisition, construction, or improvement
  of water, wastewater, or drainage facilities or improvements;
               (9) [(10)]  the establishment or improvement of parks,
  playgrounds, lakes, and open spaces, including paths, trails, boat
  docks, and wharves;
               (10)  acquisition, construction, or improvement of
  other public projects that are determined by the municipality or
  county to promote the interests of the municipality or county and to
  be of a special benefit to the public improvement district,
  including:
                     (A)  community centers, recreation centers, and
  recreation facilities;
                     (B)  libraries;
                     (C)  facilities for police, sheriffs, or
  firefighters;
                     (D)  municipal or county administration centers;
  and
                     (E)  other governmental buildings for the
  provision of governmental services;
               (11)  acquisition, construction, or improvement of
  other public projects, facilities, or services required by a
  development agreement, interlocal agreement, zoning regulation, or
  permit issued by a municipality or county having jurisdiction in
  the public improvement district;
               (12)  acquisition, construction, maintenance, or
  improvement of buildings and other facilities commonly used for
  teaching, research, or the preservation of knowledge by an
  institution of higher education or for auxiliary purposes of the
  institution, including administration, student services and
  housing, athletics, performing arts, and alumni support;
               (13)  [(11)     projects similar to those listed in
  Subdivisions (1)-(10);
               [(12)]  acquisition, by purchase or otherwise, of real
  property in connection with an authorized improvement;
               (14) [(13)]  special supplemental services for
  improvement and promotion of the district, including services
  relating to:
                     (A)  advertising;
                     (B)  [,] promotion;
                     (C)  [,] health and sanitation;
                     (D)  [,] water and wastewater;
                     (E)  enhanced fire protection, police, sheriff,
  and other[,] public safety and[,] security;
                     (F)  [,] business recruitment;
                     (G)  [,] development;
                     (H)  [,] recreation;[,] and
                     (I) cultural enhancement; and
               (15)acquisition, construction, or improvement of a rainwater harvesting system[(14)payment of expenses incurred in the establishment, administration, and operation of the district].
  a rainwater harvesting system [(14)     payment of expenses  [(14)     payment of expenses
  incurred in the establishment, administration, and operation of
  the district].].
         (c)  A public improvement project may include or may be
  limited to the provision of all or any part of the services
  described by Subsection (b)(14) [(b)(13)].
         (d)  A municipality that exercises powers under this
  subchapter may establish a public improvement district in the
  corporate limits or the extraterritorial jurisdiction of the
  municipality. A county or other political subdivision that
  exercises powers under this subchapter may establish a public
  improvement district in the county or the area of the political
  subdivision, including in the corporate limits or the
  extraterritorial jurisdiction of a municipality unless within 30
  days after the date notice is provided to the municipality of an [a
  county's] action to approve [such] a public improvement district,
  the [a home rule] municipality objects to the district's [its]
  establishment within the municipality's corporate limits or
  extraterritorial jurisdiction.
         Sec. 372.004.  COMBINED IMPROVEMENTS. A public [An]
  improvement project may consist of an improvement on more than one
  street or of more than one type of improvement. An improvement [A]
  project described by this section may be included in one proceeding
  and financed as one improvement project.
         Sec. 372.0045.  AUTHORIZED HIGHER EDUCATION FACILITIES;
  LEASE TO INSTITUTION OF HIGHER EDUCATION. (a)  In this section,
  "institution of higher education" has the meaning assigned by
  Section 61.003, Education Code.
         (b)  The governing body of a municipality or county that
  establishes a public improvement district to finance a public
  improvement project described by Section 372.003(b)(12) may enter
  into a memorandum of understanding with an institution of higher
  education that provides educational services in the municipality or
  county under which the municipality or county leases the public
  improvement project to the institution, at a nominal rate, for use
  by the institution in providing teaching, research, public service,
  or auxiliary enterprise activities to students of the institution.
         (c)  A memorandum of understanding entered into by a
  municipality or county under this section must include adequate
  controls to ensure that the lease of the public improvement project
  promotes the municipality's or county's interests and provides a
  public benefit to the area served by the district.
         Sec. 372.005.  PETITION. (a)  A petition for the
  establishment of a public improvement district must state:
               (1)  the general nature of the proposed improvements
  [improvement];
               (2)  the estimated qualified costs [cost] of the
  improvements [improvement];
               (3)  the boundaries of the proposed [assessment]
  district;
               (4)  the proposed method of assessment, which may
  specify included or excluded classes of assessable property;
               (5)  [the proposed apportionment of cost between the
  public improvement district and the municipality or county as a
  whole;
               [(6)]  whether the management of the district is to be
  by:
                     (A)  the municipality;
                     (B)  the [or] county;
                     (C)  an authorized instrumentality;
                     (D)  [,] the private sector;[,] or
                     (E)  a partnership between the private sector and
  one of the entities described by Paragraphs (A)-(C) [municipality
  or county and the private sector];
               (6) [(7)]  that the persons signing the petition
  request or concur with the establishment of the district; and
               (7) [(8)]  that an advisory body may be established or
  an authorized instrumentality may be incorporated to develop and
  recommend an improvement plan to the governing body of the
  municipality or county.
         (b)  The petition is sufficient if signed by:
               (1)  owners of taxable real property representing more
  than 50 percent of the appraised value of taxable real property
  liable for assessment under the proposal, as determined by the
  current roll of the appraisal district in which the property is
  located; and
               (2)  record owners of real property liable for
  assessment under the proposal who:
                     (A)  constitute more than 50 percent of all record
  owners of property that is liable for assessment under the
  proposal; or
                     (B)  own taxable real property that constitutes
  more than 50 percent of the area of all taxable real property that
  is liable for assessment under the proposal.
