HBA-TYH C.S.H.B. 3135 76(R)BILL ANALYSIS


Office of House Bill AnalysisC.S.H.B. 3135
By: Reyna, Arthur
State Affairs
5/2/1999
Committee Report (Substituted)



BACKGROUND AND PURPOSE 

San Antonio is a finalist to host the 2007 Pan American Games.  The
national and international organizations that govern the games are
conditioning their award on a governmental body's guarantee to assume
financial obligations associated with the games.  C.S.H.B. 3135 creates a
Pan American Games trust fund.  The bill authorizes the state comptroller
to determine the amount of incremental sales tax to be attributed to the
games.  This amount will be collected and deposited in the fund.  The fund
is initiated only when a Texas city is awarded the games and becomes a host
city. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution.  

SECTION BY SECTION ANALYSIS

SECTION 1.  DEFINITIONS.  Defines "department," "endorsing municipality,"
"games," "games support contract," "joinder agreement," "joinder
undertaking," "local organizing committee," and "site selection
organization." 

SECTION 2.  PURPOSE.  Sets forth the purpose of this Act.

SECTION 3.  LEGISLATIVE FINDINGS.  Provides legislative findings regarding
the effects if the 2007 Pan American Games are held in this state. 

SECTION 4.  GUARANTEE OF STATE AND MUNICIPAL OBLIGATIONS; PAN AMERICAN
GAMES TRUST FUND.    (a)  Provides that if a site selection organization
selects a site for the games in this state pursuant to an application by a
local organizing committee (committee), within the specified period of
time, the comptroller is required to determine for each subsequent calendar
quarter, in accordance with procedures developed by the comptroller: 

_the incremental increase in the receipts to the state from the taxes
imposed under Chapters 151 (Limited Sales, Excise, And Use Tax), 152 (Taxes
on Sale, Rental, and Use of Motor Vehicles), 156 (Hotel Occupancy Tax), and
183 (Mixed Beverage Tax), Tax Code, and under Title 5 (Taxation), Alcoholic
Beverage Code, within the market area designated under Subsection (b), that
is directly attributable, as determined by the comptroller, to the
preparation for and the presentation of the applicable games and related
events; and   

_the incremental increase in receipts collected by the state on behalf of
the endorsing municipality from the sales and use tax receipts under
Section 321.101(a), Tax Code, that is directly attributable, as determined
by the comptroller, to the preparation for and the presentation of the
applicable games and related events.  

(b)  Requires the comptroller, for the purposes of Subsection (a), to
designate as a market area for the games each area that meets the specified
descriptions.  Requires the comptroller to determine the geographic
boundaries of each market area.  Provides that the endorsing municipality
that has been selected as the site for the games must be included in a
market  area for the games. 

(c)  Requires the comptroller, subject to Section 5 of this Act and for the
purpose of guaranteeing the joint obligations of the state and the
endorsing municipality under a games support contract and this Act, to
retain the amount of municipal sales and use tax revenue determined under
Subsection (a) from the amount otherwise required to be sent to the
municipality, beginning with the specified period.  Requires the
comptroller to discontinue retaining municipal sales and use tax revenue on
the earlier of the two specified dates. 

(d)  Authorizes an endorsing municipality, in addition to municipal sales
and use tax revenue retained, to pledge surcharges from use fees charges in
connection with presentation of the game. 

(e)  Requires the comptroller to deposit the amount of state tax revenue
determined under Subsection (a)  and the amount of municipal sales and use
tax retained under Subsection (c) into a trust fund designated as the Pan
American Games trust fund (fund). Provides that the fund is established
outside the treasury but is held in trust by the comptroller for the
administration of this Act.  Authorizes money in the fund to be spent by
the Texas Department of Economic Development (department) without
appropriation only as provided by the Act.  Requires the comptroller to
discontinue deposit of the amount of state tax revenue determined under
Subsection (a) on the earlier of the two specified dates. 

(f)  Authorizes the endorsing municipality to deposit into the fund any
amount of available revenue from the municipality's hotel occupancy tax.
Provides that deposit of that revenue into the fund is considered an
authorized use of the revenue.  Requires the comptroller to credit any
amount of municipal hotel occupancy tax revenue deposited by the endorsing
municipality into the fund toward the amount otherwise required to be
retained from the municipality's sales and use tax revenue, and requires
the comptroller to reduce the amount of the municipality's sales and use
tax revenue retained from the next distribution of that revenue to the
municipality. 

