By: Elkins (Senate Sponsor - West) H.B. No. 3246
(In the Senate - Received from the House May 4, 2011;
May 5, 2011, read first time and referred to Committee on
Intergovernmental Relations; May 21, 2011, reported adversely,
with favorable Committee Substitute by the following vote: Yeas 5,
Nays 0; May 21, 2011, sent to printer.)
COMMITTEE SUBSTITUTE FOR H.B. No. 3246 By: West
A BILL TO BE ENTITLED
AN ACT
relating to public improvement districts designated by a
municipality or county.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 372.0015, Local Government Code, is
amended to read as follows:
Sec. 372.0015. DEFINITIONS [DEFINITION]. In this
subchapter:
(1) "Costs" means costs and expenses paid or incurred
before, during, or after the establishment of a public improvement
district and in connection with or related to the undertaking and
funding of a public improvement project authorized under this
subchapter.
(2) "Extraterritorial[, "extraterritorial]
jurisdiction" means extraterritorial jurisdiction as determined
under Chapter 42.
SECTION 2. Subchapter A, Chapter 372, Local Government
Code, is amended by adding Section 372.0025 to read as follows:
Sec. 372.0025. PUBLIC IMPROVEMENT DISTRICT. A public
improvement district is an area, the boundaries of which are
designated by the governing body of a municipality or county under
this subchapter, that may include two or more noncontiguous areas
separated by:
(1) a right-of-way or other land dedicated to or
owned, leased, or used by a political subdivision or other
governmental entity, tax-exempt entity, public or private utility,
or railroad; or
(2) not more than 1,000 feet, as measured in a straight
line, between the nearest points on the property lines of the
closest situated noncontiguous areas.
SECTION 3. Sections 372.003(b) and (c), Local Government
Code, are amended to read as follows:
(b) A public improvement project may include:
(1) landscaping;
(2) erection of fountains, distinctive lighting, and
signs;
(3) acquiring, constructing, improving, widening,
narrowing, closing, or rerouting of sidewalks or of streets, any
other roadways, or their rights-of-way;
(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;
(8) acquisition, construction, improvement, or
rerouting of mass transportation facilities;
(9) acquisition, construction, or improvement of
water, wastewater, or drainage facilities or improvements;
(10) the establishment or improvement of parks and
recreation facilities;
(11) facilities or equipment for firefighters,
police, sheriffs, and emergency service providers;
(12) the right to receive or provide utility services;
(13) projects similar to those listed in Subdivisions
(1)-(12) [(1)-(10)];
(14) [(12)] acquisition, by purchase or otherwise, of
real property in connection with an authorized improvement;
(15) [(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) firefighters, police, sheriffs, emergency
service providers, and other public safety and [,] security
personnel;
(F) [,] business recruitment;
(G) [,] development;
(H) [,] recreation;[,] and
(I) cultural enhancement;
(16) [(14)] payment of expenses incurred in the
establishment, administration, and operation of the district; and
(17) [(15)] the development, rehabilitation, or
expansion of affordable housing.
(c) A public improvement project may be limited to the
provision of the services described by Subsection (b)(15)
[(b)(13)].
SECTION 4. Chapter 372, Local Government Code is amended to
add Sec. 372.031 as follows:
Sec. 372.031. FINDINGS PRIOR TO ISSUANCE OF CERTAIN BONDS
OR OBLIGATIONS. (a) Prior to the issuance under this chapter of
bonds or obligations wholly or partly payable from or secured by
assessments, the governing body of a municipality with a population
of 250,000 or less or the governing body of a county with a
population of 1 million or less issuing the bonds or obligations
must find and determine the following:
(1) construction of all underground water,
wastewater, and drainage facilities and roadways to serve the real
property liable for assessments necessary to support the payment of
the bonds or obligations is at least 95 percent complete; and
(2) construction of at least 25 percent of the houses
or other buildings on the real property liable for assessments and
necessary to support the bonds or obligations has been completed.
(b) Prior to the issuance under this chapter of bonds or
obligations wholly or partly payable from or secured by
assessments, a municipality with a population of more than 700,000
or a county with a population of more than 1 million issuing the
bonds or obligations must obtain an independent market study from a
firm recognized in the area of real estate market analysis
supporting the development projects for the real property liable
for assessments and necessary to support the payment of the bonds or
obligations.