         (c)  A [The] petition filed with the municipality may be
  filed with the municipal secretary or other officer performing the
  functions of the municipal secretary. A petition filed with the
  county may be filed with the county clerk or other officer
  designated by the commissioners court. A petition filed with any
  other political subdivision exercising powers under this
  subchapter may be filed with the political subdivision's governing
  body.
         Sec. 372.006.  FINDINGS. (a)  If a petition that complies
  with this subchapter is filed, the governing body of the
  municipality or county may make findings by resolution as to:
               (1)  the advisability of the proposed improvements;
               (2)  the [improvement, its] estimated qualified costs
  of the proposed improvements; and
               (3)  [cost,] the method of assessment[, and the
  apportionment of cost between the proposed improvement district and
  the municipality or county as a whole].
         (b)  The governing body's findings under this section are
  conclusive.
         Sec. 372.007.  FEASIBILITY REPORT. (a)  Before holding the
  hearing required by Section 372.009, the governing body of the
  municipality may use the services of municipal employees, the
  governing body of the county may use the services of county
  employees, or the governing body of the municipality or county may
  employ consultants to prepare a report to determine whether
  improvements [an improvement] should be made as proposed by
  petition or otherwise or whether improvements [the improvement]
  should be made in combination with other improvements authorized
  under this subchapter. The governing body may also require that a
  preliminary estimate of the qualified costs [cost] of improvements
  [the improvement] or a combination of improvements be made.
         (b)  For the purpose of determining the feasibility and
  desirability of a public [an] improvement district, the governing
  body may take other preliminary steps before the hearing required
  by Section 372.009 and[,] before establishing a public improvement
  district[, or before entering into a contract].
         Sec. 372.008.  ADVISORY BODY. (a)  The [After receiving a
  petition that complies with Section 372.005, the] governing body of
  the municipality or county, on the governing body's own initiative
  or after receiving a petition that complies with Section 372.005,
  may appoint an advisory body with the responsibility of developing
  and recommending an improvement plan to the governing body.
         (b)  The composition of an [the] advisory body, if
  established, must include:
               (1)  owners of taxable real property representing more
  than 50 percent of the appraised value of taxable real property
  liable for assessment under the proposal, as determined by the
  current roll of the appraisal district in which the property is
  located; and
               (2)  record owners of real property liable for
  assessment under the proposal who:
                     (A)  constitute more than 50 percent of all record
  owners of property that is liable for assessment under the
  proposal; or
                     (B)  own taxable real property that constitutes
  more than 50 percent of the area of all taxable real property that
  is liable for assessment under the proposal.
         (c)  The members of the advisory body serve at the will of the
  governing body of the municipality or county creating the public
  improvement district and may be removed at any time.
         Sec. 372.009.  HEARING. (a)  A public improvement district
  may be established and improvements provided by the district may be
  financed under this subchapter only after the governing body of the
  municipality or county holds a public hearing on the advisability
  of the improvements [improvement].
         (b)  The hearing may be adjourned from time to time until the
  governing body makes findings by resolution as to:
               (1)  the advisability of each [the] improvement;
               (2)  the nature of each [the] improvement;
               (3)  the estimated qualified costs [cost] of each [the]
  improvement;
               (4)  the boundaries of the [public improvement]
  district; and
               (5)  the method of assessment[; and
               [(6)     the apportionment of costs between the district
  and the municipality or county as a whole].
         (c)  Notice of the hearing must be given in a newspaper of
  general circulation in the municipality or county. If any part of
  the public improvement district is to be located in the
  municipality's extraterritorial jurisdiction or if any part of the
  improvements is to be undertaken in the municipality's
  extraterritorial jurisdiction, the notice must also be filed with
  the municipal secretary or other officer performing the duties of
  the municipal secretary and published [given] in a newspaper of
  general circulation in the part of the extraterritorial
  jurisdiction in which the district is to be located or in which the
  improvements are to be undertaken. The final publication of notice
  must be made before the 15th day before the date of the hearing. The
  notice must state:
               (1)  the time and place of the hearing;
               (2)  the general nature of the proposed improvements
  [improvement];
               (3)  the estimated qualified costs [cost] of the
  proposed improvements [improvement];
               (4)  the boundaries of the proposed public improvement
  [assessment] district; and
               (5)  the proposed method of assessment[; and
               [(6)     the proposed apportionment of cost between the
  improvement district and the municipality or county as a whole].
         (d)  Written notice containing the information required by
  Subsection (c) must be mailed before the 15th day before the date of
  the hearing. The notice must be addressed to "Property Owner" and
  mailed to the current address of the owner, as reflected on tax
  rolls, of property subject to assessment under the proposed public
  improvement district.
         Sec. 372.010.  IMPROVEMENT ORDER. (a)  During the six-month
  period after the date of the final adjournment of the hearing under
  Section 372.009, the governing body of the municipality or county
  may authorize the creation of a public [an] improvement district
  subject to Section 372.012 if, by majority vote of all members of
  the governing body, the governing body adopts [members adopt] a
  resolution authorizing the district in accordance with its finding
  as to the advisability of the improvements [improvement].
