CHAPTER 311. TAX INCREMENT FINANCING ACT

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TAX CODE

TITLE 3. LOCAL TAXATION

SUBTITLE B. SPECIAL PROPERTY TAX PROVISIONS

CHAPTER 311. TAX INCREMENT FINANCING ACT

Sec. 311.001. SHORT TITLE. This chapter may be cited as the Tax

Increment Financing Act.

Added by Acts 1987, 70th Leg., ch. 191, Sec. 1, eff. Sept. 1,

1987.

Sec. 311.002. DEFINITIONS. In this chapter:

(1) "Project costs" means the expenditures made or estimated to

be made and monetary obligations incurred or estimated to be

incurred by the municipality or county establishing a

reinvestment zone that are listed in the project plan as costs of

public works or public improvements in the zone, plus other costs

incidental to those expenditures and obligations. "Project

costs" include:

(A) capital costs, including the actual costs of the acquisition

and construction of public works, public improvements, new

buildings, structures, and fixtures; the actual costs of the

acquisition, demolition, alteration, remodeling, repair, or

reconstruction of existing buildings, structures, and fixtures;

and the actual costs of the acquisition of land and equipment and

the clearing and grading of land;

(B) financing costs, including all interest paid to holders of

evidences of indebtedness or other obligations issued to pay for

project costs and any premium paid over the principal amount of

the obligations because of the redemption of the obligations

before maturity;

(D) professional service costs, including those incurred for

architectural, planning, engineering, and legal advice and

services;

(E) imputed administrative costs, including reasonable charges

for the time spent by employees of the municipality or county in

connection with the implementation of a project plan;

(F) relocation costs;

(G) organizational costs, including the costs of conducting

environmental impact studies or other studies, the cost of

publicizing the creation of the zone, and the cost of

implementing the project plan for the zone;

(H) interest before and during construction and for one year

after completion of construction, whether or not capitalized;

(I) the cost of operating the reinvestment zone and project

facilities;

(J) the amount of any contributions made by the municipality or

county from general revenue for the implementation of the project

plan; and

(K) payments made at the discretion of the governing body of the

municipality or county that the governing body finds necessary or

convenient to the creation of the zone or to the implementation

of the project plans for the zone.

(2) "Project plan" means the project plan for the development or

redevelopment of a reinvestment zone approved under this chapter,

including all amendments of the plan approved as provided by this

chapter.

(3) "Reinvestment zone financing plan" means the financing plan

for a reinvestment zone described by this chapter.

(4) "Taxing unit" has the meaning assigned by Section 1.04.

Added by Acts 1987, 70th Leg., ch. 191, Sec. 1, eff. Sept. 1,

1987.

Amended by:

Acts 2005, 79th Leg., Ch.

1094, Sec. 35, eff. September 1, 2005.

Sec. 311.003. PROCEDURE FOR CREATING REINVESTMENT ZONE. (a)

The governing body of a county by order may designate a

contiguous geographic area in the county and the governing body

of a municipality by ordinance may designate a contiguous or

noncontiguous geographic area that is in the corporate limits of

the municipality, in the extraterritorial jurisdiction of the

municipality, or in both to be a reinvestment zone to promote

development or redevelopment of the area if the governing body

determines that development or redevelopment would not occur

solely through private investment in the reasonably foreseeable

future. The designation of an area that is wholly or partly

located in the extraterritorial jurisdiction of a municipality is

not affected by a subsequent annexation of real property in the

reinvestment zone by the municipality.

(b) Before adopting an ordinance or order providing for a

reinvestment zone, the governing body of the municipality or

county must prepare a preliminary reinvestment zone financing

plan. As soon as the plan is completed, a copy of the plan must

be sent to the governing body of each taxing unit that levies

taxes on real property in the proposed zone.

reinvestment zone, the municipality or county must hold a public

hearing on the creation of the zone and its benefits to the

municipality or county and to property in the proposed zone. At

the hearing an interested person may speak for or against the

creation of the zone, its boundaries, or the concept of tax

increment financing. Not later than the seventh day before the

date of the hearing, notice of the hearing must be published in a

newspaper having general circulation in the municipality or

county.

(d) A municipality or county proposing to designate a

reinvestment zone must provide a reasonable opportunity for the

owner of property to protest the inclusion of the property in a

proposed reinvestment zone.

(e) Not later than the 60th day before the date of the public

hearing required by Subsection (c), the governing body of the

municipality or county must notify in writing the governing body

of each other taxing unit that levies real property taxes in the

proposed reinvestment zone that it intends to establish the zone.

The notice must contain a description of the proposed boundaries

of the zone, the tentative plans for the development or

redevelopment of the zone, and an estimate of the general impact

of the proposed zone on property values and tax revenues. The

notice may be given later than the 60th day before the date of

the public hearing if the governing body of each municipality,

county, and school district, other than the municipality or

county proposing to designate a reinvestment zone, that levies

real property taxes in the proposed zone agrees to waive the

requirement.

(f) A taxing unit may request additional information from the

governing body of the municipality or county proposing to

designate a reinvestment zone. The governing body of the

municipality or county shall provide the information requested to

the extent practicable. In addition to the notice required by

Subsection (e), the governing body of the municipality or county

proposing to designate a reinvestment zone shall make a formal

presentation to the governing body of each municipality, county,

or school district, other than the municipality or county

proposing to designate the zone, that levies real property taxes

in the proposed reinvestment zone. The presentation must include

a description of the proposed boundaries of the zone, the

tentative plans for the development or redevelopment of the zone,

and an estimate of the general impact of the proposed zone on

property values and tax revenues. The governing body of the

municipality or county shall notify each other taxing unit that

levies real property taxes in the proposed zone of each

presentation to be made to a municipality, county, or school

district under this subsection. Members of the governing body of

each taxing unit that levies real property taxes in the proposed

zone may attend a presentation under this subsection. If agreed

to by the municipalities, county, or school districts involved,

the governing body of the municipality or county proposing to

designate a reinvestment zone may make a single presentation to

more than one municipal, county, or school district governing

body.

