Office of House Bill AnalysisH.B. 2040
By: Hawley
State, Federal & International Relations


Several Texas communities have faced the closure or realignment of a
federal military base in recent years. In an effort to deal with the impact
on their communities, some communities have created redevelopment
authorities to focus on replacing the jobs and capital lost due to the
military base closure.  The 76th Legislature passed legislation to enable
municipalities to create defense base development authorities (authority).
San Antonio formed such an authority to deal with the closure of Kelly Air
Force Base (Kelly AFB).  When Beeville, a city of approximately 13,500
people, faced the closure of Chase Naval Air Station, the city formed a
development corporation under the Development Corporation Act of 1979.
However, the Development Corporation Act has not been a perfect fit for
Beeville's needs, and legal counsel has advised Beeville to reorganize its
redevelopment efforts under defense base development authorities which
assisted San Antonio after the closure of Kelly AFB.  House Bill 2040
modifies provisions relating to defense base development authorities for a
municipality of 50,000 or less. 


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. 


House Bill 2040 amends provisions of the Local Government Code regarding
certain defense base development authorities (authority).  Existing
provisions governing bond issuance and utilities conveyed by the United
States now apply only to an authority created by a municipality with a
population of 50,000 or more. 

The bill authorizes an authority created by a municipality with a
population of less than 50,000 (smaller authority) to own an electric,
sewer service, or water supply utility and to sell those utility services
to a person who leases real property from the authority.  The bill sets
forth composition requirements for the nine member board of directors of a
smaller authority and authorizes the entity that appoints a board member to
remove the member by adopting an appropriate resolution or order. 

H.B. 2040 authorizes an authority established by a municipality of 50,000
or more to issue bonds and any authority to issue a certificate of

H.B. 2040 specifies that the sale or transfer of real property, the
election or appointment of an official who took office before the effective
date of this Act, and an act or proceeding including those relating to a
bond or other obligation or incorporation taken before March 1, 2001 by a
defense base development corporation are validated and confirmed as of the
dates these actions occurred.  This provision does not apply to an act,
proceeding, bond, obligation, election, or appointment that is under
litigation for its validity or an act or proceeding that has been held
invalid by final court judgment, was void under state law at the time of
its occurrence, or was a misdemeanor or felony at the time of its


On passage, or if the Act does not receive the necessary vote, the Act
takes effect September 1, 2001.