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Title 3. Local Taxation
Subtitle B. Special Property Tax Provisions

Chapter 312. Property Redevelopment and Tax Abatement Act
Subchapter D. County Development Districts.

Sec. 312.601. Short Title.
Sec. 312.602. Legislative Intent.
Sec. 312.603. Legislative Findings.
Sec. 312.604. Definitions.
Sec. 312.605. Counties Authorized to Create Districts.
Sec. 312.6055. Petition of Landowners.
Sec. 312.606. Contents of Petition.
Sec. 312.607. Hearing on Petition.
Sec. 312.608. Notice of Hearing.
Sec. 312.609. Hearing.
Sec. 312.610. Granting or Refusing Petition.
Sec. 312.611. Temporary Directors; Vacancy in Office.
Sec. 312.612. Qualification of Temporary Directors.
Sec. 312.613. Confirmation and Sales and Use Tax Election.
Sec. 312.614. Election Order.
Sec. 312.615. Notice.
Sec. 312.616. Conduct of Election.
Sec. 312.617. Results of Election.
Sec. 312.618. Board of Directors.
Sec. 312.619. Qualifications for Directors.
Sec. 312.620. Persons Disqualified to Serve.
Sec. 312.621. Vacancies on the Board.
Sec. 312.622. Removal of Director.
Sec. 312.623. Organization of Board.
Sec. 312.624. Quorum; Officers' Duties; Management of District.
Sec. 312.625. Meetings and Notice.
Sec. 312.626. Director's Compensation; Bond and Oath of Office.
Sec. 312.627. Governmental Agency; Suits.
Sec. 312.628. Powers.
Sec. 312.629. Competitive Bidding; Contract Award.
Sec. 312.630. Eminent Domain.
Sec. 312.631. Expenditures.
Sec. 312.632. Purposes for Borrowing Money.
Sec. 312.633. Repayment of Organizational Expenses.
Sec. 312.634. Issuance of Bonds.
Sec. 312.635. Manner of Repayment of Bonds.
Sec. 312.636. Use of Bond Proceeds.
Sec. 312.637. Sales and Use Tax.
Sec. 312.638. Adding and Excluding Land from the District.
Sec. 312.639. Dissolution of District.
Sec. 312.640. Dissolution of District on Agreement with Municipality.

Sec. 312.601. Short Title.

This subchapter may be cited as the County Development District Act.

Added by 1995 Tex. Laws, p. 4993, ch. 995, Sec. 5.

Sec. 312.602. Legislative Intent.

The intent of the legislature to further the public purpose of developing and diversifying the economy of this state by providing incentives for the location and development of projects in certain counties to attract visitors and tourists.

Added by 1995 Tex. Laws, p. 4993, ch. 995, Sec. 5.

Sec. 312.603. Legislative Findings.

The legislature finds that:

(1) small and medium-sized counties in Texas are in need of incentives for the development of public improvements to attract visitors and tourists to such counties, and that such counties are at a disadvantage in competing with counties in other states for the location and development of projects that attract visitors by virtue of the availability and prevalent use in other states of financial incentives;

(2) the means and measures authorized by this subchapter are in the public interest and serve a public purpose of the state in promoting the economic welfare of the citizens of the state by providing incentives for the location and development in certain Texas counties of projects that attract visitors and tourists and that result in employment and economic activity; and

(3) the creation of development districts is essential to the accomplishment of Section 51-a, Article III, Texas Constitution, and to the accomplishment of the other public purposes stated in this subchapter and further serves the purpose of Section 59, Article XVI, and Section 52, Article III, Texas Constitution.

Added by 1995 Tex. Laws, p. 4993, ch. 995, Sec. 5.

Sec. 312.604. Definitions.

In this subchapter:

(1) "District" means a county development district created under this subchapter.

(2) "Board" means the board of directors of the district.

(3) "Director" means a member of the board.

(4) "Commissioners court" means the governing body of the county in which the district is located.

(5) "County" means the county in which the district is located.