(g) Not later than the 15th day after the date on which the

notice required by Subsection (e) is given, each taxing unit that

levies real property taxes in the proposed reinvestment zone

shall designate a representative to meet with the governing body

of the municipality or county proposing to designate a

reinvestment zone to discuss the project plan and the

reinvestment zone financing plan and shall notify the governing

body of the municipality or county of its designation. At any

time after the 15th day after the date on which the notice

required by Subsection (e) has been given to every taxing unit,

the governing body of the municipality or county proposing to

designate a reinvestment zone may call a meeting of the

representatives of the taxing units. The governing body of the

municipality or county may call as many meetings as it considers

necessary. Each representative shall be notified of each meeting

in advance. At the meetings the governing body of the

municipality or county and the representatives of the other

taxing units may discuss the boundaries of the zone, development

in the zone, the tax increment that each taxing unit will

contribute to the tax increment fund, the retention by a taxing

unit of a portion of its tax increment as permitted by Section

311.013, the exclusion of particular parcels of property from the

zone, the board of directors for the zone, and tax collection for

the zone. On the motion of the governing body of the

municipality or county calling the meeting, any other matter

relevant to the proposed reinvestment zone may be discussed.

Added by Acts 1987, 70th Leg., ch. 191, Sec. 1, eff. Sept. 1,

1987. Amended by Acts 1989, 71st Leg., ch. 1137, Sec. 16, eff.

Sept. 1, 1989; Acts 1999, 76th Leg., ch. 983, Sec. 14, eff. June

18, 1999.

Amended by:

Acts 2005, 79th Leg., Ch.

1094, Sec. 36, eff. September 1, 2005.

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

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

Sec. 311.0031. ENTERPRISE ZONE. Designation of an area under the

following other law constitutes designation of the area as a

reinvestment zone under this chapter without further hearing or

other procedural requirements other than those provided by the

other law:

(1) Chapter 2303, Government Code; and

(2) Chapter 373A, Local Government Code.

Added by Acts 1989, 71st Leg., ch. 1106, Sec. 26, eff. Aug. 28,

1989. Amended by Acts 1995, 74th Leg., ch. 76, Sec. 5.95(22),

eff. Sept. 1, 1995.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

1175, Sec. 16, eff. September 1, 2007.

Sec. 311.004. CONTENTS OF REINVESTMENT ZONE ORDINANCE OR ORDER.

(a) The ordinance or order designating an area as a reinvestment

zone must:

(1) describe the boundaries of the zone with sufficient

definiteness to identify with ordinary and reasonable certainty

the territory included in the zone;

(2) create a board of directors for the zone and specify the

number of directors of the board as provided by Section 311.009

or 311.0091, as applicable;

(3) provide that the zone take effect immediately upon passage

of the ordinance or order;

(4) provide a date for termination of the zone;

(5) assign a name to the zone for identification, with the first

zone created by a municipality or county designated as

"Reinvestment Zone Number One, City (or Town, as applicable) of

(name of municipality)," or "Reinvestment Zone Number One, (name

of county) County," as applicable, and subsequently created zones

assigned names in the same form numbered consecutively in the

order of their creation;

(6) establish a tax increment fund for the zone; and

(7) contain findings that:

(A) improvements in the zone will significantly enhance the

value of all the taxable real property in the zone and will be of

general benefit to the municipality or county; and

(B) the area meets the requirements of Section 311.005.

(b) For purposes of complying with Subsection (a)(7)(A), the

ordinance or order is not required to identify the specific

parcels of real property to be enhanced in value.

311.005(a)(4), the governing body of a municipality or county

must specify in the ordinance or order that the reinvestment zone

is designated under that section.

Added by Acts 1987, 70th Leg., ch. 191, Sec. 1, eff. Sept. 1,

1987. Amended by Acts 1989, 71st Leg., ch. 1137, Sec. 17, eff.

Sept. 1, 1989; Acts 1999, 76th Leg., ch. 983, Sec. 1, eff. June

18, 1999; Acts 2001, 77th Leg., ch. 1162, Sec. 1, eff. Sept. 1,

2001.

Amended by:

Acts 2005, 79th Leg., Ch.

1094, Sec. 36, eff. September 1, 2005.

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 14.002, eff. September 1, 2007.

Sec. 311.005. CRITERIA FOR REINVESTMENT ZONE. (a) To be

designated as a reinvestment zone, an area must:

(1) substantially arrest or impair the sound growth of the

municipality or county creating the zone, retard the provision of

housing accommodations, or constitute an economic or social

liability and be a menace to the public health, safety, morals,

or welfare in its present condition and use because of the

presence of:

(A) a substantial number of substandard, slum, deteriorated, or

deteriorating structures;

(B) the predominance of defective or inadequate sidewalk or

street layout;

accessibility, or usefulness;

(D) unsanitary or unsafe conditions;

(E) the deterioration of site or other improvements;

(F) tax or special assessment delinquency exceeding the fair

value of the land;

(G) defective or unusual conditions of title;

(H) conditions that endanger life or property by fire or other

cause; or

(I) structures, other than single-family residential structures,

less than 10 percent of the square footage of which has been used

for commercial, industrial, or residential purposes during the

preceding 12 years, if the municipality has a population of

100,000 or more;

(2) be predominantly open and, because of obsolete platting,

deterioration of structures or site improvements, or other

factors, substantially impair or arrest the sound growth of the

municipality or county;

(3) be in a federally assisted new community located in the

municipality or county or in an area immediately adjacent to a

federally assisted new community; or

(4) be an area described in a petition requesting that the area

be designated as a reinvestment zone, if the petition is

submitted to the governing body of the municipality or county by

the owners of property constituting at least 50 percent of the

appraised value of the property in the area according to the most

recent certified appraisal roll for the county in which the area

is located.

(a-1) Notwithstanding Subsection (a), if the proposed project

plan for a potential zone includes the use of land in the zone in

connection with the operation of an existing or proposed regional

commuter or mass transit rail system, or for a structure or

facility that is necessary, useful, or beneficial to such a

regional rail system, the governing body of a municipality may

designate an area as a reinvestment zone.

