S.B. No. 978
AN ACT
relating to the creation and financing of public improvement
districts.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter A, Chapter 372, Local Government
Code, is amended to read as follows:
SUBCHAPTER A. PUBLIC IMPROVEMENT DISTRICTS
Sec. 372.001. SHORT TITLE. This subchapter may be cited as
the Public Improvement District Assessment Act.
Sec. 372.0015. DEFINITIONS [DEFINITION]. In this
subchapter:
(1) "Authorized instrumentality" means a public
facility corporation created by the governing body of a
municipality or county under Chapter 303 or a local government
corporation created by the governing body of a municipality or
county under Subchapter D, Chapter 431, Transportation Code.
(2) "Extraterritorial[, "extraterritorial]
jurisdiction" means extraterritorial jurisdiction of a
municipality as determined under Chapter 42.
(3) "Public improvement district" or "district" means
an area defined by the governing body of a municipality or county
that:
(A) consists of one or more contiguous or
noncontiguous tracts of land; and
(B) will be specially benefited as determined by
the municipality or county by any or all of the public improvements
or services.
(4) "Qualified costs" means the costs and expenses
incurred in establishing, administering, managing, and operating a
public improvement district, including:
(A) costs and expenses of or related to the
construction of an improvement project;
(B) financing of an improvement project by a
municipality, county, or authorized instrumentality, including the
debt service requirements owed or to be owed under installment
purchase or reimbursement contracts, temporary notes, time
warrants, revenue bonds, special assessment bonds, or certificates
of obligation, including reserve funds and capitalized interest;
(C) costs and expenses of or related to the
negotiation, development, and execution of the obligations
described by Paragraph (B);
(D) costs and expenses of or related to credit
and interest rate management agreements entered into under Chapter
1371, Government Code;
(E) costs of attorneys and other professional
advisors, including consultants; and
(F) costs related to the administrative
oversight of public improvements, services, and operations of the
public improvement district.
(5) "Revenue bonds" means bonds, notes, or other
securities issued by a municipality, county, or authorized
instrumentality that are payable from and secured by liens on all or
part, or a combination of, the revenue derived from installment
payments of special assessments plus any other revenues, donations,
grants, or income described by Section 372.026(e).
(6) "Special assessment bonds" means bonds, notes, or
other securities issued by a municipality, county, or authorized
instrumentality that are payable solely from and secured by special
assessments levied by the governing body of the municipality or
county in a public improvement district.
(7) "Special district" means a political subdivision
of this state with a limited geographic area created by local law or
under general law for a special purpose.
Sec. 372.002. EXERCISE OF POWERS. (a) A public
improvement district is not a separate body politic or corporate
from the municipality or county that created the district.
(b) Subject to Section 372.010(c), powers [Powers] granted
under this subchapter in an area comprising a public improvement
district may be exercised by a municipality or county on and after
the date [in which] the governing body of the municipality or county
[initiates or] receives a petition requesting the establishment of
a public improvement district that complies[. A petition must
comply] with the requirements of Section 372.005.
(c) The powers granted under this subchapter may be
exercised by the governing body of any other political subdivision
if the law creating or governing the political subdivision grants
the political subdivision authority described by this subchapter.
The governing body of the political subdivision has the same powers
and is subject to the same limitations as are applicable to the
governing body of a municipality or a county under this subchapter
unless and except as modified by the law creating or governing the
political subdivision.
Sec. 372.003. AUTHORIZED IMPROVEMENTS AND SERVICES.
(a) If the governing body of a municipality or county finds that it
promotes the interests of the municipality or county, the governing
body may create one or more public improvement districts under this
subchapter and undertake one or more [an] improvement projects
[project] that confer [confers] a special benefit on the property
located in the public improvement district [a definable part of the
municipality or county or the municipality's extraterritorial
jurisdiction]. A project may be undertaken within or outside the
district in the municipality or county or in the municipality's
extraterritorial jurisdiction if the project benefits the
district.
(b) A public improvement project may include:
(1) landscaping;
(2) erection of fountains, distinctive lighting, and
signs;
(3) acquiring, constructing, improving, repairing,
widening, narrowing, closing, or rerouting of sidewalks or of
streets, roads, highways, bridges, culverts, water retention
walls, [any other roadways,] or related [their] rights-of-way owned
by or to be conveyed to the municipality, the county, the federal
government, or another political subdivision or entity exercising
powers granted under this subchapter;
(4) construction or improvement of pedestrian malls;
(5) acquisition and installation of pieces of art;
(6) acquisition, construction, or improvement of
[libraries;
[(7) acquisition, construction, or improvement of]
off-street parking facilities;
(7) [(8)] acquisition, construction, or improvement[,
or rerouting] of mass transportation facilities, including light
rail mass transit, streetcar, or similar systems, and related
vehicle parking facilities;
(8) [(9)] acquisition, construction, or improvement
of water, wastewater, or drainage facilities or improvements;
(9) [(10)] the establishment or improvement of parks,
playgrounds, lakes, and open spaces, including paths, trails, boat
docks, and wharves;
(10) acquisition, construction, or improvement of
other public projects that are determined by the municipality or
county to promote the interests of the municipality or county and to
be of a special benefit to the public improvement district,
including:
(A) community centers, recreation centers, and
recreation facilities;
(B) libraries;
(C) facilities for police, sheriffs, or
firefighters;
(D) municipal or county administration centers;
and
(E) other governmental buildings for the
provision of governmental services;
(11) acquisition, construction, or improvement of
other public projects, facilities, or services required by a
development agreement, interlocal agreement, zoning regulation, or
permit issued by a municipality or county having jurisdiction in
the public improvement district;
(12) acquisition, construction, maintenance, or
improvement of buildings and other facilities commonly used for
teaching, research, or the preservation of knowledge by an
institution of higher education or for auxiliary purposes of the
institution, including administration, student services and
housing, athletics, performing arts, and alumni support;
(13) [(11) projects similar to those listed in
Subdivisions (1)-(10);
[(12)] acquisition, by purchase or otherwise, of real
property in connection with an authorized improvement;
(14) [(13)] special supplemental services for
improvement and promotion of the district, including services
relating to:
(A) advertising;
(B) [,] promotion;
(C) [,] health and sanitation;
(D) [,] water and wastewater;
(E) enhanced fire protection, police, sheriff,
and other[,] public safety and[,] security;
(F) [,] business recruitment;
(G) [,] development;
(H) [,] recreation;[,] and
(I) cultural enhancement; and
(15)acquisition, construction, or improvement of a rainwater harvesting system[(14)payment of expenses incurred in the establishment, administration, and operation of the district].
