CHAPTER 372. IMPROVEMENT DISTRICTS IN MUNICIPALITIES AND COUNTIES

State Codes and Statutes

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LOCAL GOVERNMENT CODE

TITLE 12. PLANNING AND DEVELOPMENT

SUBTITLE A. MUNICIPAL PLANNING AND DEVELOPMENT

CHAPTER 372. IMPROVEMENT DISTRICTS IN MUNICIPALITIES AND COUNTIES

SUBCHAPTER A. PUBLIC IMPROVEMENT DISTRICTS

Sec. 372.001. SHORT TITLE. This subchapter may be cited as the

Public Improvement District Assessment Act.

Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987.

Sec. 372.0015. DEFINITION. In this subchapter,

"extraterritorial jurisdiction" means extraterritorial

jurisdiction as determined under Chapter 42.

Added by Acts 1989, 71st Leg., ch. 1, Sec. 76(b), eff. Aug. 28,

1989.

Sec. 372.002. EXERCISE OF POWERS. Powers granted under this

subchapter may be exercised by a municipality or county in which

the governing body of the municipality or county initiates or

receives a petition requesting the establishment of a public

improvement district. A petition must comply with the

requirements of Section 372.005.

Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987.

Amended by Acts 2001, 77th Leg., ch. 1341, Sec. 2, eff. June 16,

2001.

Sec. 372.003. AUTHORIZED IMPROVEMENTS. (a) If the governing

body of a municipality or county finds that it promotes the

interests of the municipality or county, the governing body may

undertake an improvement project that confers a special benefit

on a definable part of the municipality or county or the

municipality's extraterritorial jurisdiction. A project may be

undertaken in the municipality or county or the municipality's

extraterritorial jurisdiction.

(b) A public improvement project may include:

(1) landscaping;

(2) erection of fountains, distinctive lighting, and signs;

(3) acquiring, constructing, improving, widening, narrowing,

closing, or rerouting of sidewalks or of streets, any other

roadways, or their rights-of-way;

(4) construction or improvement of pedestrian malls;

(5) acquisition and installation of pieces of art;

(6) acquisition, construction, or improvement of libraries;

(7) acquisition, construction, or improvement of off-street

parking facilities;

(8) acquisition, construction, improvement, or rerouting of mass

transportation facilities;

(9) acquisition, construction, or improvement of water,

wastewater, or drainage facilities or improvements;

(10) the establishment or improvement of parks;

(11) projects similar to those listed in Subdivisions (1)-(10);

(12) acquisition, by purchase or otherwise, of real property in

connection with an authorized improvement;

(13) special supplemental services for improvement and promotion

of the district, including services relating to advertising,

promotion, health and sanitation, water and wastewater, public

safety, security, business recruitment, development, recreation,

and cultural enhancement;

(14) payment of expenses incurred in the establishment,

administration, and operation of the district; and

(15) the development, rehabilitation, or expansion of affordable

housing.

of the services described by Subsection (b)(13).

(d) A county may establish a public improvement district unless

within 30 days of a county's action to approve such a district, a

home rule municipality objects to its establishment within the

municipality's corporate limits or extraterritorial jurisdiction.

Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987.

Amended by Acts 1989, 71st Leg., ch. 1, Sec. 76(c), eff. Aug. 28,

1989; Acts 2001, 77th Leg., ch. 1341, Sec. 3, eff. June 16, 2001.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

340, Sec. 1, eff. June 19, 2009.

Sec. 372.004. COMBINED IMPROVEMENTS. An improvement project may

consist of an improvement on more than one street or of more than

one type of improvement. A project described by this section may

be included in one proceeding and financed as one improvement

project.

Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987.

Amended by Acts 1989, 71st Leg., ch. 1, Sec. 76(d), eff. Aug. 28,

1989.

Sec. 372.005. PETITION. (a) A petition for the establishment

of a public improvement district must state:

(1) the general nature of the proposed improvement;

(2) the estimated cost of the improvement;

(3) the boundaries of the proposed assessment district;

(4) the proposed method of assessment, which may specify

included or excluded classes of assessable property;

(5) the proposed apportionment of cost between the public

improvement district and the municipality or county as a whole;

(6) whether the management of the district is to be by the

municipality or county, the private sector, or a partnership

between the municipality or county and the private sector;

(7) that the persons signing the petition request or concur with

the establishment of the district; and

(8) that an advisory body may be established to develop and

recommend an improvement plan to the governing body of the

municipality or county.

