By: Pickett, et al. (Senate Sponsor - Nichols) H.B. No. 563
(In the Senate - Received from the House April 4, 2011;
April 14, 2011, read first time and referred to Committee on
Transportation and Homeland Security; May 9, 2011, reported
adversely, with favorable Committee Substitute by the following
vote: Yeas 9, Nays 0; May 9, 2011, sent to printer.)
COMMITTEE SUBSTITUTE FOR H.B. No. 563 By: Nichols
A BILL TO BE ENTITLED
AN ACT
relating to the purposes and designation of a transportation
reinvestment zone.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 222.105, Transportation Code, is amended
to read as follows:
Sec. 222.105. PURPOSES. The purposes of Sections 222.106
and 222.107 are to:
(1) promote public safety;
(2) facilitate the improvement, development, or
redevelopment of property;
(3) facilitate the movement of traffic; and
(4) enhance a local entity's ability to sponsor a
transportation project authorized under Section 222.104.
SECTION 2. Section 222.106, Transportation Code, is amended
by amending Subsections (b), (c), (g), (h), (i), (j), (k), and (l)
and adding Subsections (i-1) and (i-2) to read as follows:
(b) This section applies only to a municipality in which a
transportation project is to be developed [the governing body of
which intends to enter into an agreement with the department] under
Section 222.104.
(c) If the governing body determines an area to be
unproductive and underdeveloped and that action under this section
will further the purposes stated in Section 222.105, the governing
body of the municipality by ordinance may designate a contiguous
geographic area in the jurisdiction of the municipality to be a
transportation reinvestment zone to promote a transportation
project [described by Section 222.104 that cultivates development
or redevelopment of the area].
(g) The ordinance designating an area as a transportation
reinvestment zone must:
(1) describe the boundaries of the zone with
sufficient definiteness to identify with ordinary and reasonable
certainty the territory included in the zone;
(2) provide that the zone takes effect immediately on
passage of the ordinance and that the base year shall be the year of
passage of the ordinance or some year in the future;
(3) assign a name to the zone for identification, with
the first zone designated by a municipality designated as
"Transportation Reinvestment Zone Number One, (City or Town, as
applicable) of (name of municipality)," and subsequently
designated zones assigned names in the same form, numbered
consecutively in the order of their designation;
(4) designate the base year for purposes of
establishing the tax increment base of the municipality;
(5) establish a [an ad valorem] tax increment account
for the zone; and
(6) [(5)] contain findings that promotion of the
transportation project will cultivate the improvement,
development, or redevelopment of the zone.
(h) From taxes collected on property in a zone, the
municipality shall pay into the tax increment account for the zone
[an amount equal to] the tax increment produced by the
municipality, less any amount allocated under previous agreements,
including agreements under Chapter 380, Local Government Code, or
Chapter 311, Tax Code.
(i) All or the portion specified by the municipality of the
money deposited to a tax increment account must be used to fund the
transportation project for which the zone was designated, as well
as aesthetic improvements within the zone. Any remaining money
deposited to the tax increment account may be used for other
purposes as determined by the municipality [Money deposited to a
tax increment account must be used to fund projects authorized
under Section 222.104, including the repayment of amounts owed
under an agreement entered into under that section].
(i-1) The governing body of a municipality may contract with
a public or private entity to develop, redevelop, or improve a
transportation project in a transportation reinvestment zone and
may pledge and assign all or a specified amount of money in the tax
increment account to that entity. After a pledge or assignment is
made, if the entity that received the pledge or assignment has
itself pledged or assigned that amount to secure bonds or other
obligations issued to obtain funding for the transportation
project, the governing body of the municipality may not rescind its
pledge or assignment until the bonds or other obligations secured
by the pledge or assignment have been paid or discharged.
