CHAPTER 386. COMMERCIAL AND INDUSTRIAL DEVELOPMENT ZONES
LOCAL GOVERNMENT CODE
TITLE 12. PLANNING AND DEVELOPMENT
SUBTITLE B. COUNTY PLANNING AND DEVELOPMENT
CHAPTER 386. COMMERCIAL AND INDUSTRIAL DEVELOPMENT ZONES
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 386.001. DEFINITIONS. In this chapter:
(1) "Board" means a board of directors of a commercial and
industrial development zone.
(2) "Development zone" means an area designated as a commercial
and industrial development zone under this chapter.
Added by Acts 2001, 77th Leg., ch. 1390, Sec. 1, eff. June 16,
2001.
Sec. 386.002. JURISDICTION OF MUNICIPALITY. For the purposes of
this chapter, territory in the extraterritorial jurisdiction of a
municipality is considered to be in the jurisdiction of the
municipality.
Added by Acts 2001, 77th Leg., ch. 1390, Sec. 1, eff. June 16,
2001.
SUBCHAPTER B. CREATION OF COMMERCIAL AND INDUSTRIAL DEVELOPMENT
ZONE
Sec. 386.031. CRITERIA FOR DEVELOPMENT ZONE CREATION. (a) To
be created as a development zone, an area must:
(1) have a continuous boundary;
(2) be at least 10 square miles but not larger than an area that
is equal to five percent of the area, excluding lakes, waterways,
and transportation arteries, of the municipality, county, or
combination of municipalities and the county nominating the area
as a development zone;
(3) be an area of pervasive poverty, unemployment, or economic
distress;
(4) be located in a county with a population of 2.5 million or
more;
(5) be adjacent to major transportation nodes and thoroughfares
that may be used for exporting products to major airports,
railways, and ports; and
(6) be designated as a development zone by an ordinance or order
adopted by each creating body.
(b) A municipality may contain not more than three development
zones within its jurisdiction.
(c) A county may contain not more than three development zones
in its unincorporated areas.
(d) Repealed by Acts 2003, 78th Leg., ch. 814, Sec. 6.01(9).
Added by Acts 2001, 77th Leg., ch. 1390, Sec. 1, eff. June 16,
2001. Amended by Acts 2003, 78th Leg., ch. 814, Sec. 6.01(9),
eff. Sept. 1, 2003.
Sec. 386.032. AREA OF PERVASIVE POVERTY, UNEMPLOYMENT, OR
ECONOMIC DISTRESS. An area is an area of pervasive poverty,
unemployment, or economic distress for the purposes of Section
386.031 if:
(1) the average rate of unemployment in the area during the most
recent 12-month period for which data are available was at least
1-1/2 times the state average for that period;
(2) the area is a low-income poverty area;
(3) the area is in a jurisdiction or pocket of poverty,
according to the most recent certification available from the
United States Department of Housing and Urban Development; or
(4) at least 70 percent of the residents or households of the
area have an income that is less than 80 percent of the median
income of the residents or households of the locality or state,
whichever is less.
Added by Acts 2001, 77th Leg., ch. 1390, Sec. 1, eff. June 16,
2001.
Sec. 386.033. CREATION OF DEVELOPMENT ZONE. (a) A development
zone is created to promote and encourage:
(1) commercial development, including the development of
businesses in the technology field;
(2) workforce development;
(3) excellence in education through cooperation with public
schools, junior colleges, and institutions of higher education;
(4) public and private sector partnerships; and
(5) the revitalization of neighborhoods.
(b) The governing body of a municipality or county, individually
or in combination with other municipalities, by ordinance or
order may create as a development zone an area within its
jurisdiction that meets the criteria under Section 386.031.
(c) Each creating body must hold a public hearing before
adopting an ordinance or order under this section.
(d) The governing body of a county may not designate territory
in the jurisdiction of a municipality as part of a proposed
development zone unless the governing body of the municipality
also designates the territory.
(e) A development zone created under this section is a:
(1) political subdivision of the state; and
(2) special district.
Added by Acts 2001, 77th Leg., ch. 1390, Sec. 1, eff. June 16,
2001.
