CHAPTER 374. URBAN RENEWAL IN MUNICIPALITIES
LOCAL GOVERNMENT CODE
TITLE 12. PLANNING AND DEVELOPMENT
SUBTITLE A. MUNICIPAL PLANNING AND DEVELOPMENT
CHAPTER 374. URBAN RENEWAL IN MUNICIPALITIES
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 374.001. SHORT TITLE. This chapter may be cited as the
Texas Urban Renewal Law.
Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987.
Sec. 374.002. LEGISLATIVE FINDINGS; INTENT. (a) The
legislature finds that slum and blighted areas exist in
municipalities in this state and that those areas:
(1) are a serious and growing menace that is injurious and
inimical to the public health, safety, morals, and welfare of the
residents of this state;
(2) contribute substantially and increasingly to the spread of
disease and crime, requiring excessive and disproportionate
expenditures of public funds for the preservation of the public
health and safety, and for crime prevention, correctional
facilities, prosecution and punishment, treatment of juvenile
delinquency, and the maintenance of adequate police, fire, and
accident protection and other public services and facilities; and
(3) constitute an economic and social liability, substantially
impair the sound growth of affected municipalities, and retard
the provision of housing accommodations.
(b) For these reasons, prevention and elimination of slum and
blighted areas are matters of state policy and concern that may
be best addressed by the combined action of private enterprise,
municipal regulation, and other public action through approved
urban renewal plans. The legislature further finds that the
repair and rehabilitation of buildings and other improvements in
affected areas, public acquisition of real property, demolition
of buildings and other improvements as necessary to eliminate
slum or blight conditions or to prevent the spread of those
conditions, the disposition of property acquired in affected
areas and incidental to the purposes stated by this subsection,
and other public assistance to eliminate those conditions are
public purposes for which public money may be spent and the power
of eminent domain exercised.
(c) It is the intent of the legislature that private enterprise
be encouraged to participate in accomplishing the objectives of
urban renewal to the extent of its capacity and with governmental
assistance as provided by this chapter.
Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987.
Sec. 374.003. DEFINITIONS. In this chapter:
(1) "Agency" means a public urban renewal agency created under
this chapter.
(2) "Area of operation" means the area within the corporate
boundaries of a municipality.
(3) "Blighted area" means an area that is not a slum area, but
that, because of deteriorating buildings, structures, or other
improvements; defective or inadequate streets, street layout, or
accessibility; unsanitary conditions; or other hazardous
conditions, adversely affects the public health, safety, morals,
or welfare of the municipality and its residents, substantially
retards the provision of a sound and healthful housing
environment, or results in an economic or social liability to the
municipality. The term includes an area certified as a disaster
area as provided by Section 374.903.
(4) "Board" means a board, commission, department, division,
office, body, or other municipal unit through which a
municipality elects to perform urban renewal powers, duties, or
other functions.
(5) "Bond" means any bond, including a refunding bond, note,
interim certificate, certificate of indebtedness, debenture, or
other obligation.
(6) "Captured market value" means the amount by which the
current market value of property within the boundaries of an
urban renewal project area exceeds its market value at the time
the urban renewal project is designated under this chapter.
(7) "Conservation" means preserving and protecting an area from
blight, and includes preventing an area susceptible to blight
from becoming blighted.
(8) "Clerk" means the municipal clerk or other municipal officer
who is the custodian of the official municipal records.
(9) "Comptroller" means the comptroller of public accounts.
(10) "Deterioration" means impairment of quality, character,
value, or safety due to use, wear and tear, or other physical
causes.
(11) "Federal government" means the United States, an agency of
the United States, or a corporate or other instrumentality of the
United States.
(12) "Mayor" means the mayor or other chief executive officer of
a municipality.
(13) "Obligee" includes a bondholder, an agent or trustee for a
bondholder, a lessor who demises property used in connection with
an urban renewal project to the municipality, an assignee of any
part of the lessor's interest, and the federal government as a
party to a contract with the municipality.
(14) "Planning commission" means a municipal planning commission
established under law or charter.
(15) "Public body" means the state, any political subdivision of
the state, or a department, agency, or instrumentality of the
state or of a political subdivision of the state.
(16) "Real property" includes land, improvements and fixtures on
land, property of any nature that is appurtenant to or used in
connection with land, and every legal or equitable estate,
interest, right, or use in land, including terms for years and
liens.
(17) "Rehabilitate" means to restore to a former state of
solvency or efficiency or to a similar better state.
(18) "Rehabilitation" means the restoration of buildings or
other structures to prevent deterioration of an area that is
tending to become a blighted area or a slum area.
(19) "Slum area" means an area within a municipality that is
detrimental to the public health, safety, morals, and welfare of
the municipality because the area:
(A) has a predominance of buildings or other improvements that
are dilapidated, deteriorated, or obsolete due to age or other
reasons;
(B) is prone to high population densities and overcrowding due
to inadequate provision for open space;
(C) is composed of open land that, because of its location
within municipal limits, is necessary for sound community growth
through replatting, planning, and development for predominantly
residential uses; or
(D) has conditions that exist due to any of the causes
enumerated in Paragraphs (A)-(C) or any combination of those
causes that:
(i) endanger life or property by fire or other causes; or
(ii) are conducive to:
(a) the ill health of the residents;
(b) disease transmission;
(c) abnormally high rates of infant mortality;
(d) abnormally high rates of juvenile delinquency and crime; or
(e) disorderly development because of inadequate or improper
platting for adequate residential development of lots, streets,
and public utilities.
(20) "Tax assessor-collector" means the tax assessor-collector
of the municipality.
(21) "Tax increment" means the amount of property taxes levied
and collected each year on real property in an urban renewal
project area in excess of the amount levied and collected on that
property during the year preceding the date of the adoption of
the urban renewal plan.
