HBA-JRA H.B. 2684 76(R)BILL ANALYSIS Office of House Bill AnalysisH.B. 2684 By: Coleman Ways & Means 7/22/1999 Enrolled BACKGROUND AND PURPOSE A tax increment reinvestment zone is a special district created by a local governmental entity to revitalize an area by using the tax increment generated by economic development to finance debt service on bonds used to revitalize the zone. H.B. 2684 authorizes board of directors of a reinvestment zone to authorize the governing body of the municipality of a reinvestment zone to exercise the powers of the municipality with respect to the administration, management, or operation of a zone. This bill also authorizes a taxing unit other than a school district to enter into tax abatement agreements with owners of property in a reinvestment zone. In addition, the bill further specifies the powers and duties of a local government corporation acting of behalf of local government. 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 311.004(a), Tax Code, to provide that the ordinance designating an area as a reinvestment zone must provide that the zone take effect immediately upon passage of the ordinance, rather than on January 1 of the year following the year in which the ordinance is adopted. SECTION 2. Amends Section 311.009, Tax Code, by adding Subsection (g), as follows: (g) Provides that a member of the board of directors of a reinvestment zone is not a public official by virtue of that position and, unless otherwise ineligible, is authorized to be appointed to serve concurrently on the board of directors of a local government corporation created under Subchapter D, Chapter 431, Transportation Code. SECTION 3. Amends Section 311.010, Tax Code, by amending Subsections (a) and (b) and adding Subsections (d)-(f), as follows: (a) Authorizes the governing body of the municipality that created the zone by ordinance or resolution to authorize, rather than delegate to, the board of directors of the reinvestment zone (board) to exercise any of the municipality's powers with respect to the administration, management, or operation of the zone or the implementation of the project plan for the zone, except that the governing body is prohibited from issuing bonds, imposing taxes or fees, exercising the power of eminent domain, or giving final approval to the project plan. (b) Authorizes the governing body of the municipality that creates a reinvestment zone to enter into agreements as it considers necessary or convenient to implement the project plan and reinvestment zone financing plan and achieve their purposes. Authorizes an agreement, during its term, to pledge, or otherwise provide for the use of revenue in the tax increment fund to pay any project costs, including project costs of buildings, schools, or other educational facilities owned by or on behalf of a school district, community college district, or other political subdivision of this state; railroad or transit facilities, affordable housing, the remediation of conditions of contaminate public or private land or buildings, the preservation of the facade of public or private buildings, or the demolition of public or private buildings. Authorizes an agreement to dedicate revenue from the tax increment fund to pay the costs of providing affordable housing or areas of public assembly in or out of the zone. (d) Authorizes the board to exercise any power granted to a municipality by Section 311.008, except that the municipality that created the reinvestment zone by ordinance or resolution is authorized to restrict any power granted the board by this chapter and the board is authorized to exercise a power granted to a municipality under Section 311.008(a)(2) only with the consent of the governing body of the municipality. (e) Authorizes the board to exercise any power granted to a board under this chapter after the governing body of a municipality by ordinance creates a reinvestment zone. (f) Authorizes the board and the governing body of the municipality to enter into a contract with a local government corporation to manage the reinvestment zone or implement the project plan and reinvestment zone financing plan for the term of the agreement. Defines "local government corporation" in this subsection. SECTION 4. Amends Section 311.011(f), Tax Code, by amending Subsection (f) and adding Subsection (g), as follows: (f) Deletes the provision that the project plan of a county with a population of more than 2.1 million must exempt at least one third of the surface area of the zone, excluding certain roadways and public areas, from ad valorem taxation and be dedicated to residential housing. Provides that at least one-third of the tax increment must be used, rather than dedicated, to provide affordable, rather than low-income, housing. (g) Provides that an amendment to the project plan or the reinvestment zone financing plan for a zone that increases the amount of the tax increment to be contributed by a school district or requires or authorizes the municipality creating the zone to issue additional tax increment bonds or notes does not apply to the school district unless the governing body of the school district approves the amendment by official action. SECTION 5. Amends Section 311.012, Tax Code, to make conforming changes. SECTION 6. Amends Chapter 311, Tax Code, by adding Section 311.0125, as follows: Sec. 311.0125. TAX ABATEMENT AGREEMENTS. (a) Authorizes a taxing unit other than a school district to enter into a tax abatement agreement with an owner of real or personal property in a reinvestment zone, regardless of whether the taxing unit deposits or agrees to deposit any portion of its tax increment into the tax increment fund, notwithstanding any provision in this chapter to the contrary. (b) Provides that an agreement to abate taxes on real property in a reinvestment zone, to be effective, must be approved by the board of directors of the reinvestment zone and the governing body of each taxing unit that imposes taxes on real property in the reinvestment zone and deposits or agrees to deposit any of its tax increment into the tax increment fund for the zone. (c) Authorizes the board to covenant that the board will not approve a tax abatement agreement that applies to real property in that zone in any contract entered into by the board of