(b) In this section, "federally assisted new community" means a

federally assisted area that has received or will receive

assistance in the form of loan guarantees under Title X of the

National Housing Act, if a portion of the federally assisted area

has received grants under Section 107(a)(1) of the Housing and

Community Development Act of 1974.

Added by Acts 1987, 70th Leg., ch. 191, Sec. 1, eff. Sept. 1,

1987. Amended by Acts 1989, 71st Leg., ch. 2, Sec. 14.05(a), eff.

Aug. 28, 1989; Acts 1989, 71st Leg., ch. 1106, Sec. 27, eff. Aug.

28, 1989; Acts 1989, 71st Leg., ch. 1137, Sec. 18, eff. Sept. 1,

1989.

Amended by:

Acts 2005, 79th Leg., Ch.

1094, Sec. 37, eff. September 1, 2005.

Acts 2005, 79th Leg., Ch.

1347, Sec. 1, eff. June 18, 2005.

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 14.003, eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch.

1361, Sec. 1, eff. June 15, 2007.

Sec. 311.006. RESTRICTIONS ON COMPOSITION OF REINVESTMENT ZONE.

(a) A municipality may not create a reinvestment zone if:

(1) more than 10 percent of the property in the proposed zone,

excluding property that is publicly owned, is used for

residential purposes; or

(2) the total appraised value of taxable real property in the

proposed zone and in existing reinvestment zones exceeds:

(A) 20 percent of the total appraised value of taxable real

property in the municipality and in the industrial districts

created by the municipality, if the municipality is the county

seat of a county:

(i) that is adjacent to a county with a population of 3.3

million or more; and

(ii) in which a planned community is located that has 20,000 or

more acres of land, that was originally established under the

Urban Growth and New Community Development Act of 1970 (42 U.S.C.

Section 4501 et seq.), and that is subject to restrictive

covenants containing ad valorem or annual variable budget-based

assessments on real property; or

(B) 15 percent of the total appraised value of taxable real

property in the municipality and in the industrial districts

created by the municipality, if Paragraph (A) does not apply to

the municipality.

(b) A municipality may not change the boundaries of an existing

reinvestment zone to include property more than 10 percent of

which, excluding property dedicated to public use, is used for

residential purposes or to include more than 15 percent of the

total appraised value of taxable real property in the

municipality and in the industrial districts created by the

municipality.

the boundaries of an existing reinvestment zone if the proposed

zone or proposed boundaries of the zone contain more than 15

percent of the total appraised value of real property taxable by

a county or school district.

(d) For purposes of this section, property is used for

residential purposes if it is occupied by a house having fewer

than five living units, and the appraised value is determined

according to the most recent appraisal rolls of the municipality.

(e) Subsection (a)(1) does not apply to a reinvestment zone

designated under Section 311.005(a)(4).

Added by Acts 1987, 70th Leg., ch. 191, Sec. 1, eff. Sept. 1,

1987. Amended by Acts 1989, 71st Leg., ch. 1137, Sec. 19, eff.

Sept. 1, 1989.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 14.004, eff. September 1, 2007.

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

543, Sec. 1, eff. September 1, 2009.

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

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

Sec. 311.007. CHANGING BOUNDARIES OF EXISTING ZONE. (a) Subject

to the limitations provided by Section 311.006, if applicable,

the boundaries of an existing reinvestment zone may be reduced or

enlarged by ordinance or resolution of the governing body of the

municipality or by order or resolution of the governing body of

the county that created the zone.

(b) The governing body of the municipality or county may enlarge

an existing reinvestment zone to include an area described in a

petition requesting that the area be included in the zone if the

petition is submitted to the governing body of the municipality

or county by the owners of property constituting at least 50

percent of the appraised value of the property in the area

according to the most recent certified appraisal roll for the

county in which the area is located. The composition of the

board of directors of the zone continues to be governed by

Section 311.009(a) or (b), whichever applied to the zone

immediately before the enlargement of the zone, except that the

membership of the board must conform to the requirements of the

applicable subsection of Section 311.009 as applied to the zone

after its enlargement. The provision of Section 311.006(b)

relating to the amount of property used for residential purposes

that may be included in the zone does not apply to the

enlargement of a zone under this subsection.

Added by Acts 1987, 70th Leg., ch. 191, Sec. 1, eff. Sept. 1,

1987. Amended by Acts 1989, 71st Leg., ch. 1137, Sec. 20, eff.

Sept. 1, 1989.

Amended by:

Acts 2005, 79th Leg., Ch.

1094, Sec. 38, eff. September 1, 2005.

Sec. 311.008. POWERS OF MUNICIPALITY OR COUNTY. (a) In this

section, "educational facility" includes equipment, real

property, and other facilities, including a public school

building, that are used or intended to be used jointly by the

municipality or county and an independent school district.

(b) A municipality or county may exercise any power necessary

and convenient to carry out this chapter, including the power to:

(1) cause project plans to be prepared, approve and implement

the plans, and otherwise achieve the purposes of the plan;

(2) acquire real property by purchase, condemnation, or other

means to implement project plans and sell that property on the

terms and conditions and in the manner it considers advisable;

(3) enter into agreements, including agreements with

bondholders, determined by the governing body of the municipality

or county to be necessary or convenient to implement project

plans and achieve their purposes, which agreements may include

conditions, restrictions, or covenants that run with the land or

that by other means regulate or restrict the use of land; and

(4) consistent with the project plan for the zone:

(A) acquire blighted, deteriorated, deteriorating, undeveloped,

or inappropriately developed real property or other property in a

blighted area or in a federally assisted new community in the

zone for the preservation or restoration of historic sites,

beautification or conservation, the provision of public works or

public facilities, or other public purposes;

(B) acquire, construct, reconstruct, or install public works,

facilities, or sites or other public improvements, including

utilities, streets, street lights, water and sewer facilities,

pedestrian malls and walkways, parks, flood and drainage

facilities, or parking facilities, but not including educational

facilities; or

1999, acquire, construct, or reconstruct educational facilities

in the municipality.

law or municipal charter to the contrary.