(g)  Authorizes the department to use the fund only to fulfill the joint
obligations of the state and the endorsing municipality to a site selection
organization under a games support contract or any other agreement
providing assurances from the department or the endorsing municipality to a
site selection organization.  

(h)  Requires a committee to provide information required by the
comptroller, including annual audited statements (statement) of the
committee's financial records required by a site selection organization and
data obtained by the committee relating to attendance at the games and to
the economic impacts of the games.  Provides that a committee must provide
a statement within four months of the end of the period covered by the
statement. 

(i)  Requires the comptroller to provide an estimate before August 31,
1999, of the total amount that would be deposited in the fund before
January 1, 2008, of the games were to be held in this state at a site
selected pursuant to an application by a committee.  Requires the
comptroller to provide the estimate on request to a committee.  Authorizes
a committee to submit the comptroller's estimate to a site selection
organization. 

(j)  Authorizes the department to make a disbursement from the fund only if
the comptroller certifies that the disbursement is for a purpose for which
the state and the endorsing municipality are jointly obligated under a
games support contract or other agreement described by Subsection (g). 

(k)  Requires the obligation, if the comptroller certifies that a
disbursement may be made from the fund, to be satisfied first out of
municipal revenue deposited in the trust fund and then out of the state
revenue deposited in the trust fund. 

(l)  Requires the comptroller, on January 1, 2009, to transfer to the
general revenue fund any money remaining in the fund, not exceeding the
amount of state revenue remaining  in the trust fund, plus any interest
earned on that state revenue.  Requires the comptroller to remit to the
endorsing municipality any money remaining in the trust fund after the
required amount is transferred to the general revenue fund. 

(m)  Prohibits the amount deposited in the fund from exceeding $20 million.
Prohibits the joint liability of the state and the endorsing municipality
under a joinder agreement and any other games support contracts entered
into pursuant to this Act from exceeding $20 million. 

SECTION 5.  MUNICIPAL ELECTION.  (a)  Provides that except as provided by
Subsection (b), an endorsing municipality must hold an election in the
municipality to determine whether the municipality may contribute a portion
of its sales and use taxes to the fund.  Provides that the election must be
held on a uniform election date that occurs after the effective date of
this Act and before the date a site selection organization requires the
endorsing municipality and the state to enter into a joinder undertaking. 

(b)  Provides that an endorsing municipality is not required to hold an
election if there is not a sufficient number of days between the effective
date of this Act and a uniform election date that occurs before the date a
site selection organization requires that the endorsing municipality and
the state enter into a joinder undertaking to allow the municipality to
submit the proposed election to the United States attorney general for
preclearance at least 120 days before the election. 

(c)  Prohibits the comptroller, if an endorsing municipality is required to
hold an election, from retaining municipal sales and use tax revenue from
amounts otherwise required to be sent to that municipality, unless the
contribution of a portion of the municipality's sales and use taxes is
approved by a majority of the voters voting in the election. 

SECTION 6.  ASSISTANCE OF DEPARTMENT AND OTHER STATE AGENCIES. (a)
Requires the department to review requests from a committee that the
department, on behalf of the state, enter into a games support contract
that is required by a site selection organization in connection with the
committee's bid to host the game. 
 
(b)  Provides that a request made under Subsection (a) of this section must
be accompanied by the enumerated items. 

(c)  Requires the department to approve or deny a request made under
Subsection (a) within 30 days of the request. 

(d)  Authorizes the department to agree in a joinder undertaking entered
into with a site selection organization that the department will execute a
joinder agreement and refrain from taking any action after the execution of
the joinder undertaking that would impair its ability to execute the
joinder agreement. 
 
(e)  Authorizes the department to agree in a joinder undertaking that the
state will agree to perform the enumerated actions. 

(f)  Authorizes the department to agree to execute a joinder undertaking, a
joinder agreement, or other games support contract only if the enumerated
conditions apply. 

