BILL ANALYSIS

C.S.S.B. 971

By: Williams

Transportation

Committee Report (Substituted)

BACKGROUND AND PURPOSE

Interested parties contend that the ports along the Texas Gulf Coast need a source of revenue to help pay for costly long-term economic development projects, such as dredging waterways and widening channels. C.S.S.B. 971 seeks to assist Texas ports and thereby strengthen the Texas economy by adding port projects to the transportation projects that are eligible to receive funding through a transportation reinvestment zone.

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.S.B. 971 amends the Transportation Code to specify, for purposes of the bill's provisions, the amount or value, as applicable, of the following: the amount of a port authority's tax increment for a year, the captured appraised value of real property taxable by a port authority for a year, and the tax increment base of a port authority. The bill authorizes the port commission of a port authority, after determining that an area is unproductive or underdeveloped and that action would improve the security, movement, and intermodal transportation of cargo or passengers in commerce and trade, to designate by order or resolution a contiguous geographic area in the port authority's jurisdiction as a transportation reinvestment zone for the purposes of promoting a port project that is necessary or convenient for the proper operation of a maritime port or waterway and that will provide the specified improvement and providing for the abatement of property taxes or other form of relief from county taxes imposed on real property located in the zone.

C.S.S.B. 971 requires a port commission to comply with all applicable laws in the application of statutory provisions relating to the funding of port security, projects, and studies.

C.S.S.B. 971 requires the port commission, not later than the 30th day before the date the port commission proposes to designate an area as a transportation reinvestment zone, to hold a public hearing on the zone's creation, benefits to the authority and to property in the zone, and the tax abatement or other tax relief applicable to real property in the zone.

C.S.S.B. 971 sets out the requirements for the order or resolution designating an area as a transportation reinvestment zone and establishes that compliance with the requirements of the bill's provisions constitutes designation of an area as a transportation reinvestment zone without further hearings or other procedural requirements.

C.S.S.B. 971 authorizes the port commission to do the following: pay into a tax increment account, from taxes collected on property in the zone, an amount equal to the tax increment produced by the port authority less any amounts allocated under previous agreements, including agreements under the Property Redevelopment and Tax Abatement Act; repay any loan or other debt incurred to finance a port project under the bill's provisions from a tax increment account for the zone; enter into an agreement with the owner of any real property located in the transportation reinvestment zone to abate all or a portion of the property taxes or to grant other relief from the taxes imposed by the port authority on the owner's property in an amount not to exceed the amount calculated under the bill's provisions for that year; elect to abate all or a portion of the property taxes imposed by the port authority on all real property in a zone; or grant other relief from property taxes on property in a zone.

C.S.S.B. 971 requires all abatements or other relief granted by the port commission in a transportation reinvestment zone to be equal in rate and sets a cap on the total amount of the taxes abated or the total amount of other relief granted under the bill's provisions in any property tax year.

C.S.S.B. 971 authorizes a port authority to assess all or part of the cost of the port project for which the transportation reinvestment zone was designated against property within the zone in order to further the project's development. The bill provides for the levy and payment of such assessments in installments and establishes that the port authority has the same statutory powers provided to municipalities and counties for the assessment of costs and for the issuance of bonds by the port authority to pay the cost of a port project.

C.S.S.B. 971 authorizes the port commission to contract with a public or private entity to develop, redevelop, or improve a port project in the zone and to pledge and assign to that entity revenue the port authority receives from installment payments of the assessments to pay for the port project's costs. The bill authorizes any amount received from installment payments of the assessments not pledged or assigned in connection with the port project to be used for other purposes associated with the port project or in the zone.

C.S.S.B. 971 authorizes the boundaries of a reinvestment zone to be amended at any time to accommodate changes in the limits of the project for which a zone was designated, with specified exceptions. 

C.S.S.B. 971 establishes that a tax abatement agreement entered into under the bill's provisions or an order or resolution on the abatement of taxes or the grant of other relief from taxes terminates on December 31 of the year in which the port authority completes any contractual requirement that included the pledge or assignment of assessments collected under the bill's provisions. The bill establishes that a transportation reinvestment zone terminates on December 31 of the 10th year after the year the zone was designated, if before that date the port authority has not used the zone for the purpose for which it was designated.