         (b)  An authorization takes effect when it has been published
  one time in a newspaper of general circulation in the municipality
  or county. If any part of the [improvement] district is located in
  the municipality's extraterritorial jurisdiction or if any part of
  the improvements is to be undertaken in the municipality's
  extraterritorial jurisdiction, the authorization does not take
  effect until the notice is also given one time in a newspaper of
  general circulation in the part of the extraterritorial
  jurisdiction in which the district is located or in which the
  improvements are to be undertaken.
         (c)  Actual construction of improvements [an improvement]
  may not begin, and acquisition of existing improvements may not
  occur, until after the 20th day after the date the authorization
  takes effect and may not begin if during that 20-day period written
  protests signed by at least two-thirds of the owners of record of
  property within the [improvement] district or by the owners of
  record of property comprising at least two-thirds of the total area
  of the district are filed with the municipal [or county] secretary
  or other officer performing the duties of the municipal [or county]
  secretary or the county clerk or other officer designated by the
  commissioners court. A person whose name appears on a protest may
  withdraw the name from the protest at any time before the governing
  body of the municipality or county convenes to determine the
  sufficiency of the protest.
         (d)  Before the levy of assessments under Section 372.017,
  the property owners in the district who signed the original
  petition may petition the governing body to amend the resolution
  creating the district adopted under Subsection (a) to amend the
  estimated qualified costs of the improvements, including adding or
  deleting improvement projects. The governing body shall provide
  notice of the owners' petition and hold a public hearing as provided
  by Section 372.009 to make findings, by amended resolution, of the
  nature and estimated qualified costs of each improvement. A county
  or other entity that proposes to amend a resolution under this
  subsection in the corporate boundaries or extraterritorial
  jurisdiction of a municipality shall provide notice to the
  municipality on or before the 30th day before the date the entity
  amends the resolution.
         Sec. 372.011.  DISSOLUTION. (a)  A public hearing may be
  [called and] held after giving notice in the same manner as a
  hearing under Section 372.009 for the purpose of dissolving a
  district if a petition requesting dissolution is filed and the
  petition contains the signatures of at least enough property owners
  in the district to make a petition sufficient under Section
  372.005(b). If the district is dissolved, the district nonetheless
  shall remain in effect for the purpose of meeting obligations of
  indebtedness for improvements.
         (b)  A district may be dissolved at the discretion of the
  governing body without a petition only if no assessments have been
  levied on property in the district or if assessments previously
  levied have been paid in full and the district has no other
  outstanding obligations. A dissolution under this subsection may
  not occur until after the governing body holds a hearing and gives
  notice in the manner required by Section 372.009.
         Sec. 372.012.  AREA OF DISTRICT. The area of a public
  improvement district to be assessed according to the findings of
  the governing body of the municipality or county establishing the
  boundaries may include contiguous and noncontiguous tracts of land
  and may be less than the area described in the proposed boundaries
  stated by the notice under Section 372.009. The area to be assessed
  may not include property not described by the notice as being within
  the proposed boundaries of the district unless a hearing is held to
  include the property and notice for the hearing is given in the same
  manner as notice under Section 372.009.
         Sec. 372.013.  SERVICE PLAN. (a)  The advisory body shall
  prepare an ongoing service plan and present the plan to the
  governing body of the municipality or county for review and
  approval. The governing body may assign responsibility for the
  plan to the employees of the governing body or an authorized
  instrumentality or to another entity instead [in the absence] of an
  advisory body.
         (b)  The plan must cover a period of at least five years and
  must also define the annual indebtedness and the projected
  qualified costs for improvements.
         (c)  The plan shall be reviewed and updated annually for the
  purpose of determining the annual budget for improvements. As part
  of the annual update, a revised assessment roll must be prepared to
  reflect any division of parcels and any reallocation of assessments
  based on the division.
         Sec. 372.014.  ASSESSMENT PLAN; PAYMENT BY EXEMPT
  JURISDICTIONS. (a)  An assessment plan must be included in the
  annual service plan prepared under Section 372.013.
         (b)  The municipality or county is responsible for payment of
  assessments against exempt municipal or county property in the
  district if any assessments are levied. Payment of assessments by
  other exempt jurisdictions must be established by contract.
         (c)  The assessment plan may require the district to be
  divided into development phases and, subject to Sections 372.016
  and 372.017, may levy assessments periodically in separate
  development phases or may stagger the collection of assessments,
  with different development phases in the district assigned
  different payment and collection dates. The development phases and
  staggered collection dates may be coordinated with the installation
  of the improvements or with the maturity dates of installation
  purchase or reimbursement contract obligations or with temporary
  notes, time warrants, or bonds [An assessment paid by the
  municipality or county under this subsection is considered to have
  been paid by special assessment for the purposes of Subsection
  (a)].
         Sec. 372.015.  DETERMINATION OF ASSESSMENT. (a)  The
  governing body of the municipality or county shall apportion the
  qualified costs [cost] of an improvement to be assessed against
  property in a public [an] improvement district. The apportionment
  shall be made on the basis of special benefits accruing to the
  property because of the improvement.
         (b)  The qualified costs [Cost] of an improvement may be
  assessed:
               (1)  equally per front foot or square foot;
               (2)  according to the value of the property as
  determined by the governing body, with or without regard to
  improvements on the property; or
               (3)  in any other manner that results in imposing equal
  shares of the qualified costs [cost] on property similarly
  benefitted.
         (c)  The governing body may establish by ordinance or order:
               (1)  reasonable classifications and formulas for the
  apportionment of the qualified costs [cost] between the
  municipality or county and the area to be assessed; and
               (2)  the methods of assessing the special benefits for
  various classes of improvements.