(g)  Provides that before executing a games support contract, the
department must execute an agreement with the applicable local organizing
committee requiring that if a site selection organization selects a site
for the games in this state pursuant to an application by the committee,
the committee will repay the state any funds expended by the department
under this Act from any surplus of the committee's funds remaining after
the presentation of the games and after the payment of the expenses and
obligations incurred by the committee.  

(h)  Authorizes a games support contract to contain any additional
provisions the department requires in order to carry out the purposes of
this Act.  
 
 (i)  Authorizes the department to required a committee to list the state
as an additional insured on any policy of insurance purchased by the
committee and required by a site selection organization to be in effect in
connection with the games. 

(j)  Authorizes the Texas Department of Transportation, the Texas
Department of Public Safety, and the Texas Department of Housing and
Community Affairs to  assist a committee in developing applications and
planning for the games and to enter into contracts, agreements, or
assurances related to the presentation of the games.  

(k)  Prohibits the department, not withstanding any other provision of this
Act, from obligating the state to pay or otherwise provide funds to cover
the costs of the construction or purchase of a building or other facility
by a municipality. 

SECTION 7.  APPLICATION OF OPEN MEETINGS AND OPEN RECORDS LAWS.  Provides
that a committee and its governing body are subject to Chapters 551 (Open
Meetings) and 552 (Public Information), Government Code.  Provides that a
final bid submitted by a committee to a site selection organization is
excepted from required public disclosure until the Pan American Sports
Organization selects the site for the games. 

SECTION 8.  TAX EXEMPTIONS FOR LOCAL ORGANIZING COMMITTEE.  Provides that a
committee is exempt from the enumerated taxes.  Provides that the exemption
takes effect on the first day of the first month after the effective date
of this Act.  Provides that the exemption from franchise tax provided by
this section applies only to a tax that becomes due on or after the
effective date of this Act.   
 
SECTION 9.  ETHICS.  (a)  Provides that a local organizing committee that
submits a request under Section 6(a) of this Act must: 

(1) affirm that it is fully in compliance with the ethical guidelines set
forth in all contracts entered into and rules adopted by a site selection
organization; 

(2)  before the 15th of the first month of each calender quarter, file with
the secretary of the endorsing municipality for which the committee submits
a request the enumerated items; and  

(3)  file with the secretary of the endorsing municipality on April 15 of
each year a cope of each financial statement required to be submitted by a
committee to the United States Olympic Committee during the preceding
calendar year. 

(b)  Provides that a report made under Subsection 9(a)(2) must include the
enumerated items. 

(c)  Provides that each endorsing municipality for which a local organizing
committee submits a request under Section 6(a) of this Act must have a
comprehensive ethics code establishing standards of conduct, disclosure
requirement, and enforcement mechanisms relating to city officials and
employees before the department may consider the request. 

SECTION 10.  BRIBERY.  Provides that a person commits an offense if the
person intentionally or knowingly offers, confers, or agrees to confer on
another person, or solicits, accepts, or agrees to accept from another
person, any benefit as consideration for the recipient's decision, opinion,
recommendation, vote, or other exercise of discretion as a member or
employee of a committee.  Sets forth situations which are and are not a
defense to prosecution.  Defines "benefit."  Provides that an offense under
this section is a felony of the second degree. 

SECTION  11.  EMERGENCY.  Emergency clause.
    Effective date: 90 days after adjournment.



 COMPARISON OF ORIGINAL TO SUBSTITUTE

The substitute modifies the original bill by changing the caption from
"relating to state funding and agreements supporting the bids of certain
municipalities or counties to host the 2007 Pan American Games; providing a
penalty" to "relating to state and local funding and agreements supporting
the bids of certain municipalities or counties to host the 2007 Pan
American Games; providing a penalty." 

The substitute modifies the original bill by removing reference to
"qualified applicant" and replacing it with "local organizing committee"
throughout the bill. 

The substitute modifies the original bill in SECTION 1, by removing the
definitions of "participating municipality or county," "qualified
applicant," "regional games support authority," "site selection application
costs," and "site selection date," by adding new definitions of "joinder
agreement," "joinder undertaking," and "local organizing committee," by
redefining "site selection organization" to include the United States
Olympic Committee, and by making conforming changes. 

