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  H.B. No. 470
 
 
 
 
AN ACT
  relating to the creation, operation, management, and programs of
  homestead preservation districts.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 373A.002, Local Government Code, is
  amended by amending Subdivision (1) and adding Subdivisions (1-a),
  (2-a), and (3-a) to read as follows:
               (1)  "Affordable housing" means housing that is located
  in a district and is affordable to households earning 70 percent or
  less of the area median family income, adjusted for household size,
  as determined annually by the United States Department of Housing
  and Urban Development.
               (1-a)  "Central business district" means a compact and
  contiguous geographical area of a municipality in which at least 90
  percent of the land is used or zoned for commercial purposes and
  that has historically been the primary location in the municipality
  where business has been transacted.
               (2-a)  "County" means the county containing all or the
  greatest portion of a homestead preservation reinvestment zone.  
  For purposes of applying other law to a district or program created
  under this chapter, including Chapter 311, Tax Code, a reference in
  the other law to a "county" has the meaning assigned by this
  subdivision.
               (3-a)  "Project costs" has the meaning assigned by
  Section 311.002(1), Tax Code.
         SECTION 2.  Section 373A.003, Local Government Code, is
  amended to read as follows:
         Sec. 373A.003.  APPLICABILITY OF CHAPTER.  (a)  This chapter
  applies [only] to a municipality with a population of more than
  650,000 that is located in a uniform state service region with fewer
  than 550,000 occupied housing units as determined by the most
  recent United States decennial census.
         (b)  Subchapters A, B, C, and D apply to any municipality
  with a population of 1.18 million or more that is located
  predominantly in a county that has a total area of less than 1,000
  square miles.
         SECTION 3.  Section 373A.052, Local Government Code, is
  amended to read as follows:
         Sec. 373A.052.  ELIGIBILITY FOR DESIGNATION.  (a)  To be
  designated as a district within a municipality described by Section
  373A.003(a) under this subchapter, an area must be composed of
  census tracts forming a spatially compact area contiguous to a
  central business district and with:
               (1)  fewer than 25,000 residents;
               (2)  fewer than 8,000 households;
               (3)  a number of owner-occupied households that does
  not exceed 50 percent of the total households in the area;
               (4)  housing stock at least 55 percent of which was
  built at least 45 years ago;
               (5)  an unemployment rate that is greater than 10
  percent;
               (6)  an overall  poverty rate that is at least two times
  the poverty rate for the entire municipality;  and
               (7)  in each census tract within the area, a median
  family income that is less than 60 percent of the median family
  income for the entire municipality.
         (b)  To be designated as a district within a municipality
  described by Section 373A.003(b) under this subchapter, an area
  must be composed of census tracts forming a spatially compact area
  contiguous to a central business district and with:
               (1)  fewer than 75,000 residents;
               (2)  a median family income that is less than $30,000
  according to the last decennial census;  and
               (3)  an overall poverty rate that is at least two times
  the poverty rate for the entire municipality.
         (c)  An area that is designated as a district under this
  subchapter may retain its designation as a district regardless of
  whether the area continues to meet the eligibility criteria
  provided by this section, except that an area that does not elect to
  retain its designation as permitted by this subsection must meet
  all eligibility criteria to be considered for subsequent
  redesignation as a district.
         SECTION 4.  Subchapter B, Chapter 373A, Local Government
  Code, is amended by adding Section 373A.0521 to read as follows:
         Sec. 373A.0521.  DISSOLUTION.  (a)  The governing body of a
  municipality in which a district is located may adopt an ordinance
  dissolving the district.
         (b)  On the adoption of the ordinance, the district is
  dissolved and the municipality succeeds to the property and assets
  of the district and assumes all bonds, debts, obligations, and
  liabilities of the district.
         (c)  This section does not prohibit the municipality from
  continuing to operate programs established by the municipality,
  including programs established under Subchapter C, D, or E, in the
  area previously included in the district that are owned and
  operated by the municipality on the date the district is dissolved.
         SECTION 5.  Section 373A.101, Local Government Code, is
  amended to read as follows:
         Sec. 373A.101.  CREATION.  The governing body of a political
  subdivision [municipality] by ordinance or order may create or
  designate under this subchapter one or more homestead land trusts,
  including a housing finance corporation established under Chapter
  394 or a land trust operated by a community housing development
  organization certified by the municipality, to operate in an area
  that includes a district designated under Subchapter B [by the
  municipality].
         SECTION 6.  Section 373A.102, Local Government Code, is
  amended to read as follows:
         Sec. 373A.102. NATURE OF NONPUBLIC TRUST.  A trust that is
  not created by the governing body of a political subdivision must be
  a nonprofit organization that is:
               (1)  created to acquire and hold land for the benefit of
  developing and preserving long-term affordable housing in the
  district; and
               (2)  exempt from federal income taxation under Section
  501(a), Internal Revenue Code of 1986, by being certified as an
  exempt organization under Section 501(c)(3), Internal Revenue Code
  of 1986.
         SECTION 7.  Section 373A.104, Local Government Code, is
  amended to read as follows:
         Sec. 373A.104.  BOARD OF DIRECTORS.  (a)  A trust shall be
  governed by a board of directors.
         (b)  [The governing body of the municipality shall appoint
  the directors of a trust created by the municipality.
         [(c)     The initial board of a trust created by the
  municipality must be composed of four members of the governing body
  of the municipality and three residents of the district.
         [(d)]  If a trust holds land that provides at least 100
  housing units, at least one-third of the board members must reside
  in housing units located on land held by the trust.
         SECTION 8.  Subchapter C, Chapter 373A, Local Government
  Code, is amended by adding Section 373A.110 to read as follows:
         Sec. 373A.110.  APPLICABILITY OF SUBCHAPTER TO TRUST
  OPERATED BY HOUSING FINANCE CORPORATION.  Sections 373A.102,
  373A.104, 373A.105(b), and 373A.106 do not apply to a trust
  operated in the district by a housing finance corporation
  established under Chapter 394.
         SECTION 9.  Section 373A.151, Local Government Code, is
  amended to read as follows:
         Sec. 373A.151.  APPLICABILITY [NONAPPLICABILITY] OF OTHER
  LAW.  (a)  Except as provided by this subchapter, Chapter 311, Tax
  Code, applies [does not apply] to a homestead preservation
  reinvestment zone created under this subchapter.  To the extent of
  any conflict between this subchapter and Chapter 311, Tax Code,
  this subchapter prevails.
         (b)  In addition to other provisions of this subchapter that
  modify or supersede the application of Chapter 311, Tax Code, to a
  zone established under this subchapter, Sections 311.005 and
  311.006, Tax Code, do not apply to a zone established under this
  subchapter.
         SECTION 10.  Section 373A.152(a), Local Government Code, is
  amended to read as follows:
         (a)  A municipality by ordinance may designate a contiguous
  geographical area contained entirely within the boundaries of the
  district as [create] a homestead preservation reinvestment zone to
  develop or redevelop affordable housing [as provided by this
  section] if the municipality determines the zone is necessary to
  accomplish the purposes of this chapter [finds that the area to be
  included in the zone is unproductive, underdeveloped, or blighted
  as provided by Section 1-g(b), Article VIII, Texas Constitution.
  The governing body of the municipality shall administer the zone].
         SECTION 11.  Subchapter D, Chapter 373A, Local Government
  Code, is amended by adding Sections 373A.1521 and 373A.1522 to read
  as follows:
         Sec. 373A.1521.  CONTENTS OF REINVESTMENT ZONE ORDINANCE.  
  The ordinance designating the homestead preservation zone must:
               (1)  contain the information required under Sections
  311.004(a)(1), (4), and (6), Tax Code;
               (2)  assign a name to the zone for identification, with
  the first zone designated as "(Name of municipality) Homestead
  Preservation Reinvestment Zone Number One," and subsequently
  created zones assigned names in the same form numbered
  consecutively in the order of their designation;
               (3)  specify the amount of tax increment to be
  deposited by the municipality into the tax increment fund; and
               (4)  contain findings that the area is unproductive,
  underdeveloped, or blighted as provided by Section 1-g(b), Article
  VIII, Texas Constitution.
         Sec. 373A.1522.  EFFECTIVE DATE OF ZONE.  The zone
  designated by the ordinance adopted under Section 373A.1521 takes
  effect on the date on which the county adopts a final order:
               (1)  agreeing to the creation of the zone, the zone
  boundaries, and the zone termination date specified by the
  municipality under Section 373A.1521(1); and
               (2)  specifying an amount of tax increment to be
  deposited by the county into the tax increment fund that is equal to
  the amount of the tax increment specified by the municipality under
  Section 373A.1521(3).
         SECTION 12.  Subchapter D, Chapter 373A, Local Government
  Code, is amended by adding Section 373A.1541 to read as follows:
         Sec. 373A.1541.  TAX INCREMENT FINANCING AND ABATEMENT.  
  Designation of an area as a homestead preservation reinvestment
  zone is also designation of the area as a reinvestment zone for tax
  increment financing under Chapter 311, Tax Code.
         SECTION 13.  Section 373A.155, Local Government Code, is
  amended to read as follows:
         Sec. 373A.155. COLLECTION AND DEPOSIT OF TAX
  INCREMENTS.  (a)  The municipality designating the zone and the
  county [Each taxing unit that taxes real property located in a zone]
  shall provide for the collection of its taxes on real property
  located in the zone as for any other property taxed by the
  municipality and the county [unit].
         (a-1)  The municipality shall pay into the tax increment fund
  an amount specified in the ordinance designating the zone.
         (b)  The county [Except as provided by Subsection (d), each