         (d)  The amount of assessment for each property owner may be:
               (1)  adjusted following the annual review of the
  service plan; and
               (2)  reallocated, but not increased, if an assessed
  parcel has been divided.
         (e)  Notice of any reallocation of assessments shall be given
  to the property owner of the divided parcel.
         (f)  The findings, determinations, and assessments made by
  the governing body under this section are conclusive.
         Sec. 372.016.  ASSESSMENT ROLL. (a)  The [After the total
  cost of an improvement is determined, the governing body of the]
  municipality or county shall prepare a proposed assessment roll
  based on the estimated qualified costs of the improvements. The
  roll must state the assessment against each parcel of land in the
  district and[, as determined by] the method of assessment [chosen
  by the municipality or county under this subchapter].
         (b)  The [governing body shall file the] proposed assessment
  roll must be filed with the municipal secretary or other officer
  performing the functions of the municipal secretary or in a
  district formed by a county, the county tax assessor-collector.
  The proposed assessment roll is subject to public inspection. When
  the assessment roll is filed, the appropriate designated officer
  described by this subsection shall [The governing body shall
  require the municipal secretary or other officer or county tax
  assessor-collector to] publish notice of the governing body's
  intention to consider the proposed assessments at a public hearing.
  The notice must be published in a newspaper of general circulation
  in the municipality or county before the 10th day before the date of
  the hearing. If any part of the public improvement district is
  located in the municipality's extraterritorial jurisdiction or if
  any part of the improvements is to be undertaken in the
  municipality's extraterritorial jurisdiction, the notice must also
  be published, before the 10th day before the date of the hearing, in
  a newspaper of general circulation in the part of the
  extraterritorial jurisdiction in which the district is located or
  in which the improvements are to be undertaken. The notice must
  state:
               (1)  the date, time, and place of the hearing;
               (2)  the general nature of the improvements
  [improvement];
               (3)  the qualified costs [cost] of the improvements
  [improvement];
               (4)  the boundaries of the [assessment] district; and
               (5)  that written or oral objections will be considered
  at the hearing.
         (c)  When the assessment roll is filed under Subsection (b),
  the appropriate designated [municipal secretary or other] officer
  shall mail to the owners of property liable for assessment a notice
  of the hearing. The notice must contain the information required by
  Subsection (b) and the appropriate designated [secretary or other]
  officer shall mail the notice to the last known address of the
  property owner. The failure of a property owner to receive notice
  does not invalidate the proceeding.
         Sec. 372.017.  LEVY OF ASSESSMENTS [ASSESSMENT]. (a)  At or
  on the adjournment of the hearing referred to by Section 372.016 on
  proposed assessments, the governing body of the municipality or
  county must hear and pass on any objection to a proposed assessment.
  The governing body may:
               (1)  amend a proposed assessment on any parcel; and
               (2)  initially or by amendment, provide for reductions
  of the amount of the annual assessment installments if and to the
  extent other revenues of the municipality or county of any of the
  types described by Section 372.026(e) are pledged or become
  available to pay all or part of installment purchase or
  reimbursement contract obligations or temporary notes, time
  warrants, revenue bonds, special assessment bonds, or certificates
  of obligation that are payable in whole or in part from the
  assessment installments.
         (b)  After all objections have been heard and the governing
  body has passed on the objections, the governing body by ordinance
  or order shall levy the assessment in the amount required to pay
  qualified costs as a special assessment on the property. The
  governing body by ordinance or order shall specify the method of
  payment of the assessment. The governing body may provide that
  assessments be paid in periodic installments. The installments may
  be in equal or different annual amounts, but must be in amounts each
  year necessary to meet annual qualified costs. The installments
  [for improvements and] must continue for a period and be in amounts
  necessary to retire any [the] indebtedness or obligation to pay or
  reimburse for the qualified costs, including the proper
  administration of the district [on the improvements]. The
  obligation to pay installments may be conditioned on the occurrence
  of a future event or condition if the first periodic installment
  payment of the assessment occurs on a date not later than the fifth
  anniversary of the date the assessment was levied.
         (c)  The governing body may:
               (1)  levy multiple assessments on property in the
  district to finance all or part of public improvements and must
  comply with Section 372.016 for each assessment;
               (2)  execute and deliver installment purchase or
  reimbursement contracts or temporary notes or time warrants or
  issue revenue bonds, special assessment bonds, or certificates of
  obligation to pay the qualified costs or to refund previously
  executed installment purchase or reimbursement contracts or
  temporary notes or time warrants; and
               (3)  secure the obligations described by Subdivision
  (2) by pledging one or more of the assessments levied under this
  subchapter.
         Sec. 372.018.  INTEREST ON ASSESSMENT; LIEN. (a)  An
  assessment bears interest at the rate and for the period specified
  by the governing body of the municipality or county, but may not
  exceed a rate that is [one-half of] one percent higher than the
  actual interest rate paid on any installment purchase or
  reimbursement contract obligation or temporary note or time warrant
  [the public debt] used to finance or to evidence an obligation to
  pay for the improvement. If revenue bonds, special assessment
  bonds, or certificates of obligation are issued to pay or refund any
  of the obligations described by this subsection, the annual
  interest rate is adjusted to a rate not to exceed one percent higher
  than the actual rate paid on the bonds or certificates, if the rate
  is lower than the rate on the obligations. Interest on the
  assessment between the effective date of the ordinance or order
  levying the assessment and the date the first installment is
  payable shall be added to the first installment. The interest on
  any delinquent installment shall be added to each subsequent
  installment until all delinquent installments are paid. The added
  interest payable on an installment purchase or reimbursement
  contract or a temporary note, time warrant, or bond under this
  subsection may be used by a municipality or county to pay qualified
  costs of improvements or the costs of administration of the
  district, including the enforcement of assessments or the payment
  or prepayment of obligations.
