HBA-JEK C.S.H.B. 2040 77(R)BILL ANALYSIS Office of House Bill AnalysisC.S.H.B. 2040 By: Hawley State, Federal & International Relations 4/5/2001 Committee Report (Substituted) BACKGROUND AND PURPOSE Several Texas communities have faced the closure or realignment of a federal military base in recent years. In an effort to deal with the impact on their communities, some communities have created redevelopment authorities to focus on replacing the jobs and capital lost due to the military base closure. The 76th Legislature passed legislation to enable municipalities to create defense base development authorities (authority). San Antonio formed such an authority to deal with the closure of Kelly Air Force Base (Kelly AFB). When Beeville, a city of approximately 13,500 people, faced the closure of Chase Naval Air Station, the city formed a development corporation under the Development Corporation Act of 1979. However, the Development Corporation Act has not been a perfect fit for Beeville's needs, and legal counsel has advised Beeville to reorganize its redevelopment efforts under defense base development authorities which assisted San Antonio after the closure of Kelly AFB. C.S.H.B. 2040 modifies provisions relating to defense base development authorities for a municipality of 50,000 or less. 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. ANALYSIS C.S.H.B. 2040 amends provisions of the Local Government Code regarding certain defense base development authorities (authority). Existing provisions governing bond issuance and utilities conveyed by the United States now apply only to an authority created by a municipality with a population of 50,000 or more. The bill authorizes an authority created by a municipality with a population of less than 50,000 (smaller authority) to own an electric, sewer service, or water supply utility and to sell those utility services to a person who leases real property from the authority. The bill sets forth composition requirements for the board of directors of a smaller authority and authorizes the entity that appoints a board member to remove the member by adopting an appropriate resolution or order. C.S.H.B. 2040 sets forth separate provisions for the dissolution of an authority that was created by a municipality of 50,000 or more and an authority that was created by a municipality of less than 50,000. The bill authorizes the dissolution of a less populous authority by order or resolution of the governing body of the municipality that established the authority, the county, and each junior college in the county. The bill specifies that the sale or transfer of real property, the election or appointment of an official who took office before the effective date of this Act, and an act or proceeding including those relating to a bond or other obligation or incorporation taken before March 1, 2001, by a defense base development corporation are validated and confirmed as of the dates these actions occurred. This provision does not apply to an act, proceeding, bond, obligation, election, or appointment that is under litigation for its validity or an act or proceeding that has been held invalid by final court judgment, was void under state law at the time of its occurrence, or was a misdemeanor or felony at the time of its occurrence. EFFECTIVE DATE On passage, or if the Act does not receive the necessary vote, the Act takes effect September 1, 2001. COMPARISON OF ORIGINAL TO SUBSTITUTE C.S.H.B. 2040 differs from the original bill by removing the provision that authorized any authority to issue a certificate of obligation and the provision that authorized only an authority created by a municipality with a population of 50,000 or more to issue bonds. The substitute provides for an 11 or 14 member board of directors of a smaller authority rather than a nine member board. The substitute sets forth separate provisions for the dissolution of an authority that was created by a municipality of 50,000 or more and an authority that was created by a municipality of less than 50,000, and authorizes the dissolution of a less populous authority by order or resolution of the governing body of the municipality that established the authority, the county, and, any junior colleges in the county.