(b) The petition is sufficient if signed by:

(1) owners of taxable real property representing more than 50

percent of the appraised value of taxable real property liable

for assessment under the proposal, as determined by the current

roll of the appraisal district in which the property is located;

and

(2) record owners of real property liable for assessment under

the proposal who:

(A) constitute more than 50 percent of all record owners of

property that is liable for assessment under the proposal; or

(B) own taxable real property that constitutes more than 50

percent of the area of all taxable real property that is liable

for assessment under the proposal.

other officer performing the functions of the municipal

secretary.

Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987.

Amended by Acts 1989, 71st Leg., ch. 1, Sec. 76(e), eff. Aug. 28,

1989; Acts 2001, 77th Leg., ch. 1341, Sec. 4, eff. June 16, 2001.

Sec. 372.006. FINDINGS. If a petition that complies with this

subchapter is filed, the governing body of the municipality or

county may make findings by resolution as to the advisability of

the proposed improvement, its estimated cost, the method of

assessment, and the apportionment of cost between the proposed

improvement district and the municipality or county as a whole.

Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987.

Amended by Acts 2001, 77th Leg., ch. 1341, Sec. 5, eff. June 16,

2001.

Sec. 372.007. FEASIBILITY REPORT. (a) Before holding the

hearing required by Section 372.009, the governing body of the

municipality may use the services of municipal employees, the

governing body of the county may use the services of county

employees, or the governing body of the municipality or county

may employ consultants to prepare a report to determine whether

an improvement should be made as proposed by petition or

otherwise or whether the improvement should be made in

combination with other improvements authorized under this

subchapter. The governing body may also require that a

preliminary estimate of the cost of the improvement or

combination of improvements be made.

(b) For the purpose of determining the feasibility and

desirability of an improvement district, the governing body may

take other preliminary steps before the hearing required by

Section 372.009, before establishing a public improvement

district, or before entering into a contract.

Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987.

Amended by Acts 2001, 77th Leg., ch. 1341, Sec. 6, eff. June 16,

2001.

Sec. 372.008. ADVISORY BODY. (a) After receiving a petition

that complies with Section 372.005, the governing body of the

municipality or county may appoint an advisory body with the

responsibility of developing and recommending an improvement plan

to the governing body.

(b) The composition of the advisory body must include:

(1) owners of taxable real property representing more than 50

percent of the appraised value of taxable real property liable

for assessment under the proposal, as determined by the current

roll of the appraisal district in which the property is located;

and

(2) record owners of real property liable for assessment under

the proposal who:

(A) constitute more than 50 percent of all record owners of

property that is liable for assessment under the proposal; or

(B) own taxable real property that constitutes more than 50

percent of the area of all taxable real property that is liable

for assessment under the proposal.

Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987.

Amended by Acts 2001, 77th Leg., ch. 1341, Sec. 7, eff. June 16,

2001.

Sec. 372.009. HEARING. (a) A public improvement district may

be established and improvements provided by the district may be

financed under this subchapter only after the governing body of

the municipality or county holds a public hearing on the

advisability of the improvement.

(b) The hearing may be adjourned from time to time until the

governing body makes findings by resolution as to:

(1) the advisability of the improvement;

(2) the nature of the improvement;

(3) the estimated cost of the improvement;

(4) the boundaries of the public improvement district;

(5) the method of assessment; and

(6) the apportionment of costs between the district and the

municipality or county as a whole.

general circulation in the municipality or county. If any part of

the improvement district is to be located in the municipality's

extraterritorial jurisdiction or if any part of the improvements

is to be undertaken in the municipality's extraterritorial

jurisdiction, the notice must also be given in a newspaper of

general circulation in the part of the extraterritorial

jurisdiction in which the district is to be located or in which

the improvements are to be undertaken. The final publication of

notice must be made before the 15th day before the date of the

hearing. The notice must state:

(1) the time and place of the hearing;

(2) the general nature of the proposed improvement;

(3) the estimated cost of the improvement;

(4) the boundaries of the proposed assessment district;

(5) the proposed method of assessment; and

(6) the proposed apportionment of cost between the improvement

district and the municipality or county as a whole.