         (b)  An assessment or reassessment, with interest, the
  expense of collection, and reasonable attorney's fees, if incurred,
  is a first and prior lien against the property assessed, superior to
  all other liens and claims except liens or claims for [state,]
  county, special [school] district, or municipality ad valorem
  taxes, and is a personal liability of and charge against the owners
  of the property regardless of whether the owners are named. The
  lien is effective from the date of the ordinance or order levying
  the assessment until the assessment is paid in full and may be
  enforced by the governing body in the same manner that an ad valorem
  tax lien against real property may be enforced by the governing
  body. On the sale of assessed property, any installment or portion
  of an assessment that is or will be payable for the property during
  the year of the sale shall be prorated between the buyer and the
  seller in the same manner as ad valorem taxes are prorated between a
  buyer and seller. Delinquent installments of the assessment shall
  incur interest, penalties, and [attorney's] fees in the same manner
  as delinquent ad valorem taxes.
         (c)  A district assessment on property under this subchapter
  runs with the land. Any portion of an assessment payment obligation
  that is not yet due is not eliminated by the foreclosure of an ad
  valorem tax lien. Any purchaser of property at a foreclosure sale
  under an ad valorem tax lien takes the property subject to any
  assessment payment obligation that is not yet due and to the terms
  of payment under the applicable assessment ordinance or order.
         (d)  The owner of assessed property may pay at any time on any
  parcel or lot the entire assessment, with interest that:
               (1)  has accrued on the assessment; and
               (2)  will accrue on the assessment until the next
  scheduled prepayment or redemption date on the installment purchase
  or reimbursement contract or temporary note, time warrant, revenue
  bond, special assessment bond, or certificate of obligation that
  secured the assessment[, on any lot or parcel].
         Sec. 372.019.  SUPPLEMENTAL ASSESSMENTS. After notice and a
  hearing, the governing body of the municipality or county may make
  supplemental assessments to correct omissions or mistakes in the
  assessment relating to the qualified costs [total cost] of the
  improvement. Notice must be given and the hearing held under this
  section in the same manner as required by Sections 372.016 and
  372.017.
         Sec. 372.020.  REASSESSMENT. The governing body of the
  municipality or county may make a reassessment or new assessment of
  a parcel of land if:
               (1)  a court [of competent jurisdiction] sets aside an
  assessment against the parcel;
               (2)  the governing body determines that the original
  assessment is excessive; or
               (3)  on the written advice of counsel, the governing
  body determines that the original assessment is invalid.
         Sec. 372.021.  SPECIAL IMPROVEMENT DISTRICT FUND. (a)  A
  municipality or county that intends to create a public improvement
  district may by ordinance or order establish a special improvement
  district fund in the municipal or county treasury or in a bank
  designated by the municipality or county to serve as a depository
  bank for the district's funds.
         (b)  The municipality or county annually may levy a tax to
  support the fund established under this section.
         (c)  The fund may be used to:
               (1)  pay the qualified costs of improvements [planning,
  administration, and an improvement authorized by this subchapter];
               (2)  prepare preliminary plans, studies, and
  engineering reports to determine the feasibility of improvements
  [an improvement]; and
               (3)  if ordered by the governing body of the
  municipality or county, pay the initial qualified costs of
  improvements [cost of the improvement] until installment purchase
  contracts or reimbursement contracts are entered into or temporary
  notes or[,] time warrants are issued or revenue bonds, special
  assessment bonds, or certificates of obligation are[, or
  improvement bonds have been] issued and sold.
         (d)  The fund is not required to be budgeted for expenditure
  during any year, but the amount of the fund must be stated in the
  municipality's or county's annual budget. The amount of the fund
  must be based on an annual service plan that describes the public
  improvements for the fiscal year.
         [(e)     A grant-in-aid or contribution made to the
  municipality or county for the planning and preparation of plans
  for an improvement authorized under this subchapter may be credited
  to the special improvement district fund.]
         Sec. 372.022.  SEPARATE FUNDS. (a)  A separate public
  improvement district fund shall be created in the municipal or
  county treasury or in a designated depository bank as provided by
  Section 372.021 for each district.
         (b)  The following revenues shall be deposited to the fund:
               (1)  special assessments;
               (2)  money, if any, contributed by the municipality or
  county to pay qualified costs;
               (3)  proceeds [Proceeds] from the sale of revenue
  bonds, if payable in part from special assessments;
               (4)  proceeds from the sale of special assessment bonds
  or certificates of obligation;[, temporary notes, and time
  warrants,] and
               (5)  any other sums appropriated to the fund by the
  governing body of the municipality or county for the district
  [shall be credited to the fund].
         (c)  The fund may be used solely to pay:
               (1)  qualified costs of improvement;
               (2)  amounts due on an installment purchase contract or
  reimbursement amounts owed under a reimbursement contract,
  temporary note, or time warrant; or
               (3)  any revenue bonds, special assessment bonds, or
  certificates of obligation that are payable in whole or in part from
  special assessments levied under this subchapter [incurred in
  making an improvement].
         (d)  When an improvement is completed and all of the
  obligations are paid in full, the balance on deposit in the special
  improvement district fund that was derived from special
  assessments, if any, [of the part of the assessment that is for
  improvements] shall be transferred to a [the] fund established for
  the retirement of bonds that are payable in whole or in part from
  assessments.
