By: Shapiro S.B. No. 2338
A BILL TO BE ENTITLED
AN ACT
relating to the creation, operations and financing of tax increment
reinvestment zones.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 311.002(1), Tax Code is amended as
follows:
(1) "Project costs" means the expenditures made or
estimated to be made and monetary obligations incurred or estimated
to be incurred by the municipality or county establishing a
reinvestment zone that are listed in the project plan as costs of
public works or public improvements, programs, or other projects
[in] benefitting the zone, plus other costs incidental to those
expenditures and obligations. "Project costs" include:
(A) capital costs, including the actual costs of
the acquisition and construction of public works, public
improvements, new buildings, structures, and fixtures; the actual
costs of the acquisition, demolition, alteration, remodeling,
repair, or reconstruction of existing buildings, structures, and
fixtures; the actual costs of the remediation of conditions that
contaminate public or private land or buildings, the preservation
of the facade of a private or public building, and the demolition of
public or private buildings; and the actual costs of the
acquisition of land and equipment and the clearing and grading of
land;
(B) financing costs, including all interest paid
to holders of evidences of indebtedness or other obligations issued
to pay for project costs and any premium paid over the principal
amount of the obligations because of the redemption of the
obligations before maturity;
(C) real property assembly costs;
(D) professional service costs, including those
incurred for architectural, planning, engineering, and legal
advice and services;
(E) imputed administrative costs, including
reasonable charges for the time spent by employees of the
municipality or county in connection with the implementation of a
project plan;
(F) relocation costs;
(G) organizational costs, including the costs of
conducting environmental impact studies or other studies, the cost
of publicizing the creation of the zone, and the cost of
implementing the project plan for the zone;
(H) interest before and during construction and
for one year after completion of construction, whether or not
capitalized;
(I) the cost of operating the reinvestment zone
and project facilities;
(J) the amount of any contributions made by the
municipality or county from general revenue for the implementation
of the project plan; [and]
(K) a program described in Section 311.310(h) of
this chapter; and
(L) payments made at the discretion of the
governing body of the municipality or county that the governing
body finds necessary or convenient to the creation of the zone or to
the implementation of the project plans for the zone.
SECTION 2. Sections 311.003(a) and (b), Tax Code, are
amended as follows:
(a) The governing body of a municipality by ordinance or the
governing body of a county by order may designate a [contiguous]
geographic area in the jurisdiction of the municipality or county
to be a reinvestment zone to promote development or redevelopment
of the area if the governing body determines that development or
redevelopment would not occur solely through private investment in
the reasonably foreseeable future. The area need not be contiguous
if the governing body finds that the areas are substantially
related.
(b) Before adopting an ordinance or order providing for a
reinvestment zone, the governing body of the municipality or county
must prepare a preliminary reinvestment zone financing plan. [As
soon as the plan is completed, a copy of the plan must be sent to the
governing body of each taxing unit that levies taxes on real
property in the proposed zone.]
SECTION 3. Section 311.005(a) is amended to read as
follows:
(a) To be designated as a reinvestment zone, an area must:
(1) substantially arrest or impair the sound growth of
the municipality or county creating the zone, retard the provision
of housing accommodations, or constitute an economic or social
liability and be a menace to the public health, safety, morals, or
welfare in its present condition and use because of the presence of:
(A) a substantial number of substandard, slum,
deteriorated, or deteriorating structures;
(B) the predominance of defective or inadequate
sidewalk or street layout;
(C) faulty lot layout in relation to size,
adequacy, accessibility, or usefulness;
(D) unsanitary or unsafe conditions;
(E) the deterioration of site or other
improvements;
(F) tax or special assessment delinquency
exceeding the fair value of the land;
(G) defective or unusual conditions of title;
(H) conditions that endanger life or property by
fire or other cause; or
(I) structures, other than single-family
residential structures, less than 10 percent of the square footage
of which has been used for commercial, industrial, or residential
purposes during the preceding 12 years, if the municipality has a
population of 100,000 or more;
(2) be predominantly open, undeveloped, or
underdeveloped and, because of obsolete platting, deterioration of
structures or site improvements, or other factors, substantially
impair or arrest the sound growth of the municipality or county;
(3) be in a federally assisted new community located
in the municipality or county or in an area immediately adjacent to
a federally assisted new community; or
(4) be an area described in a petition requesting that
the area be designated as a reinvestment zone, if the petition is
submitted to the governing body of the municipality or county by the
owners of property constituting at least 50 percent of the
appraised value of the property in the area according to the most
recent certified appraisal roll for the county in which the area is
located.
