Texas 2009 - 81st Regular

Texas Senate Bill SB2338 Compare Versions

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11 By: Shapiro S.B. No. 2338
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33
44 A BILL TO BE ENTITLED
55 AN ACT
66 relating to the creation, operations and financing of tax increment
77 reinvestment zones.
88 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
99 SECTION 1. Section 311.002(1), Tax Code is amended as
1010 follows:
1111 (1) "Project costs" means the expenditures made or
1212 estimated to be made and monetary obligations incurred or estimated
1313 to be incurred by the municipality or county establishing a
1414 reinvestment zone that are listed in the project plan as costs of
1515 public works or public improvements, programs, or other projects
1616 [in] benefitting the zone, plus other costs incidental to those
1717 expenditures and obligations. "Project costs" include:
1818 (A) capital costs, including the actual costs of
1919 the acquisition and construction of public works, public
2020 improvements, new buildings, structures, and fixtures; the actual
2121 costs of the acquisition, demolition, alteration, remodeling,
2222 repair, or reconstruction of existing buildings, structures, and
2323 fixtures; the actual costs of the remediation of conditions that
2424 contaminate public or private land or buildings, the preservation
2525 of the facade of a private or public building, and the demolition of
2626 public or private buildings; and the actual costs of the
2727 acquisition of land and equipment and the clearing and grading of
2828 land;
2929 (B) financing costs, including all interest paid
3030 to holders of evidences of indebtedness or other obligations issued
3131 to pay for project costs and any premium paid over the principal
3232 amount of the obligations because of the redemption of the
3333 obligations before maturity;
3434 (C) real property assembly costs;
3535 (D) professional service costs, including those
3636 incurred for architectural, planning, engineering, and legal
3737 advice and services;
3838 (E) imputed administrative costs, including
3939 reasonable charges for the time spent by employees of the
4040 municipality or county in connection with the implementation of a
4141 project plan;
4242 (F) relocation costs;
4343 (G) organizational costs, including the costs of
4444 conducting environmental impact studies or other studies, the cost
4545 of publicizing the creation of the zone, and the cost of
4646 implementing the project plan for the zone;
4747 (H) interest before and during construction and
4848 for one year after completion of construction, whether or not
4949 capitalized;
5050 (I) the cost of operating the reinvestment zone
5151 and project facilities;
5252 (J) the amount of any contributions made by the
5353 municipality or county from general revenue for the implementation
5454 of the project plan; [and]
5555 (K) a program described in Section 311.310(h) of
5656 this chapter; and
5757 (L) payments made at the discretion of the
5858 governing body of the municipality or county that the governing
5959 body finds necessary or convenient to the creation of the zone or to
6060 the implementation of the project plans for the zone.
6161 SECTION 2. Sections 311.003(a) and (b), Tax Code, are
6262 amended as follows:
6363 (a) The governing body of a municipality by ordinance or the
6464 governing body of a county by order may designate a [contiguous]
6565 geographic area in the jurisdiction of the municipality or county
6666 to be a reinvestment zone to promote development or redevelopment
6767 of the area if the governing body determines that development or
6868 redevelopment would not occur solely through private investment in
6969 the reasonably foreseeable future. The area need not be contiguous
7070 if the governing body finds that the areas are substantially
7171 related.
7272 (b) Before adopting an ordinance or order providing for a
7373 reinvestment zone, the governing body of the municipality or county
7474 must prepare a preliminary reinvestment zone financing plan. [As
7575 soon as the plan is completed, a copy of the plan must be sent to the
7676 governing body of each taxing unit that levies taxes on real
7777 property in the proposed zone.]