         Sec. 372.023.  PAYMENT OF QUALIFIED COSTS. (a)  The
  qualified costs [cost] of an improvement made under this subchapter
  may [must] be paid by a method or by a combination of methods
  described by [in accordance with] this section and Section 372.024.
         (b)  The [A cost payable by the] municipality or county [as a
  whole] may, on its own or under an installment purchase,
  reimbursement, or other contract with a third party:
               (1)  erect, acquire, construct, improve, repair,
  establish, install, or equip improvements; and
               (2)  pay all or part of the qualified costs of the
  improvements [be paid] from:
                     (A)  general funds or other revenues available for
  that [the] purpose;
                     (B)  special assessments; or
                     (C)  the issuance and sale of general obligation
  bonds, certificates of obligation, revenue bonds, or special
  assessment bonds [other available general funds].
         (c)  The municipality or county may enter into and execute an
  installment purchase or reimbursement contract with or may deliver
  a nonnegotiable but transferable temporary note or time warrant to
  a third party under which:
               (1)  the third party agrees to:
                     (A)  erect, acquire, construct, improve, repair,
  establish, install, or equip public improvements; and
                     (B)  dedicate or sell the improvements to the
  municipality, county, or authorized instrumentality; and
               (2)  the municipality, county, or authorized
  instrumentality agrees to pay or reimburse the third party for the
  qualified costs by paying accumulated amounts due under the
  installment purchase or reimbursement contract, temporary note, or
  time warrant from any and all of the sources described by Subsection
  (b)(2) [A cost payable from a special assessment that has been paid
  in full shall be paid from that assessment].
         (d)  Subject to Section 372.018, an installment purchase or
  reimbursement contract, temporary note, or time warrant may bear
  interest at a rate and for a period determined by the governing body
  of the municipality or county [A cost payable from a special
  assessment that is to be paid in installments and a cost payable by
  the municipality or county as a whole but not payable from available
  general funds or other available general improvement funds shall be
  paid by the issuance and sale of revenue or general obligation
  bonds].
         (e)  An installment purchase or reimbursement contract,
  temporary note, or time warrant that is payable from installments
  of assessments is subject to prepayment and redemption at any time
  from the proceeds of prepayment of assessments made by a property
  owner under Section 372.018(d) [While an improvement is in
  progress, the governing body of the municipality or county may
  issue temporary notes or time warrants to pay for the costs of the
  improvement and, on completion of the improvement, issue revenue or
  general obligation bonds.
         [(f)     The cost of more than one improvement may be paid from a
  single issue and sale of bonds without other consolidation
  proceedings before the bond issue.
         [(g)     The costs of any improvement include all costs incurred
  in connection with the issuance of bonds under Section 372.024 and
  may be included in the assessments against the property in the
  improvement district as provided by this subchapter].
         Sec. 372.024.  GENERAL OBLIGATION BONDS, [AND] REVENUE AND
  SPECIAL ASSESSMENT BONDS, CERTIFICATES OF OBLIGATION, AND BONDS
  ISSUED BY AUTHORIZED INSTRUMENTALITY. (a)  The governing body of a
  municipality or county may issue:
               (1)  general [General] obligation bonds [issued to pay
  costs under Section 372.023(d) must be issued] under [the
  provisions of] Subtitles A and C, Title 9, Government Code;
               (2)  revenue bonds or special assessment bonds in one
  or more series; and
               (3)  certificates of obligation under Subchapter C,
  Chapter 271.
         (b)  A bond or obligation described by Subsection (a) may be
  issued to:
               (1)  pay qualified costs under Section 372.023(b),
  including the costs of issuing bonds; and
               (2)  pay or refund obligations executed or issued under
  Section 372.023(c).
         (c)  Certificates of obligation may be payable from and
  secured by installment payments of special assessments levied under
  this subchapter.
         (d)  The governing body of the municipality or county or the
  authorized instrumentality may include any term or provision
  consistent with this subchapter in a revenue bond or a special
  assessment bond issued under this section.
         (e)  The governing body of a municipality or county may
  incorporate an authorized instrumentality to act on its behalf to
  issue revenue bonds or special assessment bonds under this section.
  The governing body may enter into agreements and contracts with the
  authorized instrumentality to transfer pledged revenues, funds,
  and special assessments to or for the account of the authorized
  instrumentality at the times and as required by the terms of the
  resolution authorizing the issuance of the revenue bonds or special
  assessment bonds. Any bonds issued by an authorized
  instrumentality must be approved by the governing body of the
  municipality or county before issuance and delivery to the
  purchaser.
         (f)  To the extent consistent with this subchapter, an
  authorized instrumentality shall issue revenue bonds or special
  assessment bonds under:
               (1)  Chapter 303, if the authorized instrumentality is
  a public facility corporation; or
               (2)  Subchapter D, Chapter 431, Transportation Code, if
  the authorized instrumentality is a local government corporation
  [Revenue bonds issued to pay costs under that subsection may be
  issued from time to time in one or more series and are to be payable
  from and secured by liens on all or part of the revenue derived from
  improvements authorized under this subchapter, including revenue
  derived from installment payments of special assessments].
         Sec. 372.0241.  SPECIAL ASSESSMENT PUBLIC IMPROVEMENT
  DISTRICT MANAGEMENT POLICY. (a)  The governing body of a
  municipality or county may develop, adopt, and amend a special
  assessment public improvement district management policy.
