CHAPTER 377. MUNICIPAL DEVELOPMENT DISTRICTS
LOCAL GOVERNMENT CODE
TITLE 12. PLANNING AND DEVELOPMENT
SUBTITLE A. MUNICIPAL PLANNING AND DEVELOPMENT
CHAPTER 377. MUNICIPAL DEVELOPMENT DISTRICTS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 377.001. DEFINITIONS. In this chapter:
(1) "Board" means the board of directors of a municipal
development district.
(2) "District" means a municipal development district created
under this chapter.
(3) "Development project" means:
(A) a "project" as that term is defined by Sections
505.151-505.158; or
(B) a convention center facility or related improvement such as
a convention center, civic center, civic center building, civic
center hotel, or auditorium, including parking areas or
facilities that are used to park vehicles and that are located at
or in the vicinity of other convention center facilities.
Added by Acts 1997, 75th Leg., ch. 529, Sec. 1, eff. Sept. 1,
1997.
Amended by:
Acts 2005, 79th Leg., Ch.
232, Sec. 1, eff. September 1, 2005.
Acts 2007, 80th Leg., R.S., Ch.
885, Sec. 3.23, eff. April 1, 2009.
Sec. 377.002. SCOPE. (a) A municipality may create a district
as provided in this chapter in:
(1) all or part of the boundaries of the municipality;
(2) all or part of the boundaries of the municipality and all or
part of the boundaries of the municipality's extraterritorial
jurisdiction; or
(3) all or part of the municipality's extraterritorial
jurisdiction.
(b) The municipality may include territory outside of the
municipality only to the extent that territory is in the
municipality's extraterritorial jurisdiction.
Added by Acts 1997, 75th Leg., ch. 529, Sec. 1, eff. Sept. 1,
1997. Amended by Acts 2001, 77th Leg., ch. 20, Sec. 1, eff. May
1, 2001.
Amended by:
Acts 2005, 79th Leg., Ch.
232, Sec. 2, eff. September 1, 2005.
Sec. 377.003. CONSTITUTIONAL PURPOSE. This chapter creates a
program under Section 52-a, Article III, Texas Constitution.
Added by Acts 2005, 79th Leg., Ch.
232, Sec. 3, eff. September 1, 2005.
SUBCHAPTER B. MUNICIPAL DEVELOPMENT DISTRICT
Sec. 377.021. CREATION. (a) A municipality may call an
election on the question of creating a municipal development
district under this chapter to plan, acquire, establish, develop,
construct, or renovate one or more development projects
beneficial to the district.
(b) The order calling the election must:
(1) define the boundaries of the district; and
(2) call for the election to be held within those boundaries.
(c) The ballot at an election held under this section must be
printed to permit voting for or against the proposition:
"Authorizing the creation of the ____ Municipal Development
District (insert name of district) and the imposition of a sales
and use tax at the rate of ____ of one percent (insert
one-eighth, one-fourth, three-eighths, or one-half, as
appropriate) for the purpose of financing development projects
beneficial to the district."
(d) The district is created if a majority of the registered
voters of the proposed district voting at the election favor
creation of the district.
(e) If a majority of the registered voters of the proposed
district voting at the election to create the district vote
against creation of the district, the municipality may not hold
another election on the question of creating a municipal
development district before the first anniversary of the most
recent election concerning creation of a district.
(f) The Election Code governs an election held under this
chapter.
(g) In the order calling the election, the municipality may
provide for the district boundaries to conform automatically to
any changes in the boundaries of the portion of the municipality
or the municipality's extraterritorial jurisdiction included in
the district, and the election shall be held on one of the four
uniform election dates under Section 41.001, Election Code.
Added by Acts 1997, 75th Leg., ch. 529, Sec. 1, eff. Sept. 1,
1997. Amended by Acts 2001, 77th Leg., ch. 20, Sec. 2, eff. May
1, 2001.
Amended by:
Acts 2005, 79th Leg., Ch.
232, Sec. 4, eff. September 1, 2005.
Sec. 377.022. POLITICAL SUBDIVISION; OPEN MEETINGS. (a) A
district is a political subdivision of this state and of the
municipality that created the district.
(b) A district is subject to Chapter 551, Government Code.
Added by Acts 1997, 75th Leg., ch. 529, Sec. 1, eff. Sept. 1,
1997.
Amended by:
Acts 2005, 79th Leg., Ch.
232, Sec. 5, eff. September 1, 2005.
SUBCHAPTER C. BOARD OF DIRECTORS
Sec. 377.051. COMPOSITION AND APPOINTMENT OF BOARD. (a) A
district is governed by a board of at least four directors.
(b) The board is appointed by the governing body of the
municipality that created the district.
(c) Directors serve staggered two-year terms. A director may be
removed by the appointing municipality at any time without cause.
Successor directors are appointed in the same manner as the
original appointees.
