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.