(d) A municipality or county may make available to the public on

request financial information regarding the acquisition by the

municipality or county of land in the zone when the municipality

or county acquires the land.

(e) The implementation of a project plan to alleviate a

condition described by Section 311.005(a)(1), (2), or (3) and to

promote development or redevelopment of a reinvestment zone in

accordance with this chapter serves a public purpose.

Added by Acts 1987, 70th Leg., ch. 191, Sec. 1, eff. Sept. 1,

1987. Amended by Acts 1987, 70th Leg., 2nd C.S., ch. 44, Sec. 2,

eff. Oct. 20, 1987; Acts 1999, 76th Leg., ch. 1521, Sec. 1, eff.

June 19, 1999.

Amended by:

Acts 2005, 79th Leg., Ch.

1094, Sec. 39, eff. September 1, 2005.

Acts 2005, 79th Leg., Ch.

1094, Sec. 40, eff. September 1, 2005.

Acts 2005, 79th Leg., Ch.

1347, Sec. 2, eff. June 18, 2005.

Sec. 311.0085. POWER OF CERTAIN MUNICIPALITIES. (a) This

section applies only to a municipality with a population of less

than 130,000 as shown by the 2000 federal decennial census that

has territory in three counties.

(b) In this section, "educational facility" has the meaning

assigned by Section 311.008.

311.008, a municipality may enter into a new agreement, or amend

an existing agreement, with a school district that is located in

whole or in part in a reinvestment zone created by the

municipality to dedicate revenue from the tax increment fund to

the school district for acquiring, constructing, or

reconstructing an educational facility located in or outside of

the zone.

Added by Acts 2001, 77th Leg., ch. 1133, Sec. 1, eff. Sept. 1,

2001.

Amended by:

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

38, Sec. 1, eff. May 19, 2009.

Sec. 311.0087. RESTRICTION ON POWERS OF CERTAIN MUNICIPALITIES.

(a) This section applies only to a proposed reinvestment zone:

(1) the designation of which is requested in a petition

submitted under Section 311.005(a)(4) before July 31, 2004, to

the governing body of a home-rule municipality that:

(A) has a population of more than 1.1 million;

(B) is located primarily in a county with a population of 1.5

million or less; and

chapter; and

(2) that is the subject of a resolution of intent that was

adopted before October 31, 2004, by the governing body of the

municipality.

(b) If the municipality imposes a fee of more than $25,000 for

processing the petition, the municipality may not require a

property owner who submitted the petition, as a condition of

designating the reinvestment zone or approving a development

agreement, interlocal agreement, or project plan for the proposed

reinvestment zone:

(1) to waive any rights of the owner under Chapter 245, Local

Government Code, or under any agreed order or settlement

agreement to which the municipality is a party;

(2) to dedicate more than 20 percent of the owner's land in the

area described in the petition as open-space land; or

(3) to use a nonconventional use pattern for a development to be

located within the proposed reinvestment zone.

Added by Acts 2005, 79th Leg., Ch.

1347, Sec. 3, eff. June 18, 2005.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 14.005, eff. September 1, 2007.

Sec. 311.009. COMPOSITION OF BOARD OF DIRECTORS. (a) Except as

provided by Subsection (b), the board of directors of a

reinvestment zone consists of at least five and not more than 15

members, unless more than 15 members are required to satisfy the

requirements of this subsection. Each taxing unit other than the

municipality or county that created the zone that levies taxes on

real property in the zone may appoint one member of the board. A

unit may waive its right to appoint a director. The governing

body of the municipality or county that created the zone may

appoint not more than 10 directors to the board; except that if

there are fewer than five directors appointed by taxing units

other than the municipality or county, the governing body of the

municipality or county may appoint more than 10 members as long

as the total membership of the board does not exceed 15.

(b) If the zone was designated under Section 311.005(a)(4), the

board of directors of the zone consists of nine members. Each

school district, county, or municipality, other than the

municipality or county that created the zone, that levies taxes

on real property in the zone may appoint one member of the board

if the school district, county, or municipality has approved the

payment of all or part of the tax increment produced by the unit.

The member of the state senate in whose district the zone is

located is a member of the board, and the member of the state

house of representatives in whose district the zone is located is

a member of the board, except that either may designate another

individual to serve in the member's place at the pleasure of the

member. If the zone is located in more than one senate or house

district, this subsection applies only to the senator or

representative in whose district a larger portion of the zone is

located than any other senate or house district, as applicable.

The remaining members of the board are appointed by the governing

body of the municipality or county that created the zone.

unless longer terms are provided under Article XI, Section 11, of

the Texas Constitution. Terms of members may be staggered.

(d) A vacancy on the board is filled for the unexpired term by

appointment of the governing body of the taxing unit that

appointed the director who served in the vacant position.

(e) To be eligible for appointment to the board by the governing

body of the municipality or county that created the zone, an

individual must:

(1) if the board is covered by Subsection (a):

(A) be a qualified voter of the municipality or county, as

applicable; or

(B) be at least 18 years of age and own real property in the

zone, whether or not the individual resides in the municipality

or county; or

(2) if the board is covered by Subsection (b):

(A) be at least 18 years of age; and

(B) own real property in the zone or be an employee or agent of

a person that owns real property in the zone.

(f) Each year the governing body of the municipality or county

that created the zone shall appoint one member of the board to

serve as chairman for a term of one year that begins on January 1

of the following year. The board of directors may elect a

vice-chairman to preside in the absence of the chairman or when

there is a vacancy in the office of chairman. The board may

elect other officers as it considers appropriate.

(g) A member of the board of directors of a reinvestment zone:

(1) is not a public official by virtue of that position; and

(2) unless otherwise ineligible, may be appointed to serve

concurrently on the board of directors of a local government

corporation created under Subchapter D, Chapter 431,

Transportation Code.

Added by Acts 1987, 70th Leg., ch. 191, Sec. 1, eff. Sept. 1,

1987. Amended by Acts 1989, 71st Leg., ch. 1137, Sec. 21, eff.

Sept. 1, 1989; Acts 1999, 76th Leg., ch. 983, Sec. 2, eff. June

18, 1999.