(d) To qualify to serve as a director, a person must reside in
the municipality that created the district or in that
municipality's extraterritorial jurisdiction. An employee,
officer, or member of the governing body of the municipality may
serve as a director, but may not have a personal interest in a
contract executed by the district other than as an employee,
officer, or member of the governing body of the municipality.
Added by Acts 1997, 75th Leg., ch. 529, Sec. 1, eff. Sept. 1,
1997.
Amended by:
Acts 2005, 79th Leg., Ch.
232, Sec. 6, eff. September 1, 2005.
Sec. 377.052. COMPENSATION. A board member is not entitled to
compensation, but is entitled to reimbursement for actual and
necessary expenses.
Added by Acts 1997, 75th Leg., ch. 529, Sec. 1, eff. Sept. 1,
1997.
Sec. 377.053. MEETINGS. The board shall conduct its meetings in
the municipality that created the district.
Added by Acts 1997, 75th Leg., ch. 529, Sec. 1, eff. Sept. 1,
1997.
Amended by:
Acts 2005, 79th Leg., Ch.
232, Sec. 7, eff. September 1, 2005.
Sec. 377.054. OFFICERS. The board shall designate from the
members of the board a presiding officer, a secretary, and other
officers the board considers necessary.
Added by Acts 1997, 75th Leg., ch. 529, Sec. 1, eff. Sept. 1,
1997.
SUBCHAPTER D. POWERS AND DUTIES
Sec. 377.071. GENERAL POWERS OF DISTRICT. (a) A district may:
(1) perform any act necessary to the full exercise of the
district's powers;
(2) accept a grant or loan from a:
(A) department or agency of the United States;
(B) department, agency, or political subdivision of this state;
or
(C) public or private person;
(3) acquire, sell, lease, convey, or otherwise dispose of
property or an interest in property, including a development
project, under terms and conditions determined by the district;
(4) employ necessary personnel; and
(5) adopt rules to govern the operation of the district and its
employees and property.
(b) A district may contract with a public or private person to:
(1) plan, acquire, establish, develop, construct, or renovate a
development project; or
(2) perform any other act the district is authorized to perform
under this chapter.
(c) A district may not levy an ad valorem tax.
Added by Acts 1997, 75th Leg., ch. 529, Sec. 1, eff. Sept. 1,
1997.
Sec. 377.072. DEVELOPMENT PROJECT FUND. (a) A district shall
establish by resolution a fund known as the development project
fund. The district may establish separate accounts within the
fund.
(b) The district shall deposit into the development project
fund:
(1) the proceeds from any sales and use tax imposed by the
district;
(2) all revenue from the sale of bonds or other obligations by
the district; and
(3) any other money required by law to be deposited in the fund.
(c) Except as provided by Subsection (d), the district may use
money in the development project fund only to:
(1) pay the costs of planning, acquiring, establishing,
developing, constructing, or renovating one or more development
projects in the district;
(2) pay the principal of, interest on, and other costs relating
to bonds or other obligations issued by the district or to refund
bonds or other obligations; or
(3) pay the costs of operating or maintaining one or more
development projects during the planning, acquisition,
establishment, development, construction, or renovation or while
bonds or other obligations for the planning, acquisition,
establishment, development, construction, or renovation are
outstanding.
(d) A district located in a county with a population of 3.3
million or more may use money in the development project fund
only to:
(1) pay the costs of planning, acquiring, establishing,
developing, constructing, or renovating one or more development
projects beneficial to the district if the projects are in the
district boundaries or the extraterritorial jurisdiction of the
municipality where the district is located;
(2) pay the principal of, interest on, and other costs relating
to bonds or other obligations issued by the district or to refund
bonds or other obligations; or
(3) pay the costs of operating or maintaining one or more
development projects during the planning, acquisition,
establishment, development, construction, or renovation or while
bonds or other obligations for the planning, acquisition,
establishment, development, construction, or renovation are
outstanding.
Added by Acts 1997, 75th Leg., ch. 529, Sec. 1, eff. Sept. 1,
1997.
Amended by:
Acts 2005, 79th Leg., Ch.
911, Sec. 1, eff. June 18, 2005.
Sec. 377.073. BONDS AND OTHER OBLIGATIONS. (a) A district may
issue bonds, including revenue bonds and refunding bonds, or
other obligations to pay the costs of a development project.
(b) The bonds or other obligations and the proceedings
authorizing the bonds or other obligations shall be submitted to
the attorney general for review and approval as required by
Chapter 1202, Government Code.
(c) The bonds or other obligations must be payable from and
secured by the revenues of the district.
(d) The bonds or other obligations may mature serially or
otherwise not more than 30 years from their date of issuance.
(e) The bonds or other obligations are not a debt of and do not
create a claim for payment against the revenue or property of the
district other than a development project for which the bonds are
issued.
Added by Acts 1997, 75th Leg., ch. 529, Sec. 1, eff. Sept. 1,
1997. Amended by Acts 2001, 77th Leg., ch. 1420, Sec. 8.339, eff.
Sept. 1, 2001.