Sec. 386.034. DESIGNATING ORDINANCE OR ORDER. (a) An ordinance
or order designating an area as a development zone must:
(1) describe precisely the area to be included in the zone by a
legal description or by reference to roadways, lakes, waterways,
or municipal or county boundaries;
(2) state a finding that the area meets the requirements of this
chapter;
(3) summarize briefly the:
(A) incentives, including tax incentives, that the designating
body chooses to apply to businesses in the area; or
(B) programs to be developed to affect businesses in the area;
and
(4) designate the area as a development zone.
(b) The incentives or programs summarized under Subsection
(a)(3) must include:
(1) an incentive that does not apply to all businesses located
in the jurisdiction of a governmental entity that designated the
area as a development zone;
(2) an incentive or program designed to improve the skills of
the local labor pool; and
(3) an incentive or program designed to address infrastructure,
housing, or other elements essential to improving quality of
life.
(c) This section does not prohibit a municipality or county from
extending additional incentives, including tax incentives, to
business enterprises in a development zone by a separate
ordinance or order.
Added by Acts 2001, 77th Leg., ch. 1390, Sec. 1, eff. June 16,
2001.
Sec. 386.035. TAX INCREMENT. (a) A creating body may use tax
increment financing to fund a development zone, as provided by
Chapter 311, Tax Code, and as modified by this section.
(b) On adoption of an order or ordinance by each creating body,
the fund may be used to pay salaries of employees of the board
and administrative expenses of the development zone.
(c) For the purpose of tax increment financing under this
section, the board is considered the board of directors of the
reinvestment zone under Chapter 311, Tax Code. Section 311.009,
Tax Code, does not apply to this chapter.
Added by Acts 2001, 77th Leg., ch. 1390, Sec. 1, eff. June 16,
2001.
Sec. 386.036. AMENDING BOUNDARIES. (a) A creating body by
ordinance or order may amend the boundary of a development zone
after a public hearing on the issue.
(b) The amended boundary:
(1) must be continuous;
(2) may not exceed the original size requirement of Section
386.031; and
(3) may not exclude any area originally included within the
boundary of the development zone.
(c) The entire development zone with the amended boundary must
continue to meet the unemployment or economic distress
requirements of Section 386.031.
(d) A creating body may not make more than one boundary
amendment for a development zone in a calendar year.
(e) If more than one body created the development zone, each
body must agree on the amendment by ordinance or order.
Added by Acts 2001, 77th Leg., ch. 1390, Sec. 1, eff. June 16,
2001.
SUBCHAPTER C. BOARD OF DIRECTORS
Sec. 386.061. BOARD OF DIRECTORS. (a) A development zone is
governed by a board of nine directors who serve two-year terms,
appointed as follows:
(1) the governing body of the municipality, if any, that
includes the greatest part of the zone's territory shall appoint
four directors;
(2) other municipalities, if any, any part of which are included
in the zone's territory, jointly shall appoint one director;
(3) the commissioners court of the county in which the zone is
located shall appoint:
(A) nine directors, if the zone contains no municipality; or
(B) four directors, if the zone contains one or more
municipalities; and
(4) if a development zone contains territory in only one
municipality, the municipality and the county in which the zone
is located jointly shall appoint one director.
(b) The initial terms of directors may be staggered.
Added by Acts 2001, 77th Leg., ch. 1390, Sec. 1, eff. June 16,
2001.
Sec. 386.062. QUALIFICATIONS OF DIRECTORS. To serve as a
director, a person must:
(1) be at least 21 years old; and
(2) be registered to vote in the county in which the development
zone is located.
Added by Acts 2001, 77th Leg., ch. 1390, Sec. 1, eff. June 16,
2001.
Sec. 386.063. DISQUALIFICATION OF DIRECTORS. Section 49.052,
Water Code, applies to directors of a development zone created
under this chapter as if the zone were a district governed by
that section.
Added by Acts 2001, 77th Leg., ch. 1390, Sec. 1, eff. June 16,
2001.
