82R22002 TJB-F

By: Paxton H.B. No. 3140

Substitute the following for H.B. No. 3140:

By: Vo C.S.H.B. No. 3140

A BILL TO BE ENTITLED

AN ACT

relating to the authority of certain municipalities to create economic development programs and provide loans or grants for those programs; providing authority to issue bonds.

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

SECTION 1. Chapter 1509, Government Code, is amended by adding Subchapter F to read as follows:

SUBCHAPTER F. REVENUE BONDS FOR ECONOMIC DEVELOPMENT PROGRAMS

Sec. 1509.251. APPLICABILITY OF SUBCHAPTER. This subchapter applies only to a municipality located in a county with a population of 750,000 or more that is adjacent to a county that borders Oklahoma.

Sec. 1509.252. PUBLIC PURPOSE. This subchapter provides for the creation of one or more programs authorized under Section 52-a, Article III, Texas Constitution, including the following public purposes:

(1) the development and diversification of the economy of this state;

(2) the elimination of unemployment or underemployment in this state; and

(3) the development or expansion of commerce in this state.

Sec. 1509.253. ECONOMIC DEVELOPMENT PROGRAM; LOANS AND GRANTS. (a) A municipality may establish and provide for the administration of one or more programs for loans and grants of money, including the proceeds of revenue bonds authorized under this subchapter, to a private entity for use in the promotion of new manufacturing, industrial, retail, commercial, multifamily residential, or other business activity or the expansion of that business activity, including a project for purposes of that promotion or expansion.

(b) To accomplish a purpose under Section 1509.252, a municipality may, under the terms and by the methods the municipality may determine:

(1) acquire land; and

(2) construct or acquire a building or other facility for the purpose of selling or leasing the land, building, or other facility to a private entity receiving a loan or grant under this section.

Sec. 1509.254. AUTHORITY TO ISSUE REVENUE BONDS. (a) A municipality may issue and sell revenue bonds to finance an action under Section 1509.253 taken to accomplish a public purpose under Section 1509.252.

(b) Bonds issued under this subchapter are not general obligations of the municipality if no tax revenue or other general revenue of the municipality is pledged to the repayment of the bonds.

Sec. 1509.255. PROGRAM AGREEMENT REQUIRED. (a) A municipality may not loan or grant money under this subchapter to a private entity for a project or activity authorized under Section 1509.253 unless the municipality enters into a program agreement with the entity.

(b) A program agreement under this section must include:

(1) the terms under which the municipality will loan or grant the money to the entity;

(2) a provision requiring that a revenue bond issued by the municipality under this subchapter:

(A) is secured by the credit of the private entity, by funds, revenue, or assets pledged by one or more investors for the project, or by a combination of both;

(B) is additionally secured by an encumbrance or mortgage on any real or personal property acquired, constructed, or improved with the proceeds of the revenue bond; and

(C) is the obligation of the private entity and not of the municipality if no municipal revenue is pledged for repayment of the bonds;

(3) a description of and the amount of the capital investment that will be made by the entity in this state for the project or activity;

(4) a schedule of the number and types of jobs that will be created or retained as a result of the project or activity;

(5) a provision requiring repayment of the loan or grant or other penalty to be imposed on the entity if the entity does not meet the job creation or other requirements specified in the program agreement;

(6) the estimated increase in tax revenue from all sources to the municipality as a result of the project or activity, calculated by the municipality;

(7) the designated area where the project or activity will be located; and

(8) a provision prohibiting the entity from using a loan or grant for:

(A) a project or activity involving a gambling, gaming, or adult entertainment enterprise or facility; or

(B) an expenditure for which reporting is required under Chapter 305.

(c) A municipality may enter into not more than two program agreements.

(d) A municipality may not enter into a program agreement with an entity after December 31, 2015.

(e) A program agreement is subject to Chapter 552.

Sec. 1509.256. REVENUE BOND PAYMENTS. (a) Revenue bonds issued by a municipality under this subchapter may be payable from and secured by pledging:

(1) all or part of revenue received by the municipality from a loan made as provided by Section 1509.253;

(2) a portion of revenue collected by the municipality under Section 321.101(a), Tax Code, not to exceed the lesser of:

(A) one percent of the revenue collected by the municipality; or

(B) one-half of the revenue collected by the municipality from the area designated in the applicable program agreement;

(3) all or part of revenue authorized for the payment of bonds under Section 351.102(a), Tax Code;

(4) all or part of revenue from the sale or lease of all or part of the land, building, or other facility financed by the bonds; or

(5) any combination of the revenue described by Subdivisions (1)-(4).