SECTION 4. Section 311.007, Tax Code, is amended as
follows:
§
311.007. CHANGING BOUNDARIES OR TERM OF EXISTING ZONE.
(a) [Subject to the limitations provided by Section 311.006, if
applicable, the] The boundaries of an existing reinvestment zone
may be reduced or enlarged by ordinance or resolution of the
governing body of the municipality or by order or resolution of the
governing body of the county that created the zone.
(b) The governing body of the municipality or county may
that created an existing reinvestment zone may by ordinance or
resolution extend the term of the zone after notice and hearing in
the same manner as provided for the creation of the zone; provided
that no other taxing entity shall be required to participate in the
zone for the extended term except by written agreement. [enlarge an
existing reinvestment zone to include an area described in a
petition requesting that the area be included in the zone if the
petition is submitted to the governing body of the municipality or
county by the owners of property constituting at least 50 percent of
the appraised value of the property in the area according to the
most recent certified appraisal roll for the county in which the
area is located. The composition of the board of directors of the
zone continues to be governed by Section 311.009(a) or (b),
whichever applied to the zone immediately before the enlargement of
the zone, except that the membership of the board must conform to
the requirements of the applicable subsection of Section 311.009 as
applied to the zone after its enlargement. The provision of Section
311.006(b) relating to the amount of property used for residential
purposes that may be included in the zone does not apply to the
enlargement of a zone under this subsection.]
SECTION 5. Section 311.008(b)(2), Tax Code, is amended to
read as follows:
(2) acquire real property by purchase, condemnation,
or other means [to implement project plans] and sell real [that]
property, on the terms and conditions and in the manner it considers
advisable to implement the project plans;
SECTION 6. Section 311.009(a), (b), and (e), Tax Code, are
amended to read as follows:
(a) Except as provided by Subsection (b), the board of
directors of a reinvestment zone consists of at least five and not
more than 15 members, unless more than 15 members are required to
satisfy the requirements of this subsection. Each taxing unit
other than the municipality or county that created the zone that
levies taxes on real property in the zone may appoint one member of
the board if the taxing unit has approved the payment of all or part
of the tax increment produced by the unit into the tax increment
fund. A unit may waive its right to appoint a director. The
governing body of the municipality or county that created the zone
may appoint not more than 10 directors to the board; except that if
there are fewer than five directors appointed by taxing units other
than the municipality or county, the governing body of the
municipality or county may appoint more than 10 members as long as
the total membership of the board does not exceed 15.
(b) If the zone was designated under Section 311.005(a)(4),
the board of directors of the zone consists of nine members. Each
taxing unit [school district, county, or municipality,] other than
the municipality or county that created the zone, that levies taxes
on real property in the zone may appoint one member of the board if
the taxing unit [school district, county, or municipality] has
approved the payment of all or part of the tax increment produced by
the unit into the tax increment fund. The member of the state
senate in whose district the zone is located is a member of the
board, and the member of the state house of representatives in whose
district the zone is located is a member of the board, except that
either may designate another individual to serve in the member's
place at the pleasure of the member. If the zone is located in more
than one senate or house district, this subsection applies only to
the senator or representative in whose district a larger portion of
the zone is located than any other senate or house district, as
applicable. The remaining members of the board are appointed by the
governing body of the municipality or county that created the zone.
(e) To be eligible for appointment to the board by the
governing body of the municipality or county that created the zone,
an individual must:
(1) if the board is covered by Subsection (a):
(A) be a resident citizen of the State of Texas
[qualified voter of the municipality or county, as applicable]; and
[or]
(B) be at least 18 years of age [and own real
property in the zone, whether or not the individual resides in the
municipality or county]; or
(2) if the board is covered by Subsection (b):
(A) be at least 18 years of age; and
(B) own real property in the zone or be an
employee, tenant, or agent of a person that owns real property in
the zone.