(22) "Tax increment base" means the aggregate market value of
all taxable real property in an urban renewal project area on the
date of approval of the urban renewal plan.
(23) "Taxable real property" does not include personal property
or intangible property.
(24) "Taxing entity" means a governmental unit that is
authorized by law to levy taxes on property located in an urban
renewal project area. The term includes the state and a political
subdivision of the state, but does not include a municipality.
(25) "Urban renewal activities" includes slum clearance,
redevelopment, rehabilitation, and conservation activities to
prevent further deterioration of an area that is tending to
become a blighted or slum area. The term includes:
(A) the acquisition of all or part of a slum area or blighted
area or the acquisition of land that is predominantly open and
that, because of obsolete platting, diversity of ownership,
deterioration of structures or site improvements, or for other
reasons, substantially impairs or arrests the sound growth of the
community;
(B) the demolition and removal of buildings and improvements;
(C) the installation, construction, or reconstruction of
streets, utilities, parks, playgrounds, and other improvements
necessary to fulfill urban renewal objectives in accordance with
an urban renewal plan;
(D) the disposition by the municipality of property acquired in
an urban renewal area for use in accordance with an urban renewal
plan, including the sale or initial lease of the property at its
fair value or the retention of the property;
(E) the implementation of plans for a program of voluntary
repair and rehabilitation of buildings or improvements in
accordance with an urban renewal plan; and
(F) the acquisition of real property in an urban renewal area as
necessary to remove or prevent the spread of blight or
deterioration or to provide land for needed public facilities.
(26) "Urban renewal area" means a slum area, blighted area, or a
combination of those areas that the governing body of a
municipality designates as appropriate for an urban renewal
project.
(27) "Urban renewal plan" means a plan for an urban renewal
project that:
(A) conforms to the general municipal plan except as provided by
Section 374.903; and
(B) includes:
(i) any zoning and planning changes;
(ii) building requirements;
(iii) land uses;
(iv) maximum densities;
(v) land acquisition;
(vi) redevelopment;
(vii) rehabilitation;
(viii) demolition and removal of structures; and
(ix) a description of the plan's relationship to local
objectives relating to public transportation, traffic conditions,
public utilities, recreational and community facilities, and
other improvements.
(28) "Urban renewal project" includes any of the following
activities undertaken in accordance with an urban renewal plan:
(A) municipal activities in an urban renewal area that are
designed to eliminate or to prevent the development or spread of
slums and blighted areas;
(B) slum clearance and redevelopment in an urban renewal area;
(C) rehabilitation or conservation in an urban renewal area;
(D) development of open land that, because of location or
situation, is necessary for sound community growth and that is to
be developed, by replatting and planning, for predominantly
residential uses; or
(E) any combination or part of the activities described by
Paragraphs (A)-(D).
Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987.
SUBCHAPTER B. MUNICIPAL POWERS AND DUTIES RELATING TO URBAN
RENEWAL
Sec. 374.011. RESOLUTION; ELECTION. (a) Except as provided by
Section 374.012, a municipality may not exercise a power granted
under this chapter unless:
(1) the governing body of the municipality adopts a resolution
that finds that a slum area or blighted area exists in the
municipality and that the rehabilitation, the conservation, or
the slum clearance and redevelopment of the area is necessary for
the public health, safety, morals, or welfare of the residents of
the municipality; and
(2) a majority of the municipality's voters voting in an
election held as provided by Subsection (b) favor adoption of the
resolution.
(b) Before adopting the resolution, the governing body must give
notice of the proposed resolution and must hold an election on
the question. The notice must be published at least twice in the
newspaper officially designated by the governing body and must
state that, on a date that is specified in the notice and that is
after the 60th day after the date the notice is first published,
the governing body will consider the question of holding an
election to determine whether it should adopt the resolution. On
the date specified in the notice to consider the question, the
governing body may order an election on its own motion to
consider the resolution. The governing body shall order an
election on the question if it receives a petition during the
notice period that is signed by at least five percent of the
qualified voters of the municipality who own taxable real
property included on the tax rolls of the municipality. If the
governing body determines that it is necessary to order an
election, it shall give at least 30 days' notice of the election.
(c) If a majority of the voters voting in the election are
against the resolution, the governing body may not adopt it and
may not propose the resolution again for a one-year period.
Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987.
Sec. 374.012. ALTERNATE APPROVAL PROCESS FOR CERTAIN PROJECTS.
(a) A municipality that did not approve the exercise of urban
renewal powers under Section 374.011 before April 27, 1973, may
approve the exercise of those powers for a specific urban renewal
project in the alternative manner provided by this section.
(b) The governing body of the municipality must order and hold
an election in the manner provided by Section 374.011.
(c) The resolution ordering the election and the notice of the
election must contain:
(1) a complete legal description of the area included in the
proposed project;
(2) a statement of the nature of the proposed project; and
(3) a statement of the total amount of local funds to be spent
on the proposed project.
(d) The ballot proposition at the election need not contain a
complete legal description of the area included in the project,
but the proposition must contain a general description of the
area that is sufficient to give notice to the voters of the
location of the proposed project. The proposition must also
contain a statement of the nature of the proposed project and the
total amount of local funds to be spent on the project.
(e) If the ballot proposition is approved, the municipality may
not exceed the limitations imposed on the project in the
resolution ordering the election with respect to the area,
nature, or amount of local funds spent on the project. If the
municipality desires to expand the project beyond those
limitations, the proposed expansion must be approved at an
election in the manner provided for the original project.
(f) Voter approval is not required for preliminary planning of
an urban renewal project.