7878 SECTION 3. Section 311.005(a) is amended to read as
7979 follows:
8080 (a) To be designated as a reinvestment zone, an area must:
8181 (1) substantially arrest or impair the sound growth of
8282 the municipality or county creating the zone, retard the provision
8383 of housing accommodations, or constitute an economic or social
8484 liability and be a menace to the public health, safety, morals, or
8585 welfare in its present condition and use because of the presence of:
8686 (A) a substantial number of substandard, slum,
8787 deteriorated, or deteriorating structures;
8888 (B) the predominance of defective or inadequate
8989 sidewalk or street layout;
9090 (C) faulty lot layout in relation to size,
9191 adequacy, accessibility, or usefulness;
9292 (D) unsanitary or unsafe conditions;
9393 (E) the deterioration of site or other
9494 improvements;
9595 (F) tax or special assessment delinquency
9696 exceeding the fair value of the land;
9797 (G) defective or unusual conditions of title;
9898 (H) conditions that endanger life or property by
9999 fire or other cause; or
100100 (I) structures, other than single-family
101101 residential structures, less than 10 percent of the square footage
102102 of which has been used for commercial, industrial, or residential
103103 purposes during the preceding 12 years, if the municipality has a
104104 population of 100,000 or more;
105105 (2) be predominantly open, undeveloped, or
106106 underdeveloped and, because of obsolete platting, deterioration of
107107 structures or site improvements, or other factors, substantially
108108 impair or arrest the sound growth of the municipality or county;
109109 (3) be in a federally assisted new community located
110110 in the municipality or county or in an area immediately adjacent to
111111 a federally assisted new community; or
112112 (4) be an area described in a petition requesting that
113113 the area be designated as a reinvestment zone, if the petition is
114114 submitted to the governing body of the municipality or county by the
115115 owners of property constituting at least 50 percent of the
116116 appraised value of the property in the area according to the most
117117 recent certified appraisal roll for the county in which the area is
118118 located.
119119 SECTION 4. Section 311.007, Tax Code, is amended as
120120 follows:
121121 §
122122 311.007. CHANGING BOUNDARIES OR TERM OF EXISTING ZONE.
123123 (a) [Subject to the limitations provided by Section 311.006, if
124124 applicable, the] The boundaries of an existing reinvestment zone
125125 may be reduced or enlarged by ordinance or resolution of the
126126 governing body of the municipality or by order or resolution of the
127127 governing body of the county that created the zone.
128128 (b) The governing body of the municipality or county may
129129 that created an existing reinvestment zone may by ordinance or
130130 resolution extend the term of the zone after notice and hearing in
131131 the same manner as provided for the creation of the zone; provided
132132 that no other taxing entity shall be required to participate in the
133133 zone for the extended term except by written agreement. [enlarge an
134134 existing reinvestment zone to include an area described in a
135135 petition requesting that the area be included in the zone if the
136136 petition is submitted to the governing body of the municipality or
137137 county by the owners of property constituting at least 50 percent of
138138 the appraised value of the property in the area according to the
139139 most recent certified appraisal roll for the county in which the
140140 area is located. The composition of the board of directors of the
141141 zone continues to be governed by Section 311.009(a) or (b),
142142 whichever applied to the zone immediately before the enlargement of
143143 the zone, except that the membership of the board must conform to
144144 the requirements of the applicable subsection of Section 311.009 as
145145 applied to the zone after its enlargement. The provision of Section
146146 311.006(b) relating to the amount of property used for residential
147147 purposes that may be included in the zone does not apply to the
148148 enlargement of a zone under this subsection.]
149149 SECTION 5. Section 311.008(b)(2), Tax Code, is amended to
150150 read as follows:
151151 (2) acquire real property by purchase, condemnation,
152152 or other means [to implement project plans] and sell real [that]
153153 property, on the terms and conditions and in the manner it considers
154154 advisable to implement the project plans;
155155 SECTION 6. Section 311.009(a), (b), and (e), Tax Code, are
156156 amended to read as follows:
157157 (a) Except as provided by Subsection (b), the board of
158158 directors of a reinvestment zone consists of at least five and not
159159 more than 15 members, unless more than 15 members are required to
160160 satisfy the requirements of this subsection. Each taxing unit
161161 other than the municipality or county that created the zone that
162162 levies taxes on real property in the zone may appoint one member of
163163 the board if the taxing unit has approved the payment of all or part
164164 of the tax increment produced by the unit into the tax increment
165165 fund. A unit may waive its right to appoint a director. The
166166 governing body of the municipality or county that created the zone
167167 may appoint not more than 10 directors to the board; except that if
168168 there are fewer than five directors appointed by taxing units other
169169 than the municipality or county, the governing body of the
170170 municipality or county may appoint more than 10 members as long as
171171 the total membership of the board does not exceed 15.
