HBA-NLM S.B. 1807 76(R) BILL ANALYSIS Office of House Bill AnalysisS.B. 1807 By: Bernsen County Affairs 5/7/1999 Engrossed BACKGROUND AND PURPOSE Under Chapter 375, Local Government Code, the Town Center Improvement District of Montgomery County (district) is a special district with certain powers and authority to encourage and promote economic development and business activity within and adjacent to the downtown area of The Woodlands, in Montgomery County. S.B. 1807 broadens and strengthens the powers and financial capabilities of the district. In addition, this bill sets forth provisions for promoting economic development in the district. 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. Amends Section 2, Chapter 289, Acts of the 73rd Legislature, Regular Session, 1993, to define "impact area." Makes a conforming change. SECTION 2. Amends Section 7, Chapter 289, Acts of the 73rd Legislature, Regular Session, 1993, as follows: (a) Provides that the board of directors (board) of the Town Center Improvement District of Montgomery County (district) has the powers provided by this section, in addition to the general powers set forth in Section 6 of this Act. (b) Authorizes the board to levy, assess, and apply the proceeds from the limited sales and use taxes authorized by Section 11 of this Act for authorized purposes, consistent with constitutional limitations and to apply an annual average of no less than 10 percent of the net proceeds of the taxes collected under Section 11 of this Act, toward mitigation of the net negative impact of development within the district on the impact area, rather than adjacent area. Provides that direct expenditures made for the district or the impact area are allocable to each area for which the expenditure was made. Provides that expenditures for the general welfare, promotion, or benefit of the district and impact area are allocable between the district and the impact area in the amount, as determined by the board, that is proportionate to the benefit conferred on each area. (c) Makes a conforming change. (d) Authorizes the board to add or exclude territory in the manner provided by Subchapter J, Chapter 49, and Section 54.016, Water Code, except that for purposes of this subsection, a reference in that section to a tax means an ad valorem tax only, and Section 42.042, Local Government Code, and Section 54.016, Water Code, to apply only with respect to the consent of a municipality with a population of 25,000 or less and do not apply to the annexation of land restricted primarily to commercial or business use. (e)-(j) Makes conforming changes. (k) Provides that the district may not employ peace officers, but may contract for off-duty peace officers to provide public safety and security services in connection with a special event, holiday, period with high traffic congestion, or similar circumstance. (l) Makes conforming changes. (m) Authorizes the board to exercise the economic development powers and authority that Chapter 380, Local Government Code, and Article 835s, V.T.C.S., provide to a municipality with a population of more than 100,000. (n) Authorizes the board, by rule, to regulate the private use of public roadways, open spaces, parks, sidewalks, and similar public areas. Provides that to the extent the rules of the district conflict with a rule, order, ordinance, or regulation of a county or municipality with jurisdiction in the district's territory, the rule, or order, ordinance, or regulation of the county or municipality controls. Authorizes the rules to provide for the safe and orderly use of public roadways, open spaces, parks, sidewalks, and similar public areas or facilities. (o) Authorizes the board to require a permit for a parade, demonstration, celebration, entertainment event, or similar nongovernmental activity in or on the public roadways, open spaces, parks, sidewalks, and similar public areas or facilities. Authorizes the board to charge a fee for the permit application and for public safety or security services in an amount the board considers necessary. (p) Authorizes the board to require a permit or franchise agreement with a vendor, concessionaire, exhibitor, or similar private or commercial person or organization of the limited use of the area or facilities on terms and conditions and on payment of a permit or franchise fee the board may impose. (q) Authorizes the board to employ and establish the terms of employment and compensation of a president, vice-president, executive director, general manager, and any other operating officer of the district the board considers necessary. SECTION 3. Amends Sections 8(a)-(e), and (g), Chapter 289, Acts of the 73rd Legislature, Regular Session, 1993, as follows: (a) Provides that the district is governed by a board composed of 11 directors elected or appointed as provided by Subsection (c) of this section. Provides that directors serve staggered terms of fours years. (b)(1) Sets forth qualifications for a person to serve as a director, except as otherwise provided by this subsection, rather than Subdivisions (2) and (3). (2) Requires a person to be a resident of the city making the appointment, to be eligible for appointment under Subsection (c)(1) or (c)(2), rather than Subsection (c)(1)(F) or (c)(1)(G), of this section. (3) Provides that a person must be a resident described by this subsection and a resident of any county commissioners precinct that includes all or any portion of the boundaries of the district or impact area, to be eligible for appointment under Subsection (c)(3) of this section. (4) Requires a person to be a member of The Woodlands Community Association, Inc., to be eligible for appointment under Subsection (c)(4), rather than Subsection (c)(1)(H) of this section. (5) Requires a person to be a member of The Woodlands Association, Inc., to be eligible for appointment under Subsection (c)(5) of this section. (6) Requires a person to be a member of The Woodlands Commercial Owners Association, to be eligible for appointment under Subsection (c)(6) of this