89R15803 TYPED By: Gates H.B. No. 4308 A BILL TO BE ENTITLED AN ACT relating to the creation of industrial development districts in certain counties; providing authority to issue bonds; and providing authority to impose assessments, fees, or taxes. BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: SECTION 1. Subtitle B, Title 12, Local Government Code, is amended by adding Chapter 389 to read as follows: Chapter 389. COUNTY INDUSTRIAL DEVELOPMENT DISTRICTS ARTICLE I. GENERAL PROVISIONS Sec. 1.01. SHORT TITLE. This Act may be cited as the County Industrial Development District Act. Sec. 1.02. DEFINITIONS. In this Act: (1) "Board" means the board of directors of the district. (2) "Bonds" means bonds, notes, and other obligations. (3) "Commissioners court" means the governing body of the county in which the district is located. (4) "Cost" has the same meaning as that term is defined to mean in Section 501.152. (5) "County" means the county in which the district is located. (6) "Director" means a member of the board. (7) "District" means a county industrial opportunity district created under this Act. (8) "Project" includes the land, buildings, equipment, facilities, expenditures, targeted infrastructure, and improvements that are: (A) for the creation or retention of primary jobs; and (B) found by the board of directors to be required or suitable for the development, retention, or expansion of: (i) advanced manufacturing, operations and industrial facilities; (ii) research and development facilities; (iii) transportation facilities, including airports, hangars, railports, rail switching facilities, maintenance and repair facilities, cargo facilities, related infrastructure located on or adjacent to an airport or railport facility, mass commuting facilities, and parking facilities; (iv) sewage or solid waste disposal facilities; recycling facilities; (v) air or water pollution control facilities; (vi) facilities for furnishing water to the public; (vii) distribution centers; (viii) small warehouse facilities capable of serving as decentralized storage and distribution centers; (ix) primary job training facilities for use by institutions of higher education; (x) regional or national corporate headquarters facilities; or (xi) Advanced Nuclear Reactors. (C) "Project" includes job training required or suitable for the promotion or development and expansion of business enterprises described in this chapter (D) In this chapter, project includes expenditures that are found by the board of directors to be required or suitable for infrastructure necessary to promote or development new or expanded business enterprises, including but not limited to: (i) Streets and roads, rail spurs, water and sewer utilities, electric utilities, or gas utilities, drainage, site improvements, and related improvements; and (ii) Telecommunications and Internet improvements. (E) In this chapter, "Project" includes the land, buildings, equipment, facilities, improvements, and expenditures found by the board of directors to be required or suitable for use for a career center in the area to be benefited by the district. Sec. 1.03. NATURE OF DISTRICT. A district authorized under this Act will be a special district created under Section 59, Article XVI, Texas Constitution. Sec. 1.04. PURPOSE; DECLARATION OF INTENT. (a) The creation of a district is essential to accomplish the purposes of Section 52 and 52-a, Article III, Texas Constitution, and Section 59, Article XVI, Texas Constitution, and other purposes stated in this chapter. (b) By authorizing the creation of districts under this chapter, and authorizing the counties, cities, and other political subdivisions to contract with the districts, the legislature has established a program to accomplish the purposes set out in Section 52-a, Article III, Texas Constitution. (c) Authorizing the creation of districts under this chapter is necessary to promote, develop, encourage, and maintain employment, commerce, transportation, housing, tourism, recreation, the arts, entertainment, economic development, safety, and the public welfare in the districts. (d) This chapter and the authorization to create industrial development districts may not be interpreted to relieve counties or cities from providing the level of services provided as of the effective date of the Act enacting this chapter to the area in the district. The districts are created to supplement and not to supplant county or city services provided in a district. Sec. 1.05. FINDINGS OF BENEFIT AND PUBLIC PURPOSE. (a) Small and medium-sized counties in Texas are in need of incentives for the development of public improvements to attract major industrial employers to such counties, and that such counties are at a disadvantage in competing with counties in other states for the location and development of projects that attract major industrial employers by virtue of the availability and prevalent use in other states of financial incentives; (b) All land and other property included in a district created under this Act will benefit from the