C.S.S.B. 971 expands the definition of "transportation project," for purposes of a municipality's or county's establishment of a transportation reinvestment zone for such a project, to include port security, transportation, or facility projects that are necessary or convenient for the proper operation of a maritime port and that will improve the security, movement, and intermodal transportation of cargo or passengers in commerce and trade. The bill includes such projects with those public transportation projects for which the Texas Transportation Commission may issue obligations to provide state participation in the payment of part of the costs of public transportation projects that are determined by the commission to be in the best interests of Texas in its major goal of improving the mobility of Texas residents.

EFFECTIVE DATE

September 1, 2013.

COMPARISON OF ORIGINAL AND SUBSTITUTE

While C.S.S.B. 971 may differ from the engrossed version in minor or nonsubstantive ways, the following comparison is organized and highlighted in a manner that indicates the substantial differences between the engrossed and committee substitute versions of the bill.

SENATE ENGROSSED	HOUSE COMMITTEE SUBSTITUTE
SECTION 1.  Chapter 55, Transportation Code, is amended by adding Section 55.010 to read as follows: Sec. 55.010.  PORT AUTHORITY TRANSPORTATION REINVESTMENT ZONE.  (a)  In this section: (1)  "Port authority" means a port authority or navigation district created or operating under Section 52, Article III, or Section 59, Article XVI, Texas Constitution. (2)  "Port commission" means the governing body of a port authority or navigation district. (3)  "Port project" means a project that is necessary or convenient for the proper operation of a maritime port or waterway and that will improve the security, movement, and intermodal transportation of cargo or passengers in commerce and trade, including dredging, disposal, and other projects. (b)  In this section: (1)  the amount of a port authority's tax increment for a year is the amount of ad valorem taxes levied and collected by the port authority for that year on the captured appraised value of real property taxable by the port authority and located in a transportation reinvestment zone under this section; (2)  the captured appraised value of real property taxable by a port authority for a year is the total appraised value of all real property taxable by the port authority and located in a transportation reinvestment zone for that year less the tax increment base of the port authority; and (3)  the tax increment base of a port authority is the total appraised value of all real property taxable by the port authority and located in a transportation reinvestment zone for the year in which the zone was designated under this section. (c)  The port commission of the port authority, after determining that an area is unproductive or underdeveloped and that action under this section would improve the security, movement, and intermodal transportation of cargo or passengers in commerce and trade, by order or resolution may designate a contiguous geographic area in the jurisdiction of the port authority to be a transportation reinvestment zone to promote a port project and for the purpose of abating ad valorem taxes or granting other relief from taxes imposed by the county on real property located in the zone. (d)  The port commission must comply with all applicable laws in the application of this chapter. (e)  Not later than the 30th day before the date the port commission proposes to designate an area as a transportation reinvestment zone under this section, the port commission must hold a public hearing on the creation of the zone, its benefits to the port authority and to property in the proposed zone, and the abatement of ad valorem taxes or the grant of other relief from ad valorem taxes imposed by the port authority on real property located in the zone.  At the hearing an interested person may speak for or against the designation of the zone, its boundaries, or the abatement of or other relief from port authority taxes on real property in the zone.  Not later than the seventh day before the date of the hearing, notice of the hearing and the intent to create a zone must be published in a newspaper having general circulation in the county in which the zone is proposed to be located. (f)  The order or resolution designating an area as a transportation reinvestment zone must: (1)  describe the boundaries of the zone with sufficient definiteness to identify with ordinary and reasonable certainty the territory included in the zone; (2)  provide that the zone takes effect immediately on adoption of the order or resolution and that the base year shall be the year of passage of the order or resolution or some year in the future; (3)  assign a name to the zone for identification, with the first zone designated by a county designated as "Transportation Reinvestment Zone Number One, (name of port authority)," and subsequently designated zones assigned names in the same form numbered consecutively in the order of their designation; (4)  designate the base year for purposes of establishing the tax increment base of the port authority; (5)  establish an ad valorem tax increment account for the zone; and (6)  contain findings that promotion of a port project will improve the