  taxing unit] shall pay into the tax increment fund for the zone an
  amount equal to the tax increment paid by the municipality as
  specified in the order adopted under Section 373A.1522 [produced by
  the unit.
         [(c)     A taxing unit shall make a payment required by
  Subsection (b) not later than the 90th day after the delinquency
  date for the unit's property taxes. A delinquent payment incurs a
  penalty of five percent of the amount delinquent and accrues
  interest at an annual rate of 10 percent.
         [(d)     A taxing unit other than the municipality is not
  required to pay into the tax increment fund any of its tax increment
  produced from property located in a zone unless the taxing unit
  enters into an agreement to do so with the governing body of the
  municipality that created the zone. A taxing unit may enter into an
  agreement under this subsection at any time before or after the zone
  is created. The agreement may include conditions for payment of
  that tax increment into the fund and must specify the portion of the
  tax increment to be paid into the fund and the years for which that
  tax increment is to be paid into the fund. The agreement and the
  conditions in the agreement are binding on the taxing unit and the
  municipality].
         SECTION 14.  Sections 373A.157(a) and (e), Local Government
  Code, are amended to read as follows:
         (a)  The tax increment fund is administered by the governing
  body of the municipality in accordance with the project and
  reinvestment zone financing plans [annual plan developed by the
  municipality under Section 373A.156]. Revenue from the tax
  increment fund must be dedicated as provided by this section to the
  development, construction, and preservation of affordable housing
  in the zone by a political subdivision, a community housing
  development organization certified by the municipality, a trust
  created or designated by a political subdivision [the
  municipality], or another entity as provided by this section.
         (e)  The municipality must spend at least 80 percent of the
  revenue expended annually from the tax increment fund for project
  costs, including the purchase of real property, [and] the
  construction or rehabilitation of affordable housing in the zone,
  and infrastructure improvements directly related to supporting the
  construction or rehabilitation of affordable housing in the zone.
  The municipality may spend not more than 10 percent of the revenue
  expended annually from the tax increment fund for administration of
  the zone.
         SECTION 15.  Sections 373A.158(a) and (b), Local Government
  Code, are amended to read as follows:
         (a)  The county is the only taxing unit entitled to receive
  the annual report prepared under Section 311.016(a), Tax Code. [On
  or before the 90th day following the end of the fiscal year of the
  municipality, the governing body of the municipality shall submit
  to the chief executive officer of each taxing unit that imposes
  property taxes on real property in a zone created by the
  municipality under this subchapter a detailed report on the status
  of the zone.]
         (b)  The report must include:
               (1)  the amount and source of revenue in the tax
  increment fund established for the zone;
               (2)  the amount and purpose of expenditures from the
  fund and the income levels of the persons who benefited from the
  expenditures;
               (3)  the number of parcels of property purchased,
  housing units rehabilitated, and housing units constructed and the
  income levels of the persons residing in the housing units;
               (4)  the tax increment base and current captured
  appraised value retained by the zone;
               (5)  the total amount of tax increments received; and
               (6)  any additional information necessary to
  demonstrate good faith [strict] compliance with the provisions of
  this subchapter.
         SECTION 16.  Section 311.0031, Tax Code, is amended to read
  as follows:
         Sec. 311.0031. ENTERPRISE ZONE.  Designation of an area [as
  an enterprise zone] under the following other law [Chapter 2303,
  Government Code] constitutes designation of the area as a
  reinvestment zone under this chapter without further hearing or
  other procedural requirements other than those provided by the
  other law:
               (1)  Chapter 2303, Government Code; and
               (2)  Chapter 373A, Local Government Code.
         SECTION 17.  The following laws are repealed:
               (1)  Sections 373A.152(b), (c), (d), (e), and (f),
  Local Government Code;
               (2)  Section 373A.158(c), Local Government Code; and
               (3)  Sections 373A.108, 373A.153, 373A.154, and
  373A.156, Local Government Code.
         SECTION 18.  This Act takes effect September 1, 2007.
 
 
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
 
 
         I certify that H.B. No. 470 was passed by the House on May 11,
  2007, by the following vote:  Yeas 144, Nays 0, 2 present, not
  voting; and that the House concurred in Senate amendments to H.B.
  No. 470 on May 25, 2007, by the following vote:  Yeas 139, Nays 0, 2
  present, not voting.
 
  ______________________________
  Chief Clerk of the House   
 
         I certify that H.B. No. 470 was passed by the Senate, with
  amendments, on May 22, 2007, by the following vote:  Yeas 31, Nays
  0.
 
  ______________________________
  Secretary of the Senate   
  APPROVED: __________________
                  Date       
   
           __________________
                Governor