SECTION 7. Section 311.010(h), Tax Code, is amended to read
as follows:
(h) Subject to the approval of the governing body of the
municipality or county that created the zone, the board of
directors of a reinvestment zone, as necessary or convenient to
implement the project plan and reinvestment zone financing plan and
achieve their purposes, may establish and provide for the
administration of one or more programs for the public purposes of
developing and diversifying the economy of the zone, eliminating
unemployment and underemployment in the zone, and developing or
expanding transportation, business, and commercial activity in the
zone, including programs to make grants and loans [from the tax
increment fund of the zone in an aggregate amount not to exceed the
amount of the tax increment produced by the municipality and paid
into the tax increment fund for the zone] for activities that
benefit the zone and stimulate business and commercial activity in
the zone. For purposes of this subsection, on approval of the
municipality or county, the board of directors of the zone has all
the powers of a municipality under Chapter 380, Local Government
Code. The approval required by this subsection may be granted in an
ordinance or order approving a project plan and reinvestment zone
financing plan or an amendment to a project plan and reinvestment
zone financing plan.
SECTION 8. Section 311.011, Tax Code, is amended by
amending subsections (a), (b), (c), (d), and (g) and adding a new
subsection (h) as follows:
§
311.011. PROJECT AND FINANCING PLANS. (a) The board of
directors of a reinvestment zone shall prepare and adopt a project
plan and a reinvestment zone financing plan for the zone and submit
the plans to the governing body of the municipality or county that
created the zone. [The plans must be as consistent as possible with
the preliminary plans developed for the zone before the creation of
the board.]
(b) The project plan must include:
(1) a [map showing] description of existing uses and
conditions of real property in the zone and [a map showing] proposed
[improvements to and proposed] uses of that property;
(2) proposed changes of zoning ordinances, [the master
plan of the municipality,] building codes, other municipal
ordinances, and subdivision rules and regulations, if any, of the
municipality or the county, if applicable; and
(3) [a list of estimated nonproject costs; and
(4)] a statement of a method of relocating persons to
be displaced, if any, as a result of implementing the plan.
(c) The reinvestment zone financing plan must include:
(1) a detailed list describing the estimated project
costs of the zone, including administrative expenses;
(2) a statement listing the proposed kind, number, and
location of all [proposed] public works or public improvements to
be financed by [in] the zone;
(3) a finding that the zone is economically feasible
[an economic feasibility study];
(4) the estimated amount of bonded indebtedness to be
incurred;
(5) the estimated time when related costs or monetary
obligations are to be incurred;
(6) a description of the methods of financing all
estimated project costs and the expected sources of revenue to
finance or pay project costs, including the percentage of tax
increment to be derived from the property taxes of each taxing unit
anticipated to participate in the zone financing that levies taxes
on real property in the zone;
(7) the current total appraised value of taxable real
property in the zone;
(8) the estimated captured appraised value of the zone
during each year of its existence; and
(9) the duration of the zone.
(d) The governing body of the municipality or county that
created the zone must approve a project plan or reinvestment zone
financing plan after its adoption by the board. The approval must
be by ordinance, in the case of a municipality, or by order, in the
case of a county, that finds that the plan is feasible [and conforms
to the master plan, if any, of the municipality or to subdivision
rules and regulations, if any, of the county].
(g) [An amendment to the project plan or the reinvestment
zone financing plan for a zone does not apply to a] A school
district that participates in a [the] zone is not required to
increase the percentage or amount of the tax increment to be
contributed by the school district due to an amendment to the
project plan or reinvestment zone financing plan for the zone
unless the governing body of the school district by official action
approves the amendment[, if the amendment:
(1) has the effect of directly or indirectly
increasing the percentage or amount of the tax increment to be
contributed by the school district; or
(2) requires or authorizes the municipality or county
creating the zone to issue additional tax increment bonds or
notes].
(h) Unless specifically provided otherwise in the project
plan and reinvestment zone financing plan, all figures contained in
the plan shall be considered estimates, and shall not act as a
limitation on the described items, including without limitation
expenditures relating to project costs and participation by taxing
units.