Sec. 386.064. BOARD VACANCIES. A vacancy in the office of
director shall be filled by appointment by the entity that
appointed the vacating director.
Added by Acts 2001, 77th Leg., ch. 1390, Sec. 1, eff. June 16,
2001.
Sec. 386.065. REMOVAL OF DIRECTOR. A majority of the board may
remove a director for misconduct or failure to carry out the
director's duties.
Added by Acts 2001, 77th Leg., ch. 1390, Sec. 1, eff. June 16,
2001.
Sec. 386.066. ORGANIZATION OF BOARD. (a) Except as provided by
Subsection (b), after each appointment and qualification of
directors by the appointing entities, the board shall organize by
electing a president, a vice president, a secretary, and any
other officers the board considers necessary.
(b) If a director is appointed under Section 386.061(a)(4), that
director shall serve as board president.
Added by Acts 2001, 77th Leg., ch. 1390, Sec. 1, eff. June 16,
2001.
Sec. 386.067. QUORUM; DIRECTOR'S DUTIES; MANAGEMENT OF ZONE.
Sections 49.053, 49.057, and 49.058, Water Code, apply to the
board of directors of a development zone created under this
chapter as if the zone were a district governed by those
sections.
Added by Acts 2001, 77th Leg., ch. 1390, Sec. 1, eff. June 16,
2001.
Sec. 386.068. MEETINGS AND NOTICE. (a) The board shall
designate and establish a development zone office in the county.
(b) The board may establish regular meetings to conduct
development zone business and may hold special meetings at other
times as the business of a zone requires.
(c) Notice of the time, place, and purpose of any meeting of the
board shall be given by posting a notice containing that
information at a place convenient to the public within the
development zone. A copy of the notice shall be furnished to the
clerk or clerks of the county in which the zone is located, who
shall post the notice on a bulletin board in the county
courthouse used for that purpose.
Added by Acts 2001, 77th Leg., ch. 1390, Sec. 1, eff. June 16,
2001.
Sec. 386.069. DIRECTOR'S COMPENSATION; BOND AND OATH OF OFFICE.
Sections 375.067, 375.069, and 375.070 apply to directors of a
development zone created under this chapter as if the zone were a
municipal management district.
Added by Acts 2001, 77th Leg., ch. 1390, Sec. 1, eff. June 16,
2001.
SUBCHAPTER D. POWERS AND DUTIES
Sec. 386.101. GENERAL POWERS. (a) A development zone may
acquire and dispose of projects and has the powers, authority,
rights, and duties that are necessary to permit the
accomplishment of purposes for which the zone was created.
(b) A development zone may provide for general promotion of and
tourist advertising regarding the zone and its vicinity and for a
marketing program to attract visitors. The zone may conduct those
activities under contracts for professional services with persons
or organizations the zone selects.
(c) A development zone may enter into a memorandum of
understanding with any state agency, including an institution of
higher education, to further the economic development of the
zone.
(d) To the extent not inconsistent with this chapter, a
development zone has the powers of:
(1) a municipal management district created under Chapter 375;
and
(2) a county commissioners court under Section 381.004.
Added by Acts 2001, 77th Leg., ch. 1390, Sec. 1, eff. June 16,
2001.
Sec. 386.102. DUTY TO EVALUATE AVAILABLE FINANCING OPTIONS. The
board shall evaluate all options available to the development
zone as alternatives to imposing a tax under Section 386.035,
including:
(1) regional grants from federal and state agencies;
(2) local money from a creating body;
(3) money from charities;
(4) sales taxes for economic development in the development
zone;
(5) use or impact fees on affected business entities;
(6) incentives for business entities that may benefit from the
development zone;
(7) money provided by local governmental entities; and
(8) in-kind contributions.
Added by Acts 2001, 77th Leg., ch. 1390, Sec. 1, eff. June 16,
2001.
Sec. 386.103. LIMIT ON DEVELOPMENT ZONE POWERS; OTHER LAWS
SUPERSEDE. (a) For purposes of this section, "district or zone"
means:
(1) a federal enterprise zone;
(2) a state enterprise zone;
(3) a municipal management district; or
(4) any other special district, other than a development zone.