(g) This section does not require further elections,
resolutions, or actions of a municipality that has exercised
urban renewal powers under this chapter as of April 27, 1973.
Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987.
Sec. 374.013. USE OF PUBLIC OR PRIVATE RESOURCES. (a) To
further the urban renewal objectives of this chapter, a
municipality may formulate a workable program to use appropriate
private and public resources, including the resources specified
by Subsection (b), to encourage urban rehabilitation, to provide
for the redevelopment of slum and blighted areas, or to undertake
those activities or other feasible municipal activities as may be
suitably employed to achieve the objective of the program. The
program must specifically include provisions relating to:
(1) prevention, through diligent enforcement of housing and
occupancy controls and standards, of the expansion of blight into
areas of the municipality that are free from blight; and
(2) rehabilitation or conservation of slum and blighted areas as
far as practicable to areas that are free from blight through
replanning, removing congestion, providing parks, playgrounds,
and other public improvements, encouraging voluntary
rehabilitation and requiring the repair and rehabilitation of
deteriorated or deteriorating structures, and the clearance and
redevelopment of slum areas.
(b) Each municipality, to the greatest extent determined to be
feasible, shall afford the maximum opportunity, consistent with
the needs of the municipality as a whole, for the rehabilitation
or redevelopment of the urban renewal area by private enterprise.
A municipality shall consider this objective in exercising powers
under this chapter, including:
(1) formulation of a workable program for urban renewal under
Subsection (a);
(2) approval of urban renewal plans consistent with the general
plan of the municipality;
(3) exercise of zoning power;
(4) enforcement of other laws, codes, and regulations relating
to land use, use and occupancy of buildings and improvements, and
the disposition of any property acquired; and
(5) provision of necessary public improvements.
Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987.
Sec. 374.014. MUNICIPAL URBAN RENEWAL PLAN. (a) A municipality
may not prepare an urban renewal plan for an area unless the
governing body of the municipality has, by resolution, declared
the area to be a slum area, a blighted area, or both, and has
designated the area as appropriate for an urban renewal project.
The governing body may not approve an urban renewal plan until a
general plan has been prepared for the municipality. A
municipality may not acquire real property for an urban renewal
project until the governing body has approved the urban renewal
plan as provided by Subsection (d).
(b) Any person may submit an urban renewal plan to the
municipality. The governing body, before approving the plan, must
submit the proposed plan to the urban renewal agency and the
planning commission, if any, for review and recommendations as to
the plan's conformity with the general plan for municipal
development. The urban renewal agency and the planning commission
shall submit written recommendations relating to the proposed
urban renewal plan to the governing body within 30 days after the
date the plan is received for review. On receipt of those
recommendations, the governing body shall hold a hearing relating
to the proposed plan as provided by Subsection (c). If
recommendations are not proposed within the 30-day period, the
governing body may hold the hearing without recommendations.
(c) The governing body must hold a public hearing on the
proposed urban renewal plan before it may approve the urban
renewal plan. The governing body shall publish notice of the
hearing three times in a newspaper of general circulation in the
municipality. The first notice must be published before the 30th
day before the date of the hearing. The notice must state the
time, date, place, and purpose of the hearing, must generally
identify the urban renewal area, and must describe the general
scope of the urban renewal project under consideration.
(d) After the hearing, the governing body may approve an urban
renewal plan if the governing body finds that:
(1) a feasible method exists for the relocation, in decent,
safe, affordable, and sanitary accommodations, of families or
individuals who will be displaced from the urban renewal area,
without undue hardship to those persons;
(2) the urban renewal plan conforms to the general plan for
municipal development; and
(3) the urban renewal plan offers the maximum opportunity,
consistent with the needs of the municipality as a whole, for the
rehabilitation or redevelopment of the urban renewal area by
private enterprise.
(e) An urban renewal plan may be modified at any time. If
modified after the lease or sale by the municipality of real
property within the urban renewal project area, the modification
is subject to the rights at law or in equity of the lessee or
purchaser, or that person's successor in interest. If a proposed
modification affects the street layout, land use, public
utilities, zoning, if any, open space, or density of the area,
the modification may not be made until it is submitted to the
planning commission and a report is made to the governing body as
provided by Subsection (b).
(f) After the municipality approves an urban renewal plan, the
provisions of the plan that relate to the future use of the
affected property and the building requirements applicable to the
property control with respect to that property.
(g) If a building in a good state of repair is located in an
urban renewal area and may be incorporated into an urban renewal
project pattern or plan for that area, the building may not be
acquired without the consent of the owner. If the owner of
property in an urban renewal area agrees to use the property in a
manner that is consistent with the purposes of the urban renewal
plan and if improvements to the property do not constitute a fire
or health hazard, that property is not subject to the exercise of
eminent domain authority. A property owner may contest before the
governing body any exercise of eminent domain authority that
affects that person's individual ownership and may appeal to the
district court. The review on appeal is by trial de novo.
Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987.