improvements and services to be provided by the district under powers conferred by Sections 52 and 52-a, Article III, and Section 59, Article XVI, Texas Constitution, and other powers granted under this chapter. (c) The means and measures authorized by this Act are in the public interest and essential to further the public purposes of: (1) developing and diversifying the economy of the state; (2) eliminating unemployment and underemployment; and (3) developing or expanding transportation and commerce. (d) Districts created under this Act will: (1) promote the health, safety, and general welfare of residents, employers, potential employees, employees, visitors, and consumers in the district, and of the public; (2) promote the economic welfare of the citizens of the state by providing incentives for the location and development in certain Texas counties of projects that attract major industrial employers and that result in employment and economic activity; and (e) Districts created authorized for creation under this chapter will not act as the agent or instrumentality of any private interest even though the districts will benefit many private interests as well as the public. Sec. 1.06. COUNTIES AUTHORIZED TO CREATE DISTRICTS. The commissioners court in a county with a population of more than 800,000 that borders a county with a population of more than four million according to the most recent federal decennial census may, call an election on the question of creating a county industrial development district under this chapter. Sec. 1.07. ELIGIBILITY FOR INCLUSION IN SPECIAL ZONES. All or any part of the area of a district created under this Act is eligible to be included in: (a) a tax increment reinvestment zone created under Chapter 311, Tax Code; or (b) a tax abatement reinvestment zone created under Chapter 312, Tax Code. Sec. 1.08. APPLICABILITY OF MUNICIPAL MANAGEMENT DISTRICTS LAW. Except as otherwise provided by this chapter, a district created under this chapter shall have the powers of a municipal management district created under Chapter 375, Local Government Code. Sec. 1.09. CONSTRUCTION OF CHAPTER. This chapter shall be liberally construed in conformity with the findings and purposes stated in this chapter. ARTICLE 2. CREATION OF DISTRICTS Sec. 2.01. CALLING AN ELECTION. The commissioners court of the county may call an election on the question of creating a county industrial development district under this chapter and to obtain voter approval to impose an ad valorem tax or issue bonds payable from ad valorem taxes. Sec. 2.02. CONTENTS OF ORDER. The order calling the election must: (1) describe the boundaries of the proposed district by metes and bounds or by lot and block number, if there is a recorded map or plat and survey of the area; (2) call for the election to be held within those boundaries; and (3) call for the imposition of an ad valorem tax or issuance of bonds payable from ad valorem taxes. Sec. 2.03. CONDUCT OF ELECTION. (a) The election shall be held in accordance with the provisions of the Election Code, to the extent not inconsistent with this Act. (b) The ballot shall be printed to permit voting for or against the proposition: "The creation of _____________ County Industrial Development District No. ______ ; the adoption of a proposed local sales and use tax rate of ____ (the rate specified in the election order); and the imposition of an ad valorem tax to be used for the promotion and development of industrial opportunities." Sec. 2.04. RESULTS OF ELECTION. The district is created if a majority of the votes received at the election favor the creation of the district. If a majority of the votes received at the election are against the creation of the district, the district is not created. The failure to approve the creation of a district under this subsection does not affect the authority of the county to call one or more elections on the question of creating one or more county industrial opportunity districts. ARTICLE 3. DISTRICT ADMINISTRATION Sec. 3.01. BOARD OF DIRECTORS. (a) A district is governed by a board of nine directors. Positions One and Two on the board of directors shall be filled by the State Senator, or his or her designee, of the State Senate district in which the majority of the district is located. Positions Two Three and Four on the board shall be filled by State Representative, or his or her designee, of the House district in which the majority of the district is located. The commissioners court of the county in which the district is located shall be authorized to nominate and appoint five directors to fill Positions Five through Nine (b) Directors serve staggered four-year terms that expire September 1. The directors shall draw lots to determine: (1) the four directors to serve terms that expire on September 1 of the second year following creation of the district; and (2) the five directors to serve terms that expire on September 1 of the fourth year following creation of the district. Sec. 3.02. QUALIFICATIONS FOR DIRECTORS. To be qualified to serve as a director, a