(d) Written notice containing the information required by

Subsection (c) must be mailed before the 15th day before the date

of the hearing. The notice must be addressed to "Property Owner"

and mailed to the current address of the owner, as reflected on

tax rolls, of property subject to assessment under the proposed

public improvement district.

Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987.

Amended by Acts 1989, 71st Leg., ch. 1, Sec. 76(f), eff. Aug. 28,

1989; Acts 2001, 77th Leg., ch. 1341, Sec. 8, eff. June 16, 2001.

Sec. 372.010. IMPROVEMENT ORDER. (a) During the six-month

period after the date of the final adjournment of the hearing

under Section 372.009, the governing body of the municipality or

county may authorize an improvement district if, by majority vote

of all members of the governing body, the members adopt a

resolution authorizing the district in accordance with its

finding as to the advisability of the improvement.

(b) An authorization takes effect when it has been published one

time in a newspaper of general circulation in the municipality or

county. If any part of the improvement district is located in the

municipality's extraterritorial jurisdiction or if any part of

the improvements is to be undertaken in the municipality's

extraterritorial jurisdiction, the authorization does not take

effect until the notice is also given one time in a newspaper of

general circulation in the part of the extraterritorial

jurisdiction in which the district is located or in which the

improvements are to be undertaken.

after the 20th day after the date the authorization takes effect

and may not begin if during that 20-day period written protests

signed by at least two-thirds of the owners of record of property

within the improvement district or by the owners of record of

property comprising at least two-thirds of the total area of the

district are filed with the municipal or county secretary or

other officer performing the duties of the municipal or county

secretary. A person whose name appears on a protest may withdraw

the name from the protest at any time before the governing body

of the municipality or county convenes to determine the

sufficiency of the protest.

Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987.

Amended by Acts 1989, 71st Leg., ch. 1, Sec. 76(g), eff. Aug. 28,

1989; Acts 2001, 77th Leg., ch. 1341, Sec. 9, eff. June 16, 2001.

Sec. 372.011. DISSOLUTION. A public hearing may be called and

held in the same manner as a hearing under Section 372.009 for

the purpose of dissolving a district if a petition requesting

dissolution is filed and the petition contains the signatures of

at least enough property owners in the district to make a

petition sufficient under Section 372.005(b). If the district is

dissolved, the district nonetheless shall remain in effect for

the purpose of meeting obligations of indebtedness for

improvements.

Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987.

Sec. 372.012. AREA OF DISTRICT. The area of a public

improvement district to be assessed according to the findings of

the governing body of the municipality or county may be less than

the area described in the proposed boundaries stated by the

notice under Section 372.009. The area to be assessed may not

include property not described by the notice as being within the

proposed boundaries of the district unless a hearing is held to

include the property and notice for the hearing is given in the

same manner as notice under Section 372.009.

Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987.

Amended by Acts 2001, 77th Leg., ch. 1341, Sec. 10, eff. June 16,

2001.

Sec. 372.013. SERVICE PLAN. (a) The advisory body shall

prepare an ongoing service plan and present the plan to the

governing body of the municipality or county for review and

approval. The governing body may assign responsibility for the

plan to another entity in the absence of an advisory body.

(b) The plan must cover a period of at least five years and must

also define the annual indebtedness and the projected costs for

improvements. The plan shall be reviewed and updated annually for

the purpose of determining the annual budget for improvements.

Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987.

Amended by Acts 2001, 77th Leg., ch. 1341, Sec. 11, eff. June 16,

2001.

Sec. 372.014. ASSESSMENT PLAN; PAYMENT BY EXEMPT JURISDICTIONS.

(a) An assessment plan must be included in the annual service

plan.

(b) The municipality or county is responsible for payment of

assessments against exempt municipal or county property in the

district. Payment of assessments by other exempt jurisdictions

must be established by contract. An assessment paid by the

municipality or county under this subsection is considered to

have been paid by special assessment for the purposes of

Subsection (a).

Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987.