SECTION 9. Section 311.012(c), Tax Code, is amended as
follows:
(c) The tax increment base of a taxing unit is the total
[appraised] taxable value of all real property taxable by the unit
and located in a reinvestment zone for the year in which the zone
was designated under this chapter. The base year for any land
annexed into the zone is the year in which such land was annexed.
SECTION 10. Sections 311.013(f) and (l), Tax Code, is
amended as follows:
(f) A taxing unit is not required to pay into the tax
increment fund any of its tax increment produced from property
located in a reinvestment zone designated under Section 311.005(a)
or in an area added to a reinvestment zone under Section 311.007
unless the taxing unit enters into an agreement to do so with the
governing body of the municipality or county that created the zone.
A taxing unit may enter into an agreement under this subsection at
any time before or after the zone is created or enlarged. The
agreement may include conditions for payment of that tax increment
into the fund and must specify the portion of the tax increment to
be paid into the fund and the years for which that tax increment is
to be paid into the fund. The agreement may specify that the taxing
unit's participation may be computed with respect to a base year
later than the original base year of the zone. The agreement and
the conditions in the agreement are binding on the taxing unit, the
municipality or county, and the board of directors of the zone.
(l) The governing body of a municipality or a county that
designates an area as a reinvestment zone may determine, in the
designating ordinance or order adopted under Section 311.003 or in
the ordinance or order adopted under Section 311.011 approving the
reinvestment zone financing plan for the zone, the portion of the
tax increment produced by the municipality or the county that the
municipality or the county is required to pay into the tax increment
fund for the zone. If a municipality or a county does not determine
the portion of the tax increment produced by the municipality or the
county that the municipality or the county is required to pay into
the tax increment fund for a reinvestment zone, the municipality or
the county is required to pay into the fund for the zone the entire
tax increment produced by the municipality or the county, except as
provided by Subsection (b)(1).
SECTION 11. Section 311.014(b), Tax Code, is amended to
read as follows:
(b) Money may be disbursed from the fund only to satisfy
claims of holders of tax increment bonds or notes issued for the
zone, to pay project costs for the zone, to make payments pursuant
to an agreement made under Section 311.010(b) or a program under
Section 311.010(h) dedicating revenue from the tax increment fund,
or to repay other obligations incurred for the zone.
SECTION 12. Sections 311.015(a) and (l), Tax Code, are
amended as follows:
(a) A municipality creating a reinvestment zone may issue
tax increment bonds or notes, the proceeds of which may be used to
make payments pursuant to agreements made under Section 311.010(b),
to make payments pursuant to programs under Section 311.010(h), and
to pay project costs for the reinvestment zone on behalf of which
the bonds or notes were issued, or to satisfy claims of holders of
the bonds or notes. The municipality may issue refunding bonds or
notes for the payment or retirement of tax increment bonds or notes
previously issued by it.
(l) A tax increment bond or note must mature within 20 years
of the date of issue on or before the date by which the final
payments of tax increment into the tax increment fund are due.
SECTION 13. Section 311.016(a), Tax Code, is amended to
read as follows:
(a) On or before the 150th [90th] day following the end of
the fiscal year of the municipality or county, the governing body of
a municipality or county shall submit to the chief executive
officer of each taxing unit that levies property taxes on real
property in a reinvestment zone created by the municipality or
county a report on the status of the zone. The report must include:
(1) the amount and source of revenue in the tax
increment fund established for the zone;
(2) the amount and purpose of expenditures from the
fund;
(3) the amount of principal and interest due on
outstanding bonded indebtedness;
(4) the tax increment base and current captured
appraised value retained by the zone; and
(5) the captured appraised value shared by the
municipality or county and other taxing units, the total amount of
tax increments received, and any additional information necessary
to demonstrate compliance with the tax increment financing plan
adopted by the governing body of the municipality or county.