Amended by:

Acts 2005, 79th Leg., Ch.

1094, Sec. 41, eff. September 1, 2005.

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 14.006, eff. September 1, 2007.

Sec. 311.0091. COMPOSITION OF BOARD OF DIRECTORS OF CERTAIN

REINVESTMENT ZONES. (a) This section applies to a reinvestment

zone designated by a municipality which is wholly or partially

located in a county with a population of less than 1.4 million in

which the principal municipality has a population of 1.1 million

or more.

(b) Except as provided by Subsection (c), the board of directors

of a reinvestment zone consists of at least five and not more

than 15 members, unless more than 15 members are required to

satisfy the requirements of this subsection. Each taxing unit

that approves the payment of all or part of its tax increment

into the tax increment fund is entitled to appoint a number of

members to the board in proportion to the taxing unit's pro rata

share of the total anticipated tax increment to be deposited into

the tax increment fund during the term of the zone. In

determining the number of members a taxing unit may appoint to

the board, the taxing unit's percentage of anticipated pro rata

contributions to the tax increment fund is multiplied by the

number of members of the board, and a number containing a

fraction that is one-half or greater shall be rounded up to the

next whole number. Notwithstanding any other provision of this

subsection, each taxing unit that approves the payment of all or

part of its tax increment into the tax increment fund is entitled

to appoint at least one member of the board, and the municipality

that designated the zone is entitled to appoint at least as many

members of the board as any other participating taxing unit. A

taxing unit may waive its right to appoint a director.

board of directors of the zone consists of nine members, unless a

greater number of members is necessary to comply with this

subsection. Each taxing unit that approves the payment of all or

part of its tax increment into the tax increment fund is entitled

to appoint a number of members to the board in proportion to the

taxing unit's pro rata share of the total anticipated tax

increment to be deposited into the tax increment fund during the

term of the zone. In determining the number of members a taxing

unit may appoint to the board, the taxing unit's percentage of

anticipated pro rata contributions to the tax increment fund is

multiplied by nine, and a number containing a fraction that is

one-half or greater shall be rounded up to the next whole number.

Notwithstanding any other provision of this subsection, each

taxing unit that approves the payment of all or part of its tax

increment into the tax increment fund is entitled to appoint at

least one member of the board, and the municipality that

designated the zone is entitled to appoint at least as many

members of the board as any other participating taxing unit. A

taxing unit may waive its right to appoint a director. The

member of the state senate in whose district the zone is located

is a member of the board, and the member of the state house of

representatives in whose district the zone is located is a member

of the board, except that either may designate another individual

to serve in the member's place at the pleasure of the member. If

the zone is located in more than one senate or house district,

this subsection applies only to the senator or representative in

whose district a larger portion of the zone is located than any

other senate or house district, as applicable.

(d) Members of the board are appointed for terms of two years

unless longer terms are provided under Section 11, Article XI,

Texas Constitution. Terms of members may be staggered.

(e) A vacancy on the board is filled for the unexpired term by

appointment of the governing body of the taxing unit that

appointed the director who served in the vacant position.

(f) To be eligible for appointment to the board, an individual

must:

(1) be a qualified voter of the municipality; or

(2) be at least 18 years of age and own real property in the

zone or be an employee or agent of a person that owns real

property in the zone.

(g) Each year the board of directors of a reinvestment zone

shall elect one of its members to serve as presiding officer for

a term of one year. The board of directors may elect an assistant

presiding officer to preside in the absence of the presiding

officer or when there is a vacancy in the office of presiding

officer. The board may elect other officers as it considers

appropriate.

(h) A member of the board of directors of a reinvestment zone:

(1) is not a public official by virtue of that position; and

(2) unless otherwise ineligible, may be appointed to serve

concurrently on the board of directors of a local government

corporation created under Subchapter D, Chapter 431,

Transportation Code.

Added by Acts 2001, 77th Leg., ch. 1162, Sec. 2, eff. Sept. 1,

2001.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 14.007, eff. September 1, 2007.

Sec. 311.010. POWERS AND DUTIES OF BOARD OF DIRECTORS. (a) The

board of directors of a reinvestment zone shall make

recommendations to the governing body of the municipality or

county that created the zone concerning the administration of

this chapter in the zone. The governing body of the municipality

by ordinance or resolution or the county by order or resolution

may authorize the board to exercise any of the municipality's or

county's powers with respect to the administration, management,

or operation of the zone or the implementation of the project

plan for the zone, except that the governing body may not

authorize the board to:

(1) issue bonds;

(2) impose taxes or fees;

(3) exercise the power of eminent domain; or

(4) give final approval to the project plan.

(b) The board of directors of a reinvestment zone and the

governing body of the municipality or county that creates a

reinvestment zone may each enter into agreements as the board or

the governing body considers necessary or convenient to implement

the project plan and reinvestment zone financing plan and achieve

their purposes. An agreement may provide for the regulation or

restriction of the use of land by imposing conditions,

restrictions, or covenants that run with the land. An agreement

may during the term of the agreement dedicate, pledge, or

otherwise provide for the use of revenue in the tax increment

fund to pay any project costs that benefit the reinvestment zone,

including project costs relating to the cost of buildings,

schools, or other educational facilities owned by or on behalf of

a school district, community college district, or other political

subdivision of this state, railroad or transit facilities,

affordable housing, the remediation of conditions that

contaminate public or private land or buildings, the preservation

of the facade of a private or public building, or the demolition

of public or private buildings. An agreement may dedicate

revenue from the tax increment fund to pay the costs of providing

affordable housing or areas of public assembly in or out of the

zone. An agreement may dedicate revenue from the tax increment

fund to pay a neighborhood enterprise association for providing

services or carrying out projects authorized under Subchapters E

and G, Chapter 2303, Government Code, in the zone. The term of

an agreement with a neighborhood enterprise association may not

exceed 10 years.