directors of a reinvestment zone in connection with bonds or other obligations. (d) Provides that, if a taxing unit enters into a tax abatement agreement authorized by this section, taxes that are abated under that agreement are not considered taxes to be imposed or produced by that taxing unit in calculating the amount of the tax increment of that taxing unit or that taxing unit's deposit to the tax increment fund for the reinvestment zone. SECTION 7. Amends Section 311.013, Tax Code, by amending Subsections (b), (f), (g), (h), and (i) and adding Subsections (j) and (k), as follows: (b) Makes a conforming change. (f) Deletes existing subsection authorizing a taxing unit to determine the amount of tax retained by the unit and prohibiting the unit from decreasing the portion of the tax dedicated to a reinvestment zone after the project plan is approved. Redesignated from existing Subsection (g). (g) Makes this subsection subject to the provisions of Section 311.0125. Redesignated from existing Subsection (h). (h) Makes conforming changes. Redesignated from existing Subsection (i). (i) Provides that, notwithstanding Subsection (c), a taxing unit is not required to pay into a tax increment fund the applicable portion of a tax increment attributable to delinquent taxes until those taxes are collected. (j) Provides that Section 26.05(f) does not prohibit a taxing unit from depositing all of the tax increment produced by the taxing unit in a reinvestment zone into the tax increment fund for that zone. (k) Provides that a school district is not required to pay into the tax increment fund any of its tax increment produced from property located in an area added to the reinvestment zone under Section 311.007(a) or (b) unless the governing body of the school district enters into an agreement to do so with the municipality that created the zone. Authorizes a school district to enter into such an agreement at any time before or after the zone is created or enlarged. Sets forth the requirements for such an agreement. SECTION 8. Amends Chapter 311, Tax Code, by adding Section 311.018, as follows: Sec. 311.018. CONFLICTS WITH MUNICIPAL CHARTER. Provides that this chapter controls in a conflict between this chapter and a municipal charter. SECTION 9. Reenacts and amends Section 403.302(d), Government Code, as amended by Chapters 1039, 1040, and 1071, Acts of the 75th Legislature, Regular Session, 1997, to redefine "taxable value." SECTION 10. Amends Sections 403.302(e)-(g), Government Code, as follows: (e) Prohibits the total dollar amount deducted yearly in a reinvestment zone created after January 1, 1999, from exceeding the captured appraised value estimated for that year in the approved reinvestment zone financing plan before September 1, 1999. Limits the number of years for which the total dollar amount may be deducted for any zone, regardless of when it was created, to the duration of the zone as specified in the approved reinvestment zone financing plan before September 1, 1999. Prohibits the total dollar amount deducted from being increased by any plan amendments that occur after August 31, 1999, or by a change in the portion of the tax increment retained by the school district after August 31, 1999. (f) Redesignated from existing Subsection (e). (g) Redesignated from existing Subsection (f). (h) Redesignated from existing Subsection (g). SECTION 11. Amends Section 403.303(a), Transportation Code, to make conforming changes. SECTION 12. Amends Section 431.101, Transportation Code, as follows: Sec. 431.101. CREATION OF LOCAL GOVERNMENT CORPORATION. (a) Authorizes a local government corporation to be created to aid and act on behalf of one or more local governments to accomplish any governmental purpose of those local governments. Provides that, to be effective, the articles of incorporation and the bylaws of a local government corporation must be approved by ordinance, resolution, or order adopted by the governing body of each local government that the corporation is created to aid and act on behalf of. (b) Makes no change. (c) Provides that the provisions of Article 1396-1.01 et seq., V.T.C.S. (Texas Non-Profit Corporation Act) relating to powers, standards of conduct, and interests in contracts apply to the directors and officers of the local government corporation. (d) Provides that a provision of this chapter relating to the creation, dissolution, administration, or supervision of a corporation by the Texas Transportation Commission does not apply to a local government corporation. (e) Provides that Section 394.904(a), Local Government Code, applies to property and improvements owned by a local government corporation. Provides that Section 394.904(b) of that code applies to each contract awarded by the local government corporation. (f) Provides that a member of the board of directors of a local government corporation is not a public official by virtue of that position and, unless otherwise ineligible, may be appointed to serve concurrently on the board of directors of a reinvestment zone created under Chapter 311, Tax Code. SECTION 13. Amends Section 431.102(c), Transportation Code, by adding Subsection (c), as follows: (c) Prohibits the requirement of Section 394.021(a), Local Government Code, that all directors must be residents of the local government, from applying to directors of a local government corporation except that a person is prohibited from being appointed to the board of a local government corporation if the appointment of that person would result in less than a majority of the board members being residents of the local government. SECTION 14. Repealer: Section 311.003(h), Tax Code, which authorized the board of directors of the reinvestment zone to exercise any of the municipality's power with respect to the administration, management, and operation of the zone or the implementation of the project plan and reinvestment zone financing plan, with certain exceptions. SECTION 15. Provides that nothing in this Act is intended to prohibit a member of a governing body of a taxing unit that levies taxes on real property in the reinvestment zone from serving as a member of the board of directors of a reinvestment zone. Makes application of this Act prospective. SECTION 16.Emergency clause. Effective date: upon passage.