Amended by Acts 1989, 71st Leg., ch. 1, Sec. 76(h), eff. Aug. 28,

1989; Acts 2001, 77th Leg., ch. 1341, Sec. 12, eff. June 16,

2001.

Sec. 372.015. DETERMINATION OF ASSESSMENT. (a) The governing

body of the municipality or county shall apportion the cost of an

improvement to be assessed against property in an improvement

district. The apportionment shall be made on the basis of special

benefits accruing to the property because of the improvement.

(b) Cost of an improvement may be assessed:

(1) equally per front foot or square foot;

(2) according to the value of the property as determined by the

governing body, with or without regard to improvements on the

property; or

(3) in any other manner that results in imposing equal shares of

the cost on property similarly benefitted.

(1) reasonable classifications and formulas for the

apportionment of the cost between the municipality or county and

the area to be assessed; and

(2) the methods of assessing the special benefits for various

classes of improvements.

(d) The amount of assessment for each property owner may be

adjusted following the annual review of the service plan.

Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987.

Amended by Acts 2001, 77th Leg., ch. 1341, Sec. 13, eff. June 16,

2001.

Sec. 372.016. ASSESSMENT ROLL. (a) After the total cost of an

improvement is determined, the governing body of the municipality

or county shall prepare a proposed assessment roll. The roll must

state the assessment against each parcel of land in the district,

as determined by the method of assessment chosen by the

municipality or county under this subchapter.

(b) The governing body shall file the proposed assessment roll

with the municipal secretary or other officer performing the

functions of the municipal secretary or in a district formed by a

county, the county tax assessor-collector. The proposed

assessment roll is subject to public inspection. The governing

body shall require the municipal secretary or other officer or

county tax assessor-collector to publish notice of the governing

body's intention to consider the proposed assessments at a public

hearing. The notice must be published in a newspaper of general

circulation in the municipality or county before the 10th day

before the date of the hearing. If any part of the improvement

district is located in the municipality's extraterritorial

jurisdiction or if any part of the improvements is to be

undertaken in the municipality's extraterritorial jurisdiction,

the notice must also be published, before the 10th day before the

date of the hearing, in a newspaper of general circulation in the

part of the extraterritorial jurisdiction in which the district

is located or in which the improvements are to be undertaken. The

notice must state:

(1) the date, time, and place of the hearing;

(2) the general nature of the improvement;

(3) the cost of the improvement;

(4) the boundaries of the assessment district; and

(5) that written or oral objections will be considered at the

hearing.

municipal secretary or other officer shall mail to the owners of

property liable for assessment a notice of the hearing. The

notice must contain the information required by Subsection (b)

and the secretary or other officer shall mail the notice to the

last known address of the property owner. The failure of a

property owner to receive notice does not invalidate the

proceeding.

Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987.

Amended by Acts 1989, 71st Leg., ch. 1, Sec. 76(i), eff. Aug. 28,

1989; Acts 2001, 77th Leg., ch. 1341, Sec. 14, eff. June 16,

2001.

Sec. 372.017. LEVY OF ASSESSMENT. (a) At or on the adjournment

of the hearing referred to by Section 372.016 on proposed

assessments, the governing body of the municipality or county

must hear and pass on any objection to a proposed assessment. The

governing body may amend a proposed assessment on any parcel.

(b) After all objections have been heard and the governing body

has passed on the objections, the governing body by ordinance or

order shall levy the assessment as a special assessment on the

property. The governing body by ordinance or order shall specify

the method of payment of the assessment. The governing body may

provide that assessments be paid in periodic installments, at an

interest rate and for a period approved by the governing body.

The provision that assessments be paid in periodic installments

may, but is not required to, result in level annual installment

payments. The installments must be in amounts necessary to meet

annual costs for improvements and must continue for:

(1) the period necessary to retire the indebtedness on the

improvements; or

(2) the period approved by the governing body for the payment of

the installments.

Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987.

Amended by Acts 2001, 77th Leg., ch. 1341, Sec. 15, eff. June 16,

2001.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

320, Sec. 1, eff. June 19, 2009.

Sec. 372.018. INTEREST ON ASSESSMENT; LIEN. (a) An assessment

bears interest at the rate specified by the governing body of the

municipality or county beginning at the time or times or on the

occurrence of one or more events specified by the governing body.

