BILL ANALYSIS
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Senate Research Center |
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AUTHOR'S / SPONSOR'S STATEMENT OF INTENT
Under current law, a municipality may devote up to one-half of one percent of its two percent discretionary local sales tax to one or both of its economic development corporations, Type A or Type B, but cannot devote more than one-half of one percent of sales tax revenue to either, and may not have two corporations of one type. Type A corporations are limited to economic development projects that primarily promote new and expanded industrial and manufacturing activities. Type A corporations in small Texas municipalities have difficulty competing with Type A corporations in larger municipalities for industrial and manufacturing projects because larger municipalities have a greater sales tax base and therefore greater revenue with which to attract such projects. For many smaller municipalities this means their Type A corporations have accumulated balances for which they have no authorized use. For municipalities with populations of 7,500 or less with both Type A and Type B corporations, H.B. 3302, with the approval of the municipality's governing body, allows Type A corporations to act as Type B corporations, and undertake a wider range of civic and commercial projects. This would remedy small municipalities' problem of having Type A corporations with balances that cannot be expended due to narrow permissible application of Type A capital.
H.B. 3302 amends current law relating to the authority of certain Type A economic development corporations to undertake certain categories of projects.
RULEMAKING AUTHORITY
SECTION BY SECTION ANALYSIS
SECTION 1. Amends Subchapter D, Chapter 504, Local Government Code, by adding Section 504.171, as follows:
Sec. 504.171. AUTHORITY OF CERTAIN CORPORATIONS TO UNDERTAKE TYPE B PROJECTS. (a) Provides that this section applies only to a Type A corporation the creation of which was authorized by a municipality:
(1) that has also authorized the creation of a Type B corporation; and
(2) that has a population of 7,500 or less.
(b) Authorizes a Type A corporation to which this section applies, notwithstanding Section 504.152 (Election to Authorize Projects Applicable to Type B Corporations), if permitted by ordinance of the authorizing municipality, to undertake any project that a Type B corporation, the creation of which was authorized by the same municipality, may undertake under Chapter 505 (Type B Corporations).
(c) Authorizes the governing body of an authorizing municipality to by ordinance revoke any authority granted to a Type A corporation under Subsection (b). Provides that revocation under this subsection does not affect the authority of a corporation to complete a project already undertaken or the obligation to repay any debt incurred in connection with a project under Subsection (b).
SECTION 2. Effective date: upon passage or September 1, 2011.