person shall be at least 21 years old, a resident citizen of the State of Texas, and a qualified voter within the county in which the district is located. Sec. 3.03. PERSONS DISQUALIFIED FROM SERVING. Section 50.026, Water Code, relating to disqualification of directors, shall apply to directors of districts created under this Act. Sec. 3.04. VACANCIES ON THE BOARD. A vacancy in the office of director shall be filled by appointment by the office or governing body authorized to fill the respective Position of director. Sec. 3.05. REMOVAL OF DIRECTOR. The governing body of the commissioners court, after notice and hearing, may remove a director for misconduct or failure to carry out the director's duties on petition by a majority of the remaining directors. Sec. 3.06. ORGANIZATION OF BOARD. After each appointment of directors, and after the directors have qualified by taking the proper oath, they shall organize by electing a president, a vice president, a secretary, and any other officers as in the judgment of the board are considered necessary. Sec. 3.07. QUORUM; OFFICERS' DUTIES; MANAGEMENT OF DISTRICT. Sections 54.107, 54.108, 54.111, and 54.118, Water Code, relating to quorum, officers' duties, and management of the district, shall govern the board of directors of a district created under this Act. Sec. 3.08. MEETINGS AND NOTICE. (a) The board shall designate and establish a district office in the county. (b) The board may establish regular meetings to conduct district business and may hold special meetings at other times as the business of a district requires. (c) Notice of the time, place, and purpose of any meeting of the board shall be given by posting at a place convenient to the public within the district. A copy of the notice shall be furnished to the clerk or clerks of the county in which the district is located, who shall post them on a bulletin board in the county courthouse used for such purpose. (d) Except as herein provided the provisions of the open meetings law, Chapter 551, Government Code, shall be applicable to meetings of the board of directors. Any interested person may attend any meeting of the board. Sec. 3.09. DIRECTOR'S COMPENSATION; BOND AND OATH OF OFFICE. A director is not entitled to receive compensation for service on the board. Sections 375.067, 375.069, and 375.070, Local Government Code, apply to directors of a district created under this Act. Sec. 3.10. GOVERNMENTAL AGENCY; SUITS. (a) A district, when created and confirmed, may, through its directors, sue and be sued in any and all courts of this state in the name of the district. Service of process in any suit may be had by serving any two directors. (b) A district is a governmental agency, a body politic and corporate, and a political subdivision of the state. Section 375.004, Local Government Code, applies to a district created under this Act. ARTICLE 4. POWERS AND DUTIES Sec. 4.01. GENERAL POWERS OF DISTRICT. (a) A district created under this chapter has the powers and duties necessary to accomplish the purposes for which the district is created. Sec. 4.02. IMPROVEMENT PROJECTS AND SERVICES. (a) A district created under this chapter, using any money available to the district for the purpose, may: (1) provide, design, construct, acquire, improve, relocate, operate, maintain, or finance an improvement project or service authorized under this chapter or Chapter 375, Local Government Code. (2) provide the necessary infrastructure to attract major industrial employers to the district and its vicinity, which may be conducted by the district pursuant to financial incentives and contracts for professional services with persons or organizations selected by the district. (3) acquire, sell, lease, or convey, or otherwise dispose of property or an interest in property under terms determined by the district; (4) employ necessary personnel; and (5) adopt rules to govern the operation of the district and its employees and property. (b) The district shall have the power to plan, acquire, establish, develop, construct, renovate, and dispose of projects to benefit the district, and shall have the power, authority, rights, and duties which will permit accomplishment of the purposes for which the district was created. (c) A district shall have the power to enter agreements with governmental or private entities, including the providers of public utilities and commercial railways, to develop the necessary infrastructure and to perform any act the district is authorized to perform under this chapter. (d) The implementation of a district project or service is a governmental function or service for the purposes of Chapter 791, Government Code. Sec. 4.03. NONPROFIT CORPORATION. (a) The board by resolution may authorize the creation of a nonprofit corporation to assist and act for the district in implementing a project or providing a service authorized by this chapter. (b) The nonprofit corporation: (1) has each power of and is considered to be a local government corporation created under Subchapter D, Chapter 431, Transportation Code; and (2) may