(b) A municipality may provide that the revenue pledged to the bonds issued by the municipality is limited to the revenue collected from a designated area within the municipality or from a designated facility.

Sec. 1509.257. ADDITIONAL SECURITY. (a) Bonds issued under this subchapter must be additionally secured by an encumbrance or mortgage on any real or personal property acquired, constructed, or improved with proceeds of bonds or the proceeds of a loan or grant made from proceeds of bonds.

(b) Bonds issued by a municipality under this subchapter may be additionally secured by a pledge of any portion of a grant, a donation, or revenue, or income received or to be received from the United States or any other public or private source, other than the municipality itself.

Sec. 1509.258. CONTENTS OF ORDINANCE, ORDER, OR RESOLUTION AUTHORIZING BONDS. In an ordinance, order, or resolution authorizing the issuance of bonds under this subchapter, the governing body of a municipality may:

(1) provide for the deposit and accounting of money;

(2) provide for the establishment and maintenance of an interest and sinking fund, a reserve fund, or other funds relating to the bonds or a project funded with bond proceeds; and

(3) make additional covenants relating to the bonds, the pledged revenue, or the operation and maintenance of any land, building, or other facility the revenue of which is pledged for bond payments.

Sec. 1509.259. USE OF BOND PROCEEDS. Proceeds of bonds issued under this subchapter may be used to:

(1) pay interest on the bonds while the project or facility is being acquired, constructed, or improved and for the year after it is acquired, constructed, or improved;

(2) finance other funds relating to the bonds, including debt service reserve and contingency; and

(3) pay the cost or expense of the issuance of the bonds.

Sec. 1509.260. MATURITY. Bonds issued under this subchapter must mature not later than 40 years after the date the bonds are issued.

Sec. 1509.261. APPLICATION OF OTHER LAW. The provisions of Chapter 252, Local Government Code, regarding notice, competitive bids, and the right to referendum do not apply to a municipality issuing bonds under this subchapter.

Sec. 1509.262. CONFLICT OR INCONSISTENCY WITH OTHER LAW. To the extent of a conflict or inconsistency between this subchapter and another law, this subchapter controls.

Sec. 1509.263. CONSTRUCTION OF SUBCHAPTER; CORRECTION OF INVALID PROCEDURES. (a) This subchapter may not be construed or interpreted to violate either the constitution of this state or of the United States, and this subchapter does not authorize an act that violates those constitutions.

(b) If a court finds that any provision of this subchapter violates the constitution of this state or of the United States:

(1) a municipality may establish an alternative procedure that conforms with the constitution; and

(2) the validity of any other provision of this subchapter is not affected.

SECTION 2. Section 321.506, Tax Code, is amended to read as follows:

Sec. 321.506. USE OF TAX REVENUE BY MUNICIPALITY. Except as provided by Sections [Section] 321.507 and 321.5071, the money received by a municipality under this chapter is for the use and benefit of the municipality and may be used for any purpose for which the general funds of the municipality may be used, except that a municipality may not pledge the revenue received under this chapter to the payment of bonds or other indebtedness.

SECTION 3. Subchapter F, Chapter 321, Tax Code, is amended by adding Section 321.5071 to read as follows:

Sec. 321.5071. USE OF TAX REVENUE BY CERTAIN MUNICIPALITIES FOR BONDS FOR ECONOMIC DEVELOPMENT PROGRAMS. A municipality to which Subchapter F, Chapter 1509, Government Code, applies may use money received by the municipality under this chapter to provide for the payment, in the manner provided by that subchapter, of the principal of or interest on bonds issued by the municipality as authorized by that subchapter.

SECTION 4. Section 351.102, Tax Code, is amended by adding Subsection (d) to read as follows:

(d) A municipality to which Subchapter F, Chapter 1509, Government Code, applies may use money received by the municipality under this chapter to provide for the payment, in the manner provided by that subchapter, of the principal of or interest on bonds issued by the municipality as authorized by that subchapter.

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, 2011.