Sec. 374.015. GENERAL MUNICIPAL POWERS RELATING TO URBAN
RENEWAL. (a) A municipality may exercise all powers necessary
or convenient to carry out the purposes of this chapter,
including the power to:
(1) conduct preliminary surveys to determine if undertaking an
urban renewal project is feasible;
(2) conduct urban renewal projects within its area of operation;
(3) execute contracts and other instruments necessary or
convenient to the exercise of its powers under this chapter;
(4) provide, arrange, or contract for the furnishing or repair
by any person of services, privileges, works, streets, roads,
public utilities, or other facilities in connection with an urban
renewal project, including installation, construction, and
reconstruction of streets, utilities, parks, playgrounds, and
other public improvements necessary to carry out an urban renewal
project;
(5) acquire any real property, including improvements, and any
personal property necessary for administrative purposes, that is
necessary or incidental to an urban renewal project, hold,
improve, clear, or prepare the property for redevelopment,
mortgage or otherwise encumber or dispose of the real property,
insure or provide for the insurance of real or personal property
or municipal operations against any risk or hazard and to pay
premiums on that insurance, and enter any necessary contracts;
(6) invest urban renewal project funds held in reserves or
sinking funds, or not required for immediate disbursement, in
property or securities in which banks may legally invest funds
subject to their control, redeem bonds issued under Section
374.026 at the redemption price established in the bond, or
purchase those bonds at less than the redemption price, and
cancel the bonds redeemed or purchased;
(7) borrow money and apply for and accept advances, loans,
grants, contributions, and other forms of financial assistance
from the federal, state, or county government, other public body,
or other public or private sources for the purposes of this
chapter, give any required security, and make and carry out any
contracts in connection with the financial assistance;
(8) make plans necessary to carry out this chapter in its area
of operation, contract with any person in making and carrying out
the plans, and adopt, approve, modify or amend the plans;
(9) develop, test, and report methods and techniques for the
prevention of slums and urban blight, conduct demonstrations and
other activities in connection with those methods and techniques,
and apply for, accept, and use federal grants made for those
purposes;
(10) prepare plans and provide reasonable assistance for the
relocation of persons displaced from an urban renewal project
area, including families, business concerns, and others, as
necessary to acquire possession and to clear the area in order to
conduct the urban renewal project;
(11) appropriate funds and make expenditures as necessary to
implement this chapter and, subject to Subsection (c), levy taxes
and assessments for that purpose;
(12) close, vacate, plan, or replan streets, roads, sidewalks,
ways, or other places, plan, replan, zone, or rezone any part of
the municipality and make exceptions from building regulations,
and enter agreements with an urban renewal agency vested with
urban renewal powers under Subchapter C, which may extend over
any period, restricting action to be taken by the municipality
under any of the powers granted under this chapter;
(13) organize, coordinate, and direct the administration of this
chapter within the area of operation as those provisions apply to
the municipality to most effectively promote and achieve the
purposes of this chapter and establish new municipal offices or
reorganize existing offices as necessary to most effectively
implement those purposes; and
(14) issue tax increment bonds.
(b) A municipality may include in a contract made with the
federal government for financial assistance for an urban renewal
project the provisions and conditions imposed by federal law that
the municipality considers reasonable, appropriate, and
consistent with the purposes of this chapter.
(c) A municipality may not levy a tax or assessment under or for
the purposes of this chapter until the proposed levy is submitted
to the municipality's voters in an election on the question and a
majority of those voting approve the levy.
(d) Except as provided by Section 374.016, a municipality may
acquire by condemnation any interest in real property, including
a fee simple interest, that the municipality considers necessary
for or in connection with an urban renewal project. Property
dedicated to a public use may be acquired in that manner, except
that property belonging to the state or to a political
subdivision of the state may not be acquired without the consent
of the state or political subdivision.
Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987.
Sec. 374.016. SLUM CLEARANCE. (a) In this section, "slum
clearance and redevelopment section" means any substantial
contiguous part of an urban renewal area that a municipality
proposes to acquire and clear of all buildings, structures, and
other improvements for redevelopment and reuse in accordance with
the urban renewal plan.
(b) If an urban renewal project includes a slum clearance and
redevelopment section that the municipality proposes to use for
other than public use, the municipality may not use condemnation
to acquire that property unless the municipality determines by
resolution that the rehabilitation of that property without
clearance would be impractical and ineffective. That
determination must be based on a finding that at least 50 percent
of the structures in the section are dilapidated beyond the point
of feasible rehabilitation or are otherwise unfit for
rehabilitation, and that there exist other blighting
characteristics, such as overcrowding of structures on the land,
mixed uses of structures, deficient streets, or deficiencies in
public utilities or recreational and community facilities. A
municipality may exercise eminent domain authority as provided by
Chapter 21, Property Code.
Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987.
Sec. 374.017. DISPOSITION OF PROPERTY. (a) Subject to the
covenants, conditions, and restrictions, including covenants
running with the land, that the municipality considers to be in
the public interest or necessary to implement this chapter and
that are written into the instrument transferring or conveying
title, and after the governing body of the municipality approves
the urban renewal plan, the municipality may:
(1) sell, lease, or otherwise transfer real property or an
interest in real property in an urban renewal area for
residential, recreational, commercial, industrial, or other uses,
including a public use, and enter contracts relating to the
transfer; or
(2) retain the property or interest for public use in accordance
with the urban renewal plan.
(b) The original owner from whom property was acquired under
this chapter by condemnation or through threat of condemnation
has the first right to repurchase the property at the price at
which it is offered.
(c) The purchaser or lessee of property transferred under this
section, and a successor in interest to such a person, including
an assignee, must devote the property to the uses specified in
the urban renewal plan and may be obligated to comply with
conditions specified in the deed of conveyance, including the
requirement to begin any improvements required by the urban
renewal plan within a reasonable time.
(d) Real property or an interest in real property subject to
this section may only be sold, leased, or otherwise transferred
or retained at not less than the fair value of the property for
uses in accordance with the urban renewal plan. In determining
the fair value, the municipality shall consider:
(1) the uses provided in the urban renewal plan;
(2) any restrictions on and any covenants, conditions, and
obligations assumed by the purchaser, lessee, or municipality in
retaining the property;
(3) the objectives of the plan for the prevention of the
recurrence of slums or blighted areas; and
(4) any other matters that the municipality specifies as
appropriate.