a rainwater harvesting system [(14) payment of expenses [(14) payment of expenses
incurred in the establishment, administration, and operation of
the district].].
(c) A public improvement project may include or may be
limited to the provision of all or any part of the services
described by Subsection (b)(14) [(b)(13)].
(d) A municipality that exercises powers under this
subchapter may establish a public improvement district in the
corporate limits or the extraterritorial jurisdiction of the
municipality. A county or other political subdivision that
exercises powers under this subchapter may establish a public
improvement district in the county or the area of the political
subdivision, including in the corporate limits or the
extraterritorial jurisdiction of a municipality unless within 30
days after the date notice is provided to the municipality of an [a
county's] action to approve [such] a public improvement district,
the [a home rule] municipality objects to the district's [its]
establishment within the municipality's corporate limits or
extraterritorial jurisdiction.
Sec. 372.004. COMBINED IMPROVEMENTS. A public [An]
improvement project may consist of an improvement on more than one
street or of more than one type of improvement. An improvement [A]
project described by this section may be included in one proceeding
and financed as one improvement project.
Sec. 372.0045. AUTHORIZED HIGHER EDUCATION FACILITIES;
LEASE TO INSTITUTION OF HIGHER EDUCATION. (a) In this section,
"institution of higher education" has the meaning assigned by
Section 61.003, Education Code.
(b) The governing body of a municipality or county that
establishes a public improvement district to finance a public
improvement project described by Section 372.003(b)(12) may enter
into a memorandum of understanding with an institution of higher
education that provides educational services in the municipality or
county under which the municipality or county leases the public
improvement project to the institution, at a nominal rate, for use
by the institution in providing teaching, research, public service,
or auxiliary enterprise activities to students of the institution.
(c) A memorandum of understanding entered into by a
municipality or county under this section must include adequate
controls to ensure that the lease of the public improvement project
promotes the municipality's or county's interests and provides a
public benefit to the area served by the district.
Sec. 372.005. PETITION. (a) A petition for the
establishment of a public improvement district must state:
(1) the general nature of the proposed improvements
[improvement];
(2) the estimated qualified costs [cost] of the
improvements [improvement];
(3) the boundaries of the proposed [assessment]
district;
(4) the proposed method of assessment, which may
specify included or excluded classes of assessable property;
(5) [the proposed apportionment of cost between the
public improvement district and the municipality or county as a
whole;
[(6)] whether the management of the district is to be
by:
(A) the municipality;
(B) the [or] county;
(C) an authorized instrumentality;
(D) [,] the private sector;[,] or
(E) a partnership between the private sector and
one of the entities described by Paragraphs (A)-(C) [municipality
or county and the private sector];
(6) [(7)] that the persons signing the petition
request or concur with the establishment of the district; and
(7) [(8)] that an advisory body may be established or
an authorized instrumentality may be incorporated to develop and
recommend an improvement plan to the governing body of the
municipality or county.
(b) The petition is sufficient if signed by:
(1) owners of taxable real property representing more
than 50 percent of the appraised value of taxable real property
liable for assessment under the proposal, as determined by the
current roll of the appraisal district in which the property is
located; and
(2) record owners of real property liable for
assessment under the proposal who:
(A) constitute more than 50 percent of all record
owners of property that is liable for assessment under the
proposal; or
(B) own taxable real property that constitutes
more than 50 percent of the area of all taxable real property that
is liable for assessment under the proposal.
(c) A [The] petition filed with the municipality may be
filed with the municipal secretary or other officer performing the
functions of the municipal secretary. A petition filed with the
county may be filed with the county clerk or other officer
designated by the commissioners court. A petition filed with any
other political subdivision exercising powers under this
subchapter may be filed with the political subdivision's governing
body.
Sec. 372.006. FINDINGS. (a) If a petition that complies
with this subchapter is filed, the governing body of the
municipality or county may make findings by resolution as to:
(1) the advisability of the proposed improvements;
(2) the [improvement, its] estimated qualified costs
of the proposed improvements; and
(3) [cost,] the method of assessment[, and the
apportionment of cost between the proposed improvement district and
the municipality or county as a whole].
(b) The governing body's findings under this section are
conclusive.
Sec. 372.007. FEASIBILITY REPORT. (a) Before holding the
hearing required by Section 372.009, the governing body of the
municipality may use the services of municipal employees, the
governing body of the county may use the services of county
employees, or the governing body of the municipality or county may
employ consultants to prepare a report to determine whether
improvements [an improvement] should be made as proposed by
petition or otherwise or whether improvements [the improvement]
should be made in combination with other improvements authorized
under this subchapter. The governing body may also require that a
preliminary estimate of the qualified costs [cost] of improvements
[the improvement] or a combination of improvements be made.