The substitute modifies the original bill in SECTION 2, by establishing the
purpose of this act as to provide assurance required by the site selection
organization sponsoring the games.  The original bill established the
purpose as to provide a method of limited financial support that the state
may provide to municipalities to assist in the preparation and submission
of the application and to provide financial support to the designated
municipality and to provide assurance to the site selection organization. 

The substitute modifies the original bill in SECTION 3 by providing an
additional legislative finding regarding job creation opportunities. 

The substitute modifies the original bill in SECTION 4, as follows:

SECTION 4.  New title: GUARANTEE OF STATE AND MUNICIPAL OBLIGATIONS; PAN
AMERICAN GAMES TRUST FUND.  (a)  Requires the specified incremental
increases in the receipts to be determined for each subsequent calender
quarter, rather than month.  Sets forth a new period of time within which
the comptroller is required to determine the specified incremental
increases in the receipts.  Specifies that the incremental increases are to
be applied to both state tax revenue and municipal sales and use tax
revenue, rather than only the state tax revenue.  Makes conforming and
nonsubstantive changes. 

(b)  Requires the comptroller, for the purposes of Subsection (a), to
designate as a market area for the games each area that meets the specified
descriptions.  Requires the comptroller to determine the geographic
boundaries of each market area.  Provides that the endorsing municipality
that has been selected as the site for the games must be included in a
market area for the games.  In the original bill, the geographic boundaries
of the marker area was required to be proposed by the qualified applicant
and approved by the department. 

(c)  New subsection.  Requires the comptroller, subject to Section 5 of
this Act and for the purpose of guaranteeing the joint obligations of the
state and the endorsing municipality under a games support contract and
this Act, to retain the amount of municipal sales and use tax revenue
determined under Subsection (a) from the amount otherwise required to be
sent to the municipality, beginning with the specified period. Requires the
comptroller to discontinue retaining municipal sales and use tax revenue on
the earlier of the two specified dates. 

(d)  New subsection.  Authorizes an endorsing municipality, in addition to
municipal sales and use tax revenue retained, to pledge surcharges from use
fees charges in connection with presentation of the game. 

(e)  Redesignated from Subsection (b) of the original bill.  Removing
references to "Pan American Games support fund" and replaces it with "Pan
American Games trust fund."  Provides that the fund is established outside
the treasury but is held in trust by the comptroller for the administration
of this Act.  Authorizes money in the fund to be spent by the department
without appropriation only as provided by the Act.  Requires the
comptroller to discontinue deposit of the amount of state tax revenue
determined under Subsection (a) on the earlier of the two specified dates.
The original bill only set forth one date for which the comptroller is
required to discontinue the deposits. 

(f)  New subsection.  Authorizes the endorsing municipality to deposit into
the fund any amount of available revenue from the municipality's hotel
occupancy tax.  Provides that deposit of that revenue into the fund is
considered an authorized use of the revenue. Requires the comptroller to
credit any amount of municipal hotel occupancy tax revenue deposited by the
endorsing municipality into the fund toward the amount otherwise required
to be retained from the municipality's sales and use tax revenue, and
requires the comptroller to reduce the amount of the municipality's sales
and use tax revenue retained from the next distribution of that revenue to
the municipality. 

(g)  Redesignated from Subsection (c) of the original bill.  Provides that
the obligation to the site selection organization is jointly held by the
state and the endorsing municipality. Makes conforming and nonsubstantive
changes. 

(h)  New subsection.  Requires a committee to provide information required
by the comptroller, including annual audited statements (statement) of the
committee's financial records required by a site selection organization and
data obtained by the committee relating to attendance at the games and to
the economic impacts of the games.  Provides that a committee must provide
a statement within four months of the end of the period covered by the
statement. 

(i)  New subsection.  Requires the comptroller to provide an estimate
before August 21, 1999, of the total amount that would be deposited in the
fund before January 1, 2008, of the games were to be held in this state at
a site selected pursuant to an application by a committee.  Requires the
comptroller to provide the estimate on request to a committee. Authorizes a
committee to submit the comptroller's estimate to a site selection
organization. 

(j)  New subsection.  Authorizes the department to make a disbursement from
the fund unless the comptroller certifies that the disbursement is for a
purpose for which the state and the endorsing municipality are jointly
obligated under a games support contract or other agreement described by
Subsection (g). 

