HBA-TYH, ATS H.B. 3799 76(R)BILL ANALYSIS Office of House Bill AnalysisH.B. 3799 By: Coleman County Affairs 7/22/1999 Enrolled BACKGROUND AND PURPOSE Prior to the 76th Legislature, no entity existed to help improve economic development opportunities in the east downtown and Chinatown areas of Houston. H.B. 3799 establishes a special district to be known as the "East Downtown Management District." Under this bill, the district is governed by a board of 17 directors who serve staggered four-year terms. The district has the power to own, operate, acquire, construct, lease, improve, and maintain projects and to levy certain taxes. However, a majority of the directors serving must vote for the imposition of a tax, assessment, or impact fee. The district is prohibited from exercising the power of eminent domain. Under this bill, the district is authorized to issue bonds or other obligations payable in whole or in part from ad valorem taxes, assessments, impact fees, revenues, grants, or other money of the district, or any combination of those sources of money, to pay for any authorized purpose of the district. However, the district must first obtain the municipality's approval of the issuance of bonds for an improvement project. Although the board is authorized to impose and collect an assessment, the district is prohibited from imposing a tax, impact fee, or assessment on a residential property or condominium, or on the property, equipment, or facilities of a utility. Before the district imposes a maintenance tax or issues bonds payable from ad valorem taxes or assessments it must first obtain voter approval. This district if also authorized to annex territory under certain conditions. 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 Chapter 376, Local Government Code, by adding Subchapter H, as follows: SUBCHAPTER H. EAST DOWNTOWN MANAGEMENT DISTRICT Sec. 376.301. CREATION OF DISTRICT. Establishes a special district to be known as the "East Downtown Management District." Authorizes the name of the district to be changed by resolution of the board of directors of the district (board). Specifies that the creation of the district is essential to accomplish the purposes of Section 52 (Counties, Cities or Other Political Corporations or Subdivisions; Lending Credit; Grants; Bonds) and 52-a (Loan or Grant of Public Money for Economical Development), Article III, and Section 59 (Conservation and Development of Natural Resources; Conservation and Reclamation Districts), Article XVI, Texas Constitution. Sec. 376.302. DECLARATION OF INTENT. Sets forth the intent of the legislature relating to the creation of the district. Sec. 376.303. DEFINITIONS. Defines "board," "county," "district," "municipality," and "utility." Sec. 376.304. BOUNDARIES. Describes the territory encompassed by the district. Sec. 376.305. FINDINGS RELATING TO BOUNDARIES. Sets forth the findings of the legislature relating to the boundaries. Sec. 376.306. FINDINGS OF BENEFIT AND PUBLIC PURPOSE. Sets forth the findings of the legislature relating to public benefit and purpose. Provides that the district will not act as the agent or instrumentality of any private interest even though many private interests will be benefitted by the district, as will the general public. Sec. 376.307. APPLICATION OF OTHER LAW. Applies Chapter 375 (Municipal Management Districts in General) to the district and its governing body and employees, except as otherwise provided by this subchapter. Sec. 376.308. CONSTRUCTION OF SUBCHAPTER. Requires this subchapter to be liberally construed in conformity with the legislative findings and purposes stated in this subchapter. Sec. 376.309. BOARD OF DIRECTORS IN GENERAL. (a) Provides that the district is governed by a board of 17 directors who serve staggered four-year terms. Authorizes the board to increase or decrease the number of directors by resolution, provided that it is in the best interest of the district to do so and that the board consists of not fewer than 9 and not more than 30 directors. (b) Applies Subchapter D (Administrative Provisions; Board of Directors), Chapter 375, to the board to the extent that subchapter does not conflict with this subchapter. Specifies that the imposition of a tax, assessment, or impact fee requires a vote of a majority of the directors serving. Authorizes directors to vote on any matter authorized by Subchapter D, Chapter 375. Authorizes action to be taken by the board only if it is approved in the manner prescribed by Subchapter D, Chapter 375. Sec. 376.310. APPOINTMENT OF DIRECTORS; VACANCY. Requires the mayor and members of the municipality's governing body to appoint directors from persons recommended by the board who meet the qualifications of Subchapter D, Chapter 375. Requires a vacancy in the office of director because of the death, resignation, or removal of a director to be filled by the remaining members of the board by appointing a qualified person for the unexpired term. Sec. 376.311. POWERS OF DISTRICT. Establishes that the district has all powers necessary or required to accomplish the purposes for which the district was created. Specifies that the district has the rights, powers, privileges, authority, and functions of a district created under Chapter 375. Specifies that the district has the powers conferred on a corporation under Section 4B, Article 5190.6, V.T.C.S. (Development Corporation Act of 1979). Sets forth that the district has the power to own, operate, acquire, construct, lease, improve, and maintain projects. Provides that the district has the power to levy certain taxes and correct, add to, or delete assessments from its assessment rolls after notice and hearing as provided by Subchapter F (Assessments), Chapter 375. Provides that the district has the powers given to a housing finance corporation created under Chapter 394 (Housing Finance Corporations in Municipalities and Counties) to provide housing or residential development projects in the district. Sec. 376.312. EMINENT DOMAIN. Prohibits the district from exercising the power of eminent domain. Sec. 376.3125. EX OFFICIO BOARD MEMBERS. (a) Requires the following persons to serve as nonvoting ex officio