(e) The municipality or urban renewal agency may provide in an
instrument of conveyance to a private purchaser or lessee that
the purchaser or lessee may sell any or all of the unimproved
property without profit to the seller. After improving a parcel
of real property in accordance with the development plan adopted
for the area, the purchaser may sell the parcel before completion
of the development of the area or tract purchased, but the sale
does not relieve that purchaser from the obligation of completing
the development of that area or tract. The purchaser may sell a
parcel of land purchased for redevelopment to another person who
is obligated to improve the parcel as provided by the development
plan for that project if the resale is without profit to the
seller and if any subsequent purchaser is required to improve the
property as provided by the urban renewal plan and by the
conditions contained in the deed of conveyance.
(f) A municipality shall sell real property acquired by the
municipality that is to be sold to private developers in
accordance with the urban renewal plan as rapidly as is feasible
in the public interest and consistent with the goals of the urban
renewal plan. An instrument executed by a municipality or by an
urban renewal agency that purports to convey any right, title, or
interest in any property under this chapter is presumed to be
executed in compliance with this chapter with respect to the
title or interest of any bona fide lessee, transferee, or
purchaser of the property.
(g) A municipality that sells real property in an urban renewal
area to a private person must conduct the sale through
competitive sealed bids after advertising the offer in the
official publication or a newspaper of general circulation. The
advertisement must be published once before the 15th day before
the date of the sale and must invite bids for the purchase of
real property in the urban renewal area either in whole or in
parcels as determined by the municipality. Before advertising for
bids, the municipality shall adopt as part of the specifications
in the general plan of improvement any conditions binding on the
purchaser or the purchaser's successors in title, including heirs
and assignees. The municipality or urban renewal agency may
accept the highest and best responsible bid. The purchase price
must be paid in cash. If the municipality or agency determines
that the bids received are not satisfactory, it may reject all
the bids and readvertise the offer. The urban renewal agency may
not sell the property until the price and conditions of sale are
approved by the governing body of the municipality. The
municipality shall sell any real property acquired in connection
with an urban renewal and rehabilitation project within a
reasonable time for the purposes applicable to each project,
except for the property retained by the municipality for public
use. Property to be resold shall be sold within a reasonable
time, taking into account the general economic situation at the
time of sale.
(h) The municipality may temporarily lease any real property
acquired in an urban renewal area, except property that is not
fit for human habitation or that is declared substandard by any
governmental agency. The lease must provide for a right of
cancellation that permits the municipality to sell or dispose of
the property for the purposes of this chapter.
(i) The former owner of any real property that is acquired under
this chapter and that is not dedicated within a reasonable time
to the purposes applicable to the urban renewal project for which
it was acquired is entitled, after notice, to repurchase the
property at the price for which it was acquired, less any actual
damages sustained by the former owner because of the taking of
the property, unless the property is devoted to the urban renewal
purposes within 60 days after the date the former owner gives the
record owner and the municipality written notice of the intention
to exercise the right of repurchase. After a repurchase, any
buildings placed on or allowed to remain on the property must
conform to the pattern and intent of the urban renewal project if
the project is completed.
(j) Any purchaser or lessee who is a private developer of any
part of the real property acquired under this chapter may use
that property as security to finance the development of the
property. The purchaser or lessee may execute and deliver to a
lender notes, deeds of trust with powers of sale, mortgages, and
other instruments required in connection with obtaining and
securing the repayment of the loan. The purchaser or lessee has
all the rights, titles, and incidents of ownership available to a
purchaser or lessee of land generally, and the person is entitled
to mortgage and encumber the property for either the purchase
price or for improvements in accordance with the objectives of
this chapter. Any subsequent owner or lessee who acquires title
through foreclosure of a lien given to secure the indebtedness or
through a conveyance or assignment in satisfaction of debt takes
title subject only to the restrictive covenants related to the
use and improvement of the land that are contained in the
original conveyance from the municipality. The owner's or
lessee's interest is not subject to any condition precedent or
condition subsequent that would result in reverter or forfeiture
of title or to any restraint as to the amount for which the
property may be resold or leased.
(k) Notwithstanding any other provision of this chapter or of
any other law relating to competitive bid requirements, a
municipality or urban renewal agency may sell urban renewal land
for uses in accordance with an urban renewal plan to a public or
private nonprofit corporation or foundation. The sale must be for
at least the fair market value of the land as determined by the
municipality or urban renewal agency.
Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987.
SUBCHAPTER C. URBAN RENEWAL AGENCY
Sec. 374.021. EXERCISE OF URBAN RENEWAL PROJECT POWERS. (a) A
municipality may exercise urban renewal project powers through a
board or through municipal officers selected by the governing
body of the municipality by resolution. The municipality may
exercise those powers through an urban renewal agency created
under this subchapter if the governing body by resolution
determines that the creation of an urban renewal agency is in the
public interest. An urban renewal agency created under this
subchapter may exercise all the urban renewal project powers of
the municipality.
(b) In this section, "urban renewal project powers" includes the
rights, powers, functions, and duties of a municipality under
this chapter. The term does not include the power to:
(1) determine an area as a slum area, blighted area, or both and
to designate that area as appropriate for an urban renewal
project;
(2) approve and amend urban renewal plans and hold public
hearings relating to those plans;
(3) establish a general plan for the locality as a whole;
(4) establish a workable program under Section 374.013;
(5) make determinations and findings under Section 374.011(a),
374.013(b), or 374.014(d);
(6) issue general obligation bonds; and
(7) appropriate funds, levy taxes and assessments, and exercise
other functions under Subdivisions (11) and (12) of Section
374.015(a).
Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987.
Sec. 374.022. CREATION OF URBAN RENEWAL AGENCY. (a) An urban
renewal agency created in a municipality is a public body
corporate and politic.