security, movement, and intermodal transportation of cargo or passengers in commerce and trade. (g)  Compliance with the requirements of this section constitutes designation of an area as a transportation reinvestment zone without further hearings or other procedural requirements. (h)  The port commission may: (1)  from taxes collected on property in a zone, including maintenance and operation taxes, pay into a tax increment account for the zone an amount equal to the tax increment produced by the port authority less any amounts allocated under previous agreements, including agreements under Chapter 312, Tax Code; (2)  from a tax increment account for the zone, repay any loan or other debt incurred to finance a port project under this section; (3)  by order or resolution enter into an agreement with the owner of any real property located in the transportation reinvestment zone to abate all or a portion of the ad valorem taxes or to grant other relief from the taxes imposed by the port authority on the owner's property in an amount not to exceed the amount calculated under Subsection (b)(1) for that year; (4)  by order or resolution elect to abate all or a portion of the ad valorem taxes imposed by the port authority on all real property in a zone; or (5)  grant other relief from ad valorem taxes on property in a zone. (i)  All abatements or other relief granted by the port commission in a transportation reinvestment zone must be equal in rate.  In any ad valorem tax year, the total amount of the taxes abated or the total amount of other relief granted under this section may not exceed the amount calculated under Subsection (b)(1) for that year, less any amounts allocated under previous agreements, including agreements under Chapter 312, Tax Code. (j)  To further the development of the port project for which the transportation reinvestment zone was designated, a port authority may assess all or part of the cost of the port project against property within the zone.  The assessment against each property in the zone may be levied and payable in installments in the same manner as provided for municipal and county public improvement districts under Sections 372.016-372.018, Local Government Code, provided that the installments do not exceed the total amount of the tax abatement or other relief granted under Subsection (h).  The port authority has the powers provided to municipalities and counties under Sections 372.015-372.020 and 372.023, Local Government Code, for the assessment of costs and Sections 372.024-372.030, Local Government Code, for the issuance of bonds by the port authority to pay the cost of a port project.  The port commission of the port authority may contract with a public or private entity to develop, redevelop, or improve a port project in the transportation reinvestment zone, including aesthetic improvements, and may pledge and assign to that entity all or a specified amount of the revenue the port authority receives from installment payments of the assessments for the payment of the costs of that port project.  After a pledge or assignment is made, if the entity that received the pledge or assignment has itself pledged or assigned that amount to secure bonds or other obligations issued to obtain funding for the port project, the port commission of the port authority may not rescind its pledge or assignment until the bonds or other obligations secured by the pledge or assignment have been paid or discharged.  Any amount received from installment payments of the assessments not pledged or assigned in connection with the port project may be used for other purposes associated with the port project or in the zone. (k)  To accommodate changes in the limits of the project for which a reinvestment zone was designated, the boundaries of a zone may be amended at any time, except that property may not be removed or excluded from a designated zone if any part of the assessment has been assigned or pledged directly by the port authority or through another entity to secure bonds or other obligations issued to obtain funding of the project, and property may not be added to a designated zone unless the port commission of the port authority complies with Subsections (e) and (f). (l)  Except as provided by Subsection (m), a tax abatement agreement entered into under Subsection (h), or an order or resolution on the abatement of taxes or the grant of other relief from taxes under that subsection, terminates on December 31 of the year in which the port authority completes any contractual requirement that included the pledge or assignment of assessments collected under this section. (m)  A transportation reinvestment zone terminates on December 31 of the 10th year after the year the zone was designated, if before that date the port authority has not used the zone for the purpose for which it was designated. (n)  Notwithstanding any other law, the authority granted by this section may be exercised only by a port commission and may not be exercised by another governmental entity, political subdivision, or special district that has the powers of a port authority or a navigation district.  This subsection does not limit the authority of a municipality under Section 222.106 or a county under Section 222.107 to fund a transportation project described by Section 222.108(d)(2).	SECTION 1.  