         (b)  The policy may establish the general requirements and
  standards for and the preconditions to:
               (1)  the creation of a public improvement district
  under this subchapter;
               (2)  the execution and issuance of installment purchase
  or reimbursement contracts or temporary notes or time warrants; and
               (3)  the issuance of any bonds or certificates of
  obligation payable in whole or in part from special assessments.
         (c)  If a management policy is adopted, compliance with the
  terms of the policy, including any amendments to the policy, is
  required for:
               (1)  the execution of any installment purchase or
  reimbursement contracts or temporary notes or time warrants;
               (2)  the issuance of any revenue bonds or special
  assessment bonds by the municipality or county or by an authorized
  instrumentality; and
               (3)  the issuance of any certificates of obligation by
  a municipality or county.
         Sec. 372.025.  TERMS AND CONDITIONS OF BONDS. (a)  Revenue
  bonds and special assessment bonds issued under Section 372.024
  must be authorized by:
               (1)  ordinance, if issued by a municipality;
               (2)  order, if issued by a county; and
               (3)  resolution, if issued by an authorized
  instrumentality.
         (b)  Revenue bonds and special assessment bonds may be issued
  to mature serially or in any other manner but must mature not later
  than 40 years after their date. A provision may be made for the
  subsequent issuance of additional parity bonds or subordinate lien
  bonds secured in whole or in part by any assessments or any other
  revenues authorized by this subchapter under terms and conditions
  specified in the ordinance, [or] order, or resolution authorizing
  the issuance of the bonds.
         (c)  Revenue bonds, special assessment bonds, and
  certificates of obligation may be subject to redemption before
  maturity at the option of the issuer and at the times and in the
  manner provided by the ordinance, order, or resolution authorizing
  the issuance. Revenue bonds and certificates of obligation that
  are secured in part by a pledge of special assessments and all
  special assessment bonds are subject to mandatory redemption at
  least semiannually from funds provided by assessed parties, if any,
  as prepayment of installments of special assessments under Section
  372.018(d).
         (d)  Revenue bonds and special assessment bonds shall be
  executed in the manner and by the persons required by the ordinance,
  order, or resolution authorizing the issuance.
         (e)  Revenue bonds and special assessment [(b)  The] bonds
  [shall be executed and the bonds] and any interest coupons
  appertaining to the bonds [them] are negotiable instruments within
  the meaning and for all purposes of the Uniform Commercial Code
  (Section 1.101 et seq., Business & Commerce Code).
         (f)  The ordinance, [or] order, or resolution authorizing
  the issuance of the revenue bonds or special assessment bonds must
  specify:
               (1)  whether the bonds may be registered [are issued
  registrable] as to principal alone or as to both principal and
  interest;
               (2)  whether the bonds are redeemable before maturity;
               (3)  the form, denomination, and manner of issuance;
               (4)  the terms, conditions, and other details applying
  to the bonds including the price, terms, and interest rates on the
  bonds; and
               (5)  the manner of sale of the bonds.
         (g) [(c)]  The ordinance, [or] order, or resolution
  authorizing the issuance of the bonds may specify that the proceeds
  from the sale of the bonds:
               (1)  be used to pay interest on the bonds during and
  after the period of acquisition or construction of an improvement
  financed through the sale of the bonds;
               (2)  be used for creating a reserve fund for payment of
  the principal of and interest on the bonds and for creating other
  funds; [and]
               (3)  be used for the payment of any other qualified
  costs as determined by the governing body of the municipality or
  county or by the authorized instrumentality; and
               (4)  may be placed in time deposit or invested, until
  needed.
         Sec. 372.026.  PLEDGES. (a)  For the payment of [bonds
  issued under this subchapter and the payment of] principal,
  interest, and any other amounts payable on or with respect to any
  bonds issued by a municipality or county under this subchapter
  [required or permitted in connection with the bonds], the governing
  body of the municipality or county may pledge:
               (1)  all or part of the income from improvements
  financed under this subchapter, including income received in
  installment payments from special assessments; and
               (2)  if the payment is for the payment of revenue bonds,
  any other revenue described by Subsection (e) [under Section
  372.023].
         (b)  For the payment of principal, interest, and any other
  amounts payable on or with respect to bonds issued by an authorized
  instrumentality under this subchapter, the authorized
  instrumentality may pledge all or part of the assessments or other
  revenues, if any, that are to be transferred and paid to the
  authorized instrumentality by the municipality or county under an
  agreement entered into between the parties under Section
  372.024(e).
         (c)  Pledged income must be [fixed and collected in amounts]
  sufficient, with other pledged resources, if any, to pay principal,
  interest, and other expenses related to the bonds, and to the extent
  required by the ordinance, [or] order, or resolution authorizing
  the bonds, to pay for the operation, maintenance, and other
  expenses related to improvements authorized by this subchapter.
         (d)  Bonds issued by a municipality or county [(c)     The
  bonds] may also be secured by mortgages or deeds of trust on any
  real property related to the facilities authorized under this
  subchapter that are owned or are to be acquired by the municipality
  or county and by chattel mortgages, liens, or security interests on
  any personal property appurtenant to that real property. The
  governing body may authorize the execution of trust indentures,
  mortgages, deeds of trust, or other forms of encumbrances as
  evidence of the security interest of the holders of the bonds in the
  related property [indebtedness].