(b) For the purpose of determining the feasibility and
desirability of a public [an] improvement district, the governing
body may take other preliminary steps before the hearing required
by Section 372.009 and[,] before establishing a public improvement
district[, or before entering into a contract].
Sec. 372.008. ADVISORY BODY. (a) The [After receiving a
petition that complies with Section 372.005, the] governing body of
the municipality or county, on the governing body's own initiative
or after receiving a petition that complies with Section 372.005,
may appoint an advisory body with the responsibility of developing
and recommending an improvement plan to the governing body.
(b) The composition of an [the] advisory body, if
established, must include:
(1) owners of taxable real property representing more
than 50 percent of the appraised value of taxable real property
liable for assessment under the proposal, as determined by the
current roll of the appraisal district in which the property is
located; and
(2) record owners of real property liable for
assessment under the proposal who:
(A) constitute more than 50 percent of all record
owners of property that is liable for assessment under the
proposal; or
(B) own taxable real property that constitutes
more than 50 percent of the area of all taxable real property that
is liable for assessment under the proposal.
(c) The members of the advisory body serve at the will of the
governing body of the municipality or county creating the public
improvement district and may be removed at any time.
Sec. 372.009. HEARING. (a) A public improvement district
may be established and improvements provided by the district may be
financed under this subchapter only after the governing body of the
municipality or county holds a public hearing on the advisability
of the improvements [improvement].
(b) The hearing may be adjourned from time to time until the
governing body makes findings by resolution as to:
(1) the advisability of each [the] improvement;
(2) the nature of each [the] improvement;
(3) the estimated qualified costs [cost] of each [the]
improvement;
(4) the boundaries of the [public improvement]
district; and
(5) the method of assessment[; and
[(6) the apportionment of costs between the district
and the municipality or county as a whole].
(c) Notice of the hearing must be given in a newspaper of
general circulation in the municipality or county. If any part of
the public improvement district is to be located in the
municipality's extraterritorial jurisdiction or if any part of the
improvements is to be undertaken in the municipality's
extraterritorial jurisdiction, the notice must also be filed with
the municipal secretary or other officer performing the duties of
the municipal secretary and published [given] in a newspaper of
general circulation in the part of the extraterritorial
jurisdiction in which the district is to be located or in which the
improvements are to be undertaken. The final publication of notice
must be made before the 15th day before the date of the hearing. The
notice must state:
(1) the time and place of the hearing;
(2) the general nature of the proposed improvements
[improvement];
(3) the estimated qualified costs [cost] of the
proposed improvements [improvement];
(4) the boundaries of the proposed public improvement
[assessment] district; and
(5) the proposed method of assessment[; and
[(6) the proposed apportionment of cost between the
improvement district and the municipality or county as a whole].
(d) Written notice containing the information required by
Subsection (c) must be mailed before the 15th day before the date of
the hearing. The notice must be addressed to "Property Owner" and
mailed to the current address of the owner, as reflected on tax
rolls, of property subject to assessment under the proposed public
improvement district.
Sec. 372.010. IMPROVEMENT ORDER. (a) During the six-month
period after the date of the final adjournment of the hearing under
Section 372.009, the governing body of the municipality or county
may authorize the creation of a public [an] improvement district
subject to Section 372.012 if, by majority vote of all members of
the governing body, the governing body adopts [members adopt] a
resolution authorizing the district in accordance with its finding
as to the advisability of the improvements [improvement].
(b) An authorization takes effect when it has been published
one time in a newspaper of general circulation in the municipality
or county. If any part of the [improvement] district is located in
the municipality's extraterritorial jurisdiction or if any part of
the improvements is to be undertaken in the municipality's
extraterritorial jurisdiction, the authorization does not take
effect until the notice is also given one time in a newspaper of
general circulation in the part of the extraterritorial
jurisdiction in which the district is located or in which the
improvements are to be undertaken.
(c) Actual construction of improvements [an improvement]
may not begin, and acquisition of existing improvements may not
occur, until after the 20th day after the date the authorization
takes effect and may not begin if during that 20-day period written
protests signed by at least two-thirds of the owners of record of
property within the [improvement] district or by the owners of
record of property comprising at least two-thirds of the total area
of the district are filed with the municipal [or county] secretary
or other officer performing the duties of the municipal [or county]
secretary or the county clerk or other officer designated by the
commissioners court. A person whose name appears on a protest may
withdraw the name from the protest at any time before the governing
body of the municipality or county convenes to determine the
sufficiency of the protest.
(d) Before the levy of assessments under Section 372.017,
the property owners in the district who signed the original
petition may petition the governing body to amend the resolution
creating the district adopted under Subsection (a) to amend the
estimated qualified costs of the improvements, including adding or
deleting improvement projects. The governing body shall provide
notice of the owners' petition and hold a public hearing as provided
by Section 372.009 to make findings, by amended resolution, of the
nature and estimated qualified costs of each improvement. A county
or other entity that proposes to amend a resolution under this
subsection in the corporate boundaries or extraterritorial
jurisdiction of a municipality shall provide notice to the
municipality on or before the 30th day before the date the entity
amends the resolution.
Sec. 372.011. DISSOLUTION. (a) A public hearing may be
[called and] held after giving notice 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.
(b) A district may be dissolved at the discretion of the
governing body without a petition only if no assessments have been
levied on property in the district or if assessments previously
levied have been paid in full and the district has no other
outstanding obligations. A dissolution under this subsection may
not occur until after the governing body holds a hearing and gives
notice in the manner required by Section 372.009.