172172 (b) If the zone was designated under Section 311.005(a)(4),
173173 the board of directors of the zone consists of nine members. Each
174174 taxing unit [school district, county, or municipality,] other than
175175 the municipality or county that created the zone, that levies taxes
176176 on real property in the zone may appoint one member of the board if
177177 the taxing unit [school district, county, or municipality] has
178178 approved the payment of all or part of the tax increment produced by
179179 the unit into the tax increment fund. The member of the state
180180 senate in whose district the zone is located is a member of the
181181 board, and the member of the state house of representatives in whose
182182 district the zone is located is a member of the board, except that
183183 either may designate another individual to serve in the member's
184184 place at the pleasure of the member. If the zone is located in more
185185 than one senate or house district, this subsection applies only to
186186 the senator or representative in whose district a larger portion of
187187 the zone is located than any other senate or house district, as
188188 applicable. The remaining members of the board are appointed by the
189189 governing body of the municipality or county that created the zone.
190190 (e) To be eligible for appointment to the board by the
191191 governing body of the municipality or county that created the zone,
192192 an individual must:
193193 (1) if the board is covered by Subsection (a):
194194 (A) be a resident citizen of the State of Texas
195195 [qualified voter of the municipality or county, as applicable]; and
196196 [or]
197197 (B) be at least 18 years of age [and own real
198198 property in the zone, whether or not the individual resides in the
199199 municipality or county]; or
200200 (2) if the board is covered by Subsection (b):
201201 (A) be at least 18 years of age; and
202202 (B) own real property in the zone or be an
203203 employee, tenant, or agent of a person that owns real property in
204204 the zone.
205205 SECTION 7. Section 311.010(h), Tax Code, is amended to read
206206 as follows:
207207 (h) Subject to the approval of the governing body of the
208208 municipality or county that created the zone, the board of
209209 directors of a reinvestment zone, as necessary or convenient to
210210 implement the project plan and reinvestment zone financing plan and
211211 achieve their purposes, may establish and provide for the
212212 administration of one or more programs for the public purposes of
213213 developing and diversifying the economy of the zone, eliminating
214214 unemployment and underemployment in the zone, and developing or
215215 expanding transportation, business, and commercial activity in the
216216 zone, including programs to make grants and loans [from the tax
217217 increment fund of the zone in an aggregate amount not to exceed the
218218 amount of the tax increment produced by the municipality and paid
219219 into the tax increment fund for the zone] for activities that
220220 benefit the zone and stimulate business and commercial activity in
221221 the zone. For purposes of this subsection, on approval of the
222222 municipality or county, the board of directors of the zone has all
223223 the powers of a municipality under Chapter 380, Local Government
224224 Code. The approval required by this subsection may be granted in an
225225 ordinance or order approving a project plan and reinvestment zone
226226 financing plan or an amendment to a project plan and reinvestment
227227 zone financing plan.
228228 SECTION 8. Section 311.011, Tax Code, is amended by
229229 amending subsections (a), (b), (c), (d), and (g) and adding a new
230230 subsection (h) as follows:
231231 §
232232 311.011. PROJECT AND FINANCING PLANS. (a) The board of
233233 directors of a reinvestment zone shall prepare and adopt a project
234234 plan and a reinvestment zone financing plan for the zone and submit
235235 the plans to the governing body of the municipality or county that
236236 created the zone. [The plans must be as consistent as possible with
237237 the preliminary plans developed for the zone before the creation of
238238 the board.]
239239 (b) The project plan must include:
240240 (1) a [map showing] description of existing uses and
241241 conditions of real property in the zone and [a map showing] proposed
242242 [improvements to and proposed] uses of that property;
243243 (2) proposed changes of zoning ordinances, [the master
244244 plan of the municipality,] building codes, other municipal
245245 ordinances, and subdivision rules and regulations, if any, of the
246246 municipality or the county, if applicable; and
247247 (3) [a list of estimated nonproject costs; and
248248 (4)] a statement of a method of relocating persons to
249249 be displaced, if any, as a result of implementing the plan.