directors: _the director of the following departments of the municipality: parks and recreation; planning and development; public works; and civic center; _the municipality's chief of police; _the general manager of the Metropolitan Transit Authority; and _the presidents of any institutions of higher learning located in the district. (b) Provides that if a department described by Subsection (a) is consolidated, renamed, or changed, the board is authorized to appoint a director of the consolidated, renamed, or changed department as a nonvoting ex officio board member. Provides that if a department described by Subsection (a) is abolished, the board is authorized to appoint a representative of another department of the municipality that performs duties comparable to those performed by the abolished department. (c) Authorizes the board to appoint the presiding officer of a nonprofit corporation that is actively involved in activities in the municipality's midtown area to serve as a nonvoting ex officio director. Sec. 376.3128. CONFLICTS OF INTEREST; ONE-TIME AFFIDAVIT. (a) Authorizes a director to participate in all board votes and decisions and provides that Chapter 171 (Regulation of Conflicts of Interest of Officers of Municipalities, Counties, and Certain Other Local Governments) governs conflicts of interest for board members, except as provided in this section. (b) Provides that Section 171.004 (Affidavit and Abstention From Voting Required) does not apply to the district. Requires a director who has a substantial interest in a business or charitable entity that will receive a pecuniary benefit from a board action to file a one-time affidavit declaring the interest. An additional affidavit is not required if the director's interest changes. Authorizes the director, after the affidavit is filed with the board secretary, to participate in a discussion or vote on that action if a majority of the directors have a similar interest in the same entity or all other similar business or charitable entities in the district will receive a similar pecuniary benefit. (c) Prohibits a director who is also an officer or employee of a public entity from participating in the discussion of or vote on a matter regarding a contract with that same public entity. (d) Provides that for purposes of this section, a director has a substantial interest in a charitable entity in the same manner that a person would have a substantial interest in a business entity under Section 171.002 (Substantial Interest in Business Entity). Sec. 376.313. EXPENSES AND LIABILITY FOR CERTAIN ACTIONS AFFECTING PROPERTY. Sets forth that the district must pay for the expense of a required relocation, adjustment, raising, lowering, rerouting, or changing the grade of or altering the construction of certain roadways or utility structures if the district requires this to be done. Requires the district to bear damages that are suffered by owners of the facility or other property. Sec. 376.314. RELATION TO OTHER LAW. Provides that this subchapter prevails if any provision of general law is in conflict with or is inconsistent with this subchapter. Specifies that any law referenced in this subchapter that is not in conflict or inconsistent with this subchapter is adopted and incorporated by reference. Sec. 376.315. REQUIREMENTS FOR FINANCING SERVICES AND IMPROVEMENTS. Prohibits the board from financing services and improvement projects under this subchapter unless a written petition requesting those improvements or services has been filed with the board. Provides that the petition must be signed by certain persons described by this section. Sec. 376.316. NONPROFIT CORPORATION. (a) Authorizes the board by resolution to authorize the creation of a nonprofit corporation to assist and act on behalf of the district in implementing a project or providing a service authorized by this subchapter. (b) Requires the board to appoint the board of directors of a nonprofit corporation created under this section. Requires the board of directors of the nonprofit corporation to serve in the same manner as, for the same term as, and on the conditions of the board of directors of a local government corporation created under Chapter 431 (Transportation Corporations), Transportation Code. (c) Provides that a nonprofit corporation created under this section has the powers of and is considered for purposes of this subchapter to be a local government corporation created under Chapter 431, Transportation Code. (d) Authorizes a nonprofit corporation created under this section to implement any project and provide any services authorized by this subchapter. Sec. 376.317. DISBURSEMENTS OR TRANSFERS OF FUNDS. Requires the board by resolution to establish the number of directors' signatures and the procedure required for a disbursement or transfer of the district's money. Sec. 376.318. BONDS. (a) Authorizes the district to issue bonds or other obligations payable in whole or in part from ad valorem taxes, assessments, impact fees, revenues, grants, or other money of the district, or any combination of those sources of money, to pay for any authorized purpose of the district. (b) Authorizes the issuance of bonds or other obligations of the district in the form of bonds, notes, certificates of participation, including other instruments evidencing a proportionate interest in payments to be made by the district, or other obligations that are issued in the exercise of the district's borrowing power and to be issued in bearer or registered form or not represented by an instrument but the transfer of which is registered on books maintained by or on behalf of the district. Authorizes the board to impose and collect an assessment under Subchapter F, Chapter 375, for any purpose authorized by this subchapter or by Chapter 375. (c) Provides that the district must obtain the municipality's approval of the issuance of bonds for an improvement project, the plans and specifications of the improvement project to be financed by the bonds, and the plans and specifications of a district improvement project related to the use of land owned by the municipality, an easement granted by the municipality, or a right-of-way