Sec. 372.012. AREA OF DISTRICT. The area of a public
improvement district to be assessed according to the findings of
the governing body of the municipality or county establishing the
boundaries may include contiguous and noncontiguous tracts of land
and may be less than the area described in the proposed boundaries
stated by the notice under Section 372.009. The area to be assessed
may not include property not described by the notice as being within
the proposed boundaries of the district unless a hearing is held to
include the property and notice for the hearing is given in the same
manner as notice under Section 372.009.
Sec. 372.013. SERVICE PLAN. (a) The advisory body shall
prepare an ongoing service plan and present the plan to the
governing body of the municipality or county for review and
approval. The governing body may assign responsibility for the
plan to the employees of the governing body or an authorized
instrumentality or to another entity instead [in the absence] of an
advisory body.
(b) The plan must cover a period of at least five years and
must also define the annual indebtedness and the projected
qualified costs for improvements.
(c) The plan shall be reviewed and updated annually for the
purpose of determining the annual budget for improvements. As part
of the annual update, a revised assessment roll must be prepared to
reflect any division of parcels and any reallocation of assessments
based on the division.
Sec. 372.014. ASSESSMENT PLAN; PAYMENT BY EXEMPT
JURISDICTIONS. (a) An assessment plan must be included in the
annual service plan prepared under Section 372.013.
(b) The municipality or county is responsible for payment of
assessments against exempt municipal or county property in the
district if any assessments are levied. Payment of assessments by
other exempt jurisdictions must be established by contract.
(c) The assessment plan may require the district to be
divided into development phases and, subject to Sections 372.016
and 372.017, may levy assessments periodically in separate
development phases or may stagger the collection of assessments,
with different development phases in the district assigned
different payment and collection dates. The development phases and
staggered collection dates may be coordinated with the installation
of the improvements or with the maturity dates of installation
purchase or reimbursement contract obligations or with temporary
notes, time warrants, or bonds [An assessment paid by the
municipality or county under this subsection is considered to have
been paid by special assessment for the purposes of Subsection
(a)].
Sec. 372.015. DETERMINATION OF ASSESSMENT. (a) The
governing body of the municipality or county shall apportion the
qualified costs [cost] of an improvement to be assessed against
property in a public [an] improvement district. The apportionment
shall be made on the basis of special benefits accruing to the
property because of the improvement.
(b) The qualified costs [Cost] of an improvement may be
assessed:
(1) equally per front foot or square foot;
(2) according to the value of the property as
determined by the governing body, with or without regard to
improvements on the property; or
(3) in any other manner that results in imposing equal
shares of the qualified costs [cost] on property similarly
benefitted.
(c) The governing body may establish by ordinance or order:
(1) reasonable classifications and formulas for the
apportionment of the qualified costs [cost] between the
municipality or county and the area to be assessed; and
(2) the methods of assessing the special benefits for
various classes of improvements.
(d) The amount of assessment for each property owner may be:
(1) adjusted following the annual review of the
service plan; and
(2) reallocated, but not increased, if an assessed
parcel has been divided.
(e) Notice of any reallocation of assessments shall be given
to the property owner of the divided parcel.
(f) The findings, determinations, and assessments made by
the governing body under this section are conclusive.
Sec. 372.016. ASSESSMENT ROLL. (a) The [After the total
cost of an improvement is determined, the governing body of the]
municipality or county shall prepare a proposed assessment roll
based on the estimated qualified costs of the improvements. The
roll must state the assessment against each parcel of land in the
district and[, as determined by] the method of assessment [chosen
by the municipality or county under this subchapter].
(b) The [governing body shall file the] proposed assessment
roll must be filed with the municipal secretary or other officer
performing the functions of the municipal secretary or in a
district formed by a county, the county tax assessor-collector.
The proposed assessment roll is subject to public inspection. When
the assessment roll is filed, the appropriate designated officer
described by this subsection shall [The governing body shall
require the municipal secretary or other officer or county tax
assessor-collector to] publish notice of the governing body's
intention to consider the proposed assessments at a public hearing.
The notice must be published in a newspaper of general circulation
in the municipality or county before the 10th day before the date of
the hearing. If any part of the public improvement district is
located in the municipality's extraterritorial jurisdiction or if
any part of the improvements is to be undertaken in the
municipality's extraterritorial jurisdiction, the notice must also
be published, before the 10th day before the date of the hearing, in
a newspaper of general circulation in the part of the
extraterritorial jurisdiction in which the district is located or
in which the improvements are to be undertaken. The notice must
state:
(1) the date, time, and place of the hearing;
(2) the general nature of the improvements
[improvement];
(3) the qualified costs [cost] of the improvements
[improvement];
(4) the boundaries of the [assessment] district; and
(5) that written or oral objections will be considered
at the hearing.
(c) When the assessment roll is filed under Subsection (b),
the appropriate designated [municipal secretary or other] officer
shall mail to the owners of property liable for assessment a notice
of the hearing. The notice must contain the information required by
Subsection (b) and the appropriate designated [secretary or other]
officer shall mail the notice to the last known address of the
property owner. The failure of a property owner to receive notice
does not invalidate the proceeding.
Sec. 372.017. LEVY OF ASSESSMENTS [ASSESSMENT]. (a) At or
on the adjournment of the hearing referred to by Section 372.016 on
proposed assessments, the governing body of the municipality or
county must hear and pass on any objection to a proposed assessment.
The governing body may:
(1) amend a proposed assessment on any parcel; and
(2) initially or by amendment, provide for reductions
of the amount of the annual assessment installments if and to the
extent other revenues of the municipality or county of any of the
types described by Section 372.026(e) are pledged or become
available to pay all or part of installment purchase or
reimbursement contract obligations or temporary notes, time
warrants, revenue bonds, special assessment bonds, or certificates
of obligation that are payable in whole or in part from the
assessment installments.