250250 (c) The reinvestment zone financing plan must include:
251251 (1) a detailed list describing the estimated project
252252 costs of the zone, including administrative expenses;
253253 (2) a statement listing the proposed kind, number, and
254254 location of all [proposed] public works or public improvements to
255255 be financed by [in] the zone;
256256 (3) a finding that the zone is economically feasible
257257 [an economic feasibility study];
258258 (4) the estimated amount of bonded indebtedness to be
259259 incurred;
260260 (5) the estimated time when related costs or monetary
261261 obligations are to be incurred;
262262 (6) a description of the methods of financing all
263263 estimated project costs and the expected sources of revenue to
264264 finance or pay project costs, including the percentage of tax
265265 increment to be derived from the property taxes of each taxing unit
266266 anticipated to participate in the zone financing that levies taxes
267267 on real property in the zone;
268268 (7) the current total appraised value of taxable real
269269 property in the zone;
270270 (8) the estimated captured appraised value of the zone
271271 during each year of its existence; and
272272 (9) the duration of the zone.
273273 (d) The governing body of the municipality or county that
274274 created the zone must approve a project plan or reinvestment zone
275275 financing plan after its adoption by the board. The approval must
276276 be by ordinance, in the case of a municipality, or by order, in the
277277 case of a county, that finds that the plan is feasible [and conforms
278278 to the master plan, if any, of the municipality or to subdivision
279279 rules and regulations, if any, of the county].
280280 (g) [An amendment to the project plan or the reinvestment
281281 zone financing plan for a zone does not apply to a] A school
282282 district that participates in a [the] zone is not required to
283283 increase the percentage or amount of the tax increment to be
284284 contributed by the school district due to an amendment to the
285285 project plan or reinvestment zone financing plan for the zone
286286 unless the governing body of the school district by official action
287287 approves the amendment[, if the amendment:
288288 (1) has the effect of directly or indirectly
289289 increasing the percentage or amount of the tax increment to be
290290 contributed by the school district; or
291291 (2) requires or authorizes the municipality or county
292292 creating the zone to issue additional tax increment bonds or
293293 notes].
294294 (h) Unless specifically provided otherwise in the project
295295 plan and reinvestment zone financing plan, all figures contained in
296296 the plan shall be considered estimates, and shall not act as a
297297 limitation on the described items, including without limitation
298298 expenditures relating to project costs and participation by taxing
299299 units.
300300 SECTION 9. Section 311.012(c), Tax Code, is amended as
301301 follows:
302302 (c) The tax increment base of a taxing unit is the total
303303 [appraised] taxable value of all real property taxable by the unit
304304 and located in a reinvestment zone for the year in which the zone
305305 was designated under this chapter. The base year for any land
306306 annexed into the zone is the year in which such land was annexed.
307307 SECTION 10. Sections 311.013(f) and (l), Tax Code, is
308308 amended as follows:
309309 (f) A taxing unit is not required to pay into the tax
310310 increment fund any of its tax increment produced from property
311311 located in a reinvestment zone designated under Section 311.005(a)
312312 or in an area added to a reinvestment zone under Section 311.007
313313 unless the taxing unit enters into an agreement to do so with the
314314 governing body of the municipality or county that created the zone.
315315 A taxing unit may enter into an agreement under this subsection at
316316 any time before or after the zone is created or enlarged. The
317317 agreement may include conditions for payment of that tax increment
318318 into the fund and must specify the portion of the tax increment to
319319 be paid into the fund and the years for which that tax increment is
320320 to be paid into the fund. The agreement may specify that the taxing
321321 unit's participation may be computed with respect to a base year
322322 later than the original base year of the zone. The agreement and
323323 the conditions in the agreement are binding on the taxing unit, the
324324 municipality or county, and the board of directors of the zone.