If general obligation bonds, revenue bonds, time warrants, or

temporary notes are issued to finance the improvement for which

the assessment is assessed, the interest rate for that assessment

may not exceed a rate that is one-half of one percent higher than

the actual interest rate paid on the debt. Interest on the

assessment between the effective date of the ordinance or order

levying the assessment and the date the first installment is

payable shall be added to the first installment. The interest on

any delinquent installment shall be added to each subsequent

installment until all delinquent installments are paid.

(b) An assessment or reassessment, with interest, the expense of

collection, and reasonable attorney's fees, if incurred, is:

(1) a first and prior lien against the property assessed;

(2) superior to all other liens and claims except liens or claims

for state, county, school district, or municipality ad valorem

taxes; and

(3) a personal liability of and charge against the owners of the

property regardless of whether the owners are named.

order levying the assessment until the assessment is paid.

(d) The lien runs with the land and that portion of an

assessment payment that has not yet come due is not eliminated by

foreclosure of an ad valorem tax lien.

(e) The assessment lien may be enforced by the governing body in

the same manner that an ad valorem tax lien against real property

may be enforced by the governing body. Foreclosure of accrued

installments does not eliminate the outstanding principal balance

of the assessment. Any purchaser of the property in foreclosure

takes the property subject to the assessment lien and any

associated obligations.

(f) Delinquent installments of the assessment shall incur

interest, penalties, and attorney's fees in the same manner as

delinquent ad valorem taxes. The owner of assessed property may

pay at any time all or any part of the assessment, with interest

that has accrued on the assessment, on any lot or parcel.

Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987.

Amended by Acts 1989, 71st Leg., ch. 1, Sec. 76(j), eff. Aug. 28,

1989; Acts 2001, 77th Leg., ch. 1341, Sec. 16, eff. June 16,

2001.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

320, Sec. 2, eff. June 19, 2009.

Sec. 372.019. SUPPLEMENTAL ASSESSMENTS. After notice and a

hearing, the governing body of the municipality or county may

make supplemental assessments to correct omissions or mistakes in

the assessment relating to the total cost of the improvement.

Notice must be given and the hearing held under this section in

the same manner as required by Sections 372.016 and 372.017.

Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987.

Amended by Acts 2001, 77th Leg., ch. 1341, Sec. 17, eff. June 16,

2001.

Sec. 372.020. REASSESSMENT. The governing body of the

municipality or county may make a reassessment or new assessment

of a parcel of land if:

(1) a court of competent jurisdiction sets aside an assessment

against the parcel;

(2) the governing body determines that the original assessment

is excessive; or

(3) on the written advice of counsel, the governing body

determines that the original assessment is invalid.

Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987.

Amended by Acts 2001, 77th Leg., ch. 1341, Sec. 18, eff. June 16,

2001.

Sec. 372.021. SPECIAL IMPROVEMENT DISTRICT FUND. (a) A

municipality or county that intends to create a public

improvement district may by ordinance or order establish a

special improvement district fund in the municipal or county

treasury.

(b) The municipality or county annually may levy a tax to

support the fund.

(1) pay the costs of planning, administration, and an

improvement authorized by this subchapter;

(2) prepare preliminary plans, studies, and engineering reports

to determine the feasibility of an improvement; and

(3) if ordered by the governing body of the municipality or

county, pay the initial cost of the improvement until temporary

notes, time warrants, or improvement bonds have been issued and

sold.

(d) The fund is not required to be budgeted for expenditure

during any year, but the amount of the fund must be stated in the

municipality's or county's annual budget. The amount of the fund

must be based on an annual service plan that describes the public

improvements for the fiscal year.

(e) A grant-in-aid or contribution made to the municipality or

county for the planning and preparation of plans for an

improvement authorized under this subchapter may be credited to

the special improvement district fund.

Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987.

Amended by Acts 2001, 77th Leg., ch. 1341, Sec. 19, eff. June 16,

2001.

Sec. 372.022. SEPARATE FUNDS. If bonds are issued, a separate

public improvement district fund shall be created in the

municipal or county treasury for each district. Proceeds from

the sale of bonds, temporary notes, and time warrants, and other

sums appropriated to the fund by the governing body of the

municipality or county shall be credited to the fund. The fund

may be used solely to pay costs incurred in making an

improvement. When an improvement is completed, the balance of

the part of the assessment that is for improvements shall be

transferred to the fund established for the retirement of bonds.

Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987.

Amended by Acts 2001, 77th Leg., ch. 1341, Sec. 20, eff. June 16,

2001.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

320, Sec. 3, eff. June 19, 2009.

Sec. 372.023. PAYMENT OF COSTS. (a) The cost of an improvement

made under this subchapter must be paid in accordance with this

section.

(b) A cost payable by the municipality or county as a whole may

be paid from general funds available for the purpose or other

available general funds.

in full shall be paid from that assessment.

(d) A cost payable from a special assessment that is to be paid

in installments and a cost payable by the municipality or county

as a whole but not payable from available general funds or other

available general improvement funds shall be paid:

(1) under an installment sale contract or a reimbursement

agreement with the person who contracts to install or construct

the improvement for which the costs apply;

(2) as provided by a temporary note or time warrant issued by

the municipality or county to reimburse a person for money

advanced or work performed in connection with an improvement; or

(3) by the issuance and sale of revenue or general obligation

bonds.

(e) The net effective interest rate, as computed for a public

security under Section 1204.005, Government Code, on money owed

or paid under Subsection (d) may not exceed one-half of one

percent above the highest average interest rate reported by a

newspaper in a weekly bond index in the month before the date of

the contract or agreement or the issuance of the bond, temporary

note, or time warrant. The newspaper must specialize in bonds

and be acceptable as a reliable source for bond interest rates to

the governing body of the municipality or county that enters into

the contract or agreement or that issues the bond, temporary

note, or time warrant.

(f) While an improvement is in progress, the governing body of

the municipality or county, to pay the costs of the improvement,

may issue temporary notes for money advanced or time warrants to

pay for work performed in connection with the improvement and, on

completion of the improvement, issue revenue or general

obligation bonds. The bond proceeds may be used to repay the

obligations incurred under this subsection.

(g) The cost of more than one improvement may be paid:

(1) from a single issue and sale of bonds without other

consolidation proceedings before the bond issue; or

(2) under an agreement with a person who contracts to install or

construct the improvement and who sells the improvement to the

municipality or county.

(h) The costs of any improvement include interest payable on a

temporary note or time warrant and all costs incurred in

connection with the issuance of bonds under Section 372.024 and

may be included in the assessments against the property in the

improvement district as provided by this subchapter.

Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987.

Amended by Acts 1989, 71st Leg., ch. 1, Sec. 76(k), eff. Aug. 28,

1989; Acts 2001, 77th Leg., ch. 1341, Sec. 21, eff. June 16,

2001.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

320, Sec. 4, eff. June 19, 2009.

Sec. 372.024. GENERAL OBLIGATION AND REVENUE BONDS. General

obligation bonds issued to pay costs under Section 372.023(d)

must be issued under the provisions of Subtitles A and C, Title

9, Government Code. Revenue bonds issued to pay costs under that

subsection may be issued from time to time in one or more series

and are to be payable from and secured by liens on all or part of

the revenue derived from improvements authorized under this

subchapter, including revenue derived from installment payments

of special assessments.

Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987.

Amended by Acts 2001, 77th Leg., ch. 1420, Sec. 8.330, eff. Sept.

1, 2001.

Sec. 372.025. TERMS AND CONDITIONS OF BONDS. (a) Revenue bonds

may be issued to mature serially or in any other manner but must

mature not later than 40 years after their date. A provision may

be made for the subsequent issuance of additional parity bonds or

subordinate lien bonds under terms and conditions specified in

the ordinance or order authorizing the issuance of the bonds.

(b) The bonds shall be executed and the bonds and interest

coupons appertaining to them are negotiable instruments within

the meaning and for all purposes of the Uniform Commercial Code

(Section 1.101 et seq., Business & Commerce Code). The

ordinance or order authorizing the issuance of the bonds must

specify:

(1) whether the bonds are issued registrable as to principal

alone or as to both principal and interest;

(2) whether the bonds are redeemable before maturity;

(3) the form, denomination, and manner of issuance;

(4) the terms, conditions, and other details applying to the

bonds including the price, terms, and interest rates on the

bonds; and

(5) the manner of sale of the bonds.

may specify that the proceeds from the sale of the bonds:

(1) be used to pay interest on the bonds during and after the

period of acquisition or construction of an improvement financed

through the sale of the bonds;

(2) be used for creating a reserve fund for payment of the

principal of and interest on the bonds and for creating other

funds; and

(3) may be placed in time deposit or invested, until needed.

Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987.

Amended by Acts 2001, 77th Leg., ch. 1341, Sec. 22, eff. June 16,

2001.

Sec. 372.026. PLEDGES. (a) In this section, "obligation" means

bonds, temporary notes, time warrants, or an obligation under an

installment sale contract or reimbursement agreement.

(b) For the payment of obligations issued or agreed to under

this subchapter and the payment of principal, interest, and any

other amounts required or permitted in connection with the

obligations, the governing body of the municipality or county may

pledge all or part of the income from improvements financed under

this subchapter, including income received in installment

payments under Section 372.023.

sufficient, with other pledged resources, to pay principal,

interest, and other expenses related to the obligations, and to

the extent required by the ordinance, order, or agreement

authorizing the obligations, to pay for the operation,

maintenance, and other expenses related to improvements

authorized by this subchapter.

(d) The obligations may also be secured by mortgages or deeds of

trust on any real property related to the facilities authorized

under this subchapter that are owned or are to be acquired by the

municipality or county and by chattel mortgages, liens, or

security interests on any personal property appurtenant to that

real property. The governing body may authorize the execution of

trust indentures, mortgages, deeds of trust, or other forms of

encumbrance as evidence of the indebtedness.

(e) The governing body may pledge to the payment of obligations

all or part of a grant, donation, revenue, or income received or

to be received from the government of the United States or any

other public or private source, whether or not it is received

pursuant to an agreement or otherwise.

(f) The governing body may enter into an agreement with a

corporation created by the municipality or county under the Texas

Constitution or other law that provides for payment of amounts

pledged under this section to the corporation to secure

indebtedness issued by the corporation to finance an improvement

project, including indebtedness to pay capitalized interest and a

reserve fund permitted by this subchapter for revenue or general

obligation bonds issued under this subchapter and indebtedness

issued to pay the corporation's costs of issuance. In addition,

the agreement may provide that:

(1) the corporation is responsible for managing the district; or

(2) title to one or more improvements will be held by the

corporation.

Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987.

Amended by Acts 2001, 77th Leg., ch. 1341, Sec. 23, eff. June 16,

2001.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

320, Sec. 5, eff. June 19, 2009.

Sec. 372.027. REFUNDING BONDS. (a) Revenue bonds issued under

this subchapter may be refunded or refinanced by the issuance of

refunding bonds, under terms or conditions set forth in

ordinances or orders of the municipality or county issuing the

bonds. The provisions of this subchapter applying generally to

revenue bonds, including provisions related to the issuance of

those bonds, apply to refunding bonds authorized by this section.

The refunding bonds may be sold and delivered in amounts

necessary for the principal, interest, and any redemption premium

of the bonds to be refunded, on the date of the maturity of the

bond or any redemption date of the bond.

(b) Refunding bonds may be issued for exchange with the bonds

they are refunding. The comptroller of public accounts shall

the bonds to holders of bonds being refunded in accordance with

the ordinance or order authorizing the issuance of refunding

bonds. The exchange may be made in one delivery or several

installment deliveries.

refunded in the manner provided by law.

Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987.

Amended by Acts 2001, 77th Leg., ch. 1341, Sec. 24, eff. June 16,

2001.

Sec. 372.028. APPROVAL AND REGISTRATION. (a) Revenue bonds

issued under this subchapter and a record of the proceedings

authorizing their issuance must be submitted to the attorney

general for examination. If bonds state that they are secured by

a pledge of revenue or rentals from a contract or lease, a copy

of the contract or lease and a description of the proceedings

authorizing the contract or lease must also be submitted to the

attorney general.

(b) If the attorney general determines that the bonds were

authorized and the contracts or leases related to the bonds were

made in accordance with the law, the attorney general shall

approve the bonds and the contract or lease. On the approval of

the attorney general, the comptroller of public accounts shall

this section are valid and binding obligations for all purposes

in accordance with their terms and are incontestable in any court

or other forum.

