CHAPTER 386. COMMERCIAL AND INDUSTRIAL DEVELOPMENT ZONES

State Codes and Statutes

Statutes > Texas > Local-government-code > Title-12-planning-and-development > 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.

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(d) Repealed by Acts 2003, 78th Leg., ch. 814, Sec. 6.01(9).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.

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.

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.

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.

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.

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.

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.

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

(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.

State Codes and Statutes

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