(6) "Project" has the same meaning as that term is defined to mean in Section 4B(a)(2), Development Corporation Act of 1979 (Article 5190.6, Vernon's Texas Civil Statutes).

(7) "Cost" has the same meaning as that term is defined to mean in Section 2(4), Development Corporation Act of 1979 (Article 5190.6, Vernon's Texas Civil Statutes).

(8) "Bonds" means bonds, notes, and other obligations.

Added by 1995 Tex. Laws, p. 4993, ch. 995, Sec. 5.

Sec. 312.605. Counties Authorized to Create Districts.

The commissioners court of a county with a population of not more than 400,000 according to the most recent federal decennial census may, on petition of the owners of land in a proposed district, commence the creation of a county development district. The creation of the district is subject to a confirmation election held as provided by this subchapter.

Added by 1995 Tex. Laws, p. 4993, ch. 995, Sec. 5.

Sec. 312.6055. Petition of Landowners.

To create a district, a petition requesting creation shall be filed with the county commissioners court of the county in which all of the land in the proposed district is located. The petition shall be accompanied by a sworn statement indicating consent to creation signed by the holders of fee simple title of all of the land within the proposed district.

Added by 1995 Tex. Laws, p. 4993, ch. 995, Sec. 5.

Sec. 312.606. Contents of Petition.

The petition shall:

(1) describe the boundaries of the proposed district by metes and bounds or by lot and block number, if there is a recorded map or plat and survey of the area;

(2) include a name of the district which shall include the name of the county followed by the words "Development District No. ___";

(3) include the names of five persons who are willing and qualified to serve as temporary directors of the proposed district;

(4) state the general nature of the work proposed to be done and the cost of the project as then estimated by the petitioners; and

(5) state the necessity and feasibility of the proposed district and whether the district will serve the public purpose of attracting visitors and tourists to the county.

Added by 1995 Tex. Laws, p. 4993, ch. 995, Sec. 5.

Sec. 312.607. Hearing on Petition.

Not later than the 60th day after the date a petition is received, the commissioners court shall fix a date, time, and place at which the petition shall be heard and shall issue notice of the date, time, place, and subject matter of the hearing. The notice shall inform all persons of their right to appear and present evidence and testify for or against the creation of the district.

Added by 1995 Tex. Laws, p. 4994, ch. 995, Sec. 5.

Sec. 312.608. Notice of Hearing.

At least 30 days before the date set for the hearing, notice of the hearing shall be mailed to the developer who signed the petition and the landowners of all the land in the district and shall be published in a newspaper with general circulation in the county in which the proposed district is located.

Added by 1995 Tex. Laws, p. 4994, ch. 995, Sec. 5.

Sec. 312.609. Hearing.

At the hearing, the commissioners court shall examine the petition to ascertain its sufficiency, and any person interested may appear before the commission to offer testimony on the sufficiency of the petition and whether or not the district should be created.

Added by 1995 Tex. Laws, p. 4994, ch. 995, Sec. 5.

Sec. 312.610. Granting or Refusing Petition.

(a) After the hearing, if it is found that the petition conforms to the requirements of Section 312.6055 and that the creation of the district and the proposed project is feasible and necessary and would serve the public purpose of attracting visitors and tourists to the county, the commissioners court shall so find and enter an order creating the district.

(b) If the commissioners court finds that the petition does not conform to the requirements of Section 312.6055 or that the creation of the district and the proposed project is not feasible and necessary and would not serve the purpose of attracting visitors and tourists to the county, the commissioners court shall so find by its order and deny the petition.

Added by 1995 Tex. Laws, p. 4994, ch. 995, Sec. 5.

Sec. 312.611. Temporary Directors; Vacancy in Office.

If the commissioners court grants the petition, it shall appoint to serve as temporary directors of the district five persons who are qualified under this subchapter to serve as directors. A vacancy in the office of temporary director shall be filled by appointment by the commissioners court.

Added by 1995 Tex. Laws, p. 4994, ch. 995, Sec. 5.

Sec. 312.612. Qualification of Temporary Directors.