(b) An urban renewal agency may not transact business or
exercise any powers under this chapter until the governing body
of the municipality:
(1) adopts a resolution as provided by Section 374.011; and
(2) elects to exercise urban renewal project power through an
urban renewal agency as provided by Section 374.021(a).
Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987.
Sec. 374.023. BOARD OF COMMISSIONERS. (a) If an urban renewal
agency is created by a municipality, the mayor of the
municipality, with the advice and consent of the governing body
of the municipality, shall appoint a board of commissioners for
the urban renewal agency.
(b) The board must be composed of at least five but not more
than nine members. A member serves a two-year term. The
commissioners shall designate one member to serve as chairman and
one to serve as vice-chairman for one-year terms. A member of the
board must be a resident of the municipality and a real property
owner. The number of commissioners shall be determined by the
governing body at the time of the appointment of the
commissioners and may not be changed more than once every two
years. At the time of the initial appointments, a simple majority
of the commissioners shall be designated to serve for a one-year
term and the remaining members for two-year terms. If a vacancy
occurs, the governing body shall fill the vacancy for the
unexpired term in the same manner as the initial appointment.
(c) A commissioner serves without compensation but is entitled
to necessary expenses incurred in the performance of official
duties, including travel expenses.
(d) A certificate of appointment, which is conclusive evidence
of the proper appointment of each commissioner, must be filed
with the clerk of the municipality.
(e) If the board is composed of five, seven, or nine members,
any action by the board, to be valid, must be adopted or rejected
by a majority of the total number of the commissioners.
(f) The governing body may remove a commissioner for
inefficiency, neglect of duty, or misconduct in office after
notice of the charges and a hearing. The commissioner must
receive a copy of the charges before the 10th day before the date
of the hearing and must have the opportunity to be heard either
in person or by counsel.
Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987.
Sec. 374.024. AGENCY PERSONNEL; REPORT. (a) An urban renewal
agency may employ an executive director, technical experts, and
other agents and employees as it determines necessary, and may
determine the qualifications, duties, and compensation of those
personnel. An agency may employ or retain its own counsel and
legal staff to perform required legal services.
(b) On or before March 31 of each year, an urban renewal agency
shall file with the municipality a report of its activities for
the preceding calendar year. If requested by the governing body
of the municipality, the agency shall file a quarterly report.
The report must include a complete financial statement by the
agency that shows its assets, liabilities, income, and operating
expenses as of the end of the reporting period.
(c) At the time the report is filed, the agency shall publish
notice of the filing in a newspaper of general circulation in the
municipality. The notice must state that the report is available
for inspection during business hours in the office of the urban
renewal agency and in the office of the municipal secretary.
Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987.
Sec. 374.025. APPROVAL REQUIREMENT. An urban renewal agency
created under this subchapter may not undertake a renewal or
rehabilitation project until the area proposed as a renewal or
rehabilitation area and the plan of improvement for the project
area are approved by the governing body of the municipality.
Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987.
Sec. 374.026. URBAN RENEWAL BONDS. (a) An urban renewal agency
created under this subchapter may issue bonds from time to time
to finance an urban renewal project, including the payment of
principal and interest on any advances for surveys and plans. The
agency may also issue refunding bonds for the payment or
retirement of bonds previously issued.
(b) Bonds issued under this section must be made payable, both
as to principal and interest, only from the income, proceeds,
revenues, and funds of the urban renewal agency that are derived
from or held in connection with the conduct of urban renewal
projects. Payment of the principal and interest of the bonds may
be further secured by a pledge of any loan, grant, or
contribution from the federal government, or from any other
source, in aid of an urban renewal project, or by a mortgage of
such a project if title is held by the urban renewal agency.
(c) A bond issued under this section is not an indebtedness of
the state or of a political subdivision of the state other than
the issuing urban renewal agency and is not subject to any other
law relating to the authorization, issuance, or sale of bonds.
(d) A bond issued under this section is issued for an essential
public and governmental purpose and is, with the interest on the
bond and the income from it, exempt from taxes.
(e) A bond issued under this section must be authorized by a
resolution or ordinance of the governing body of the urban
renewal agency and may be issued in one or more series. The bond
must bear the date, be payable on demand or mature at a time or
times, bear interest at a rate, be in a denomination or
denominations, be in either coupon or registered form, carry
conversion or registration privileges, have a rank or priority,
have a manner of execution, be payable in a medium of payment and
at a place or places of payment, be subject to terms of
redemption, with or without premium, be secured in a manner, and
have any other characteristics, as provided by the resolution,
trust indenture, or mortgage issued in relation to the bond.
(f) A bond issued under this section may be sold at not less
than par at a public sale held after notice is published in a
newspaper of general circulation in the area of operation and in
any other medium of publication determined by the urban renewal
agency and may also be exchanged for other bonds on a par basis.
A bond issued under this section is fully negotiable.
(g) A bond issued under this section may be sold to the federal
government at not less than par at a private sale. If less than
all of the authorized principal amount of the bonds is sold to
the federal government, the balance may be sold at a private sale
at not less than par at an interest cost to the urban renewal
agency that does not exceed the interest cost to the agency of
the part of the bonds sold to the federal government.
(h) If the officials whose signatures appear on bonds or coupons
issued under this section cease to be officials of the urban
renewal agency before the delivery of the bonds, their signatures
are valid for all purposes as if they had remained in office
until delivery.
(i) In an action involving the validity or enforceability of a
bond issued under this subchapter or the security for such a
bond, a bond that recites in substance that it was issued by an
urban renewal agency in connection with an urban renewal project
is conclusively considered to have been issued for those
purposes, and the project is conclusively considered to have been
conducted in accordance with this chapter.