Sec. 377.074. PUBLIC PURPOSE OF PROJECT. (a) The legislature
finds for all constitutional and statutory purposes that a
development project is owned, used, and held for public purposes
by the district.
(b) Section 25.07(a), Tax Code, does not apply to a leasehold or
other possessory interest granted by the district while the
district owns the development project.
(c) The development project is exempt from taxation under
Section 11.11, Tax Code, while the district owns the project.
Added by Acts 1997, 75th Leg., ch. 529, Sec. 1, eff. Sept. 1,
1997.
SUBCHAPTER E. SALES AND USE TAX
Sec. 377.101. SALES AND USE TAX. (a) A district by order may
impose a sales and use tax under this subchapter.
(b) A district may impose a tax under this subchapter only if
the tax is approved at an election held under Section 377.021.
(c) A district may not adopt a sales and use tax under this
subchapter if the adoption of the tax under this subchapter would
result in a combined tax rate of all local sales and use taxes of
more than two percent in any location in the district.
Added by Acts 1997, 75th Leg., ch. 529, Sec. 1, eff. Sept. 1,
1997.
Sec. 377.102. TAX CODE APPLICABLE. (a) Chapter 323, Tax Code,
governs the imposition, computation, administration, collection,
and remittance of a tax authorized under this subchapter except
as inconsistent with this subchapter.
(b) Section 323.101(b), Tax Code, does not apply to the tax
authorized by this subchapter.
Added by Acts 1997, 75th Leg., ch. 529, Sec. 1, eff. Sept. 1,
1997.
Sec. 377.103. TAX RATE. The rate of a tax adopted under this
subchapter must be one-eighth, one-fourth, three-eighths, or
one-half of one percent.
Added by Acts 1997, 75th Leg., ch. 529, Sec. 1, eff. Sept. 1,
1997.
Sec. 377.104. REPEAL OR RATE CHANGE. (a) A district that has
adopted a sales and use tax under this subchapter may by order
and subject to Section 377.101(c), change the rate of the tax or
repeal the tax if the change or repeal is approved by a majority
of the registered voters of that district voting at an election
called and held for that purpose.
(b) The tax may be changed under Subsection (a) in one or more
increments of one-eighth of one percent to a maximum of one-half
of one percent.
(c) The ballot for an election to change the tax shall be
printed to permit voting for or against the proposition: "The
adoption of a sales and use tax at the rate of ____ of one
percent (insert one-fourth, three-eighths, or one-half, as
appropriate)."
(d) The ballot for the election to repeal the tax shall be
printed to permit voting for or against the proposition: "The
repeal of the sales and use tax for financing development
projects in the __________ Municipal Development District (insert
name of district)."
Added by Acts 1997, 75th Leg., ch. 529, Sec. 1, eff. Sept. 1,
1997.
Sec. 377.105. IMPOSITION OF TAX. (a) If the district adopts
the tax, a tax is imposed on the receipts from the sale at retail
of taxable items in the district at the rate approved at the
election.
(b) There is also imposed an excise tax on the use, storage, or
other consumption in the district of tangible personal property
purchased, leased, or rented from a retailer during the period
that the tax is effective in the district. The rate of the excise
tax is the same as the rate of the sales tax portion of the tax
and is applied to the sale price of the tangible personal
property.
Added by Acts 1997, 75th Leg., ch. 529, Sec. 1, eff. Sept. 1,
1997.
Sec. 377.106. EFFECTIVE DATE OF TAX. Except as provided by
Section 377.107, the adoption of the tax, the change of the tax
rate, or the repeal of the tax takes effect on the first day of
the first calendar quarter occurring after the expiration of the
first complete quarter occurring after the date on which the
comptroller receives a notice of the results of the election
adopting, changing, or repealing the tax.
Added by Acts 1997, 75th Leg., ch. 529, Sec. 1, eff. Sept. 1,
1997.
Sec. 377.107. COLLECTION OF TAX TO PAY BONDS OR OTHER
OBLIGATIONS. (a) If the district votes to repeal the sales and
use tax under Section 377.104, and the district had issued bonds
or incurred other obligations secured by the tax before the date
of the election, the district shall continue to collect the tax
until the bonds or other obligations are paid.
(b) The district shall immediately notify the comptroller when
the bonds or other obligations have been paid.
(c) The repeal of the tax takes effect on the first day of the
first calendar quarter occurring after the expiration of the
first complete quarter occurring after the date on which the
comptroller receives the notice under Subsection (b).
Added by Acts 1997, 75th Leg., ch. 529, Sec. 1, eff. Sept. 1,
1997.
Sec. 377.108. DEPOSIT OF TAX REVENUES. Revenue from the tax
imposed under this subchapter shall be deposited in the
development project fund of the district imposing the tax.
Added by Acts 1997, 75th Leg., ch. 529, Sec. 1, eff. Sept. 1,
1997.