implement any project and provide any service authorized by this chapter. (c) The board shall appoint the board of directors of the nonprofit corporation. The board of directors of the nonprofit corporation shall serve in the same manner as the board of directors of a local government corporation created under Subchapter D, Chapter 431, Transportation Code, except that a board member is not required to reside in the district. Sec. 4.04. COMPETITIVE BIDDING; CONTRACT AWARD. Sections 375.221 and 375.223, Local Government Code, apply to a district created under this Act. The district shall have the authority to use a method authorized by Chapter 2269, Government Code for as an alternative to competitive bidding. Notwithstanding any other provision of this Act to the contrary, any contract between the district and a governmental entity or nonprofit corporation created under the Development Corporation Act of Subtitle C1, Title 12, Chapter 501, Texas Local Government Code shall not be subject to the competitive bidding requirement of this Act. Sec. 4.05. ECONOMIC DEVELOPMENT PROGRAMS. (a) A district created under this chapter may engage in activities that accomplish the economic development purposes of the district. (b) The district may establish and provide for the administration of one or more programs to promote state or local economic development and stimulate business and commercial activity in the district, including programs to: (1) make loans and grants of public money; and (2) provide district personnel and services. (c) The district may create economic development programs and exercise the economic development powers provided to municipalities by: (1) Chapter 380, Local Government Code; and (2) Subchapter A, Chapter 1509, Government Code. Sec. 4.06. ADDING OR EXCLUDING LAND. A district created under this chapter may add or exclude land in the manner provided by Subchapter J, Chapter 49, Water Code, or by Subchapter H, Chapter 54, Water Code. Sec. 4.07. DISBURSEMENTS AND TRANSFERS OF MONEY. The board by resolution shall establish the method of disbursement of the districts funds and the number of directors' signatures and the procedure required for the disbursement or transfer of district money. Sec. 4.08. REPAYMENT OF ORGANIZATIONAL EXPENSES. The district's directors are authorized to pay all costs and expenses necessarily incurred in the creation and organization of a district, the cost of investigation and making plans, the cost of the engineer's report, project designer fees, legal fees, and other incidental expenses and to reimburse any person for money advanced for these purposes. These payments may be made from money obtained from the issuance of notes or the sale of bonds first issued by the district or out of other revenues of the district. ARTICLE 5. ASSESSMENTS Sec. 5.01. PETITION REQUIRED FOR FINANCING SERVICES AND IMPROVEMENTS WITH ASSESSMENTS. (a) The board may not finance a service or improvement project with assessments under this chapter unless a written petition requesting that service or improvement has been filed with the board. (b) A petition filed under Subsection (a) must be signed by the owners of a majority of the assessed value of real property in the district subject to assessment according to the most recent certified tax appraisal roll for the county. Sec. 5.02. ASSESSMENTS; LIENS FOR ASSESSMENTS. (a) The board by resolution may impose and collect an assessment for any purpose authorized by this chapter in all or any part of the district. (b) An assessment, a reassessment, or an assessment resulting from an addition to or correction of the assessment roll by the district, penalties and interest on an assessment or reassessment, an expense of collection, and reasonable attorney's fees incurred by the district; (1) are a first and prior lien against the property assessed; (2) are superior to any other lien or claim other than a lien or claim for county, school district, or municipal ad valorem taxes; and (3) or the personal liability of and a charge against the owners of the property even if the owners are not named in the assessment proceedings. (c) The lien is effective from the date of the board's resolution imposing the assessment until the date the assessment is paid. The board may enforce the lien in the same manner that the board may enforce an ad valorem tax lien against real property. (d) The board may make a correction to or deletion from the assessment roll that does not increase the amount of assessment of any parcel of land without providing notice and holding a hearing in the manner required for additional assessments. ARTICLE 6. TAXES AND BONDS Sec. 6.01. TAX ELECTION REQUIRED. The district must hold an election in the manner provided by Chapter 49, Water Code, or if applicable, Chapter 375, Local Government Code, to obtain voter approval before the district may impose an ad valorem tax. Sec. 6.02. OPERATION AND MAINTENANCE TAX. (a) If authorized by a majority of the district voters voting in the election under Section 6.02., the district may impose an operation