Each temporary director shall execute a bond in accordance with the provisions of Section 312.626 and shall take an oath of office, and the board shall meet and organize.

Added by 1995 Tex. Laws, p. 4994, ch. 995, Sec. 5.

Sec. 312.613. Confirmation and Sales and Use Tax Election.

The temporary board of directors shall conduct an election within the boundaries of the district to confirm the creation of the district and authorize a sales and use tax in conformity with this subchapter.

Added by 1995 Tex. Laws, p. 4994, ch. 995, Sec. 5.

Sec. 312.614. Election Order.

An order calling an election under Section 312.613 must state:

(1) the nature of the election, including the proposition that is to appear on the ballot;

(2) the date of the election;

(3) the hours during which the polls will be open;

(4) the location of the polling places; and

(5) the proposed rate of the sales and use tax for the district.

Added by 1995 Tex. Laws, p. 4994, ch. 995, Sec. 5.

Sec. 312.615. Notice.

The temporary directors shall give notice of the confirmation and sales and use tax election by publishing a substantial copy of the election order in a newspaper with general circulation in the county in which the proposed district is located once a week for two consecutive weeks. The first publication must appear at least 14 days before the date set for the election.

Added by 1995 Tex. Laws, p. 4994, ch. 995, Sec. 5.

Sec. 312.616. Conduct of Election.

(a) The election shall be held in accordance with the provisions of the Election Code, to the extent not inconsistent with this subchapter.

(b) The ballot shall be printed to permit voting for or against the proposition: "The creation of ______________ County Development District No. ____ and the adoption of a proposed local sales and use tax rate of ____ (the rate specified in the election order) to be used for the promotion and development of tourism."

Added by 1995 Tex. Laws, p. 4994, ch. 995, Sec. 5.

Sec. 312.617. Results of Election.

(a) After the confirmation and sales and use tax election, the presiding judge shall make returns of the result to the temporary board of directors. The temporary board of directors shall canvass the returns and declare the results.

(b) If a majority of the votes cast in the election favor the creation of the district and the adoption of the sales and use tax, the temporary board shall declare that the district is created and shall declare the amount of the local sales and use tax adopted and enter the result in its minutes. If a majority of the votes cast in the election are against the creation of the district and the adoption of the sales and use tax, the temporary board shall declare that the proposition to create the district was defeated and enter the result in its minutes.

(c) A certified copy of the minute order declaring that the district is created and the local sales and use tax adopted and including the rate of the sales and use tax, or declaring that the proposition to create the district was defeated, shall be sent to the commissioners court, the comptroller, and any taxing entity by certified or registered mail. Such order shall also show the date of the election, the proposition on which the vote was held, the total number of votes cast for or against the proposition, and the number of votes by which the proposition was approved.

Added by 1995 Tex. Laws, p. 4995, ch. 995, Sec. 5.

Sec. 312.618. Board of Directors.

(a) A district is governed by a board of five directors appointed by the county commissioners of the county in which the district is located. The temporary directors appointed under Section 312.611 shall become permanent directors of the district, provided that the creation of the district is confirmed at the confirmation election.

(b) Directors serve staggered four-year terms that expire September 1. Following confirmation of the district at the election, the temporary directors shall draw lots to determine:

(1) the two directors to serve terms that expire on September 1 of the second year following creation of the district; and

(2) the three directors to serve terms that expire on September 1 of the fourth year following creation of the district.

Added by 1995 Tex. Laws, p. 4995, ch. 995, Sec. 5.

Sec. 312.619. Qualifications for Directors.

To be qualified to serve as a director, a person shall be at least 21 years of age, a resident citizen of the State of Texas, and a qualified voter within the county in which the district is located.

Added by 1995 Tex. Laws, p. 4995, ch. 995, Sec. 5.

Sec. 312.620. Persons Disqualified to Serve.

Section 50.026, Water Code, relating to the disqualification of directors, shall apply to directors of districts created under this subchapter.

Added by 1995 Tex. Laws, p. 4995, ch. 995, Sec. 5.