section. (7) Provides that notwithstanding any other provision of this subsection, no more than three members of the board at any time may be agents, employees, officers, or directors of a single individual, corporation, trust, or partnership that owns or leases real property described by Subdivision (1)(B), (C), (D), (E), or (F) of this subsection, regardless of whether the member is elected or appointed under this section. Provides that any person filing a ballot or write-in candidate's application or any person who is to be appointed to the board, whose election or appointment, at the time of filing or appointment, would cause the limitation of this subdivision to be violated, is ineligible for election or appointment. (c) Includes on the board of directors one individual appointed by the commissioners court of the county in which the majority of the district's territory is located, one individual appointed by the board of directors of The Woodlands Association, Inc., one individual appointed by the board of directors of The Woodlands Commercial Owners Association, and five individuals elected by the voters of the district at large, in addition to individuals appointed by three other entities. (d) Provides that directors serve until their successors have been elected or appointed and have qualified. (e) Requires a vacancy in the office of director to be filled by appointment of a qualified individual by a majority vote of the remaining directors, except that if the number of directors for any reason is less than six, rather than five, on petition of a resident of or owner of real property in the district, the commission shall appoint the required number of qualified individuals to fill the vacancies. (g) Requires appointed or elected directors to organize or reorganize by electing a chairman, rather than president, a vice chairman, rather than vice-president, a secretary, and any other officers of the board as the board considers necessary. SECTION 4. Amends Sections 11(e) and (i), Chapter 289, Acts of the 73rd Legislature, Regular Session, 1993, to provide that a tax imposed under this Act or the repeal or reduction of a tax under this Act takes effect on the first day of the calendar quarter, rather than on October 1 after the expiration of the first complete calendar quarter. Deletes text regarding a reduction of the district's sales and use tax and an ordinance. SECTION 5. Amends Chapter 289, Acts of the 73rd Legislature, Regular Session, 1993, by adding Section 11C, as follows: Sec. 11C. ECONOMIC DEVELOPMENT ZONES. (a) Defines "development zone," "governing body," "initial development," and "substantial redevelopment." (b) Provides that the board, on its own motion, or upon receipt of a petition signed by the owners of all real property in a defined area of the district, by resolution may create, designate, describe, assign a name to, and appoint the governing body for a development zone in the district to promote initial development or substantial redevelopment of the area, if the board finds that the creation of a zone will further certain public purposes. (c) Provides that the board, before designating a development zone, must prepare a preliminary financing plan for such a zone to include certain information. (d) Requires the board to call and hold a public hearing on the creation of the zone in the manner provided by Section 311.003, Tax Code, for reinvestment zones designated by a municipality, before designating a development zone on its own motion or, if ad valorem taxes are to be used, in whole or in part, for the payment of improvement project costs in a development zone to be designated in response to a landowner petition. (e) Prohibits a development zone from being created, if more than 10 percent of the property in the proposed zone, other than property that is publicly owned, is used or planned for use for residential purposes. Provides that for purposes of this section, property is used for residential purposes if the property occupied by a house that has fewer than five living units. (f) Sets forth requirements for a resolution designating an area as a development zone. (g) Requires members of the governing body to be appointed for a term of two years, except for the initial members of the governing body, some of whose terms may be limited to one year in order to achieve staggered terms of office. Requires the district by appointment to fill a vacancy on the governing body of the zone for the unexpired term. (h) Requires a member of a governing body to be at least 18 years of age, a citizen of the state, and a person described in Subsection 8(b) of this Act. Authorizes a member of the board of directors of the district to be appointed to the governing body. Requires each member to qualify for office by subscribing to the constitutional oath of office for public officers and furnishing a fidelity bond issued by a responsible surety in the amount of $10,000 in favor of the development zone to secure faithful performance of the member's duties. (i) Requires the governing body of the development zone to meet and organize by electing a president, a vice-president, a secretary/treasurer, and other officers the governing body considers appropriate, following appointment and qualifications. (j) Authorizes the boundaries of a development zone to be reduced or enlarged in the manner provided by this section for creation of a zone. (k) Provides that a development zone created by the district under this section is a body politic and corporate and a political subdivision of the state, separate from the district. Provides that the district and the development zone have the same power and authority to carry out this section as Section 311.008, Tax Code, provides a municipality to carry out Chapter 311, Tax Code. Authorizes the board by order to delegate, subject in whole or in part to final approval by the board of directors, any powers and duties relating to the financing and implementation of the project plan for the zone, including the power and authority to impose certain