89R15003 MP-F

By: Middleton S.B. No. 2594

A BILL TO BE ENTITLED

AN ACT

relating to the provision of supplemental services by management organizations in certain public improvement districts located in certain municipalities.

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

SECTION 1. Section 372.011, Local Government Code, is amended to read as follows:

Sec. 372.011. DISSOLUTION. Except as provided by Section 372.203, a [A] public hearing may be called and held 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.

SECTION 2. Chapter 372, Local Government Code, is amended by adding Subchapter E to read as follows:

SUBCHAPTER E. DOWNTOWN IMPROVEMENT DISTRICTS IN CERTAIN

MUNICIPALITIES

Sec. 372.201. DEFINITIONS. In this subchapter:

(1) "Affected district" means a public improvement district that is located in a municipality's central business district and has the largest operating budget of any public improvement district located in the central business district as of January 1, 2025.

(2) "Management organization" means a nonprofit organization that a municipality has entered into a contract with to implement supplemental services and improvements in an affected district.

(3) "Vagrancy" means the habitual act of loitering, begging, panhandling, scavenging, camping, sleeping, or otherwise remaining idle for extended periods of time in a public place without a lawful purpose.

Sec. 372.202. APPLICABILITY OF SUBCHAPTER. This subchapter applies only to a municipality that has a population of more than 900,000 and less than two million.

Sec. 372.203. PERPETUAL EXISTENCE. Notwithstanding any other law, an affected district may not be dissolved under Section 372.011 or any other general law, but may be dissolved by special law.

Sec. 372.204. CONTRACT WITH MANAGEMENT ORGANIZATION. (a) Except as provided by Section 372.205, a municipality shall enter into a contract with a management organization that:

(1) implements supplemental services and improvements in an affected district created by the municipality; and

(2) is delegated full authority to oversee and manage the implementation of supplemental services and improvements as provided by Section 372.208, including the receipt, handling, and use of money in accordance with this subchapter.

(b) A management organization that enters into a contract under this section is considered a governmental body for purposes of Chapter 552, Government Code.

Sec. 372.205. GOVERNING BODY OF MANAGEMENT ORGANIZATIONS. (a) A municipality may not enter into a contract with a management organization under this subchapter unless the governing body of the management organization complies with this section.

(b) The governing body of a nonprofit organization that may serve as a management organization under this subchapter must be composed of seven directors that serve staggered, four-year terms. Five of the directors must be appointed as provided by Subsection (c) and two of the directors must be elected as provided by Subsection (d).

(c) The appointed directors of the governing body of a nonprofit organization that may serve as a management organization under this subchapter must be appointed as follows:

(1) one director appointed by the municipality in which the affected district is located;

(2) one director appointed by the commissioners court of the county in which the affected district is located;

(3) one director appointed by the governor;

(4) one director appointed by the lieutenant governor; and

(5) one director appointed by the speaker of the house of representatives.

(d) The elected directors of the governing body of a nonprofit organization that may serve as a management organization under this subchapter must be elected by the 10 largest owners of taxable real property liable for an assessment in the affected district, as determined by the current roll of the appraisal district in which the property is located. The governing documents of the nonprofit organization must prescribe the means of electing the directors under this subsection. An elected director may not serve consecutive terms.

Sec. 372.206. LOCAL FUNDING. (a) A municipality shall transfer annually to the management organization of an affected district located in the municipality an amount of money equal to the revenue collected through an existing special assessment on properties located in the district over the previous municipal fiscal year.

(b) A county shall transfer annually to the management organization of an affected district located in the county an amount of money equal to one half of the amount described by Subsection (a).

(c) A municipality or county may not change the rate of an assessment in response to a transfer of money under this section.

Sec. 372.207. STATE FUNDING. A management organization is eligible to receive state funding for the purpose of implementing supplemental services as described by Section 372.208.

Sec. 372.208. USE OF MONEY FOR SUPPLEMENTAL SERVICES. (a) Except as provided by Subsection (b), a management organization may only use money allocated to the management organization under this subchapter for the following supplemental services, in order of priority:

(1) eliminating crime;

(2) eliminating vagrancy;

(3) improving cleanliness;

(4) increasing beautification; and

(5) implementing other projects to improve the public improvement district.

(b) An affected district may only use money appropriated to the management organization under Section 372.207 for:

(1) eliminating crime; and

(2) eliminating vagrancy.

Sec. 372.209. ENFORCEMENT. (a) An owner of real property located in an affected district may bring an action against a management organization to seek injunctive relief or specific performance in a district court to enforce compliance with any applicable law or the governing documents of the management organization. A property owner is not entitled to money damages in an action under this section.

(b) A court shall award reasonable attorney's fees and court costs incurred in bringing an action under this section to a prevailing claimant.

SECTION 3. This Act takes effect September 1, 2025.