Sec. 312.621. Vacancies on the Board.

A vacancy in the office of director shall be filled by appointment of the commissioners court.

Added by 1995 Tex. Laws, p. 4995, ch. 995, Sec. 5.

Sec. 312.622. Removal of Director.

The governing body of the commissioners court, after notice and hearing, may remove a director for misconduct or failure to carry out the director's duties on petition by a majority of the remaining directors.

Added by 1995 Tex. Laws, p. 4995, ch. 995, Sec. 5.

Sec. 312.623. Organization of Board.

After each appointment of directors by the commissioners court, and after the directors have qualified by taking the proper oath, they shall organize by electing a president, a vice president, a secretary, and any other officers as in the judgment of the board are considered necessary.

Added by 1995 Tex. Laws, p. 4995, ch. 995, Sec. 5.

Sec. 312.624. Quorum; Officers' Duties; Management of District.

Sections 54.107, 54.108, 54.111, and 54.118, Water Code, relating to quorum, officers' duties, and management of the district, shall govern the board of directors of a district created under this subchapter.

Added by 1995 Tex. Laws, p. 4995, ch. 995, Sec. 5.

Sec. 312.625. Meetings and Notice.

(a) The board shall designate and establish a district office in the county.

(b) The board may establish regular meetings to conduct district business and may hold special meetings at other times as the business of the district requires.

(c) Notice of the time, place, and purpose of any meeting of the board shall be given by posting the notice at a place convenient to the public within the district. A copy of the notice shall be furnished to the clerk or clerks of the county in which the district is located, who shall post it on a bulletin board in the county courthouse used for such purpose.

(d) Except as herein provided the provisions of the open meetings law, Chapter 551, Government Code, shall be applicable to meetings of the board of directors. Any interested person may attend any meeting of the board.

Added by 1995 Tex. Laws, p. 4995, ch. 995, Sec. 5.

Sec. 312.626. Director's Compensation; Bond and Oath of Office.

A director is not entitled to receive compensation for service on the board. Sections 375.067, 375.069, and 375.070, Local Government Code, apply to directors of a district created under this subchapter.

Added by 1995 Tex. Laws, p. 4996, ch. 995, Sec. 5.

Sec. 312.627. Governmental Agency; Suits.

(a) A district, when created and confirmed, may, through its directors, sue and be sued in any and all courts of this state in the name of the district. Service of process in any suit may be had by serving any two directors.

(b) A district is a governmental agency, a body politic and corporate, and a political subdivision of the sate. Section 375.004, Local Government Code, applies to a district created under this subchapter.

Added by 1995 Tex. Laws, p. 4996, ch. 995, Sec. 5.

Sec. 312.628. Powers.

(a) A district shall have the power to acquire and dispose of projects and shall have all of the other powers, authority, rights, and duties which will permit accomplishment of the purposes for which the district was created.

(b) The district shall have the power to provide for general promotion and tourist advertising of the district and its vicinity and to conduct a marketing program to attract visitors, any of which may be conducted by the district pursuant to contracts for professional services with persons or organizations selected by the district.

(c) The district shall have the powers of a municipal management district created under Chapter 375, Local Government Code, to the extent not inconsistent with this subchapter.

Added by 1995 Tex. Laws, p. 4996, ch. 995, Sec. 5.

Sec. 312.629. Competitive Bidding; Contract Award.

Sections 375.221 and 375.223, Local Government Code, apply to a district created under this subchapter. Notwithstanding any other provision of this subchapter to the contrary, any contract between the district and a governmental entity or nonprofit corporation created under the Development Corporation Act of 1979 (Article 5190.6, Vernon's Texas Civil Statutes) shall not be subject to the competitive bidding requirements of this subchapter.

Added by 1995 Tex. Laws, p. 4996, ch. 995, Sec. 5.

Sec. 312.630. Eminent Domain.

A district not located within the corporate limits of a municipality may exercise the power of eminent domain to acquire land or interests in land within the district deemed necessary by the board of directors of the district for the purpose of providing water and sewer services to an authorized project. The right of eminent domain shall be exercised in the manner provided by Chapter 21, Property Code.