(c) Subsections (a) and (b) do not apply to general
obligation bonds or certificates of obligations.
(d) The Attorney General shall adopt rules to enforce this
section and to ensure the integrity and economic feasibility of
bonds or obligations issued under this chapter.
SECTION 5. Subchapter A, Chapter 372, Local Government
Code, is amended by adding Section 372.0035 to read as follows:
Sec. 372.0035. 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) A public improvement project under Section 372.003 may
include the acquisition, construction, maintenance, or improvement
of buildings and other facilities commonly used for:
(1) teaching, research, or the preservation of
knowledge by an institution of higher education; or
(2) an auxiliary purpose of an institution of higher
education, including the provision of administrative services,
student services, student housing, athletics, performing arts, and
alumni support.
(c) The governing body of a municipality or county that
establishes a public improvement district to finance a public
improvement project described by Subsection (b) 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.
SECTION 6. Section 372.014, Local Government Code, is
amended by adding Subsection (c) to read as follows:
(c) The assessment plan is intended to be flexible to
provide for various development scenarios, including:
(1) assessments against all property to pay the costs
of improvements that benefit all the property and additional
assessments levied against portions of the property to pay the
costs of improvements that benefit those portions of the property;
or
(2) assessments levied to pay the costs for all
improvements contemplated for all phases of development of the
property with different payment and collection dates for the
different phases determined by events established by the plan,
including events related to the future phased development of the
property.
SECTION 7. Section 372.015, Local Government Code, is
amended by adding Subsections (e), (f), (g), and (h) to read as
follows:
(e) The annual installment of an assessment payable in
installments may be increased or decreased by the governing body of
the municipality or county as reflected in the updated annual
service plan and the corresponding updated assessment roll.
(f) If a parcel is subdivided, the assessment against the
parcel before the parcel was subdivided may be reallocated among
the subdivided parcels.
(g) If two or more parcels are consolidated, the assessments
against each parcel may be reallocated to the consolidated parcel.
(h) If a proposed use of an undeveloped parcel changes after
an assessment is levied against a parcel:
(1) the change in use does not affect the validity of
the assessment against the parcel; and
(2) the aggregate amount of assessments levied against
multiple undeveloped parcels for which the proposed use has changed
may be reallocated among the undeveloped parcels.
SECTION 8. Subchapter A, Chapter 372, Local Government
Code, is amended by adding Section 372.0175 to read as follows:
Sec. 372.0175. CONTRACTS FOR COLLECTION OF ASSESSMENTS.
The governing body of a municipality or county may contract with the
governing body of another taxing unit, as defined by Section 1.04,
Tax Code, or the board of directors of an appraisal district to
perform the duties of the municipality or county relating to
collection of special assessments levied under this subchapter.
SECTION 9. Section 372.018, Local Government Code, is
amended by amending Subsections (a) and (f) and adding Subsection
(g) to read as follows:
(a) An assessment bears interest at the rate specified by
the governing body of the municipality or county beginning at the
time or times or on the occurrence of one or more events specified
by the governing body. If general obligation bonds, revenue bonds,
installment sales contracts, reimbursement agreements, time
warrants, or temporary notes are issued or entered into to finance
or pay for the improvement for which the assessment is levied
[assessed], the interest rate for the [that] assessment may not
exceed a rate that is one-half of one percent higher than the actual
interest rate paid on the debt. [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 may be used to pay costs,
including the payment or prepayment of the assessment,
administrative costs, costs of improvements, and costs of financing
such as reserves for debt service.
(f) Delinquent installments of the assessment shall incur
interest, penalties, and attorney's fees in the same manner as
delinquent ad valorem taxes.
(g) The owner of assessed property may pay at any time on any
parcel or lot all or any part of the 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 general obligation
bonds, revenue bonds, installment sales contract, reimbursement
agreement, temporary note, or time warrant issued or entered into
to finance or pay for the improvements [, on any lot or parcel].