(i-2) To accommodate changes in the limits of the project
for which a reinvestment zone was designated, the boundaries of a
zone may be amended at any time, except that property may not be
removed or excluded from a designated zone if any part of the tax
increment account has been assigned or pledged directly by the
municipality or through another entity to secure bonds or other
obligations issued to obtain funding of the project, and property
may not be added to a designated zone unless the governing body of
the municipality complies with Subsections (e) and (g).
(j) Except as provided by Subsections (i-1) and
[Subsection] (k), a transportation reinvestment zone terminates on
December 31 of the year in which the municipality completes
[complies with] a contractual requirement, if any, that included
the pledge or assignment of all or a portion of money deposited to a
tax increment account or the repayment of money owed under an [the]
agreement for development, redevelopment, or improvement of the
project for [under Section 222.104 in connection with] which the
zone was designated.
(k) A transportation reinvestment zone terminates on
December 31 of the 10th year after the year the zone was designated,
if before that date the municipality has not entered into a contract
described in Subsection (i-1) or otherwise not used the zone for the
purpose for which it was designated.
(l) Any surplus remaining in a tax increment account on
termination of a zone may be used for other purposes as determined
by [transportation projects of] the municipality [in or outside of
the zone].
SECTION 3. The heading to Section 222.107, Transportation
Code, is amended to read as follows:
Sec. 222.107. COUNTY TRANSPORTATION REINVESTMENT ZONES[;
TAX ABATEMENTS; ROAD UTILITY DISTRICTS].
SECTION 4. Section 222.107, Transportation Code, is amended
by amending Subsections (b), (c), (e), (f), (h), (i), (k), and (l)
and adding Subsections (h-1) and (k-1) to read as follows:
(b) This section applies only to a county in which a
transportation project is to be developed [the commissioners court
of which intends to enter into a pass-through toll agreement with
the department] under Section 222.104.
(c) The commissioners court of the county, after
determining that an area is unproductive and underdeveloped and
that action under this section would further the purposes described
by Section 222.105, by order or resolution may designate a
contiguous geographic area in the jurisdiction of the county to be a
transportation reinvestment zone to promote a transportation
project [described by Section 222.104 that cultivates development
or redevelopment of the area] and for the purpose of abating ad
valorem taxes or granting other relief from taxes imposed by the
county on real property located in the zone.
(e) Not later than the 30th day before the date the
commissioners court proposes to designate an area as a
transportation reinvestment zone under this section, the
commissioners court must hold a public hearing on the creation of
the zone, its benefits to the county and to property in the proposed
zone, and the abatement of ad valorem taxes or the grant of other
relief from ad valorem taxes imposed by the county on real property
located in the zone. At the hearing an interested person may speak
for or against the designation of the zone, its boundaries, or the
abatement of or the relief from county taxes on real property in the
zone. Not later than the seventh day before the date of the
hearing, notice of the hearing and the intent to create a zone must
be published in a newspaper having general circulation in the
county.
(f) The order or resolution designating an area as a
transportation reinvestment zone must:
(1) describe the boundaries of the zone with
sufficient definiteness to identify with ordinary and reasonable
certainty the territory included in the zone;
(2) provide that the zone takes effect immediately on
adoption of the order or resolution and that the base year shall be
the year of passage of the order or resolution or some year in the
future; [and]
(3) assign a name to the zone for identification, with
the first zone designated by a county designated as "Transportation
Reinvestment Zone Number One, County of (name of county)," and
subsequently designated zones assigned names in the same form
numbered consecutively in the order of their designation; and
(4) designate the base year for purposes of
establishing the tax increment base of the county.
(h) The commissioners court by order or resolution may enter
into an agreement with the owner of any real property located in the
transportation reinvestment zone to abate all or a portion of the ad
valorem taxes or to grant other relief from the taxes imposed by the
county on the owner's property in an amount not to exceed the amount
calculated under Subsection (a)(1) for that year. All abatements
or other relief granted by the commissioners court in a
transportation reinvestment zone must be equal in rate. In the
alternative, the commissioners court by order or resolution may
elect to abate a portion of the ad valorem taxes or otherwise grant
relief from the taxes imposed by the county on all real property
located in the zone. In any ad valorem tax year, the total amount of
the taxes abated or the total amount of relief granted under this
section may not exceed the amount calculated under Subsection
(a)(1) for that year, less any amounts allocated under previous
agreements, including agreements under Chapter 381, Local
Government Code, or Chapter 312, Tax Code.