SECTION 14. Section 311.017, Tax Code, is amended by
amending Subsection (a) and adding new Subsections (a-1), (c), and
(d) to read as follows:
(a) A reinvestment zone terminates on the earlier of:
(1) the termination date designated in the ordinance
or order, as applicable, creating the zone or an earlier or later
termination date designated by an ordinance or order adopted
[subsequent to the ordinance or order creating the zone] under
Section 311.007(b); or
(2) the date on which all project costs, tax increment
bonds and interest on those bonds, and other obligations have been
paid in full.
(a-1) Notwithstanding the designation of a later
termination date under Section 311.007(b), a taxing unit that taxes
real property located in the zone, other than the municipality or
county that created the zone, is not required to pay any of its tax
increment into the tax increment fund for the zone after the
termination date designated in the ordinance or order creating the
zone unless the governing body of the taxing unit enters into an
agreement to do so with the governing body of the municipality or
county that created the zone.
(c) With respect to a zone established under Section
311.0031, the zone shall terminate on the date on which all project
costs, tax increment bonds and interest on those bonds, and other
obligations have been paid in full, notwithstanding the expiration
of the designation of the area under the specified law.
(d) If tax increment bonds or obligations of the zone are
outstanding when the zone is terminated, the zone shall remain in
existence solely for the purpose of fully paying its obligations or
the tax increment bonds. The termination is effective when all zone
obligations or tax increment bonds have been fully paid.
SECTION 15. Chapter 311, Tax Code, is amended by adding a
new Section 311.021, as follows:
Sec. 311.021. ACT OR PROCEEDING PRESUMED VALID. (a) A
governmental act or proceeding relating to the designation,
operation, or administration of a reinvestment zone or
implementation of a project plan or reinvestment zone financing
plan under this chapter of a municipality or county, zone board, or
an entity acting pursuant to Section 311.010(f), is conclusively
presumed, as of the date it occurred, valid and to have occurred in
accordance with all applicable statutes and rules if:
(1) the second anniversary of the effective date of
the act or proceeding has expired; and
(2) a lawsuit to annul or invalidate the act or
proceeding has not been filed on or before that second anniversary.
(b) This section does not apply to:
(1) an act or proceeding that was void at the time it
occurred;
(2) an act or proceeding that, under a statute of this
state or the United States, was a misdemeanor or felony at the time
the act or proceeding occurred;
(3) a rule that, at the time it was passed, was
preempted by a statute of this state or the United States, including
Section 1.06 or 109.57, Alcoholic Beverage Code; or
(4) a matter that on the effective date of this
section:
(A) is involved in litigation if the litigation
ultimately results in the matter being held invalid by a final
judgment of a court; or
(B) has been held invalid by a final judgment of a
court.
SECTION 16. The following provisions of the Tax Code are
repealed:
(1) Section 311.003(e), (f), and (g);
(2) Section 311.006;
(3) Section 311.01005;
(4) Section 311.007(b);
(5) Sections 311.013(d) and (e); and
(6) Section 311.016(b) as amended by Acts 2005, 79th
Leg., R.S., Ch. 977, Sec.2.
SECTION 17. Section 42.2516, Education Code, is amended to
designate existing subsections (k) and (l) as (l) and (m),
respectively, and to add a new subsection (k), as follows:
(k) In computing the local revenue per student available to
a school district there shall be deducted from the local revenue
available to the school district the amount of taxes paid by the
school district into a tax increment reinvestment zone under
Chapter 311, Tax Code.
SECTION 18. (a) The legislature validates and confirms all
governmental acts and proceedings that were taken before the
effective date of this Act and relate to or are associated with the
designation, operation, or administration of a reinvestment zone or
implementation of a project plan or reinvestment zone financing
plan under Chapter 311, Tax Code, of a municipality or county, zone
board, or an entity acting pursuant to Section 311.010(f),
including the extension of the term of a reinvestment zone, as of
the dates on which they occurred. The acts and proceedings may not
be held invalid because they were not in accordance with Chapter
311, Tax Code, or other law.
(b) Subsection (a) of this section does not apply to any
matter that on the effective date of this Act:
(1) is involved in litigation if the litigation
ultimately results in the matter being held invalid by a final
judgment of a court; or
(2) has been held invalid by a final judgment of a
court.
SECTION 19. EFFECTIVE DATE. 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, 2009.