(b) After all objections have been heard and the governing
body has passed on the objections, the governing body by ordinance
or order shall levy the assessment in the amount required to pay
qualified costs as a special assessment on the property. The
governing body by ordinance or order shall specify the method of
payment of the assessment. The governing body may provide that
assessments be paid in periodic installments. The installments may
be in equal or different annual amounts, but must be in amounts each
year necessary to meet annual qualified costs. The installments
[for improvements and] must continue for a period and be in amounts
necessary to retire any [the] indebtedness or obligation to pay or
reimburse for the qualified costs, including the proper
administration of the district [on the improvements]. The
obligation to pay installments may be conditioned on the occurrence
of a future event or condition if the first periodic installment
payment of the assessment occurs on a date not later than the fifth
anniversary of the date the assessment was levied.
(c) The governing body may:
(1) levy multiple assessments on property in the
district to finance all or part of public improvements and must
comply with Section 372.016 for each assessment;
(2) execute and deliver installment purchase or
reimbursement contracts or temporary notes or time warrants or
issue revenue bonds, special assessment bonds, or certificates of
obligation to pay the qualified costs or to refund previously
executed installment purchase or reimbursement contracts or
temporary notes or time warrants; and
(3) secure the obligations described by Subdivision
(2) by pledging one or more of the assessments levied under this
subchapter.
Sec. 372.018. INTEREST ON ASSESSMENT; LIEN. (a) An
assessment bears interest at the rate and for the period specified
by the governing body of the municipality or county, but may not
exceed a rate that is [one-half of] one percent higher than the
actual interest rate paid on any installment purchase or
reimbursement contract obligation or temporary note or time warrant
[the public debt] used to finance or to evidence an obligation to
pay for the improvement. If revenue bonds, special assessment
bonds, or certificates of obligation are issued to pay or refund any
of the obligations described by this subsection, the annual
interest rate is adjusted to a rate not to exceed one percent higher
than the actual rate paid on the bonds or certificates, if the rate
is lower than the rate on the obligations. Interest on the
assessment between the effective date of the ordinance or order
levying the assessment and the date the first installment is
payable shall be added to the first installment. The interest on
any delinquent installment shall be added to each subsequent
installment until all delinquent installments are paid. The added
interest payable on an installment purchase or reimbursement
contract or a temporary note, time warrant, or bond under this
subsection may be used by a municipality or county to pay qualified
costs of improvements or the costs of administration of the
district, including the enforcement of assessments or the payment
or prepayment of obligations.
(b) An assessment or reassessment, with interest, the
expense of collection, and reasonable attorney's fees, if incurred,
is a first and prior lien against the property assessed, superior to
all other liens and claims except liens or claims for [state,]
county, special [school] district, or municipality ad valorem
taxes, and is a personal liability of and charge against the owners
of the property regardless of whether the owners are named. The
lien is effective from the date of the ordinance or order levying
the assessment until the assessment is paid in full and may be
enforced by the governing body in the same manner that an ad valorem
tax lien against real property may be enforced by the governing
body. On the sale of assessed property, any installment or portion
of an assessment that is or will be payable for the property during
the year of the sale shall be prorated between the buyer and the
seller in the same manner as ad valorem taxes are prorated between a
buyer and seller. Delinquent installments of the assessment shall
incur interest, penalties, and [attorney's] fees in the same manner
as delinquent ad valorem taxes.
(c) A district assessment on property under this subchapter
runs with the land. Any portion of an assessment payment obligation
that is not yet due is not eliminated by the foreclosure of an ad
valorem tax lien. Any purchaser of property at a foreclosure sale
under an ad valorem tax lien takes the property subject to any
assessment payment obligation that is not yet due and to the terms
of payment under the applicable assessment ordinance or order.
(d) The owner of assessed property may pay at any time on any
parcel or lot the entire assessment, with interest that:
(1) has accrued on the assessment; and
(2) will accrue on the assessment until the next
scheduled prepayment or redemption date on the installment purchase
or reimbursement contract or temporary note, time warrant, revenue
bond, special assessment bond, or certificate of obligation that
secured the assessment[, on any lot or parcel].
Sec. 372.019. SUPPLEMENTAL ASSESSMENTS. After notice and a
hearing, the governing body of the municipality or county may make
supplemental assessments to correct omissions or mistakes in the
assessment relating to the qualified costs [total cost] of the
improvement. Notice must be given and the hearing held under this
section in the same manner as required by Sections 372.016 and
372.017.
Sec. 372.020. REASSESSMENT. The governing body of the
municipality or county may make a reassessment or new assessment of
a parcel of land if:
(1) a court [of competent jurisdiction] sets aside an
assessment against the parcel;
(2) the governing body determines that the original
assessment is excessive; or
(3) on the written advice of counsel, the governing
body determines that the original assessment is invalid.
Sec. 372.021. SPECIAL IMPROVEMENT DISTRICT FUND. (a) A
municipality or county that intends to create a public improvement
district may by ordinance or order establish a special improvement
district fund in the municipal or county treasury or in a bank
designated by the municipality or county to serve as a depository
bank for the district's funds.
(b) The municipality or county annually may levy a tax to
support the fund established under this section.
(c) The fund may be used to:
(1) pay the qualified costs of improvements [planning,
administration, and an improvement authorized by this subchapter];
(2) prepare preliminary plans, studies, and
engineering reports to determine the feasibility of improvements
[an improvement]; and
(3) if ordered by the governing body of the
municipality or county, pay the initial qualified costs of
improvements [cost of the improvement] until installment purchase
contracts or reimbursement contracts are entered into or temporary
notes or[,] time warrants are issued or revenue bonds, special
assessment bonds, or certificates of obligation are[, or
improvement bonds have been] issued and sold.
