CHAPTER 377. MUNICIPAL DEVELOPMENT DISTRICTS

State Codes and Statutes

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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.

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.

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;

(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.

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.

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.

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.

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.

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.

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.

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.

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