HBA-TYH H.B. 3161 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 3161 By: Dunnam Economic Development 4/7/1999 Introduced BACKGROUND AND PURPOSE Chapter 2310, Government Code, provides for special assistance to local communities which have experienced the closing of a Department of Defense military base or facility. This chapter provides for the creation of a defense economic readjustment zone (DERZ) wherein approved projects are eligible for special benefits, exemptions from regulations, and certain incentives. The designation of an area as DERZ also qualifies the area as a reinvestment zone for tax increment financing and tax abatement purposes. The overall purpose of DERZ designation is to encourage economic redevelopment to offset the impact to the local economy when a military base closes. The incentives created by Chapter 2310 are intended to assist communities attempting to attract new business enterprises. Under the present system, a business may approach a city (or vice versa) regarding the construction of an industrial or business facility on city property located on a former military base. If the city has obtained a DERZ designation, special benefits are available through the city to the industrial prospect. In order to determine whether it wants to locate on the property, the business will discuss and negotiate available incentives with the city. Normally, the business and the city would then enter into a contract containing the agreements regarding incentives. However, Section 272.001, Local Government Code, requires a city to sell its land by a competitive bidding process. A city which has entered into long negotiations with an industrial prospect is then required to sell the land which the prospect wishes to purchase through a competitive bidding process. This may result in the land being sold to a completely different entity, which has made no commitment to the city regarding the type of development to be placed on the property or the number of persons to be employed. Additionally, few industrial prospects are willing to purchase the property at a competitive bidding process before the negotiation of incentives. This situation creates an obstacle to economic development on former defense bases and makes negotiation of economic development agreements awkward. H.B. 3161 authorizes buildings or cityowned land located in a readjustment zone to be sold without notice or bidding if the sale satisfies the criteria and public purpose designated by the governing body in an ordinance. 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 2310.410, Government Code, to authorize the state, a municipality, or a county that owns a surplus building or vacant land in the zone, after an area is designated as a readjustment zone, to dispose of the building or land by selling the building or land without notice or bidding. Authorizes the building or land, if the surplus building or vacant land is sold at a public auction, to be sold to a buyer who is not the highest bidder if the criteria and public purpose specified in the ordinance or order adopted under this section are satisfied. Authorizes the surplus building or vacant land to be sold without complying with notice or bidding requirements if the criteria and public purpose specified in the ordinance or order adopted under this section are satisfied. Deletes text authorizing the building or land to be sold to a buyer who is not the highest bidder under certain conditions. Makes conforming changes. SECTION 2. Emergency clause. Effective date: upon passage.