         (e) [(d)]  The governing body may pledge to the payment of
  certificates of obligation issued by the governing body or to the
  payment of revenue bonds issued by the governing body or by an
  authorized instrumentality all or part of a grant, donation,
  revenue, or income received or to be received from the government of
  the United States or any other public or private source, whether or
  not it is received pursuant to an agreement or otherwise, including
  impact fees and incremental ad valorem tax revenues collected by a
  municipality or by another taxing unit and municipal sales tax
  collected by a municipality from all or part of a tax increment
  reinvestment zone created under Chapter 311, Tax Code.
         Sec. 372.027.  REFUNDING BONDS. (a)  Revenue bonds and
  special assessment bonds issued under this subchapter and
  certificates of obligation payable solely from special assessments
  may be refunded or refinanced by the issuance of refunding bonds,
  under terms or conditions provided [set forth] in the ordinance,
  order, or resolution authorizing the issuance [ordinances or
  orders] of the [municipality or county issuing the] bonds. The
  provisions of this subchapter applying generally to revenue bonds
  and special assessment bonds, including provisions related to the
  issuance of those bonds, apply to refunding bonds of like kind
  authorized by this section. The refunding bonds may be sold and
  delivered in amounts necessary to pay [for] the principal,
  interest, and any redemption premium of the bonds [to be refunded],
  on the date of the maturity of the bonds [bond] or any redemption
  date of the bonds [bond].
         (b)  Refunding bonds may be issued for exchange with the
  bonds they are refunding. The comptroller of public accounts shall
  register refunding bonds described by this subsection and deliver
  the bonds to holders of bonds being refunded in accordance with the
  ordinance, [or] order, or resolution authorizing the issuance of
  refunding bonds. The exchange may be made in one delivery or
  several installment deliveries.
         (c)  General obligation bonds and certificates of obligation
  issued under this subchapter may be refunded in the manner provided
  by law.
         Sec. 372.028.  APPROVAL AND REGISTRATION. (a)  Revenue
  bonds and special assessment bonds issued under this subchapter and
  a record of the proceedings authorizing their issuance must be
  submitted to the attorney general for examination. If revenue
  bonds state that they are secured by a pledge of revenue or rentals
  from a contract or lease, a copy of the contract or lease and a
  description of the proceedings authorizing the contract or lease
  must also be submitted to the attorney general.
         (b)  If the attorney general determines that the bonds were
  authorized and the contracts or leases related to the bonds were
  made in accordance with the law, the attorney general shall approve
  the bonds and the contract or lease. After [On the approval of] the
  attorney general approves the bonds and the contract or lease, the
  comptroller of public accounts shall register the bonds.
         (c)  Bonds and contracts or leases approved and registered
  under this section are:
               (1)  valid and binding obligations for all purposes in
  accordance with their terms; and
               (2)  [are] incontestable in any court or other forum.
         (d)  General obligation bonds and certificates of obligation
  issued under this subchapter shall be approved and registered as
  provided by law.
         Sec. 372.029.  AUTHORIZED INVESTMENTS; SECURITY.
  (a)  Bonds issued under this subchapter are legal and authorized
  investments for:
               (1)  banks, trust companies, and savings and loan
  associations;
               (2)  all insurance companies;
               (3)  fiduciaries, trustees, and guardians; and
               (4)  interest funds, sinking funds, and other public
  funds of the state or of an agency, subdivision, or instrumentality
  of the state, including a county, municipality, school district, or
  other district, public agency, or body politic.
         (b)  Bonds issued under this subchapter may be security for
  deposits of public funds of the state or of an agency, subdivision,
  or instrumentality of the state, including a county, municipality,
  school district, or other district, public agency, or body politic,
  to the extent of the market value of the bonds, if accompanied by
  any appurtenant [unmatured] interest coupons that have not matured.
         Sec. 372.030.  SUBCHAPTER NOT EXCLUSIVE. This subchapter is
  an alternative to other methods by which a municipality may finance
  public improvements under applicable law [by assessing property
  owners].
         SECTION 2.  Section 61.0572, Education Code, is amended by
  adding Subsection (f) to read as follows:
         (f)  Approval of the board is not required for buildings or
  other facilities financed by a public improvement district under
  Subchapter A, Chapter 372, Local Government Code.
         SECTION 3.  Section 61.058, Education Code, is amended by
  adding Subsection (c) to read as follows:
         (c)  This section does not apply to construction, repair, or
  rehabilitation of buildings or other facilities financed by a
  public improvement district under Subchapter A, Chapter 372, Local
  Government Code.
         SECTION 4.  All governmental acts and proceedings of a
  governmental body of a municipality or county under Subchapter A,
  Chapter 372, Local Government Code, as that subchapter existed
  before the effective date of this Act, to establish a public
  improvement district, designate improvements, levy assessments,
  and finance costs of improvements in response to a petition filed
  with the governing body that conformed to the requirements of
  Section 372.005, Local Government Code, as that section existed
  before the effective date of this Act, are validated and confirmed
  in all respects.
         SECTION 5.  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.
 
 
 
 
 
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
 
         I hereby certify that S.B. No. 978 passed the Senate on
  May 7, 2009, by the following vote: Yeas 29, Nays 2; and that the
  Senate concurred in House amendment on May 30, 2009, by the
  following vote: Yeas 29, Nays 2.
 
 
  ______________________________
  Secretary of the Senate    
 
         I hereby certify that S.B. No. 978 passed the House, with
  amendment, on May 27, 2009, by the following vote: Yeas 148,
  Nays 0, one present not voting.
 
 
  ______________________________
  Chief Clerk of the House   
 
 
 
  Approved:
 
  ______________________________ 
              Date
 
 
  ______________________________ 
            Governor