(b) The board of directors of a reinvestment zone and the

governing body of the municipality or county that creates a

reinvestment zone may each enter into agreements as the board or

the governing body considers necessary or convenient to implement

the project plan and reinvestment zone financing plan and achieve

their purposes. An agreement may provide for the regulation or

restriction of the use of land by imposing conditions,

restrictions, or covenants that run with the land. An agreement

may during the term of the agreement dedicate, pledge, or

otherwise provide for the use of revenue in the tax increment

fund to pay any project costs that benefit the reinvestment zone,

including project costs relating to the cost of buildings,

schools, or other educational facilities owned by or on behalf of

a school district, community college district, or other political

subdivision of this state, railroad or transit facilities,

affordable housing, the remediation of conditions that

contaminate public or private land or buildings, the preservation

of the facade of a private or public building, the demolition of

public or private buildings, or the construction of a road,

sidewalk, or other public infrastructure in or out of the zone,

including the cost of acquiring the real property necessary for

the construction of the road, sidewalk, or other public

infrastructure. An agreement may dedicate revenue from the tax

increment fund to pay the costs of providing affordable housing

or areas of public assembly in or out of the zone.

municipality that created the zone, the board of a zone

designated by the governing body of a municipality under Section

311.005(a)(4) may exercise the power granted by Chapter 211,

Local Government Code, to the governing body of the municipality

that created the zone to restrict the use or uses of property in

the zone. The board may provide that a restriction adopted by

the board continues in effect after the termination of the zone.

In that event, after termination of the zone the restriction is

treated as if it had been adopted by the governing body of the

municipality.

(d) The board of directors of a reinvestment zone may exercise

any power granted to a municipality or county by Section 311.008,

except that:

(1) the municipality or county that created the reinvestment

zone by ordinance, resolution, or order may restrict any power

granted to the board by this chapter; and

(2) the board may exercise a power granted to a municipality or

county under Section 311.008(b)(2) only with the consent of the

governing body of the municipality or county.

(e) After the governing body of a municipality by ordinance or

the governing body of a county by order creates a reinvestment

zone under this chapter, the board of directors of the zone may

exercise any power granted to a board under this chapter.

(f) The board of directors of a reinvestment zone and the

governing body of the municipality or county that created the

zone may enter into a contract with a local government

corporation or a political subdivision to manage the reinvestment

zone or implement the project plan and reinvestment zone

financing plan for the term of the agreement. In this

subsection, "local government corporation" means a local

government corporation created by the municipality or county

under Chapter 431, Transportation Code.

(g) Chapter 252, Local Government Code, does not apply to a

dedication, pledge, or other use of revenue in the tax increment

fund for a reinvestment zone by the board of directors of the

zone in carrying out its powers under Subsection (b).

(h) Subject to the approval of the governing body of the

municipality that created the zone, the board of directors of a

reinvestment zone, as necessary or convenient to implement the

project plan and reinvestment zone financing plan and achieve

their purposes, may establish and provide for the administration

of one or more programs for the public purposes of developing and

diversifying the economy of the zone, eliminating unemployment

and underemployment in the zone, and developing or expanding

transportation, business, and commercial activity in the zone,

including programs to make grants and loans from the tax

increment fund of the zone in an aggregate amount not to exceed

the amount of the tax increment produced by the municipality and

paid into the tax increment fund for the zone for activities that

benefit the zone and stimulate business and commercial activity

in the zone. For purposes of this subsection, on approval of the

municipality, the board of directors of the zone has all the

powers of a municipality under Chapter 380, Local Government

Code.

(i) The board of directors of a reinvestment zone or a local

government corporation administering a reinvestment zone may

contract with the municipality that created the zone to allocate

from the tax increment fund for the zone an amount equal to the

tax increment produced by the municipality and paid into the tax

increment fund for the zone to pay the incremental costs of

providing municipal services incurred as a result of the creation

of the zone or the development or redevelopment of the land in

the zone, regardless of whether the costs of those services are

identified in the project plan or reinvestment zone financing

plan for the zone.

Added by Acts 1987, 70th Leg., ch. 191, Sec. 1, eff. Sept. 1,

1987. Amended by Acts 1989, 71st Leg., ch. 1137, Sec. 22, eff.

Sept. 1, 1989; Acts 1991, 72nd Leg., 2nd C.S., ch. 11, Sec. 58,

eff. Sept. 1, 1991; Acts 1995, 74th Leg., ch. 76, Sec. 5.95(23),

eff. Sept. 1, 1995; Acts 1999, 76th Leg., ch. 983, Sec. 3, eff.

June 18, 1999.

Amended by:

Acts 2005, 79th Leg., Ch.

1094, Sec. 42, eff. September 1, 2005.

Acts 2005, 79th Leg., Ch.

1347, Sec. 4, eff. June 18, 2005.

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 14.008, eff. September 1, 2007.

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

1358, Sec. 1, eff. June 19, 2009.

Sec. 311.01005. COSTS ASSOCIATED WITH TRANSPORTATION OR TRANSIT

PROJECTS. (a) In this section:

(1) "Bus rapid transit project" means a mass transportation

facility designed to give preferential treatment to buses on a

roadway in order to reduce bus travel time, improve service

reliability, increase the convenience of users, and increase bus

ridership, including:

(A) a fixed guideway, high occupancy vehicle lane, bus way, or

bus lane;

(B) a transit center or station;

(D) other real property associated with a bus rapid transit

operation.

(2) "Rail transportation project" means a passenger rail

facility, including:

(A) tracks;

(B) a rail line;

(D) a maintenance facility; and

(E) other real property associated with a passenger rail

operation.

(b) This section does not affect the power of the board of

directors of a reinvestment zone or the governing body of the

municipality that creates a reinvestment zone to enter into an

agreement under Section 311.010(b) to dedicate, pledge, or

otherwise provide for the use of revenue in the tax increment

fund to pay the costs of acquiring, constructing, operating, or

maintaining property located in the zone or to acquire or

reimburse acquisition costs of real property outside the zone for

right-of-way or easements necessary to construct public

rights-of-way or infrastructure that benefits the zone.

or otherwise provide for the use of revenue in the tax increment

fund to pay the costs of acquiring land, or the development

rights or a conservation easement in land, located outside the

reinvestment zone, if:

(1) the zone is or will be served by a rail transportation

project or bus rapid transit project;

(2) the land or the development rights or conservation easement

in the land is acquired for the purpose of preserving the land in

its natural or undeveloped condition; and

(3) the land is located in the county in which the zone is

located.