(d) General obligation bonds issued under this subchapter shall

be approved and registered as provided by law.

Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987.

Sec. 372.029. AUTHORIZED INVESTMENTS; SECURITY. (a) Bonds

issued under this subchapter are legal and authorized investments

for:

(1) banks, trust companies, and savings and loan associations;

(2) all insurance companies;

(3) fiduciaries, trustees, and guardians; and

(4) interest funds, sinking funds, and other public funds of the

state or of an agency, subdivision, or instrumentality of the

state, including a county, municipality, school district, or

other district, public agency, or body politic.

(b) Bonds issued under this subchapter may be security for

deposits of public funds of the state or of an agency,

subdivision, or instrumentality of the state, including a county,

municipality, school district, or other district, public agency,

or body politic, to the extent of the market value of the bonds,

if accompanied by any appurtenant unmatured interest coupons.

Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987.

Sec. 372.030. SUBCHAPTER NOT EXCLUSIVE. This subchapter is an

alternative to other methods by which a municipality may finance

public improvements by assessing property owners.

Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987.

SUBCHAPTER B. IMPROVEMENT DISTRICTS IN HOME-RULE MUNICIPALITIES

Sec. 372.041. AUTHORITY OF HOME-RULE MUNICIPALITY. (a) A

home-rule municipality may create improvement districts for the

purposes of:

(1) levying, straightening, widening, enclosing, or otherwise

improving a river, creek, bayou, stream, other body of water,

street, or alley;

(2) draining, grading, filling, and otherwise protecting and

improving the territory within the municipality's limits; and

(3) issuing bonds to finance improvements listed in this

subsection.

(b) If a home-rule municipality creates an improvement district

in order to make improvements authorized by this subsection, the

municipality must comply with the general law of the state

relating to the creation of improvement districts. Bonds issued

for improvements under this section must be issued in a manner

that complies with the general authority of a home-rule

municipality to issue bonds.

in the territory specially benefitted in enhanced value by

improvements made under this section to pay the costs of the

improvement. If a municipality finances an improvement under this

subsection, the municipality shall make a personal charge against

those property owners and fix a lien against that property by

special assessment. The municipality may issue assignable or

negotiable certificates to pay for the costs of improvements and

require the property owners to make deferred payments to retire

the certificates. Interest on deferred payments may not exceed

eight percent. The municipality may appoint special commissioners

or provide otherwise for the making and levying of special

assessments under this subsection, or may provide that the making

and levying of the assessment be performed by the governing body

of the municipality, in compliance with requirements for hearings

and other procedures as may be adopted under or required by the

municipal charter.

Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987.

SUBCHAPTER D. REIMBURSEMENT FOR PUBLIC IMPROVEMENTS IN CERTAIN

COUNTIES

Sec. 372.151. APPLICABILITY. This subchapter applies only to a

county that:

(1) contains no municipality with a population of more than

50,000; and

(2) is adjacent to at least two counties, each with a population

of more than one million.

Added by Acts 2009, 81st Leg., R.S., Ch.

645, Sec. 1, eff. June 19, 2009.

Sec. 372.152. ISSUANCE OF BONDS TO REIMBURSE ACQUIRED PUBLIC

IMPROVEMENTS. (a) The governing body of a municipality or

county may issue and sell general obligation bonds or revenue

bonds to reimburse a developer for the cost of a public

improvement if:

(1) the public improvement is located in a public improvement

district created on or after January 1, 2005;

(2) the public improvement has been dedicated to and accepted by

the municipality or county; and

(3) before the public improvement was dedicated to and accepted

by the municipality or county, the governing body of the

municipality or county entered into an agreement with the

developer to pay for the public improvement.

(b) General obligation bonds or revenue bonds issued under this

subchapter must comply with the provisions relating to general

obligation bonds or revenue bonds issued under Subchapter A.

Added by Acts 2009, 81st Leg., R.S., Ch.

645, Sec. 1, eff. June 19, 2009.

State Codes and Statutes

State Codes and Statutes

State Codes and Statutes

State Codes and Statutes

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