(d) The fund is not required to be budgeted for expenditure
during any year, but the amount of the fund must be stated in the
municipality's or county's annual budget. The amount of the fund
must be based on an annual service plan that describes the public
improvements for the fiscal year.
[(e) A grant-in-aid or contribution made to the
municipality or county for the planning and preparation of plans
for an improvement authorized under this subchapter may be credited
to the special improvement district fund.]
Sec. 372.022. SEPARATE FUNDS. (a) A separate public
improvement district fund shall be created in the municipal or
county treasury or in a designated depository bank as provided by
Section 372.021 for each district.
(b) The following revenues shall be deposited to the fund:
(1) special assessments;
(2) money, if any, contributed by the municipality or
county to pay qualified costs;
(3) proceeds [Proceeds] from the sale of revenue
bonds, if payable in part from special assessments;
(4) proceeds from the sale of special assessment bonds
or certificates of obligation;[, temporary notes, and time
warrants,] and
(5) any other sums appropriated to the fund by the
governing body of the municipality or county for the district
[shall be credited to the fund].
(c) The fund may be used solely to pay:
(1) qualified costs of improvement;
(2) amounts due on an installment purchase contract or
reimbursement amounts owed under a reimbursement contract,
temporary note, or time warrant; or
(3) any revenue bonds, special assessment bonds, or
certificates of obligation that are payable in whole or in part from
special assessments levied under this subchapter [incurred in
making an improvement].
(d) When an improvement is completed and all of the
obligations are paid in full, the balance on deposit in the special
improvement district fund that was derived from special
assessments, if any, [of the part of the assessment that is for
improvements] shall be transferred to a [the] fund established for
the retirement of bonds that are payable in whole or in part from
assessments.
Sec. 372.023. PAYMENT OF QUALIFIED COSTS. (a) The
qualified costs [cost] of an improvement made under this subchapter
may [must] be paid by a method or by a combination of methods
described by [in accordance with] this section and Section 372.024.
(b) The [A cost payable by the] municipality or county [as a
whole] may, on its own or under an installment purchase,
reimbursement, or other contract with a third party:
(1) erect, acquire, construct, improve, repair,
establish, install, or equip improvements; and
(2) pay all or part of the qualified costs of the
improvements [be paid] from:
(A) general funds or other revenues available for
that [the] purpose;
(B) special assessments; or
(C) the issuance and sale of general obligation
bonds, certificates of obligation, revenue bonds, or special
assessment bonds [other available general funds].
(c) The municipality or county may enter into and execute an
installment purchase or reimbursement contract with or may deliver
a nonnegotiable but transferable temporary note or time warrant to
a third party under which:
(1) the third party agrees to:
(A) erect, acquire, construct, improve, repair,
establish, install, or equip public improvements; and
(B) dedicate or sell the improvements to the
municipality, county, or authorized instrumentality; and
(2) the municipality, county, or authorized
instrumentality agrees to pay or reimburse the third party for the
qualified costs by paying accumulated amounts due under the
installment purchase or reimbursement contract, temporary note, or
time warrant from any and all of the sources described by Subsection
(b)(2) [A cost payable from a special assessment that has been paid
in full shall be paid from that assessment].
(d) Subject to Section 372.018, an installment purchase or
reimbursement contract, temporary note, or time warrant may bear
interest at a rate and for a period determined by the governing body
of the municipality or county [A cost payable from a special
assessment that is to be paid in installments and a cost payable by
the municipality or county as a whole but not payable from available
general funds or other available general improvement funds shall be
paid by the issuance and sale of revenue or general obligation
bonds].
(e) An installment purchase or reimbursement contract,
temporary note, or time warrant that is payable from installments
of assessments is subject to prepayment and redemption at any time
from the proceeds of prepayment of assessments made by a property
owner under Section 372.018(d) [While an improvement is in
progress, the governing body of the municipality or county may
issue temporary notes or time warrants to pay for the costs of the
improvement and, on completion of the improvement, issue revenue or
general obligation bonds.
[(f) The cost of more than one improvement may be paid from a
single issue and sale of bonds without other consolidation
proceedings before the bond issue.
[(g) The costs of any improvement include all costs incurred
in connection with the issuance of bonds under Section 372.024 and
may be included in the assessments against the property in the
improvement district as provided by this subchapter].
Sec. 372.024. GENERAL OBLIGATION BONDS, [AND] REVENUE AND
SPECIAL ASSESSMENT BONDS, CERTIFICATES OF OBLIGATION, AND BONDS
ISSUED BY AUTHORIZED INSTRUMENTALITY. (a) The governing body of a
municipality or county may issue:
(1) general [General] obligation bonds [issued to pay
costs under Section 372.023(d) must be issued] under [the
provisions of] Subtitles A and C, Title 9, Government Code;
(2) revenue bonds or special assessment bonds in one
or more series; and
(3) certificates of obligation under Subchapter C,
Chapter 271.
(b) A bond or obligation described by Subsection (a) may be
issued to:
(1) pay qualified costs under Section 372.023(b),
including the costs of issuing bonds; and
(2) pay or refund obligations executed or issued under
Section 372.023(c).
(c) Certificates of obligation may be payable from and
secured by installment payments of special assessments levied under
this subchapter.
(d) The governing body of the municipality or county or the
authorized instrumentality may include any term or provision
consistent with this subchapter in a revenue bond or a special
assessment bond issued under this section.
(e) The governing body of a municipality or county may
incorporate an authorized instrumentality to act on its behalf to
issue revenue bonds or special assessment bonds under this section.
