HBA-TYH H.B. 3029 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 3029 By: Oliveira Economic Development 4/12/1999 Introduced BACKGROUND AND PURPOSE The sales tax for economic development has been an effective tool used by cities throughout the state to promote economic development. Although authorization for the local option tax has been in effect only since 1989, over 378 cities have levied an economic development sales tax. The cities that have voted to adopt this tax have cumulatively raised in excess of $200 million dollars annually, which is dedicated to the promotion of local economic development. The purpose of this bill is to clarify and strengthen the Development Corporation Act of 1979. H.B. 3029 redefines "project" to include targeted infrastructure and improvements to promote new and expanded business development, job creation and retention, job training, and educational facilities. This bill provides that the costs of a publicly owned and operated project that is purchased or constructed under this section include the maintenance and operating costs of the project. This bill allows the public to petition for the dissolution of, reduction in, or increase in the rate of a sales and use tax. This bill also exempts the projects from property taxation by local tax units. 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(10), Article 5190.6, V.T.C.S. (Development Corporation Act of 1979), by redefining "project" to include targeted infrastructure and improvements to promote new and expanded business development, job creation and retention, job training, and educational facilities. SECTION 2. Amends Section 4A, Artcle 5190.6, V.T.C.S.(Development Corporation Act of 1979), by adding Subsection (c-1), as follows: (c-1) Provides that the costs of a publicly owned and operated project that is purchased or constructed under this section include the maintenance and operating costs of the project. Authorizes the proceeds of taxes imposed under this section to be used to pay the maintenance and operating costs of a project, unless within 60 days of the date notice of this specific use of the tax proceeds is first published, the governing body of the city receives a petition from more than 10 percent of the registered voters of the city requesting that an election be held before the tax proceeds may be used to pay the maintenance and operating costs of a project. SECTION 3. Amends Section 4B, Article 5190.6, V.T.C.S. (Development Corporation Act of 1979), by adding Subsection (e-1) and amending Subsection (i), as follows: (e-1) Provides that in a city in which a sales and use tax for the benefit of a corporation has been imposed under this section, in the same manner and by the same procedure, the city by majority vote of the qualified voters of the city voting at an election called and held for the purpose is authorized to reduce or increase the tax. Authorizes the rate to be reduced in one or more increments of one-eighth of one percent to a minimum of one-eighth of one percent or increased in one or more increments of one-eighth of one percent to a maximum of one-half of one percent. Requires the governing body of the city, on petition of 10 percent or more of the registered voters of the city requesting an election on the increase or reduction of the tax under this section, to order an election on the issue. Requires the ballot, in an election to increase or reduce the tax under this section, to be printed to provide for voting for or against the proposition. Sets forth the specific language to be placed on the ballot. (i) Requires the governing body, on petition of 10 percent or more of the registered voters of the city requesting an election on the dissolution of the corporation, to order an election on the issue at the next available uniform election date that is within 45 days of the date on which the petition is filed. Provides that the election must be conducted according to the applicable provisions of the Election Code. Requires the ballot for the election to be printed to provide for voting for or against the proposition: "Dissolution of the ___________________ (name of the corporation)." Requires the corporation, if a majority of voters voting on the issue approve the dissolution, to continue operations only as necessary to pay the principal of and interest on its bonds and to meet obligations incurred before the date of the election and, to the extent practicable, to dispose of its assets and apply the proceeds to satisfy those obligations. Requires any remaining assets of the corporation, when the last of the obligations is satisfied, to be transferred to the city, and provides that the corporation is dissolved. Prohibits a tax, rather than a sales and use tax, imposed under this section from being collected after the last day of the first calendar quarter beginning, rather than occurring, after notification to the comptroller by the corporation that the last of its obligations is satisfied. Deletes text providing that certain bonds and obligations have been set aside in a trust account dedicated to the payment of the bonds and other obligations. SECTION 4. Amends Article 5190.6, V.T.C.S.(Development Corporation Act of 1979), by adding Section 4D, as follows: Sec. 4D. Provides that the legislature finds for all constitutional and statutory purposes that projects are owned, used, and held for public purposes for and on behalf of the eligible city incorporating the corporation, and that Section 23(b) (Powers of Corporation) of this article and Section 25.07(a) (Leasehold and Other Possessory Interests in Exempt Property), Tax Code, are not applicable to leasehold or other possessory interests granted by the corporation during the period projects are owned by the corporation on behalf of the eligible city. Provides that projects are exempt from taxation under Section 11.11 (Public Property), Tax Code, for that period. SECTION 5. Effective date: September 1, 1999. SECTION 6. Emergency clause.