Added by 1995 Tex. Laws, p. 4996, ch. 995, Sec. 5.

Sec. 312.631. Expenditures.

A district's money may be disbursed only by check, draft, order, or other instrument which shall be signed by at least three directors. The general manager, treasurer, or other employee of the district when authorized by resolution of the board may sign checks, drafts, orders, or other instruments on any district operation account and these need not be signed by anyone else.

Added by 1995 Tex. Laws, p. 4996, ch. 995, Sec. 5.

Sec. 312.632. Purposes for Borrowing Money.

The district may borrow money for any corporate purpose or combination of corporate purposes.

Added by 1995 Tex. Laws, p. 4996, ch. 995, Sec. 5.

Sec. 312.633. Repayment of Organizational Expenses.

The district's directors are authorized to pay all costs and expenses necessarily incurred in the creation and organization of a district, the cost of investigation and making plans, the cost of the engineer's report, project designer fees, legal fees, and other incidental expenses and to reimburse any person for money advanced for these purposes. These payments may be made from money obtained from the issuance of notes or the sale of bonds first issued by the district or out of other revenues of the district.

Added by 1995 Tex. Laws, p. 4996, ch. 995, Sec. 5.

Sec. 312.634. Issuance of Bonds.

The district may issue bonds for the purpose of defraying all or part of the cost of any project as provided in this subchapter. Sections 375.201 through 375.208, Local Government Code, shall apply to a district created under this subchapter to the extent not inconsistent with this subchapter.

Added by 1995 Tex. Laws, p. 4996, ch. 995, Sec. 5.

Sec. 312.635. Manner of Repayment of Bonds.

The board may provide for the payment of principal of and interest and redemption price on bonds from taxes; by pledging all or any part of the designated revenues, license fees, and other compensation from a project or any part thereof, including revenues and receipts derived by the district from the lease or sale of the project or by pledging all or any part of any grant, donation, revenues, or income received or to be received from any public or private source; or from a combination of such sources.

Added by 1995 Tex. Laws, p. 4997, ch. 995, Sec. 5.

Sec. 312.636. Use of Bond Proceeds.

The district may use bond proceeds to pay interest on the bonds during and after the period of the acquisition or construction of a project, to pay administrative and operating expenses, to create a reserve fund for the payment of principal and interest on the bonds, and to pay all expenses incurred and to be incurred in the issuance, sales, and delivery of the bonds.

Added by 1995 Tex. Laws, p. 4997, ch. 995, Sec. 5.

Sec. 312.637. Sales and Use Tax.

(a) A district may levy a sales and use tax for the benefit of the district if authorized by a majority of the qualified voters of the district voting at an election called for that purpose. The sales and use tax, if adopted, does not count toward the limitation imposed by Chapter 323 on any sales and use tax that has been levied by the county.

(b) If a district adopts the tax, there is imposed a tax on the receipts from the sale at retail of taxable items within the district at a rate of up to one-half of one percent. For purposes of this section, the term "taxable items" includes all items subject to any sales and use tax that is imposed by the county in which the district is located if the county has imposed a sales and use tax. There is also imposed an excise tax on the use, storage, or other consumption within the district of taxable items purchased, leased, or rented from a retailer during the period that the tax is effective within the district. The rate of the excise tax is the same as the rate of the sales tax portion of the tax applied to the sales price of the taxable items and is included in the sales tax.

(c) Chapter 323, to the extent not inconsistent with this subchapter, governs the imposition, computation, administration, and governance of the tax under this section, except that Sections 323.101(b) and (e), and Sections 323.209, 323.401 through 323.406, and 323.505 do not apply. Chapter 323 does not apply to the use and allocation of revenues under this subchapter. In applying the procedures under Chapter 323, the district's name shall be substituted for "the county" and "board of directors" is substituted for "commissioners court."