The governing body may enter into agreements and contracts with the
authorized instrumentality to transfer pledged revenues, funds,
and special assessments to or for the account of the authorized
instrumentality at the times and as required by the terms of the
resolution authorizing the issuance of the revenue bonds or special
assessment bonds. Any bonds issued by an authorized
instrumentality must be approved by the governing body of the
municipality or county before issuance and delivery to the
purchaser.
(f) To the extent consistent with this subchapter, an
authorized instrumentality shall issue revenue bonds or special
assessment bonds under:
(1) Chapter 303, if the authorized instrumentality is
a public facility corporation; or
(2) Subchapter D, Chapter 431, Transportation Code, if
the authorized instrumentality is a local government corporation
[Revenue bonds issued to pay costs under that subsection may be
issued from time to time in one or more series and are to be payable
from and secured by liens on all or part of the revenue derived from
improvements authorized under this subchapter, including revenue
derived from installment payments of special assessments].
Sec. 372.0241. SPECIAL ASSESSMENT PUBLIC IMPROVEMENT
DISTRICT MANAGEMENT POLICY. (a) The governing body of a
municipality or county may develop, adopt, and amend a special
assessment public improvement district management policy.
(b) The policy may establish the general requirements and
standards for and the preconditions to:
(1) the creation of a public improvement district
under this subchapter;
(2) the execution and issuance of installment purchase
or reimbursement contracts or temporary notes or time warrants; and
(3) the issuance of any bonds or certificates of
obligation payable in whole or in part from special assessments.
(c) If a management policy is adopted, compliance with the
terms of the policy, including any amendments to the policy, is
required for:
(1) the execution of any installment purchase or
reimbursement contracts or temporary notes or time warrants;
(2) the issuance of any revenue bonds or special
assessment bonds by the municipality or county or by an authorized
instrumentality; and
(3) the issuance of any certificates of obligation by
a municipality or county.
Sec. 372.025. TERMS AND CONDITIONS OF BONDS. (a) Revenue
bonds and special assessment bonds issued under Section 372.024
must be authorized by:
(1) ordinance, if issued by a municipality;
(2) order, if issued by a county; and
(3) resolution, if issued by an authorized
instrumentality.
(b) Revenue bonds and special assessment bonds may be issued
to mature serially or in any other manner but must mature not later
than 40 years after their date. A provision may be made for the
subsequent issuance of additional parity bonds or subordinate lien
bonds secured in whole or in part by any assessments or any other
revenues authorized by this subchapter under terms and conditions
specified in the ordinance, [or] order, or resolution authorizing
the issuance of the bonds.
(c) Revenue bonds, special assessment bonds, and
certificates of obligation may be subject to redemption before
maturity at the option of the issuer and at the times and in the
manner provided by the ordinance, order, or resolution authorizing
the issuance. Revenue bonds and certificates of obligation that
are secured in part by a pledge of special assessments and all
special assessment bonds are subject to mandatory redemption at
least semiannually from funds provided by assessed parties, if any,
as prepayment of installments of special assessments under Section
372.018(d).
(d) Revenue bonds and special assessment bonds shall be
executed in the manner and by the persons required by the ordinance,
order, or resolution authorizing the issuance.
(e) Revenue bonds and special assessment [(b) The] bonds
[shall be executed and the bonds] and any interest coupons
appertaining to the bonds [them] are negotiable instruments within
the meaning and for all purposes of the Uniform Commercial Code
(Section 1.101 et seq., Business & Commerce Code).
(f) The ordinance, [or] order, or resolution authorizing
the issuance of the revenue bonds or special assessment bonds must
specify:
(1) whether the bonds may be registered [are issued
registrable] as to principal alone or as to both principal and
interest;
(2) whether the bonds are redeemable before maturity;
(3) the form, denomination, and manner of issuance;
(4) the terms, conditions, and other details applying
to the bonds including the price, terms, and interest rates on the
bonds; and
(5) the manner of sale of the bonds.
(g) [(c)] The ordinance, [or] order, or resolution
authorizing the issuance of the bonds may specify that the proceeds
from the sale of the bonds:
(1) be used to pay interest on the bonds during and
after the period of acquisition or construction of an improvement
financed through the sale of the bonds;
(2) be used for creating a reserve fund for payment of
the principal of and interest on the bonds and for creating other
funds; [and]
(3) be used for the payment of any other qualified
costs as determined by the governing body of the municipality or
county or by the authorized instrumentality; and
(4) may be placed in time deposit or invested, until
needed.
Sec. 372.026. PLEDGES. (a) For the payment of [bonds
issued under this subchapter and the payment of] principal,
interest, and any other amounts payable on or with respect to any
bonds issued by a municipality or county under this subchapter
[required or permitted in connection with the bonds], the governing
body of the municipality or county may pledge:
(1) all or part of the income from improvements
financed under this subchapter, including income received in
installment payments from special assessments; and
(2) if the payment is for the payment of revenue bonds,
any other revenue described by Subsection (e) [under Section
372.023].
(b) For the payment of principal, interest, and any other
amounts payable on or with respect to bonds issued by an authorized
instrumentality under this subchapter, the authorized
instrumentality may pledge all or part of the assessments or other
revenues, if any, that are to be transferred and paid to the
authorized instrumentality by the municipality or county under an
agreement entered into between the parties under Section
372.024(e).
(c) Pledged income must be [fixed and collected in amounts]
sufficient, with other pledged resources, if any, to pay principal,
interest, and other expenses related to the bonds, and to the extent
required by the ordinance, [or] order, or resolution authorizing
the bonds, to pay for the operation, maintenance, and other
expenses related to improvements authorized by this subchapter.