Subchapter E, Chapter 222, Transportation Code, is amended by adding Section 222.1075 to read as follows: Sec. 222.1075.  PORT AUTHORITY TRANSPORTATION REINVESTMENT ZONE.  (a)  In this section: (1)  "Port authority" means a port authority or navigation district created or operating under Section 52, Article III, or Section 59, Article XVI, Texas Constitution. (2)  "Port commission" means the governing body of a port authority or navigation district. (3)  "Port project" means a project that is necessary or convenient for the proper operation of a maritime port or waterway and that will improve the security, movement, and intermodal transportation of cargo or passengers in commerce and trade, including dredging, disposal, and other projects. (b)  In this section: (1)  the amount of a port authority's tax increment for a year is the amount of ad valorem taxes levied and collected by the port authority or by the commissioners court on behalf of the port authority for that year on the captured appraised value of real property taxable by the port authority and located in a transportation reinvestment zone under this section; (2)  the captured appraised value of real property taxable by a port authority for a year is the total appraised value of all real property taxable by the port authority and located in a transportation reinvestment zone for that year less the tax increment base of the port authority; and (3)  the tax increment base of a port authority is the total appraised value of all real property taxable by the port authority and located in a transportation reinvestment zone for the year in which the zone was designated under this section. (c)  The port commission of the port authority, after determining that an area is unproductive or underdeveloped and that action under this section would improve the security, movement, and intermodal transportation of cargo or passengers in commerce and trade, by order or resolution may designate a contiguous geographic area in the jurisdiction of the port authority to be a transportation reinvestment zone to promote a port project and for the purpose of abating ad valorem taxes or granting other relief from taxes imposed by the county on real property located in the zone. (d)  The port commission must comply with all applicable laws in the application of this chapter. (e)  Not later than the 30th day before the date the port commission proposes to designate an area as a transportation reinvestment zone under this section, the port commission must hold a public hearing on the creation of the zone, its benefits to the port authority and to property in the proposed zone, and the abatement of ad valorem taxes or the grant of other relief from ad valorem taxes imposed by the port authority on real property located in the zone.  At the hearing an interested person may speak for or against the designation of the zone, its boundaries, or the abatement of or other relief from port authority taxes on real property in the zone.  Not later than the seventh day before the date of the hearing, notice of the hearing and the intent to create a zone must be published in a newspaper having general circulation in the county in which the zone is proposed to be located. (f)  The order or resolution designating an area as a transportation reinvestment zone must: (1)  describe the boundaries of the zone with sufficient definiteness to identify with ordinary and reasonable certainty the territory included in the zone; (2)  provide that the zone takes effect immediately on adoption of the order or resolution and that the base year shall be the year of passage of the order or resolution or some year in the future; (3)  assign a name to the zone for identification, with the first zone designated by a county designated as "Transportation Reinvestment Zone Number One, (name of port authority)," and subsequently designated zones assigned names in the same form numbered consecutively in the order of their designation; (4)  designate the base year for purposes of establishing the tax increment base of the port authority; (5)  establish an ad valorem tax increment account for the zone; and (6)  contain findings that promotion of a port project will improve the security, movement, and intermodal transportation of cargo or passengers in commerce and trade. (g)  Compliance with the requirements of this section constitutes designation of an area as a transportation reinvestment zone without further hearings or other procedural requirements. (h)  The port commission may: (1)  from taxes collected on property in a zone, including maintenance and operation taxes, pay into a tax increment account for the zone an amount equal to the tax increment produced by the port authority less any amounts allocated under previous agreements, including agreements under Chapter 312, Tax Code; (2)  from a tax increment account for the zone, repay any loan or other debt incurred to finance a port project under this section; (3)  by order or resolution enter into an agreement with the owner of any real property located in the transportation reinvestment zone to abate all or a portion of the ad valorem taxes or to grant other relief from the taxes imposed by the port authority on the owner's property in an amount not to exceed the amount calculated under Subsection (b)(1) for that year; (4)  by order or resolution elect to abate all or a portion of the ad valorem taxes imposed by the port authority on all real property in a zone; or (5)  grant other relief from ad valorem taxes on property in a zone. (i)  All abatements or other relief granted by the port commission in a transportation reinvestment zone must be equal in rate.  