HBA-DMD S.B. 655 76(R) BILL ANALYSIS Office of House Bill AnalysisS.B. 655 By: Madla State, Federal, & International Relations 5/7/1999 Engrossed BACKGROUND AND PURPOSE The Development Corporation Act of 1979 (DCA) requires state approval of local actions of a nonprofit corporation which can result in substantial administrative expenses and delays regarding a non-profit corporation's efforts to save and expand job opportunities and engage in economic development in an area threatened by defense base closures. S.B. 655 authorizes a municipality to establish a defense base development authority (authority) with a board of directors (board) consisting of 11 members with the responsibility for the management, operation, and control of the authority. This bill provides that once the authority is established it is a special district and political subdivision of this state. This bill also authorizes the municipality to designate the authority to be the successor in interest to a nonprofit corporation organized under DCA. In addition, this bill authorizes an authority to sue and be sued. This bill authorizes the board to designate as a redevelopment project, a project that relates to the development of base property and the surrounding areas or the development of a defense base in the territory of the municipality that established the authority and areas surrounding that base. It authorizes an authority to issue bonds only if the municipality that established the authority authorizes the issuance by resolution. In addition, this bill exempts an authority's property, income, and operations from taxes imposed by the state or a political subdivision of the state. This bill authorizes the governing body of a municipality that established the authority by resolution to dissolve the authority after all debts or obligations of the authority have been satisfied. 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 Subtitle A, Title 12, Local Government Code, by adding Chapter 378, as follows: CHAPTER 378. DEFENSE BASE DEVELOPMENT AUTHORITIES Sec. 378.001. DEFINITIONS. Defines "authority," "base property," "board," "bond," and "defense base" in this chapter. Sec. 378.002. ESTABLISHMENT; SUCCESSOR. (a) Authorizes a municipality by resolution to establish a defense base development authority (authority). Provides that the resolution must include a legal description of the base property. Provides that once the resolution is adopted the authority is established as a special district and political subdivision of this state, with a boundary coterminous with the base property described in the resolution. (b) Authorizes the municipality, when establishing an authority, to designate the authority in the municipality's resolution to be the successor in interest to a nonprofit corporation organized under the Development Corporation Act of 1979 (Article 5190.6, V.T.C.S.). Provides that once the resolution is adopted, the corporation is dissolved and the authority succeeds to all rights and liabilities of that corporation. Sec. 378.003. PURPOSE AND NATURE OF AUTHORITY. Provides that an authority is created to accept title to or operate under a lease from the United States or any other person all or a part of the base property and areas around the base property and to engage in the economic development of the base property and areas around the base property. Sets forth that an authority exercises public and essential governmental functions. Sec. 378.004. POWERS AND DUTIES OF AUTHORITY. Sets forth the powers and duties that an authority is authorized to exercise in order to carry out a purpose of this chapter. Requires an authority to establish and maintain an office and agent registered with the secretary of state. Requires an authority to endeavor to raise revenue sufficient to pay its debts. Sec. 378.005. SUITS; INDEMNITY. Authorizes an authority to sue and be sued. Authorizes process to be served on the president, vice president, or registered agent, in a suit against an authority. Prohibits an authority from being required to give a bond on an appeal or writ of error taken in a civil case that the authority is prosecuting or defending. Authorizes an authority to indemnify an authority employee or a member of the board of directors of the authority (board) or a former authority employee or board member for necessary expenses and costs, including attorney's fees, incurred by that person in connection with a claim asserted against that person if certain conditions are met. Sec. 378.006. UTILITIES. (a) Authorizes an authority to accept an electric, gas, potable water, or sanitary sewage utility conveyed by the United States but prohibits the authority from operating it. (b) Requires an authority to convey a utility received under Subsection (a) to the municipality that established the authority. Requires the municipality to pay the authority fair market value for the utility. (c) Requires the municipality, if state or federal law prohibits the operation or ownership of the utility by the municipality, to convey the utility to an entity that authorized to operate it. Authorizes the municipality to charge fair market value for the conveyance. Sec. 378.007. BOARD OF DIRECTORS. (a) Provides that the board consists of 11 members and is responsible for the management, operation, and control of the authority. (b) Requires the governing body of the municipality that established the authority to appoint each board member to a term not exceeding two years. Provides that a vacancy on the board is filled in the same manner as the original appointment. (c) Authorizes the municipality to remove a board member by adopting a resolution. (d) Requires the members of the board to elect from its membership a president, vice president, secretary, and treasurer. Authorizes the board, by rule, to provide for the election of other officers. (e) Provides that a board member serves without compensation but the board member is authorized to be reimbursed for a reasonable and necessary expense incurred in the performance of an official duty. (f) Requires the board to adopt rules for its proceedings and authorizes it to employ and compensate persons to carry out the powers and duties of the authority. Sec. 378.008. POWERS AND DUTIES OF BOARD. Sets forth the required powers and duties of the board. Provides that for the base property and areas adjacent to the base property the board is required to promote economic development, attempt to reduce unemployment, encourage the development of new industry by private businesses, and encourage financing of projects designated under Section 378.009. Sec. 378.009. REDEVELOPMENT PROJECTS. Authorizes the board to designate as a redevelopment project, a project that relates to the development of base property and the surrounding areas or the development of a defense base in the territory of the municipality that established the authority and areas surrounding that base. Provides that a project designated under Subsection (a) is for a public purpose. Sec. 378.010. BONDS. Authorizes an authority to issue bonds only if the municipality that established the authority authorizes the issuance by resolution. Provides that a bond issued under this chapter must be payable solely from authority revenue, mature no later than 40 years after its date of issuance, and state on its face that it is not an obligation of this state or the municipality. Sec. 378.011. TAX EXEMPTIONS. (a) Exempts an authority's property, income, and operations from taxes imposed by the state or a political subdivision of the state. (b) Provides that Section 25.07(a) (Leasehold and Other Possessory Interests in Exempt Property), Tax Code, applies to a leasehold or other possessory interest in real property granted by an authority for a project designated under Section 378.009(a) in the same manner as it applies to a leasehold or other possessory interest in real property constituting a project described by Section 4B(k), Article 5190.6, V.T.C.S. (relating to legislative findings). Sec. 378.012. DISSOLUTION. Authorizes the governing body of a municipality that established the authority by resolution to dissolve the authority after all debts or obligations of the authority have been satisfied. Provides that property of the authority that remains after dissolution is conveyed to the municipality. SECTION 2. (a) Defines "defense base development corporation" for purposes of this section. (b) Specifies acts of a defense base development corporation that are validated and confirmed as of the date they occurred. (c) Sets forth provisions to which this section does not apply. SECTION 3.Emergency clause. Effective date: upon passage.