(h-1) To further the development of the transportation
project for which the transportation reinvestment zone was
designated, a county may assess all or part of the cost of the
transportation project against property within the zone. The
assessment against each property in the zone may be levied and
payable in installments in the same manner as provided by Sections
372.016-372.018, Local Government Code, provided that the
installments do not exceed the total amount of the tax abatement or
other relief granted under Subsection (h). The county may elect to
adopt and apply the provisions of Sections 372.015-372.020 and
372.023, Local Government Code, to the assessment of costs and
Sections 372.024-372.030, Local Government Code, to the issuance of
bonds by the county to pay the cost of a transportation project.
The commissioners court of the county may contract with a public or
private entity to develop, redevelop, or improve a transportation
project in the transportation reinvestment zone, including
aesthetic improvements, and may pledge and assign to that entity
all or a specified amount of the revenue the county receives from
installment payments of the assessments for the payment of the
costs of that transportation project. After a pledge or assignment
is made, if the entity that received the pledge or assignment has
itself pledged or assigned that amount to secure bonds or other
obligations issued to obtain funding for the transportation
project, the commissioners court of the county may not rescind its
pledge or assignment until the bonds or other obligations secured
by the pledge or assignment have been paid or discharged. Any
amount received from installment payments of the assessments not
pledged or assigned in connection with the transportation project
may be used for other purposes associated with the transportation
project or in the zone.
(i) In the alternative, to [To] assist the county in
developing a transportation project [authorized under Section
222.104], if authorized by the commission under Chapter 441, a road
utility district may be formed under that chapter that has the same
boundaries as a transportation reinvestment zone created under this
section.
(k) A road utility district formed as provided by Subsection
(i) may enter into an agreement [with the county to assume the
obligation, if any, of the county] to fund development of a project
[under Section 222.104] or to repay funds owed to the department
[under Section 222.104]. Any amount paid for this purpose is
considered to be an operating expense of the district. Any taxes
collected by the district that are not paid for this purpose may be
used for any district purpose.
(k-1) To accommodate changes in the limits of the project
for which a reinvestment zone was designated, the boundaries of a
zone may be amended at any time, except that property may not be
removed or excluded from a designated zone if any part of the
assessment has been assigned or pledged directly by the county or
through another entity to secure bonds or other obligations issued
to obtain funding of the project, and property may not be added to a
designated zone unless the commissioners court of the county
complies with Subsections (e) and (f).
(l) Except as provided by Subsection (m), a tax abatement
agreement entered into under Subsection (h), or an order or
resolution on the abatement of taxes or the grant of relief from
taxes under that subsection, terminates on December 31 of the year
in which the county completes any contractual requirement that
included the pledge or assignment of assessments [of money]
collected under this section.
SECTION 5. Subchapter E, Chapter 222, Transportation Code,
is amended by adding Sections 222.108, 222.109, and 222.110 to read
as follows:
Sec. 222.108. TRANSPORTATION REINVESTMENT ZONES FOR OTHER
TRANSPORTATION PROJECTS. (a) Notwithstanding the requirement in
Sections 222.106(b) and 222.107(b) that a transportation
reinvestment zone be established in connection with a project under
Section 222.104, a municipality or county may establish a
transportation reinvestment zone for any transportation project.
If all or part of the transportation project is subject to oversight
by the department, at the option of the governing body of the
municipality or county, the department, to the extent permitted by
law, shall delegate full responsibility for the development,
design, letting of bids, and construction of the project, including
project inspection, to the municipality or county. After assuming
responsibility for a project under this subsection, a municipality
or county shall enter into an agreement with the department that
prescribes:
(1) the development process;
(2) the roles and responsibilities of the parties; and
(3) the timelines for any required reviews or
approvals.