(j) A bank, trust company, banker, savings bank and institution,
savings and loan association, investment company, and other
person conducting a banking or investment business, an insurance
company, insurance association, and other person conducting an
insurance business, and an executor, administrator, curator,
trustee, and other fiduciary may invest a sinking fund, money, or
other fund belonging to it or in its control in any bonds or
obligations issued by an urban renewal agency under this section.
Those bonds or other obligations must be secured by an agreement
between the issuer and the federal government in which the issuer
agrees to borrow from the federal government and the federal
government agrees to lend to the issuer, before the maturity of
the bonds or other obligations, money in an amount that, together
with any other money irrevocably committed to the payment of
interest on the bonds or other obligations, is sufficient to pay
the principal of the bonds or other obligations with interest to
maturity. Under the terms of the agreement the money must be used
to pay the principal of and interest on the bonds or other
obligations at maturity. Those bonds and other obligations are
authorized security for a public deposit. Any person may use
funds owned or controlled by the person to purchase those bonds
or obligations. This subsection does not relieve a person of a
duty to exercise reasonable care in selecting securities.
Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987.
SUBCHAPTER D. TAX INCREMENT FINANCING FOR URBAN RENEWAL PROJECTS
Sec. 374.031. ELECTION REQUIRED. (a) A municipality may not
use the tax increment method of financing prescribed under this
subchapter unless a majority of the qualified voters of the
municipality voting on the question approve that method of
financing in an election held by the municipality.
(b) The ballot shall be printed to provide for voting for or
against the proposition: "Use of tax increment financing for
urban renewal purposes."
(c) The election may be held in conjunction with an election
held under Section 374.011 or 374.012.
(d) This referendum is not required if the constitutional
amendment on tax increment financing is approved by the voters.
Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987.
Sec. 374.032. TAX INCREMENT FUND. On approval of an urban
renewal plan by the governing body of a municipality and on
approval of tax increment financing as required by Section
374.031, the governing body by resolution shall establish a fund
known as the tax increment fund.
Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987.
Sec. 374.033. COMPUTATION OF TAX INCREMENTS. (a) A tax
increment is computed by multiplying the total in property taxes
levied and collected by the municipality and all other taxing
entities on the taxable real property in an urban renewal project
area in a year by a fraction, the numerator of which is equal to
that year's market value of all taxable real property in the area
minus the tax increment base and the denominator of which is
equal to that year's market value of all taxable real property in
the area.
(b) For the purposes of this chapter, only the tax
assessor-collector determines the market value of property
located in an urban renewal project area during the time that the
project exists. The determination requires the concurrence of the
comptroller. A property owner who is aggrieved by a determination
of the tax assessor-collector has the same right of appeal as
that provided by law to owners of property not affected by this
chapter.
(c) At the time an urban renewal project is designated by the
governing body, the tax assessor-collector shall, with the
concurrence of the comptroller, certify to the governing body the
market value of property within the boundaries of the urban
renewal district. The tax assessor-collector shall include at its
most recently determined market value any property that is
taxable at the time that the urban renewal project is designated
and shall include at zero any property that is exempt from
taxation at the time that the district is designated.
(d) The tax assessor-collector shall annually certify to the
governing body the amount of the captured market value of
property within the boundaries of the district and the amount of
tax increments produced from that captured market value. The tax
assessor-collector shall make the initial certification not later
than one year from the date on which an urban renewal project is
designated.
(e) For any year in which taxes are to be paid into the tax
increment fund established under Section 374.032, a taxing entity
may not consider any captured market value with respect to an
urban renewal project in computing a debt limitation or for any
other purpose except to determine the amount to be paid into the
tax increment fund.
Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987.
Sec. 374.034. ALLOCATION OF TAX COLLECTIONS AND TAX INCREMENTS;
TAX INCREMENT FUND. (a) For the purposes of this chapter, the
tax assessor-collector has the sole authority and the duty to
collect the taxes levied by the municipality and all other taxing
entities on property located within an urban renewal project and
to allocate taxes and tax increments in the manner required by
this chapter.
(b) Beginning with the first payment of taxes levied by the
municipality or other taxing entity after the time an urban
renewal project is designated, the receipts from those taxes
shall be allocated and paid as provided by this subsection. The
receipts from the property taxes collected that are produced from
the tax increment base shall first be allocated and paid to the
municipality or appropriate taxing entity. All tax increments
produced from the captured market value of the property located
within the urban renewal project district shall then be deposited
into the tax increment fund established for the project.
Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987.
Sec. 374.035. TAX INCREMENT BONDS. (a) A municipality may
issue tax increment bonds, the proceeds of which may be used to
pay redevelopment costs relating to the urban renewal project for
which the bonds were issued or to satisfy claims of holders of
those bonds. On the approval of two-thirds of the qualified
voters of the municipality, the municipality may also issue
refunding bonds for the payment or retirement of tax increment
bonds previously issued by the municipality. The tax increment
bonds may be made payable, both as to principal and interest,
only from:
(1) tax increments allocated to and paid into the tax increment
fund established by the municipality under Section 374.032;
(2) private sources;
(3) contributions or other financial assistance from this state
or the United States; or
(4) a combination of those methods.
(b) A tax increment bond issued under this section, with the
interest and income from the bond, is exempt from taxation. The
period of maturity of a tax increment bond is limited to a
maximum of 20 years from the date of issuance. Bonds issued under
this section must be authorized by a resolution or ordinance of
the governing body of the municipality and may be issued in one
or more series. The bond must have the characteristics prescribed
by Section 374.026(e) as provided by the resolution, trust
indenture, or mortgage issued in relation to the bond.
(c) A bond issued under this section may be sold at not less
than par at a public sale after notice published in a newspaper
of general circulation in the municipality and in any other
medium of publication determined by the governing body or may be
exchanged for other bonds on a par basis. A bond issued under
this section is fully negotiable.