SECTION 10. Section 372.023, Local Government Code, is
amended by amending Subsections (a), (d), (e), and (g) and adding
Subsections (a-1) and (d-1) to read as follows:
(a) Costs of improvements may be paid or reimbursed by any
combination of the methods described by this section if the
improvements are dedicated, conveyed, leased, or otherwise
provided to or for the benefit of:
(1) a municipality or county;
(2) a political subdivision or other entity exercising
the powers granted under this subchapter as authorized by other
law; or
(3) an entity that:
(A) is approved by the governing body of an
entity described by Subdivision (1) or (2); and
(B) is authorized by order, ordinance,
resolution, or other official action to act for an entity described
by Subdivision (1) or (2) [The cost of an improvement made under
this subchapter must be paid in accordance with this section].
(a-1) The payment or reimbursement may be provided before or
after a method of payment or reimbursement authorized by this
section is entered into or issued.
(d) Costs [A cost] payable from a special assessment that is
payable [to be paid] in installments may be paid by any combination
of the following methods [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]:
(1) under an installment sales [sale] contract or a
reimbursement agreement between the municipality or county and
[with] the person who acquires, installs, or constructs the
improvements [contracts to install or construct the improvement for
which the costs apply];
(2) as provided by a temporary note or time warrant
issued by the municipality or county and payable to the [reimburse
a] person who acquires, installs, or constructs the improvements
[for money advanced or work performed in connection with an
improvement]; or
(3) by the issuance and sale of [revenue or general
obligation] bonds under Section 372.024.
(d-1) An installment sales contract, reimbursement
agreement, temporary note, or time warrant described by Subsection
(d) may be assigned by the payee without the consent of the
municipality or county.
(e) The [net effective] interest rate[, as computed for a
public security under Section 1204.005, Government Code,] on unpaid
amounts due under an installment sales contract, reimbursement
agreement, temporary note, or time warrant described by [money owed
or paid under] Subsection (d):
(1) may not exceed, for a period of not more than five
years, as determined by the governing body of the municipality or
county, five [one-half of one] percent above the highest average
index [interest] rate for tax-exempt bonds reported in a daily or
[by a newspaper in a] weekly bond index approved by the governing
body and reported in the month before the date the obligation was
incurred; and
(2) after the period described by Subdivision (1), may
not exceed two percent above the bond index rate described by
Subdivision (1) [of the contract or agreement or the issuance of the
bond, temporary note, or time warrant. The newspaper must
specialize in bonds and be acceptable as a reliable source for bond
interest rates to the governing body of the municipality or county
that enters into the contract or agreement or that issues the bond,
temporary note, or time warrant].
(g) The cost of more than one improvement may be paid:
(1) from a single issue and sale of bonds without other
consolidation proceedings before the bond issue; or
(2) under a single installment sales contract,
reimbursement agreement, temporary note, or time warrant [an
agreement with a person who contracts to install or construct the
improvement and who sells the improvement to the municipality or
county].
SECTION 11. Section 372.024, Local Government Code, is
amended to read as follows:
Sec. 372.024. GENERAL OBLIGATION AND REVENUE BONDS. (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) certificates of obligation under Subchapter C,
Chapter 271; and
(3) revenue [. 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].
(b) The bond or obligation may be:
(1) issued on the terms determined by the governing
body of the municipality or county;
(2) issued to pay costs;
(3) issued to refund any obligation entered into or
issued under this subchapter, including an installment sales
contract, reimbursement agreement, temporary note, and time
warrant; and
(4) payable from and secured by special assessments.
(c) If the bond or obligation is issued for the purpose
described by Subsection (b)(3) and is secured wholly or partly by a
special assessment, the lien created by the originally levied
special assessment continues uninterrupted for the term of the bond
or obligation to secure payment of the bond or obligation.
SECTION 12. Section 372.026, Local Government Code, is
amended by adding Subsection (g) to read as follows:
(g) If an assessment is collected and applied to pay an
amount due under an installment sales contract, reimbursement
agreement, temporary note, or time warrant, the governing body of a
municipality or county may pledge all or any part of the revenue
collected to pay general obligation bonds, certificates of
obligation, or revenue bonds issued to refund those obligations.
The pledge authorized by this subsection:
(1) does not affect the lien of that assessment; and
(2) is not a reassessment or a new assessment.
SECTION 13. Section 372.023(f), Local Government Code, is
repealed.
SECTION 14. 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, 2011.
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