(d) The board of directors of a reinvestment zone, if all of the

members of the board are appointed by the municipality that

creates the zone, or the governing body of the municipality that

creates a reinvestment zone may enter into an agreement described

by Subsection (c) only if:

(1) the board or the governing body determines that the

acquisition of the land, or the development rights or

conservation easement in the land, located outside the zone

benefits or will benefit the zone by facilitating the

preservation of regional open space in order to balance the

regional effects of urban development promoted by the rail

transportation project or bus rapid transit project; and

(2) the municipality that creates the reinvestment zone and the

county in which the zone is located pay the same portion of their

tax increment into the tax increment fund for the zone.

(e) Property acquired under Subsection (c) may not be acquired

through condemnation.

Added by Acts 2005, 79th Leg., Ch.

1134, Sec. 1, eff. June 18, 2005.

Sec. 311.0101. PARTICIPATION OF DISADVANTAGED BUSINESSES IN

CERTAIN ZONES. (a) It is the goal of the legislature, subject

to the constitutional requirements spelled out by the United

States Supreme Court in J. A. Croson Company v. City of Richmond

(822 F.2d 1355) and as hereafter further elaborated by federal

and state courts, that all disadvantaged businesses in the zone

designated under Section 311.005(a)(4) be given full and complete

access to the procurement process whereby supplies, materials,

services, and equipment are acquired by the board. It is also

the intent of the legislature that to the extent constitutionally

permissible, a preference be given to disadvantaged businesses.

The board and general contractor shall give preference, among

bids or other proposals that are otherwise comparable, to a bid

or other proposal by a disadvantaged business having its home

office located in this state.

(b) It is the intent of the legislature that the zone shall:

(1) implement a program or programs targeted to disadvantaged

businesses in order to inform them fully about the zone

procurement process and the requirements for their participation

in that process;

(2) implement such steps as are necessary to ensure that all

disadvantaged businesses are made fully aware of opportunities in

the zone, including but not limited to specific opportunities to

submit bids and proposals. Steps that may be appropriate in

certain circumstances include mailing requests for proposals or

notices inviting bids to all disadvantaged businesses in the

county;

(3) require prime contractors, as part of their responses to

requests for proposals or bids, to make a specific showing of how

they intend to maximize participation by disadvantaged businesses

as subcontractors. The zone shall be required to evaluate such

actions by prime contractors as a factor in the award of

contracts within the zone procurement process;

(4) identify disadvantaged businesses in the county that provide

or have the potential to provide supplies, materials, services,

and equipment to the zone; and

(5) identify barriers to participation by disadvantaged

businesses in the zone procurement process, such as bonding,

insurance, and working capital requirements that may be imposed

on businesses.

required to develop a program pursuant to this Act for the

purchase of supplies, materials, services, and equipment and that

the board of the zone compile a report on an annual basis listing

the total number and dollar amount of contracts awarded to

disadvantaged businesses during the previous year as well as the

total number and dollar amount of all contracts awarded. Such

annual report shall be available for inspection by the general

public during regular business hours.

(d) The board by rule shall adopt goals for the participation of

minority business enterprises and women-owned business

enterprises in the awarding of state contracts for professional

services. To implement the participation goals, the board shall

encourage each issuer to award to minority business enterprises

and women-owned business enterprises not less than 15 percent of

the total value of all professional services contract awards that

the issuer expects to make in its fiscal year.

Added by Acts 1989, 71st Leg., ch. 1137, Sec. 23, eff. Sept. 1,

1989.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 14.009, eff. September 1, 2007.

Sec. 311.011. PROJECT AND FINANCING PLANS. (a) The board of

directors of a reinvestment zone shall prepare and adopt a

project plan and a reinvestment zone financing plan for the zone

and submit the plans to the governing body of the municipality or

county that created the zone. The plans must be as consistent as

possible with the preliminary plans developed for the zone before

the creation of the board.

(b) The project plan must include:

(1) a map showing existing uses and conditions of real property

in the zone and a map showing proposed improvements to and

proposed uses of that property;

(2) proposed changes of zoning ordinances, the master plan of

the municipality, building codes, other municipal ordinances, and

subdivision rules and regulations, if any, of the county, if

applicable;

(3) a list of estimated nonproject costs; and

(4) a statement of a method of relocating persons to be

displaced as a result of implementing the plan.

(1) a detailed list describing the estimated project costs of

the zone, including administrative expenses;

(2) a statement listing the kind, number, and location of all

proposed public works or public improvements in the zone;

(3) an economic feasibility study;

(4) the estimated amount of bonded indebtedness to be incurred;

(5) the time when related costs or monetary obligations are to

be incurred;

(6) a description of the methods of financing all estimated

project costs and the expected sources of revenue to finance or

pay project costs, including the percentage of tax increment to

be derived from the property taxes of each taxing unit that

levies taxes on real property in the zone;

(7) the current total appraised value of taxable real property

in the zone;

(8) the estimated captured appraised value of the zone during

each year of its existence; and

(9) the duration of the zone.

(d) The governing body of the municipality or county that

created the zone must approve a project plan or reinvestment zone

financing plan after its adoption by the board. The approval

must be by ordinance, in the case of a municipality, or by order,

in the case of a county, that finds that the plan is feasible and

conforms to the master plan, if any, of the municipality or to

subdivision rules and regulations, if any, of the county.

