Office of House Bill AnalysisH.B. 3161
By: Dunnam
Economic Development


Chapter 2310, Government Code, provides for special assistance to local
communities which have experienced the closing of a Department of Defense
military base or facility.  This chapter provides for the creation of a
defense economic readjustment zone (DERZ) wherein approved projects are
eligible for special benefits, exemptions from regulations, and certain
incentives.  The designation of an area as DERZ also qualifies the area as
a reinvestment zone for tax increment financing and tax abatement purposes.
The overall purpose of DERZ designation is to encourage economic
redevelopment to offset the impact to the local economy when a military
base closes.   

The incentives created by Chapter 2310 are intended to assist communities
attempting to attract new business enterprises.  Under the present system,
a business may approach a city (or vice versa) regarding the construction
of an industrial or business facility on city property located on a former
military base.  If the city has obtained a DERZ designation, special
benefits are available through the city to the industrial prospect.  In
order to determine whether it wants to locate on the property, the business
will discuss and negotiate available incentives with the city.   

Normally, the business and the city would then enter into a contract
containing the agreements regarding incentives.  However, prior to the 76th
Legislature, Section 272.001, Local Government Code, required a city to
sell its land by a competitive bidding process.  A city which has entered
into long negotiations with an industrial prospect was then required to
sell the land which the prospect wishes to purchase through a competitive
bidding process.  This could have resulted result in the land being sold to
a completely different entity, which had made no commitment to the city
regarding the type of development to be placed on the property or the
number of persons to be employed.  Additionally, few industrial prospects
were willing to purchase the property at a competitive bidding process
before the negotiation of incentives. 

This situation created an obstacle to economic development on former
defense bases and made negotiation of economic development agreements
awkward.  H.B.  3161 authorizes buildings or cityowned land located in a
readjustment zone to be sold without notice or bidding if the sale
satisfies the criteria and public purpose designated by the governing body
in an ordinance. 


It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 


SECTION 1.  Amends Section 2310.410, Government Code, to authorize the
state, a municipality, or a county that owns a surplus building or vacant
land in the zone, after an area is designated as a readjustment zone, to
dispose of the building or land by selling the building or land without
notice or bidding.   Authorizes the  building or land, if the surplus
building or vacant land is sold at a public auction, to be sold to a buyer
who is not the highest bidder if the criteria and public purpose specified
in the ordinance or order adopted under this section are satisfied.
Authorizes the surplus building or vacant land to be sold without complying
with notice or bidding requirements if the criteria and public purpose
specified in the ordinance or order adopted under this section are
satisfied.  Deletes text authorizing the building or land to be sold to a
buyer who is not the highest bidder under certain conditions.  Makes
conforming changes. 

SECTION 2.  Emergency clause.
  Effective date: upon passage.