(b) This section applies only to a district or zone that
contains territory included in the development zone's territory.
(c) The authority granted to a development zone under this
chapter is not intended to duplicate the authority granted to a
district or zone.
(d) This chapter does not limit the authority or jurisdiction of
any district or zone.
(e) To the extent the laws of this chapter conflict with the
laws of any other district or zone, the laws of the other
district or zone shall control over this chapter.
Added by Acts 2001, 77th Leg., ch. 1390, Sec. 1, eff. June 16,
2001.
Sec. 386.104. MONITORING. (a) The board shall monitor each
person in a development zone that receives benefits available
under this chapter.
(b) On the board's request, the Texas Workforce Commission or
the comptroller's office shall provide to the board tax records
of a person that receives benefits under this chapter.
Added by Acts 2001, 77th Leg., ch. 1390, Sec. 1, eff. June 16,
2001.
Sec. 386.105. NEIGHBORHOOD REDEVELOPMENT ZONES. (a) The board
may designate an area as a neighborhood redevelopment zone if the
area is:
(1) adjacent to the development zone; and
(2) eligible for inclusion in the development zone under
Sections 386.036(b) and (c).
(b) A development zone may exercise the powers available to it
in an area designated by the board under Subsection (a).
Added by Acts 2001, 77th Leg., ch. 1390, Sec. 1, eff. June 16,
2001.
Sec. 386.106. SUITS. A development zone may, through its
directors, sue and be sued in this state in the name of the
development zone. Service of process in a suit may be had by
serving a director.
Added by Acts 2001, 77th Leg., ch. 1390, Sec. 1, eff. June 16,
2001.
SUBCHAPTER E. GENERAL FISCAL PROVISIONS
Sec. 386.201. EXPENDITURES. A development zone's money may be
disbursed only by check, draft, order, or other instrument signed
by at least three directors. The general manager, treasurer, or
other employee of the development zone, if authorized by
resolution of the board, may sign checks, drafts, orders, or
other instruments on any development zone operation account on
behalf of the board.
Added by Acts 2001, 77th Leg., ch. 1390, Sec. 1, eff. June 16,
2001.
Sec. 386.202. COMPETITIVE BIDDING; CONTRACT AWARD. Subchapter
K, Chapter 375, applies to a development zone created under this
chapter as if the zone were a municipal management district.
Added by Acts 2001, 77th Leg., ch. 1390, Sec. 1, eff. June 16,
2001.
SUBCHAPTER F. DISSOLUTION
Sec. 386.301. DISSOLUTION OF DEVELOPMENT ZONE BY CREATING BODY.
(a) After a hearing, a creating body may dissolve a development
zone if:
(1) the area no longer meets the criteria for designation under
this chapter;
(2) the best interests of the creating body and the owners of
property and interests in property in the zone will be served by
dissolving the zone; and
(3) each creating body agrees by ordinance or order on the:
(A) proposition that the zone should be dissolved;
(B) disposition of zone assets; and
(C) assumption of liabilities by the creating bodies.
(b) The dissolution of a development zone does not affect the
validity of a:
(1) tax incentive or regulatory relief granted or accrued before
the removal; or
(2) bond issued under this chapter.
Added by Acts 2001, 77th Leg., ch. 1390, Sec. 1, eff. June 16,
2001.
Sec. 386.302. DISSOLUTION BY BOARD REQUEST. A board may
petition a creating body to dissolve the development zone under
Section 386.301 if a majority of the board finds at any time:
(1) before the authorization of bonds or the final lending of
its credit that the continuation of the development zone is
impracticable or cannot be successfully and beneficially
accomplished; or
(2) that all bonds of the development zone or other debts of the
zone have been paid and the purposes of the zone have been
accomplished.
Added by Acts 2001, 77th Leg., ch. 1390, Sec. 1, eff. June 16,
2001.
Sec. 386.303. TAXES. On dissolution of a development zone, any
taxes levied on behalf of the zone are abolished.
Added by Acts 2001, 77th Leg., ch. 1390, Sec. 1, eff. June 16,
2001.