and maintenance tax on taxable property in the district in the manner provided by Section 49.107, Water Code, for any district purpose, including to: (1) maintain and operate the district; (2) construct or acquire improvements; or (3) provide a service. (b) The board shall determine the tax rate. The rate may not exceed the rate approved at the election. Sec. 6.03. AUTHORITY TO BORROW MONEY AND TO ISSUE BONDS AND OTHER OBLIGATIONS. (a) The district created under this chapter may borrow money on terms determined by the board. (b) The district may issue bonds, notes, or other obligations payable wholly or partly from ad valorem taxes, assessments, impact fees, revenue contract payments, grants, or other district money, or any combination of those sources of money, to pay for any authorized district purpose, including but not limited to the following: (1) pay interest on the bonds during and after the period of the acquisition or construction of a project; (2) pay administrative and operating expenses; (3) create a reserve fund for the payment of principal and interest on the bonds; and (4) pay all expenses incurred and to be incurred in the issuance, sale, and delivery of the bonds. (c) The limitation on the outstanding principal amount of bonds, notes, or other obligations provided by Section 49.4645, Water Code, does not apply to the district. Sec. 6.04. BONDS SECURED BY REVENUE OR CONTRACT PAYMENTS. A district created under this chapter may issue, without an election, bonds secured by: (1) revenue other than ad valorem taxes, including contract revenues; or (2) contract payments, provided that the requirements of Section 49.108, Water Code, have been met. Sec. 6.05. BONDS SECURED BY AD VALOREM TAXES; ELECTIONS. (a) If authorized at an election under Section 6.01., a district created under this chapter may issue bonds payable from ad valorem taxes. (b) Section 375.243, Local Government Code, does not apply to the district. (c) At the time the district issues bonds payable wholly or partly from ad valorem taxes, the board shall provide for the annual imposition of a continuing directs annual ad valorem tax, without limit as to rate or amount, for each year that all or part of the bonds are outstanding as required and in the manner provided by Sections 54.601 and 54.602, Water Code. (d) All or any part of any facilities or improvements that may be acquired by a district by the issuance of its bonds may be submitted as a single proposition or as several propositions to be voted on at an election. Sec. 6.06. CONSENT OF MUNICIPALITY REQUIRED. (a) The board may not issue bonds until each municipality in whose corporate limits or extraterritorial jurisdiction the district is located has consented by ordinance or resolution to the creation of the district and to the inclusion of land in the district. (b) This section applies only to the district's first issuance of bonds payable from ad valorem taxes. ARTICLE 7. SALES AND USE TAXES Sec. 7.01. APPLICABILITY OF CERTAIN TAX CODE PROVISIONS. (a) Chapter 321, Tax Code, governs the imposition, computation, administration, enforcement, and collection of the sales and use tax authorized by this subchapter except to the extent Chapter 321, Tax Code is inconsistent with this chapter. (b) For the purposes of section, a reference in Chapter 321, Tax Code, to a municipality or the governing body of a municipality is a reference to the district or the board, respectively. Sec. 7.02. ELECTION; ADOPTION OF TAX. (a) The district may adopt a sales and use tax if authorized by a majority of the voters of the district voting at an election held for that purpose. (b) The board by order may call an election to authorize the adoption of the sales and use tax. The election may be held on any uniform election date and in conjunction with any other district election. (c) The district shall provide notice of the election and shall hold the election in the manner prescribed by Section 2.01. (d) The ballot shall be printed to provide for voting for or against the proposition: "Authorization of a sales and use tax in the [__________] County Industrial Development District No. [___] at a rate not to exceed [_____] percent" (insert rate of one or more increments of one-eighth of one percent in accordance with Section 2.03. Sec. 7.03. SALES AND USE TAX RATE. (a) After the date the results are declared of an election held under Section 7.02 at which the voters authorized imposition of a tax, the board shall provide by resolution or order the initial tax of the tax, which must be in one or more increments of one-eighth of one percent. (b) After the authorization of a tax under Section 7.02, the board may increase or decrease the rate of the tax by one or more increments of one-eighth of one percent. (c) The board may not decrease the rate of the tax if the decrease would impair the repayment of any outstanding debt or obligation payable from the tax. (d) The initial rate of the tax or any rate resulting from subsequent increases or decreases may not exceed the lesser of: (1) the maximum rate authorized