(e) The board of directors of the zone at any time may adopt an

amendment to the project plan consistent with the requirements

and limitations of this chapter. The amendment takes effect on

approval by the governing body of the municipality or county that

created the zone. That approval must be by ordinance, in the

case of a municipality, or by order, in the case of a county. If

an amendment reduces or increases the geographic area of the

zone, increases the amount of bonded indebtedness to be incurred,

increases or decreases the percentage of a tax increment to be

contributed by a taxing unit, increases the total estimated

project costs, or designates additional property in the zone to

be acquired by the municipality or county, the approval must be

by ordinance or order, as applicable, adopted after a public

hearing that satisfies the procedural requirements of Sections

311.003(c) and (d).

(f) In a zone designated under Section 311.005(a)(4) that is

located in a county with a population of 3.3 million or more, the

project plan must provide that at least one-third of the tax

increment of the zone be used to provide affordable housing

during the term of the zone.

(g) An amendment to the project plan or the reinvestment zone

financing plan for a zone does not apply to a school district

that participates in the zone unless the governing body of the

school district by official action approves the amendment, if the

amendment:

(1) has the effect of directly or indirectly increasing the

percentage or amount of the tax increment to be contributed by

the school district; or

(2) requires or authorizes the municipality or county creating

the zone to issue additional tax increment bonds or notes.

Added by Acts 1987, 70th Leg., ch. 191, Sec. 1, eff. Sept. 1,

1987. Amended by Acts 1989, 71st Leg., ch. 1137, Sec. 24, eff.

Sept. 1, 1989; Acts 1999, 76th Leg., ch. 983, Sec. 4, eff. June

18, 1999; Acts 2001, 77th Leg., ch. 669, Sec. 120, eff. Sept. 1,

2001.

Amended by:

Acts 2005, 79th Leg., Ch.

1094, Sec. 43, eff. September 1, 2005.

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 14.010, eff. September 1, 2007.

Sec. 311.012. DETERMINATION OF AMOUNT OF TAX INCREMENT. (a)

The amount of a taxing unit's tax increment for a year is the

amount of property taxes levied and assessed by the unit for that

year on the captured appraised value of real property taxable by

the unit and located in a reinvestment zone or the amount of

property taxes levied and collected by the unit for that year on

the captured appraised value of real property taxable by the unit

and located in a reinvestment zone. The governing body of a

taxing unit shall determine which of the methods specified by

this subsection is used to calculate the amount of the unit's tax

increment.

(b) The captured appraised value of real property taxable by a

taxing unit for a year is the total appraised value of all real

property taxable by the unit and located in a reinvestment zone

for that year less the tax increment base of the unit.

appraised value of all real property taxable by the unit and

located in a reinvestment zone for the year in which the zone was

designated under this chapter.

Added by Acts 1987, 70th Leg., ch. 191, Sec. 1, eff. Sept. 1,

1987. Amended by Acts 1999, 76th Leg., ch. 983, Sec. 5, eff. June

18, 1999.

Amended by:

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

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

Sec. 311.0123. SALES TAX INCREMENT. (a) In this section,

"sales tax base" for a reinvestment zone means the amount of

municipal sales and use taxes attributable to the zone for the

year in which the zone was designated under this chapter.

(b) The governing body of a municipality may determine, in an

ordinance designating an area as a reinvestment zone or in an

ordinance adopted subsequent to the designation of a zone, the

portion or amount of tax increment generated from municipal sales

and use taxes attributable to the zone, above the sales tax base,

to be deposited into the tax increment fund. Nothing in this

section requires a municipality to contribute sales tax increment

into a tax increment fund.

under this chapter that pledges the payments into the tax

increment fund under Subsection (b), the governing body of a

municipality may enter into an agreement, under Subchapter E,

Chapter 271, Local Government Code, to authorize and direct the

comptroller to:

(1) withhold from any payment to which the municipality may be

entitled the amount of the payment into the tax increment fund

under Subsection (b);

(2) deposit that amount into the tax increment fund; and

(3) continue withholding and making additional payments into the

tax increment fund until an amount sufficient to satisfy the

amount due has been met.

(d) A local government corporation created under Chapter 431,

Transportation Code, that has contracted with a reinvestment zone

and a municipality under Section 311.010(f) may be a party to an

agreement under Subsection (c) and the agreement may provide for

payments to be made to a paying agent of the local government

corporation.

(e) The sales and use taxes to be deposited into the tax

increment fund under this section may be disbursed from the fund

only to:

(1) satisfy claims of holders of tax increment bonds, notes, or

other obligations issued or incurred for the reinvestment zone;

(2) pay project costs for the zone; and

(3) make payments in accordance with an agreement made under

Section 311.010(b) dedicating revenue from the tax increment

fund.

Added by Acts 2005, 79th Leg., Ch.

114, Sec. 1, eff. May 20, 2005.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

189, Sec. 1, eff. May 23, 2007.

Sec. 311.0125. TAX ABATEMENT AGREEMENTS. (a) Notwithstanding

any provision in this chapter to the contrary, a taxing unit

other than a school district may enter into a tax abatement

agreement with an owner of real or personal property in a

reinvestment zone, regardless of whether the taxing unit deposits

or agrees to deposit any portion of its tax increment into the

tax increment fund.

(b) To be effective, an agreement to abate taxes on real

property in a reinvestment zone must be approved by:

(1) the board of directors of the reinvestment zone; and

(2) the governing body of each taxing unit that imposes taxes on

real property in the reinvestment zone and deposits or agrees to

deposit any of its tax increment into the tax increment fund for

the zone.

reinvestment zone in connection with bonds or other obligations,

the board may convenant that the board will not approve a tax

abatement agreement that applies to real property in that zone.

(d) If a taxing unit enters into a tax abatement agreement

authorized by this section, taxes that are abated under that

agreement are not considered taxes to be imposed or produced by

that taxing unit in calculating the amount of:

(1) the tax increment of that taxing unit; or

(2) that taxing unit's deposit to the tax increment fund for the

reinvestment zone.

(e) The Texas Department of Economic Development or its

successor may recommend that a taxing unit enter into a tax

abatement agreement with a person under this chapter. In

determining whether to approve an agreement to abate taxes on

real property in a reinvestment zone under Subsection (b), the

board of directors of the reinvestment zone and th

State Codes and Statutes

State Codes and Statutes

State Codes and Statutes

State Codes and Statutes

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