(k)  New subsection.  Requires the obligation, if the comptroller certifies
that a disbursement may be made from the fund, to be satisfied first out of
municipal revenue deposited in the trust fund and then out of the state
revenue deposited in the trust fund. 

(l)  New subsection.  Requires the comptroller, on January 1, 2009, to
transfer to the general revenue fund any money remaining in the fund, not
exceeding the amount of state revenue remaining in the trust fund, plus any
interest earned on that state revenue. Requires the comptroller to remit to
the endorsing municipality any money remaining in the trust fund after the
required amount is transferred to the general revenue fund. 

(m)  New subsection.  Prohibits the amount deposited in the fund from
exceeding $20 million.  Prohibits the joint liability of the state and the
endorsing municipality under a joinder agreement and any other games
support contracts entered into pursuant to this Act from exceeding $20
million. 

The substitute modifies the original bill by adding a new SECTION 5
(Municipal Election).  For a complete analysis of SECTION 5, please see the
Section-by-Section Analysis portion of this document. 

The substitute modifies the original bill by redesignating SECTION 5 of the
original bill to SECTION 6, and amending SECTION 6, as follows: 
 
SECTION 6.  ASSISTANCE OF DEPARTMENT AND OTHER STATE AGENCIES.  (a)  Refers
to the games support contract that the department enters into as being
required by a site selection organization in connection with the
committee's bid to host the games.  The original bill refers to the games
support contract that the department enters into as a contract with the
qualified applicant. 

(b)  Provides for "other information reasonably requested by the department
to assist it in reviewing the request," in addition to other items, to
accompany the request.  Makes conforming changes. 

(c)  Makes no change.

(d)  New subsection.  Authorizes the department to agree in a joinder
undertaking entered into with a site selection organization that the
department will execute a joinder agreement and refrain from taking any
action after the execution of the joinder undertaking that would impair its
ability to execute the joinder agreement.  Deletes Subsection (d) of the
original bill, which relate to department approval of request, conditions
under which the department will enter into a games support contract. 
 
(e)  New subsection.  Authorizes the department to agree in a joinder
undertaking that the state will agree to perform the enumerated actions.
Deletes Subsection (e) of the original bill, which relate to terms of the
games support contract. 

(f)  New subsection.  Authorizes the department to agree to execute a
joinder undertaking, a joinder agreement, or other games support contract
only if the enumerated conditions apply. 

(g)  Redisignated from Subsection (f) of the original bill.  Provides that
before executing a games support contract, the department must execute an
agreement with the applicable local organizing committee requiring that if
a site selection organization selects a site for the games in this state
pursuant to an application by the committee, the committee will repay the
state any funds expended by the department under this Act from any surplus
of the committee's funds remaining after the presentation of the games and
after the payment of the expenses and obligations incurred by the
committee.  The original bill required the game support contract to
prescribe this requirement. 

(h)  Redesignated from Subsection (g) of the original bill.

(i)  New subsection.  Authorizes the department to required a committee to
list the state as an additional insured on any policy of insurance
purchased by the committee and required by a site selection organization to
be in effect in connection with the games. 

(j)  Redesignated from Subsection (h) of the original bill.  Makes
conforming changes. 

(k)  New subsection.  Prohibits the department, not withstanding any other
provision of this Act, from obligating the state to pay or otherwise
provide funds to cover the costs of the construction or purchase of a
building or other facility by a municipality. 

The substitute modifies the original bill by removing SECTIONS 6, 7, 8, and
9 of  the original bill, which created a regional games support authority,
set forth the powers of the participating municipality or county and the
regional games support authority, authorized the issuance of appropriate
bonds, and required the adoption of a set of ethical regulations for
participating entities. 

The substitute modifies the original bill by adding new SECTIONS 7
(Application of Open Meetings and Open Records Laws), 8 (Tax Exemptions for
Local Organizing Committee), 9 (Ethics) and 10 (Bribery).  For a complete
analysis of these new SECTIONS, please see the Section-by-Section Analysis
portion of this document. 

The substitute modifies the original bill by redesignating SECTION 10 (long
emergency clause) of the original bill as SECTION 11 (short emergency
clause).