(b) Any portion of a transportation project developed under
Subsection (a) that is on the state highway system or is located in
the state highway right-of-way must comply with applicable state
and federal requirements and criteria for project development,
design, and construction, unless the department grants an exception
to the municipality or county.
(c) The development, design, and construction plans and
specifications for the portions of a project described by
Subsection (b) must be reviewed and approved by the department
under the agreement entered into under Subsection (a).
(d) In this section, "transportation project" has the
meaning assigned by Section 370.003.
Sec. 222.109. REDUCTION PROHIBITED. (a) A municipality or
county may not be penalized with a reduction in traditional
transportation funding because of the designation and use of a
transportation reinvestment zone under this chapter. Any funding
from the department committed to a project before the date that a
transportation reinvestment zone is designated may not be reduced
because the transportation reinvestment zone is designated in
connection with that project.
(b) The department may not reduce any allocation of
traditional transportation funding to any of its districts because
a district contains a municipality or county that contains a
transportation reinvestment zone designated under this chapter.
Sec. 222.110. SALES TAX INCREMENT. (a) In this section,
"sales tax base" for a transportation reinvestment zone means the
amount of sales and use taxes imposed by a municipality under
Section 321.101(a), Tax Code, or by a county under Chapter 323, Tax
Code, as applicable, attributable to the zone for the year in which
the zone was designated under this chapter.
(b) The governing body of a municipality or county may
determine, in an ordinance or order designating an area as a
transportation reinvestment zone or in an ordinance or order
adopted subsequent to the designation of a zone, the portion or
amount of tax increment generated from the sales and use taxes
imposed by a municipality under Section 321.101(a), Tax Code, or by
a county under Chapter 323, Tax Code, attributable to the zone,
above the sales tax base, to be used as provided by Subsection (e).
Nothing in this section requires a municipality or county to
contribute sales tax increment under this subsection.
(c) A county that designates a portion or amount of sales
tax increment under Subsection (b) must establish a tax increment
account. A municipality or county shall deposit the designated
portion or amount of tax increment under Subsection (b) to the
entity's respective tax increment account.
(d) Before pledging or otherwise committing money in the tax
increment account under Subsection (c), the governing body of a
municipality or county may enter into an agreement, under
Subchapter E, Chapter 271, Local Government Code, to authorize and
direct the comptroller to:
(1) withhold from any payment to which the
municipality or county may be entitled the amount of the payment
into the tax increment account under Subsection (b);
(2) deposit that amount into the tax increment
account; and
(3) continue withholding and making additional
payments into the tax increment account until an amount sufficient
to satisfy the amount due has been met.
(e) The sales and use taxes to be deposited into the tax
increment account under this section may be disbursed from the
account only to:
(1) pay for projects authorized under Section 222.104,
including the repayment of amounts owed under an agreement entered
into under that section; and
(2) notwithstanding Sections 321.506 and 323.505, Tax
Code, satisfy claims of holders of tax increment bonds, notes, or
other obligations issued or incurred for projects authorized under
Section 222.104.
(f) The amount deposited by a county to a tax increment
account under this section is not considered to be sales and use tax
revenue for the purpose of property tax reduction and computation
of the county tax rate under Section 26.041, Tax Code.
SECTION 6. Sections 222.106(h), (i), (j), (k), and (l) and
222.107(h), (i), (k), and (l), Transportation Code, as amended by
this Act, and Sections 222.106(i-1) and (i-2), 222.107(h-1) and
(k-1), 222.108, and 222.109, Transportation Code, as added by this
Act, apply to a transportation reinvestment zone that is governed
by those sections designated before the effective date of this Act.
SECTION 7. This Act takes effect September 1, 2011.
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