In any ad valorem tax year, the total amount of the taxes abated or the total amount of other relief granted under this section may not exceed the amount calculated under Subsection (b)(1) for that year, less any amounts allocated under previous agreements, including agreements under Chapter 312, Tax Code. (j)  To further the development of the port project for which the transportation reinvestment zone was designated, a port authority may assess all or part of the cost of the port project against property within the zone.  The assessment against each property in the zone may be levied and payable in installments in the same manner as provided for municipal and county public improvement districts under Sections 372.016-372.018, Local Government Code, provided that the installments do not exceed the total amount of the tax abatement or other relief granted under Subsection (h).  The port authority has the powers provided to municipalities and counties under Sections 372.015-372.020 and 372.023, Local Government Code, for the assessment of costs and Sections 372.024-372.030, Local Government Code, for the issuance of bonds by the port authority to pay the cost of a port project.  The port commission of the port authority may contract with a public or private entity to develop, redevelop, or improve a port project in the transportation reinvestment zone, including aesthetic improvements, and may pledge and assign to that entity all or a specified amount of the revenue the port authority receives from installment payments of the assessments for the payment of the costs of that port project.  After a pledge or assignment is made, if the entity that received the pledge or assignment has itself pledged or assigned that amount to secure bonds or other obligations issued to obtain funding for the port project, the port commission of the port authority may not rescind its pledge or assignment until the bonds or other obligations secured by the pledge or assignment have been paid or discharged.  Any amount received from installment payments of the assessments not pledged or assigned in connection with the port project may be used for other purposes associated with the port project or in the zone. (k)  To accommodate changes in the limits of the project for which a reinvestment zone was designated, the boundaries of a zone may be amended at any time, except that property may not be removed or excluded from a designated zone if any part of the assessment has been assigned or pledged directly by the port authority or through another entity to secure bonds or other obligations issued to obtain funding of the project, and property may not be added to a designated zone unless the port commission of the port authority complies with Subsections (e) and (f). (l)  Except as provided by Subsection (m), a tax abatement agreement entered into under Subsection (h), or an order or resolution on the abatement of taxes or the grant of other relief from taxes under that subsection, terminates on December 31 of the year in which the port authority completes any contractual requirement that included the pledge or assignment of assessments collected under this section. (m)  A transportation reinvestment zone terminates on December 31 of the 10th year after the year the zone was designated, if before that date the port authority has not used the zone for the purpose for which it was designated.
No equivalent provision.	SECTION 2.  Section 201.943(d), Transportation Code, is amended to read as follows: (d)  Obligations may be issued for one or more of the following purposes: (1)  to pay all or part of the costs of constructing, reconstructing, acquiring, and expanding state highways, including any necessary design and acquisition of rights-of-way, in the manner and locations determined by the commission that, according to conclusive findings of the commission, have an expected useful life, without material repair, of not less than 10 years; (2)  to provide participation by the state in the payment of part of the costs of constructing and providing publicly owned toll roads and other public transportation projects, including transportation projects described by Section 222.108(d), that are determined by the commission to be in the best interests of the state in its major goal of improving the mobility of the residents of the state; (3)  to create debt service reserve accounts; (4)  to pay interest on obligations for a period of not longer than two years; (5)  to refund or cancel outstanding obligations; and (6)  to pay the commission's costs of issuance.
SECTION 2.  Subsection (d), Section 222.108, Transportation Code, is amended to read as follows: (d)  In this section, "transportation project" includes: (1)  transportation projects described [has the meaning assigned] by Section 370.003; and (2)  port security, transportation, or facility projects described by Section 55.001(5).	SECTION 3. Same as engrossed version except for recitation.
SECTION 3.  This Act takes effect September 1, 2013.	SECTION 4. Same as engrossed version.