taxes, in addition to the powers granted to the governing body by this section. (l) Authorizes the board and the governing body to each enter into an agreement considered necessary or convenient to implement a project plan and development zone financing plan and achieve their purposes. Authorizes an agreement to provide for the regulation or restriction of the use of land by imposing conditions, restrictions, or covenants that run with the land. Authorizes an agreement to dedicate revenue from the tax increment fund to pay project costs and to provide that a restriction adopted by the governing body continues in effect after the termination of the zone. Authorizes the district and the development zone to agree that the district will provide administration, management, investment, accounting, and other services for the zone in consideration for the benefits received by the district through the implementation of the project plan for the zone. (m) Requires the governing body to prepare and adopt, and authorizes the governing body to amend, a project plan and a development zone financing plan for the development zone containing generally the information and estimates described by Section 311.011, Tax Code, with respect to reinvestment zones, together with an estimate of total and incremental sales and use taxes to be derived from the zone, subject to approval by resolution of the board. Authorizes the amendment to be adopted only after a public hearing meeting the procedural requirements of this section for a meeting on the creation of a development zone has been held, if a plan amendment reduces or increases the geographic area of the zone, increases the amount of bonded indebtedness to be incurred, creates or changes a tax increment to be contributed by a taxing unit, or increases the total estimated project costs. (n) Requires the provisions of Sections 311.012 and 311.013, Tax Code, to apply to the development zone as if the zone were a taxing unit under those sections and to the governing body as if the governing body were the governing body of a taxing unit under those sections, if the financing plan adopted by the governing body of the development zone uses ad valorem taxes, in whole or part, for payment of project costs. (o) Authorizes the district to adopt or repeal for the use and benefit of one or more development zones created by the district before or after the election an incremental sales and use tax of no more than one percent, if approved at an election by a majority of the qualified voters voting in an election called and held for that purpose. Authorizes an election on the adoption or repeal of the maximum rate of incremental sales and use tax to be called and held by the board as provided by Section 11 of this Act for an election on the adoption of the limited sales and use tax authorized by Section 11. Authorizes the governing body to impose, assess, and collect all or any portion of the incremental sales and use tax, in increments of no less than one-eight of one-percent, for the benefit of the zone, by order of the governing body, after adoption at an election, to the extent the district has delegated the authority to the zone. Provides that the incremental sales and use tax is in addition to the limited sales and use tax authorized and imposed, assessed, and collected by the district under Section 11 of this Act. Requires the incremental sales and use tax to become effective on the first day of the calendar quarter following the date the comptroller receives written notice of the imposition of the tax and to be paid into the tax increment fund for the development zone. (p) Provides that Sections 311.002 and 311.014-31.017, Tax Code, apply to the district, except for certain purposes. SECTION 6. Amends Sections 12A(a) and (c), Chapter 289, Acts of the 73rd Legislature, Regular Session, 1993, to authorize the board of the district to issue bonds in the manner provided by Subchapter J, Chapter 375, Local Government Code. Provides that Sections 375.207 and 375.208, Local Government Code, do not apply to bonds issued by the district under this Act. Deletes text regarding repayments to the district by a municipality. SECTION 7. Amends Section 13, Chapter 289, Acts of the 73rd Legislature, Regular Session, 1993, to authorize the district and a municipality any part of which is located in the boundaries of the district or impact area of the district to enter into and carry out interlocal agreements for the accomplishment of an improvement project or the provision of a facility, a service, or equipment by the district in or for the benefit of the municipality. Provides that notwithstanding any other law, payment for the improvement project, facility, service, or equipment may be made or pledged by the municipality to the district out of any money the municipality collects under Chapter 351, Tax Code, or out of any other available money. Makes a conforming change. SECTION 8. Repealer: Section 11(h), Chapter 289, Acts of the 73rd Legislature, Regular Session, 1993 (annexation or incorporation of a district into a municipality). SECTION 9. Requires the additional directors authorized by this Act to be appointed and qualified as soon as practicable after the effective date of this Act. Requires one of the additional directors to serve for a term ending on the first Saturday in May 2000, and the remaining two additional directors to serve for a term ending on the first Saturday in May 2002, as determined by the board by lot or by mutual agreement. Provides that nothing in this Act shall be deemed or construed to affect the terms of office of the existing directors. SECTION 10. (a) Provides that the proper and 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 required persons and entities. (b) Provides that the Texas Natural Resource Conservation Commission has filed its recommendations to specified persons within the required time. (c) Provides that all requirements and procedures are fulfilled and accomplished. SECTION 11. Emergency clause. Effective date: upon passage.