325325 (l) The governing body of a municipality or a county that
326326 designates an area as a reinvestment zone may determine, in the
327327 designating ordinance or order adopted under Section 311.003 or in
328328 the ordinance or order adopted under Section 311.011 approving the
329329 reinvestment zone financing plan for the zone, the portion of the
330330 tax increment produced by the municipality or the county that the
331331 municipality or the county is required to pay into the tax increment
332332 fund for the zone. If a municipality or a county does not determine
333333 the portion of the tax increment produced by the municipality or the
334334 county that the municipality or the county is required to pay into
335335 the tax increment fund for a reinvestment zone, the municipality or
336336 the county is required to pay into the fund for the zone the entire
337337 tax increment produced by the municipality or the county, except as
338338 provided by Subsection (b)(1).
339339 SECTION 11. Section 311.014(b), Tax Code, is amended to
340340 read as follows:
341341 (b) Money may be disbursed from the fund only to satisfy
342342 claims of holders of tax increment bonds or notes issued for the
343343 zone, to pay project costs for the zone, to make payments pursuant
344344 to an agreement made under Section 311.010(b) or a program under
345345 Section 311.010(h) dedicating revenue from the tax increment fund,
346346 or to repay other obligations incurred for the zone.
347347 SECTION 12. Sections 311.015(a) and (l), Tax Code, are
348348 amended as follows:
349349 (a) A municipality creating a reinvestment zone may issue
350350 tax increment bonds or notes, the proceeds of which may be used to
351351 make payments pursuant to agreements made under Section 311.010(b),
352352 to make payments pursuant to programs under Section 311.010(h), and
353353 to pay project costs for the reinvestment zone on behalf of which
354354 the bonds or notes were issued, or to satisfy claims of holders of
355355 the bonds or notes. The municipality may issue refunding bonds or
356356 notes for the payment or retirement of tax increment bonds or notes
357357 previously issued by it.
358358 (l) A tax increment bond or note must mature within 20 years
359359 of the date of issue on or before the date by which the final
360360 payments of tax increment into the tax increment fund are due.
361361 SECTION 13. Section 311.016(a), Tax Code, is amended to
362362 read as follows:
363363 (a) On or before the 150th [90th] day following the end of
364364 the fiscal year of the municipality or county, the governing body of
365365 a municipality or county shall submit to the chief executive
366366 officer of each taxing unit that levies property taxes on real
367367 property in a reinvestment zone created by the municipality or
368368 county a report on the status of the zone. The report must include:
369369 (1) the amount and source of revenue in the tax
370370 increment fund established for the zone;
371371 (2) the amount and purpose of expenditures from the
372372 fund;
373373 (3) the amount of principal and interest due on
374374 outstanding bonded indebtedness;
375375 (4) the tax increment base and current captured
376376 appraised value retained by the zone; and
377377 (5) the captured appraised value shared by the
378378 municipality or county and other taxing units, the total amount of
379379 tax increments received, and any additional information necessary
380380 to demonstrate compliance with the tax increment financing plan
381381 adopted by the governing body of the municipality or county.
382382 SECTION 14. Section 311.017, Tax Code, is amended by
383383 amending Subsection (a) and adding new Subsections (a-1), (c), and
384384 (d) to read as follows:
385385 (a) A reinvestment zone terminates on the earlier of:
386386 (1) the termination date designated in the ordinance
387387 or order, as applicable, creating the zone or an earlier or later
388388 termination date designated by an ordinance or order adopted
389389 [subsequent to the ordinance or order creating the zone] under
390390 Section 311.007(b); or
391391 (2) the date on which all project costs, tax increment
392392 bonds and interest on those bonds, and other obligations have been
393393 paid in full.
394394 (a-1) Notwithstanding the designation of a later
395395 termination date under Section 311.007(b), a taxing unit that taxes
396396 real property located in the zone, other than the municipality or
397397 county that created the zone, is not required to pay any of its tax
398398 increment into the tax increment fund for the zone after the
399399 termination date designated in the ordinance or order creating the
400400 zone unless the governing body of the taxing unit enters into an
401401 agreement to do so with the governing body of the municipality or
402402 county that created the zone.
