Economic Development Basics - Texas Municipal League
Economic Development Basics - Texas Municipal League Economic Development Basics - Texas Municipal League
to the extent provided by the municipality’s charter. (2) A majority of thequalified property tax-paying voters voting at an election held to consider thebond issue must have approved the issuance. Op. Tex. Att'y Gen. No. DM-185 (1992). Funds granted under § 380.002 to a § 501(2)(3) corporation or adevelopment corporation under art. 5190.6 cannot be from the proceeds ofbonds or other obligations of the municipality payable from ad valorem taxes.Make sure the intended use of funds is consistent with the authorizedpurposes of the funds. For instance, hotel occupancy tax can be used only forcertain purposes. Funds from a 4A or 4B sales tax can be used only forcertain purposes. All statutes and "contracts with the voters" applicable to aparticular funding source should be evaluated prior to obligating the funds.The statute also authorizes the use of city staff, city facilities, or city servicesat minimal or no charge, but the safeguards discussed below should beutilized to avoid an allegation of a donation of public property. See Op. Tex.Att'y Gen. No. JC-0109 (1999).c. What is the benefit to the City from utilizing Chapter 380? Flexibility tostructure a program to meet the needs of the city for a particular project.d. Initial Requirements:(1) Establish a program. The statute does not define the term "program."In order to meet the constitutional requirement that a public purpose isserved by the expenditure of public funds or the provision of publicservices, the program should be planned and described in a writtendocument that includes at least the minimal safeguards to achieve thepublic purpose of economic development. The minimum safeguardsare:(a)(b)(c)(d)Written agreement.Outline the steps the business must take to justify publicfunding; for instance, creation of jobs or the expansion of thetax base by construction or enhancement of real propertyimprovements.Provide for the recapture of incentives provided if the businessdoes not meet its obligations.Provide an effective method for measuring whether theindustry has met its obligations.(2) Comply with Budget law contained in Chapter 102 of the LocalGovernment Code.(3) Comply with Municipal Charter for limitations on expenditures.e. Required Findings:That the public purpose of economic development will be accomplishedthrough the program.(15)
That there will be a demonstrable benefit to the municipality from use of theincentives.That sufficient safeguards are in place to determine whether a business hasmet its obligations, and if the obligations have not been met, that theincentives granted can be recaptured.See Op. Tex. Att'y Gen. No. DM-185 (1992) regarding the constitutionality ofChapter 380.2. Local Government CorporationsTex. Transp. Code Ann. § 431.101 (Vernon Supp. 2004); also applicable, Tex. Loc.Gov’t Code Ann. Ch. 394 (Vernon 1999).a. What is a Local Government Corporation?A local government corporation is a non-profit corporation created to aid andact on behalf of one or more local governments to accomplish anygovernmental purpose of those local governments. Tex. Transp. Code Ann.§ 431.101(a) (Vernon Supp. 2004). If the city chooses to create a localgovernment corporation, the city must approve by ordinance or resolution thearticles of incorporation and the bylaws of the corporation. The city isentitled to any income earned by the local government corporation that is notneeded to pay the corporation’s expenses or obligations. The localgovernment corporation is subject to the Public Information Act and theOpen Meetings Act (Transp. Code §§ 431.003, 431.004, 431.005) and mayissue bonds and notes, but does not have taxing authority. The corporation isdissolved when the purposes of the corporation are fulfilled and allobligations of the corporation have been fully paid. On dissolution orliquidation of a corporation created by a city, the title to all assets shall betransferred to the city. Tex. Trans. Code Ann. § 431.186 (Vernon 1999).b. What is the funding source?The corporation may issue bonds and notes. [Transp. Code §§ 431.070;431.101(b)]A corporation may borrow money to meet any expense or need associatedwith the operation of the corporation. [Transp. Code §§ 431.065; 431.101(b)].Additionally, a home-rule municipality with a population of more than100,000 may create programs for the grant of public money to the localgovernment corporation, as an organization exempt from taxation asdescribed in Tex. Loc. Gov’t Code Ann. § 380.002(a). The funds granted bythe municipality may be derived from any source lawfully available to themunicipality, other than from the proceeds of bonds or other obligations ofthe municipality payable from ad valorem taxes. For instance, the grant maybe made from a revenue source approved by the voters for a sports andcommunity venue project authorized by Loc. Gov’t Code Ch. 334 or 335.c. What is the benefit to the city of using a local government corporation?Reasons stated by governmental entities for using local governmentcorporations include:(16)
- Page 3 and 4: 3. Land as an Economic Development
- Page 5 and 6: a. What is it? Sections 4A and 4B o
- Page 7 and 8: Other differencesA 4A sales tax may
- Page 9 and 10: (4) Parking Tax (§ 334.201)Imposed
- Page 11 and 12: c. How can the hotel occupancy tax
- Page 13 and 14: a. What is tax abatement? An exempt
- Page 15: delinquency that exceeds the fair m
- Page 19 and 20: (5) Tax Increment Reinvestment Zone
- Page 21 and 22: for nonpayment of a public improvem
- Page 23 and 24: Attachment 1PRACTICE POINTERS:PUBLI
- Page 25: Attachment 2Notice and Hearing:Sect
to the extent provided by the municipality’s charter. (2) A majority of thequalified property tax-paying voters voting at an election held to consider thebond issue must have approved the issuance. Op. Tex. Att'y Gen. No. DM-185 (1992). Funds granted under § 380.002 to a § 501(2)(3) corporation or adevelopment corporation under art. 5190.6 cannot be from the proceeds ofbonds or other obligations of the municipality payable from ad valorem taxes.Make sure the intended use of funds is consistent with the authorizedpurposes of the funds. For instance, hotel occupancy tax can be used only forcertain purposes. Funds from a 4A or 4B sales tax can be used only forcertain purposes. All statutes and "contracts with the voters" applicable to aparticular funding source should be evaluated prior to obligating the funds.The statute also authorizes the use of city staff, city facilities, or city servicesat minimal or no charge, but the safeguards discussed below should beutilized to avoid an allegation of a donation of public property. See Op. Tex.Att'y Gen. No. JC-0109 (1999).c. What is the benefit to the City from utilizing Chapter 380? Flexibility tostructure a program to meet the needs of the city for a particular project.d. Initial Requirements:(1) Establish a program. The statute does not define the term "program."In order to meet the constitutional requirement that a public purpose isserved by the expenditure of public funds or the provision of publicservices, the program should be planned and described in a writtendocument that includes at least the minimal safeguards to achieve thepublic purpose of economic development. The minimum safeguardsare:(a)(b)(c)(d)Written agreement.Outline the steps the business must take to justify publicfunding; for instance, creation of jobs or the expansion of thetax base by construction or enhancement of real propertyimprovements.Provide for the recapture of incentives provided if the businessdoes not meet its obligations.Provide an effective method for measuring whether theindustry has met its obligations.(2) Comply with Budget law contained in Chapter 102 of the LocalGovernment Code.(3) Comply with <strong>Municipal</strong> Charter for limitations on expenditures.e. Required Findings:That the public purpose of economic development will be accomplishedthrough the program.(15)
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