at an election held under Section 7.02; or (2) a rate that, when added to the rates of all sales and use taxes imposed by other political subdivisions with territory in the district, would result in the maximum combined rate prescribed Section 321.101(f), Tax Code, at any location in the district. (e) In determining whether the combined sales and use tax rate under Subsection (d) (2) would exceed the maximum combined rate prescribed by Section 321.0101(f), Tax Code, at any location in the district, the board shall include: (1) any sales and use tax imposed by a political subdivision whose territory overlaps all or part of the district; (2) any sales and use tax to be imposed by the city or the county as a result of an election held on the same date as the election held under Section 7.02; and (3) any increase to an existing sales and use tax imposed by the city of the county as a result of an election held on the same date as the election held under Section 7.02. (f) If the district adopts a sales and use tax authorized at an election under Section 7.02 and subsequently includes a new territory in the district, the district: (1) is not required to hold another election to approve the imposition of the sales and use tax in the included territory; and (2) shall impose the sales and use tax in the included territory as provided in Chapter 321, Tax Code. (g) If the district adopts a sales and use tax authorized at an election held under Section 7.02 and subsequently excludes territory in the district under this section, the sales and use tax is inapplicable to the excluded territory as provided by Chapter 321, Tax Code, but is applicable to the territory remaining in the district. Sec. 7.04. NOTIFICATION OF RATE CHANGE. The board shall notify the comptroller of any changes made to the tax rate under this subchapter in the same manner the municipal secretary provides notice to the comptroller under Section 321.405(b), Tax Code. Sec. 7.05. USE OF REVENUE. Revenue from the sales and use tax imposed under this subchapter is for the use and benefit of the district and may be used for any district purpose. The district may pledge all or part of the revenue to the payment of bonds, notes, or other obligations, and that pledge of revenue may be in combination with other revenue, including tax revenue, available to the district. Sec. 7.06. ABOLITION OF TAX. (a) Except as provided by Subsection (b), the board may abolish the tax imposed under this subchapter without an election. (b) The board may not abolish the tax imposed under this section if the district has any outstanding debt or obligation secured by the tax, and repayment of the debt or obligation would be impaired by the abolition of the tax. (c) If the board abolishes the tax, the board shall notify the comptroller of that action in the same manner as the municipal secretary provides notice to the comptroller under Section 321.405(b), Tax Code. (d) If the board abolishes the tax or decreases the tax rate to zero, a new election to authorize a sales and use tax must be held under Section 2.01. before the district may subsequently impose the tax. ARTICLE 8. DISSOLUTION Sec. 8.01. DISSOLUTION. (a) A district created under this chapter may be dissolved only as provided in this section. (b) The board of directors may petition the commissioners court to dissolve the district if a majority of the board finds at any time (1) before the authorization of bonds or the final lending of its credit, that the proposed undertaking is impracticable or cannot be successfully and beneficially accomplished, or (2) that all bonds of the district or other debts of the district have been paid and the purposes of the district have been accomplished. (c) On receipt of a petition from the board for dissolution of the district, the county commissioners shall hold a hearing. (d) If the commissioners court determines from the evidence that the best interests of the county and the owners of property and interests in property within the district will be served by dissolving the district, the commissioners court shall enter in its records the appropriate findings and order dissolving the district. Otherwise the commissioners court shall enter its order providing that the district has not been dissolved. On dissolution of the district, funds and property of the district, if any, shall be transferred to the commissioners court. SECTION 2. (a) The legal notice of the intention to introduce this Act, setting forth the general substance of this Act, has been published as provided by law, and the notice and a copy of this Act have been furnished to all persons, agencies, officials, or entities to which they are required to be furnished under Section 59, Article XVI, Texas Constitution, and Chapter 313, Government Code. (b) All requirements of the constitution and laws of this state and the rules of procedure of the legislature with respect to the notice, introduction, and passage of this Act have been fulfilled and accomplished. SECTION 3. 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, 2025.