403403 (c) With respect to a zone established under Section
404404 311.0031, the zone shall terminate on the date on which all project
405405 costs, tax increment bonds and interest on those bonds, and other
406406 obligations have been paid in full, notwithstanding the expiration
407407 of the designation of the area under the specified law.
408408 (d) If tax increment bonds or obligations of the zone are
409409 outstanding when the zone is terminated, the zone shall remain in
410410 existence solely for the purpose of fully paying its obligations or
411411 the tax increment bonds. The termination is effective when all zone
412412 obligations or tax increment bonds have been fully paid.
413413 SECTION 15. Chapter 311, Tax Code, is amended by adding a
414414 new Section 311.021, as follows:
415415 Sec. 311.021. ACT OR PROCEEDING PRESUMED VALID. (a) A
416416 governmental act or proceeding relating to the designation,
417417 operation, or administration of a reinvestment zone or
418418 implementation of a project plan or reinvestment zone financing
419419 plan under this chapter of a municipality or county, zone board, or
420420 an entity acting pursuant to Section 311.010(f), is conclusively
421421 presumed, as of the date it occurred, valid and to have occurred in
422422 accordance with all applicable statutes and rules if:
423423 (1) the second anniversary of the effective date of
424424 the act or proceeding has expired; and
425425 (2) a lawsuit to annul or invalidate the act or
426426 proceeding has not been filed on or before that second anniversary.
427427 (b) This section does not apply to:
428428 (1) an act or proceeding that was void at the time it
429429 occurred;
430430 (2) an act or proceeding that, under a statute of this
431431 state or the United States, was a misdemeanor or felony at the time
432432 the act or proceeding occurred;
433433 (3) a rule that, at the time it was passed, was
434434 preempted by a statute of this state or the United States, including
435435 Section 1.06 or 109.57, Alcoholic Beverage Code; or
436436 (4) a matter that on the effective date of this
437437 section:
438438 (A) is involved in litigation if the litigation
439439 ultimately results in the matter being held invalid by a final
440440 judgment of a court; or
441441 (B) has been held invalid by a final judgment of a
442442 court.
443443 SECTION 16. The following provisions of the Tax Code are
444444 repealed:
445445 (1) Section 311.003(e), (f), and (g);
446446 (2) Section 311.006;
447447 (3) Section 311.01005;
448448 (4) Section 311.007(b);
449449 (5) Sections 311.013(d) and (e); and
450450 (6) Section 311.016(b) as amended by Acts 2005, 79th
451451 Leg., R.S., Ch. 977, Sec.2.
452452 SECTION 17. Section 42.2516, Education Code, is amended to
453453 designate existing subsections (k) and (l) as (l) and (m),
454454 respectively, and to add a new subsection (k), as follows:
455455 (k) In computing the local revenue per student available to
456456 a school district there shall be deducted from the local revenue
457457 available to the school district the amount of taxes paid by the
458458 school district into a tax increment reinvestment zone under
459459 Chapter 311, Tax Code.
460460 SECTION 18. (a) The legislature validates and confirms all
461461 governmental acts and proceedings that were taken before the
462462 effective date of this Act and relate to or are associated with the
463463 designation, operation, or administration of a reinvestment zone or
464464 implementation of a project plan or reinvestment zone financing
465465 plan under Chapter 311, Tax Code, of a municipality or county, zone
466466 board, or an entity acting pursuant to Section 311.010(f),
467467 including the extension of the term of a reinvestment zone, as of
468468 the dates on which they occurred. The acts and proceedings may not
469469 be held invalid because they were not in accordance with Chapter
470470 311, Tax Code, or other law.
471471 (b) Subsection (a) of this section does not apply to any
472472 matter that on the effective date of this Act:
473473 (1) is involved in litigation if the litigation
474474 ultimately results in the matter being held invalid by a final
475475 judgment of a court; or
476476 (2) has been held invalid by a final judgment of a
477477 court.
478478 SECTION 19. EFFECTIVE DATE. This Act takes effect
479479 immediately if it receives a vote of two-thirds of all the members
480480 elected to each house, as provided by Section 39, Article III, Texas
481481 Constitution. If this Act does not receive the vote necessary for
482482 immediate effect, this Act takes effect September 1, 2009.