Cities Must Match Downtown District Assessments For A Nonprofit

The text as introduced · 995 words

89R15003 MP-F

By: Middleton
S.B. No. 2594

A BILL TO BE ENTITLED

AN ACT

relating to the provision of supplemental services by management

organizations in certain public improvement districts located in

certain municipalities.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 372.011, Local Government Code, is

amended to read as follows:

Sec. 372.011. DISSOLUTION. Except as provided by Section

372.203, a [ 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.

SECTION 2. Chapter 372, Local Government Code, is amended

by adding Subchapter E to read as follows:

SUBCHAPTER E. DOWNTOWN IMPROVEMENT DISTRICTS IN CERTAIN

MUNICIPALITIES

Sec. 372.201. DEFINITIONS. In this subchapter:

(1) "Affected district" means a public improvement

district that is located in a municipality's central business

district and has the largest operating budget of any public

improvement district located in the central business district as of

January 1, 2025.

(2) "Management organization" means a nonprofit

organization that a municipality has entered into a contract with

to implement supplemental services and improvements in an affected

district.

(3) "Vagrancy" means the habitual act of loitering,

begging, panhandling, scavenging, camping, sleeping, or otherwise

remaining idle for extended periods of time in a public place

without a lawful purpose.

Sec. 372.202. APPLICABILITY OF SUBCHAPTER. This subchapter

applies only to a municipality that has a population of more than

900,000 and less than two million.

Sec. 372.203. PERPETUAL EXISTENCE. Notwithstanding any

other law, an affected district may not be dissolved under Section

372.011 or any other general law, but may be dissolved by special

law.

Sec. 372.204. CONTRACT WITH MANAGEMENT ORGANIZATION. (a)

Except as provided by Section 372.205, a municipality shall enter

into a contract with a management organization that:

(1) implements supplemental services and improvements

in an affected district created by the municipality; and

(2) is delegated full authority to oversee and manage

the implementation of supplemental services and improvements as

provided by Section 372.208, including the receipt, handling, and

use of money in accordance with this subchapter.

(b) A management organization that enters into a contract

under this section is considered a governmental body for purposes

of Chapter 552, Government Code.

Sec. 372.205. GOVERNING BODY OF MANAGEMENT ORGANIZATIONS.

(a) A municipality may not enter into a contract with a management

organization under this subchapter unless the governing body of the

management organization complies with this section.

(b) The governing body of a nonprofit organization that may

serve as a management organization under this subchapter must be

composed of seven directors that serve staggered, four-year terms.

Five of the directors must be appointed as provided by Subsection

(c) and two of the directors must be elected as provided by

Subsection (d).

(c) The appointed directors of the governing body of a

nonprofit organization that may serve as a management organization

under this subchapter must be appointed as follows:

(1) one director appointed by the municipality in

which the affected district is located;

(2) one director appointed by the commissioners court

of the county in which the affected district is located;

(3) one director appointed by the governor;

(4) one director appointed by the lieutenant governor;

and

(5) one director appointed by the speaker of the house

of representatives.

(d) The elected directors of the governing body of a

nonprofit organization that may serve as a management organization

under this subchapter must be elected by the 10 largest owners of

taxable real property liable for an assessment in the affected

district, as determined by the current roll of the appraisal

district in which the property is located. The governing documents

of the nonprofit organization must prescribe the means of electing

the directors under this subsection. An elected director may not

serve consecutive terms.

Sec. 372.206. LOCAL FUNDING. (a) A municipality shall

transfer annually to the management organization of an affected

district located in the municipality an amount of money equal to the

revenue collected through an existing special assessment on

properties located in the district over the previous municipal

fiscal year.

(b) A county shall transfer annually to the management

organization of an affected district located in the county an

amount of money equal to one half of the amount described by

Subsection (a).

(c) A municipality or county may not change the rate of an

assessment in response to a transfer of money under this section.

Sec. 372.207. STATE FUNDING. A management organization is

eligible to receive state funding for the purpose of implementing

supplemental services as described by Section 372.208.

Sec. 372.208. USE OF MONEY FOR SUPPLEMENTAL SERVICES. (a)

Except as provided by Subsection (b), a management organization may

only use money allocated to the management organization under this

subchapter for the following supplemental services, in order of

priority:

(1) eliminating crime;

(2) eliminating vagrancy;

(3) improving cleanliness;

(4) increasing beautification; and

(5) implementing other projects to improve the public

improvement district.

(b) An affected district may only use money appropriated to

the management organization under Section 372.207 for:

(1) eliminating crime; and

(2) eliminating vagrancy.

Sec. 372.209. ENFORCEMENT. (a) An owner of real property

located in an affected district may bring an action against a

management organization to seek injunctive relief or specific

performance in a district court to enforce compliance with any

applicable law or the governing documents of the management

organization. A property owner is not entitled to money damages in

an action under this section.

(b) A court shall award reasonable attorney's fees and court

costs incurred in bringing an action under this section to a

prevailing claimant.

SECTION 3. This Act takes effect September 1, 2025.