(d) Bonds issued by a municipality or county [(c) The
bonds] may also be secured by mortgages or deeds of trust on any
real property related to the facilities authorized under this
subchapter that are owned or are to be acquired by the municipality
or county and by chattel mortgages, liens, or security interests on
any personal property appurtenant to that real property. The
governing body may authorize the execution of trust indentures,
mortgages, deeds of trust, or other forms of encumbrances as
evidence of the security interest of the holders of the bonds in the
related property [indebtedness].
(e) [(d)] The governing body may pledge to the payment of
certificates of obligation issued by the governing body or to the
payment of revenue bonds issued by the governing body or by an
authorized instrumentality all or part of a grant, donation,
revenue, or income received or to be received from the government of
the United States or any other public or private source, whether or
not it is received pursuant to an agreement or otherwise, including
impact fees and incremental ad valorem tax revenues collected by a
municipality or by another taxing unit and municipal sales tax
collected by a municipality from all or part of a tax increment
reinvestment zone created under Chapter 311, Tax Code.
Sec. 372.027. REFUNDING BONDS. (a) Revenue bonds and
special assessment bonds issued under this subchapter and
certificates of obligation payable solely from special assessments
may be refunded or refinanced by the issuance of refunding bonds,
under terms or conditions provided [set forth] in the ordinance,
order, or resolution authorizing the issuance [ordinances or
orders] of the [municipality or county issuing the] bonds. The
provisions of this subchapter applying generally to revenue bonds
and special assessment bonds, including provisions related to the
issuance of those bonds, apply to refunding bonds of like kind
authorized by this section. The refunding bonds may be sold and
delivered in amounts necessary to pay [for] the principal,
interest, and any redemption premium of the bonds [to be refunded],
on the date of the maturity of the bonds [bond] or any redemption
date of the bonds [bond].
(b) Refunding bonds may be issued for exchange with the
bonds they are refunding. The comptroller of public accounts shall
register refunding bonds described by this subsection and deliver
the bonds to holders of bonds being refunded in accordance with the
ordinance, [or] order, or resolution authorizing the issuance of
refunding bonds. The exchange may be made in one delivery or
several installment deliveries.
(c) General obligation bonds and certificates of obligation
issued under this subchapter may be refunded in the manner provided
by law.
Sec. 372.028. APPROVAL AND REGISTRATION. (a) Revenue
bonds and special assessment bonds issued under this subchapter and
a record of the proceedings authorizing their issuance must be
submitted to the attorney general for examination. If revenue
bonds state that they are secured by a pledge of revenue or rentals
from a contract or lease, a copy of the contract or lease and a
description of the proceedings authorizing the contract or lease
must also be submitted to the attorney general.
(b) If the attorney general determines that the bonds were
authorized and the contracts or leases related to the bonds were
made in accordance with the law, the attorney general shall approve
the bonds and the contract or lease. After [On the approval of] the
attorney general approves the bonds and the contract or lease, the
comptroller of public accounts shall register the bonds.
(c) Bonds and contracts or leases approved and registered
under this section are:
(1) valid and binding obligations for all purposes in
accordance with their terms; and
(2) [are] incontestable in any court or other forum.
(d) General obligation bonds and certificates of obligation
issued under this subchapter shall be approved and registered as
provided by law.
Sec. 372.029. AUTHORIZED INVESTMENTS; SECURITY.
(a) Bonds issued under this subchapter are legal and authorized
investments for:
(1) banks, trust companies, and savings and loan
associations;
(2) all insurance companies;
(3) fiduciaries, trustees, and guardians; and
(4) interest funds, sinking funds, and other public
funds of the state or of an agency, subdivision, or instrumentality
of the state, including a county, municipality, school district, or
other district, public agency, or body politic.
(b) Bonds issued under this subchapter may be security for
deposits of public funds of the state or of an agency, subdivision,
or instrumentality of the state, including a county, municipality,
school district, or other district, public agency, or body politic,
to the extent of the market value of the bonds, if accompanied by
any appurtenant [unmatured] interest coupons that have not matured.
Sec. 372.030. SUBCHAPTER NOT EXCLUSIVE. This subchapter is
an alternative to other methods by which a municipality may finance
public improvements under applicable law [by assessing property
owners].
SECTION 2. Section 61.0572, Education Code, is amended by
adding Subsection (f) to read as follows:
(f) Approval of the board is not required for buildings or
other facilities financed by a public improvement district under
Subchapter A, Chapter 372, Local Government Code.
SECTION 3. Section 61.058, Education Code, is amended by
adding Subsection (c) to read as follows:
(c) This section does not apply to construction, repair, or
rehabilitation of buildings or other facilities financed by a
public improvement district under Subchapter A, Chapter 372, Local
Government Code.
SECTION 4. All governmental acts and proceedings of a
governmental body of a municipality or county under Subchapter A,
Chapter 372, Local Government Code, as that subchapter existed
before the effective date of this Act, to establish a public
improvement district, designate improvements, levy assessments,
and finance costs of improvements in response to a petition filed
with the governing body that conformed to the requirements of
Section 372.005, Local Government Code, as that section existed
before the effective date of this Act, are validated and confirmed
in all respects.
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, 2009.
______________________________ ______________________________
President of the Senate Speaker of the House
I hereby certify that S.B. No. 978 passed the Senate on
May 7, 2009, by the following vote: Yeas 29, Nays 2; and that the
Senate concurred in House amendment on May 30, 2009, by the
following vote: Yeas 29, Nays 2.
______________________________
Secretary of the Senate
I hereby certify that S.B. No. 978 passed the House, with
amendment, on May 27, 2009, by the following vote: Yeas 148,
Nays 0, one present not voting.
______________________________
Chief Clerk of the House
Approved:
______________________________
Date
______________________________
Governor