BILL ANALYSIS

C.S.H.B. 3275

By: Coleman

Ways & Means

Committee Report (Substituted)

BACKGROUND AND PURPOSE

It has been suggested that fiscally responsible economic development is critical to sustaining communities and managing growth at all levels of government, particularly given current economic conditions. According to interested parties, one of the more effective and frequently used tools of economic development available to local governments is tax increment financing, which is used to finance public infrastructure improvements within a specified geographic area. Tax increment financing is not a tax abatement, nor a partial or total tax exemption, nor a new tax. C.S.H.B. 3275 seeks to address certain issues with regard to the operation and governance of tax increment financing reinvestment zones.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.

ANALYSIS

C.S.H.B. 3275 amends the Tax Code to make the authority for a taxing unit, other than the municipality or county that created a reinvestment zone, that levies taxes on real property in the zone to appoint one member of the board of directors of the zone contingent on the taxing unit having approved the payment of all or part of the tax increment produced by the unit into the tax increment fund for the zone.

C.S.H.B. 3275 makes certain eligibility criteria for appointment to the board of directors of a reinvestment zone designated by a municipality which is wholly or partially located in a county with a population of less than 1.4 million in which the principal municipality has a population of 1.1 million or more inapplicable to an individual appointed by a constitutionally created conservation and reclamation district the jurisdiction of which covers four counties.

C.S.H.B. 3275 expands provisions authorizing the governing body of an entity that designates a reinvestment zone to determine the portion of the tax increment produced by the entity that the entity is required to pay into the zone's tax increment fund to apply to a county as well as to a municipality designating such a zone.

C.S.H.B. 3275 extends the deadline by which the governing body of a municipality or county is required to 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 from the 90th day to the 150th day following the end of the fiscal year of the municipality or county.

EFFECTIVE DATE

September 1, 2011.

COMPARISON OF ORIGINAL AND SUBSTITUTE

C.S.H.B. 3275 contains a provision not included in the original making certain eligibility criteria for appointment to the board of directors of a reinvestment zone designated by a municipality which is wholly or partially located in a county with a population of less than 1.4 million in which the principal municipality has a population of 1.1 million or more inapplicable to an individual appointed by a constitutionally created conservation and reclamation district the jurisdiction of which covers four counties.

C.S.H.B. 3275 contains a provision not included in the original extending the deadline by which the governing body of a municipality or county is required to 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.

C.S.H.B. 3275 omits provisions included in the original establishing the eligibility of the area of a municipal management district to be included in special zones and establishing a conclusive presumption that certain governmental acts or proceedings of a municipal management district are valid as of the date they occurred and that they occurred in accordance with all applicable statutes and rules if certain conditions are met.  

C.S.H.B. 3275 omits provisions included in the original authorizing the annexation or exclusion of land by a public improvement district in certain counties and repealing a provision prohibiting a hotel occupancy tax from being imposed on the occupants of a hotel unless the owner of the hotel agrees to the imposition of the hotel occupancy taxes under provisions governing improvement projects in certain counties.

C.S.H.B. 3275 omits provisions included in the original authorizing more than one county assistance district to be created in a county and changing the maximum combined rate of all local sales and use taxes imposed in a district.

C.S.H.B. 3275 omits provisions included in the original authorizing territory of a municipality that was included in a proposed county assistance district but is excluded from the district by the governing body of the municipality to subsequently be included in another district after complying with applicable statutory requirements and after an election is held regarding inclusion in a district and imposition of the district's sales and use tax and revising the election method for the creation of a county assistance district.

C.S.H.B. 3275 omits provisions included in the original replacing a provision establishing that the commissioners court of the county in which a county assistance district is created is the governing body of the district with a provision requiring the commissioners court of the county in which such a district is created by order to provide that the commissioners court is the governing body of the district or that the commissioners court shall appoint a governing body of the district and providing for the terms and eligibility of an appointed board of directors.

C.S.H.B. 3275 omits provisions included in the original authorizing a county assistance district to enter into agreements with municipalities necessary or convenient to achieve the district's purposes and authorizing a district to define areas in the district to pay for improvements, facilities, or services that primarily benefit that area and do not generally and directly benefit the district as a whole and to impose different rates of sales and use taxes in each defined area; prohibiting the sales and use tax rate in each area from exceeding the rate approved at an election on the creation or expansion of the district; and removing language providing for the rate of an adopted tax to be in increments of one-fourth, three-eighths, or one-half of one percent.