of a street, road, or highway, except as provided by Subsection (d). (d) Authorizes the district to finance the capital improvements and issue bonds specified in the budget without further municipal approval, if the district obtains the municipality's approval of a capital improvements budget for a specified period not to exceed five years. (e) Requires the district to submit the bonds and the record of proceedings of the district relating to authorization of the bonds to the attorney general before the district issues bonds for approval. Sec. 376.319. ASSESSMENTS. (a) Authorizes the board to impose and collect an assessment for any purpose authorized by this subchapter. (b) Provides that assessments, reassessments, or assessments resulting from an addition to or correction of the assessment roll by the district, penalties and interest on an assessment or reassessment, expenses of collection, and reasonable attorney's fees incurred by the district: (1) are a first and prior lien against the property assessed; (2) are superior to any other lien or claim other than a lien or claim for county, school district, or municipal ad valorem taxes; and (3) are the personal liability of and charge against the owners of the property even if the owners are not named in the assessment proceedings. (c) Establishes that the lien is effective from the date of the resolution of the board levying the assessment until the assessment is paid. Authorizes the board to enforce the lien in the same manner that the board may enforce an ad valorem tax lien against real property. Sec. 376.320. PROPERTY EXEMPTED FROM TAX, FEE, OR ASSESSMENT. Prohibits a district from imposing a tax, impact fee, or assessment on a residential property or condominium. Prohibits the district from imposing an impact fee or assessment on the property, equipment, or facilities of a utility. Sec. 376.321. ELECTIONS. Requires the district to hold an election in the manner provided by Subchapter L (Elections), Chapter 375, Government Code, to obtain voter approval before the district imposes a maintenance tax or issues bonds payable from ad valorem taxes or assessments in addition to other necessary elections. Authorizes the board to submit multiple purposes in a single proposition at an election Sec. 376.322. IMPACT FEES. Authorizes the district to impose an impact fee for an authorized purpose as provided by Subchapter G (Impact Fees), Chapter 375, Local Government Code. Sec. 376.323. MAINTENANCE TAX. Authorizes the district, to impose and collect an annual ad valorem tax on taxable property in the district for the maintenance and operation of the district and the improvements constructed or acquired by the district or for the provision of services, if authorized at an election held in accordance with Section 376.321. Requires the board to determine the tax rate. Sec. 376.324. DISSOLUTION OF DISTRICT. Authorizes the district to be dissolved as provided in Subchapter M (Dissolution), Chapter 375, Local Government Code. Requires the district to remain in existence solely for the limited purpose of discharging its bonds or other obligations according to their terms, if the district has debt and is dissolved. Sec. 376.325. CONTRACTS. Authorizes the district to contract with the municipality or county for the municipality or county to provide law enforcement services in the district for a fee. Authorizes the municipality, county, or any other political subdivision of the state, without further authorization, to contract with the district to implement a project of the district or assist the district in providing the services authorized under this subchapter. Authorizes a contract under this subsection to: _be for a period on which the parties agree; _include terms on which the parties agree; _be payable from taxes or any other sources of revenue that may be available for such purpose; or _provide that taxes or other revenue collected at a district project or from a person using or purchasing a commodity or service at a district project may be paid or rebated to the district under the terms of the contract. Authorizes the district to enter into a contract, lease, or agreement with or make or accept grants and loans to or from certain entities and persons. Authorizes the district to perform all acts necessary for the full exercise of the powers vested in the district on terms and conditions and for the term the board may determine to be advisable. Sec. 376.326. COMPETITIVE BIDDING UNIT. Provides that Section 375.221 (Competitive Bidding on Certain Public Works Contracts) does not apply to the district unless the contract is for more than $25,000. Sec. 376.327. ANNEXATION. Authorizes the district to annex territory as provided by Subchapter C (Boundaries), Chapter 375, and annex territory located inside the boundaries of a reinvestment zone created by the municipality under Chapter 311 (Tax Increment Financing Act), Tax Code, if the governing body of the municipality consents to the annexation. Sec. 376.328. AGREEMENTS: GENERAL; DONATIONS, INTERLOCAL AGREEMENTS, AND LAW ENFORCEMENT SERVICES. Authorizes the district to make an agreement with or accept a donation, grant, or loan from any person. Provides that the implementation of a project is a governmental function or service for the purposes of Chapter 791 (Interlocal Cooperation Contracts), Government Code. Authorizes the district, in order to protect the public interest, to contract with the municipality or the county for the municipality or county to provide law enforcement services in the district for a fee. SECTION 2. Sets forth the findings of the legislature relating to the proper and legal notice of the intention to introduce this Act, recommendations filed by the Texas Natural Resource Conservation Commission, and compliance with the constitution and other state laws. SECTION 3. Identifies the seventeen individuals who compose the initial board of directors of the district. Provides that, of the initial board, members in enumerated positions 1-9 serve terms that expire June 1, 2003, and members in positions 10-17 serve terms that expire June 1, 2001. SECTION 4.Emergency clause. Effective date: upon passage.