(d) In an action or proceeding involving the validity or
enforceability of a bond issued under this section or the
security for such a bond, a bond that recites in substance that
it is issued by the municipality in connection with an urban
renewal project is conclusively considered to have been issued
for those purposes, and the urban renewal project is conclusively
considered to have been planned, located, and carried out in
accordance with this chapter.
(e) A bank, trust company, banker, savings bank and institution,
savings and loan association, investment company, and other
person conducting a banking or investment business, an insurance
company, insurance association, and other person conducting an
insurance business, and an executor, administrator, curator,
trustee, and other fiduciary may invest a sinking fund, money, or
other fund belonging to it or in its control in any tax increment
bonds issued by a municipality under this section. The bond is an
authorized security for a public deposit. Any person may use
funds owned or controlled by the person to purchase those bonds.
This subsection does not relieve a person of a duty to exercise
reasonable care in selecting securities.
(f) Tax increment bonds may be paid only out of the tax
increment fund established under Section 374.032. The governing
body of the municipality may irrevocably pledge all or part of
the fund to the payment of those bonds or notes. The fund or the
designated part of the fund may only be used for the payment of
those bonds and interest on those bonds until they have been
fully paid. A holder of those bonds or coupons relating to the
bonds has a lien against the fund for the payment of the bonds or
notes and the interest on them and may protect and enforce that
lien by an action at law or in equity.
(g) To increase the security and marketability of tax increment
bonds, the municipality, according to its best judgment, may:
(1) create a lien for the benefit of the bondholders on a public
improvement or public work financed by the bonds or on the
revenue from the public improvement or public work; or
(2) make covenants and take other action as necessary,
convenient, or desirable to additionally secure the bonds or make
the bonds more marketable.
(h) A tax increment bond issued under this section is not a
general obligation of the municipality, is not a charge against
its general credit or taxing powers, and is not payable other
than as provided by this chapter. The tax increment bond must
state those limitations on its face.
(i) A tax increment bond issued under this section may not be
included in computing the debt of the issuing municipality.
(j) Tax increment bonds may not be issued in an amount exceeding
the aggregate costs of implementing the urban renewal plan for
the project for which they were issued.
Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987.
Sec. 374.036. DISBURSEMENTS FROM TAX INCREMENT FUND. (a) Money
may be disbursed from a tax increment fund only to satisfy the
claims of holders of tax increment bonds issued in aid of the
urban renewal project with respect to which the fund was
established or to pay project costs. In this section, "project
costs" means any expenditure made or estimated to be made, or
monetary obligations incurred or estimated to be incurred, by the
municipality that are listed in an urban renewal project, plus
any incidental costs, less any income or revenues other than tax
increments, received or reasonably expected to be received by the
municipality in connection with the implementation of the urban
renewal plan. Those project costs include:
(1) capital costs, including:
(A) the actual costs of the construction of public works or
improvements, new buildings, structures, and fixtures;
(B) the costs of demolition, alteration, remodeling, repair, or
reconstruction of existing buildings, structures, and fixtures;
(C) the costs of acquisition of equipment; and
(D) the costs of clearing and grading of land;
(2) financing costs, including interest paid to holders of tax
increment bonds issued to pay for project costs and any premium
paid over the principal amount because of the redemption of the
obligation before maturity;
(3) professional service costs, including costs incurred for
architectural, planning, engineering, or legal services;
(4) imputed administrative costs, including reasonable charges
for the time spent by municipal employees in connection with the
implementation of an urban renewal plan; and
(5) organizational costs, including the cost of conducting
studies and the cost of informing the public with respect to the
creation of urban renewal projects and the implementation of
project plans.
(b) Subject to any agreement with holders of tax increment
bonds, money in a tax increment fund may be temporarily invested
in the same manner as other municipal funds.
(c) After project costs and tax increment bonds issued with
respect to an urban renewal project have been paid or payment has
been arranged, and subject to any agreement with bondholders, any
money remaining in a tax increment fund shall be paid over to the
municipality and to other taxing entities levying taxes on
property within the project in amounts belonging to each entity.
Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987.
Sec. 374.037. MUNICIPAL ANNUAL REPORT; STATEMENT. (a) Before
July 2 each year, the governing body of the municipality shall
submit to the chief executive officer of each taxing entity a
report on the status of each urban renewal district. The report
must include statements of:
(1) the amount and source of revenue in the tax increment fund
established under Section 374.032;
(2) the amount and purpose of expenditures from the fund;
(3) the amount of principal and interest due on any outstanding
bonded indebtedness;
(4) the tax increment base and the current captured market value
retained by the urban renewal project; and
(5) the captured market value shared by the municipality and
other taxing entities, the total in received tax increments, and
any additional information required to demonstrate compliance
with the tax increment financing plan adopted by the governing
body.
(b) On or before July 1 each year, the governing body shall
publish a statement in a newspaper of general circulation in the
municipality showing:
(1) the tax increment received and expended during the previous
year;
(2) the original market value and captured market value of all
property located within the urban renewal project;
(3) the amount in outstanding indebtedness incurred in aid of
the urban renewal project; and
(4) any additional information the governing body considers
necessary.
Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987.
SUBCHAPTER Z. MISCELLANEOUS PROVISIONS
Sec. 374.901. USE OF ACQUIRED PROPERTY FOR PUBLIC HOUSING. (a)
Except as provided by Subsection (b), real property acquired
under this chapter may not be sold, leased, granted, conveyed, or
otherwise made available for public housing.
(b) Real property acquired under this chapter may be made
available for public housing if the municipality holds an
election at which a majority of the qualified voters voting in
the election approve that use of the property. The municipality
shall conduct the election in the manner provided for an election
under Section 374.011. The ballot