C.S.H.B. 3275 omits provisions included in the original limiting the applicability of the authorization of a county assistance district that has adopted a sales and use tax by order to change the rate of the tax or repeal the tax; authorizing a district that has adopted a sales and use tax to reduce the rate of the tax or repeal the tax without an election under certain conditions and with a certain exception; authorizing such a district to increase the rate of the sales and use tax if the increased rate of the sales and use tax will not exceed the rate approved at an election on the creation or expansion of the district; and removing the cap to which the sales and use tax may be changed in one or more increments of one-eighth of one percent and establishing the effective date of the adoption of the tax, the increase or reduction of the tax rate, or the repeal of the tax.

C.S.H.B. 3275 omits provisions included in the original defining "project"; expanding the projects for which a municipality is authorized to enter into a contract with a water district or with a corporation organized to be operated without profit under which the district or corporation will acquire for the benefit of and convey to the municipality; authorizing a county to enter into such a contract; and revising statutory provisions governing contracts with water districts or certain nonprofit corporations.

C.S.H.B. 3275 omits provisions included in the original making a reference to creating a reinvestment zone a reference to designating such a zone, changing the restriction on the composition of a reinvestment zone to prohibit a municipality from designating such a zone if certain specified conditions apply, and prohibiting a municipality from changing the boundaries of an existing reinvestment zone to include property in excess of such restrictions on composition of a zone.

C.S.H.B. 3275 omits provisions included in the original authorizing the governing body of the municipality or county that designated a reinvestment zone to provide that the zone's board of directors consists of nine appointed members, unless more than nine members are required to provide representation for each taxing unit that is authorized to appoint a member; authorizing certain taxing units to appoint one member of the board if certain conditions are met; authorizing the municipality or county that designated the zone to appoint a number of members such that the board comprises nine members under certain circumstances; authorizing the municipality or county to appoint one member given certain conditions; and changing the eligibility requirements for appointment to the board for an individual under certain circumstances.

C.S.H.B. 3275 omits provisions included in the original exempting a dedication, pledge, or other use of revenue in the tax increment fund for a reinvestment zone from provisions relating to purchasing and contracting authority of municipalities and removing a specification that capped the aggregate amount of grants or loans from a zone's tax increment fund. The substitute omits a provision included in the original authorizing the approval of the governing body of the municipality or county that designated the zone required for the establishment of programs to make grants or loans by the board of directors to be granted in a municipal ordinance or a county order, as applicable, approving a project plan or reinvestment zone financing plan or approving an amendment to a project plan or reinvestment zone financing plan.

C.S.H.B. 3275 omits provisions included in the original authorizing an agreement between a taxing unit and the governing body of the entity that designated a reinvestment zone to specify the projects to which a participating taxing unit's tax increment will be dedicated and that the taxing unit's participation may be computed with respect to a base year later than the original base year of the zone; changing the applicability of the requirement that a school district pay into the fund an amount equal to the amount by which the amount of taxes the district would have been required to pay into the fund in the current year if the district levied taxes at the rate the district levied in 2005 exceeds the amount the district is otherwise required to pay into the fund in the year of the reduction; prohibiting the additional amount from exceeding the amount the school district receives in state aid for the current tax year with regard to tax increment financing payments; and requiring the school district to pay the additional amount after the district receives the state aid to which the district is entitled for the current tax year.

C.S.H.B. 3275 omits a provision included in the original establishing a conclusive presumption that certain governmental acts or proceedings of a municipality, county, reinvestment zone's board of directors, or local government corporation or political subdivision relating to the designation, operation, or administration of a reinvestment zone or the implementation of a project plan or reinvestment zone financing plan are valid as of the date they occurred and that they occurred in accordance with all applicable statutes and rules if certain conditions are met.

C.S.H.B. 3275 omits a provision included in the original entitling a school district to certain state aid each school year with regard to the tax increment reinvestment fund for a reinvestment zone.

C.S.H.B. 3275 omits provisions included in the original providing that the validity of an action taken at a meeting of the governing body of a water district is not affected by certain specified circumstances and establishing that a peace officer contracted for by a district is an independent contractor and that the district is responsible for the acts or omissions of the peace officer only to the extent provided by law for other independent contractors.

C.S.H.B. 3275 omits a provision included in the original repealing Section 382.155(d) and Section 387.010(d), Local Government Code.