(d) The permissible rates for a local sales and use tax levied under this subchapter are one-fourth of one percent, three-eighths of one percent, and one-half of one percent.

(e) The board by order may decrease or abolish the local sales and use tax rate or may call an election to increase, decrease, or abolish the local sales and use tax rate.

(f) At the election, the ballots shall be prepared to permit voting for or against the proposition: "The increase (decrease) in the local sales and use tax rate of (name of district) to (percentage) to be used for the promotion and development of tourism" or "The abolition of the district sales and use tax used for the promotion and development of tourism." The increase or decrease in the tax rate is effective if it is approved by a majority of the votes cast. In calling and holding the election, the board shall use the procedure for the confirmation and tax election set forth in this subchapter.

(g) Taxes collected under this section may be used only for the purposes for which the district was created, and the district may pledge the revenue derived from the taxes imposed under this section to the payment of bonds issued by the district.

(h) A county development district may adopt a tax under this section only if as a result of adoption of the tax the combined rate of all local sales and use taxes imposed by political subdivisions having territory in the district will not exceed two percent. If, as a result of the levy of increase in a sales and use tax by a municipality in which there is located a district with an existing sales and use tax or as a result of the annexation by a municipality of the territory in a district with an existing sales and use tax, the overlapping local sales and use taxes in the area within the district will exceed two percent, then the district's sales and use tax rate shall automatically be reduced to a rate that when added to the combined rate of local sales and use taxes will equal two percent. If a district's tax rate is so reduced, the municipality will make payments to the district equal to the amounts that would have been collected by the district had the municipality not levied or increased its sales and use tax or annexed the area within the district, less amounts that the district collects following the city's levy of or increase in its sales and use tax or annexation of the area within the district. Such payment shall be made by the municipality to the district within 10 days of receipt of the money from the comptroller's office and shall continue only for so long as any bonds of the district are outstanding.

Added by 1995 Tex. Laws, p. 4997, ch. 995, Sec. 5.

Sec. 312.638. Adding and Excluding Land from the District.

(a) Before the board issues bonds, the board may, on its own motion or on request of a landowner in the district, petition the county commissioners for the addition of land to or exclusion of the land from the district.

(b) If the commissioners court unanimously determines from the evidence that the best interests of the persons and property in the district will be served by adding or excluding land, the commissioners court shall enter in its records the appropriate findings and order adding or excluding land.

Added by 1995 Tex. Laws, p. 4998, ch. 995, Sec. 5.

Sec. 312.639. Dissolution of District.

(a) A district may be dissolved only as provided by this section.

(b) The board of directors may petition the commissioners court to dissolve the district if a majority of the board finds at any time:

(1) before the authorization of bonds or the final lending of its credit, that the proposed undertaking is impracticable or cannot be successfully and beneficially accomplished; or

(2) that all bonds of the district or other debts of the district have been paid and the purposes of the district have been accomplished.

(c) On receipt of a petition from the board of dissolution of the district, the county commissioners shall hold a hearing as provided by Section 312.607.

(d) If the commissioners court unanimously determines from the evidence that the best interests of the county and the owners of property and interests in property within the district will be served by dissolving the district, the commissioners court shall enter in its records the appropriate findings and order dissolving the district. Otherwise the commissioners court shall enter its order providing that the district has not been dissolved. On dissolution of the district, funds and property of the district, if any, shall be transferred to the commissioners court.

Added by 1995 Tex. Laws, p. 4998, ch. 995, Sec. 5.

Sec. 312.640. Dissolution of District on Agreement with Municipality.

A district may be dissolved by agreement between the governing body of a municipality and the board of directors of a district if all of the territory within the district is located within or annexed by the municipality. The agreement shall require the municipality to acquire all of the funds, property, and other assets of the district and assume all contracts, debts, bonds, and other obligations of the district, and the municipality shall be bound in the same manner and to the same extent that the district was bound with respect to such contracts, debts, bonds, and other obligations. On dissolution of the district, the taxes levied by the district are abolished.

Added by 1995 Tex. Laws, p. 4998, ch. 995, Sec. 5.