CHAPTER 501. PROVISIONS GOVERNING DEVELOPMENT CORPORATIONS

LOCAL GOVERNMENT CODE

TITLE 12. PLANNING AND DEVELOPMENT

SUBTITLE C1. ADDITIONAL PLANNING AND DEVELOPMENT PROVISIONS

APPLYING TO MORE THAN ONE TYPE OF LOCAL GOVERNMENT

CHAPTER 501. PROVISIONS GOVERNING DEVELOPMENT CORPORATIONS

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 501.001. SHORT TITLE. This subtitle may be cited as the

Development Corporation Act.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.002. DEFINITIONS. In this subtitle:

(1) "Authorizing unit" means the unit that authorizes the

creation of a corporation under this subtitle.

(2) "Board of directors" means the board of directors of a

corporation.

(3) "Bonds" includes evidences of indebtedness, including bonds

and notes.

(4) "Corporate headquarters facilities" means buildings proposed

for construction or occupancy as the principal office for a

business enterprise's administrative and management services.

(5) "Corporation" means a corporation organized under this

subtitle.

(6) "Cost," with respect to a project, has the meaning assigned

by Section 501.152.

(7) "County alliance" means two or more counties that jointly

authorize the creation of a corporation under this subtitle.

(8) "District" means a conservation and reclamation district

established under Section 59, Article XVI, Texas Constitution.

(9) "Economic development office" means the Texas Economic

Development and Tourism Office within the office of the governor.

(10) "Governing body" means the commissioners court of a county

or the governing body of a municipality or district.

(11) "Institution of higher education" has the meaning assigned

by Section 61.003, Education Code.

(12) "Primary job" means:

(A) a job that is:

(i) available at a company for which a majority of the products

or services of that company are ultimately exported to regional,

statewide, national, or international markets infusing new

dollars into the local economy; and

(ii) included in one of the following sectors of the North

American Industry Classification System (NAICS):

NAICS Sector #

Description

111

Crop Production

112

Animal Production

113

Forestry and Logging

11411

Commercial Fishing

115

Support Activities for Agriculture and Forestry

211-213

Mining

221

Utilities

311-339

Manufacturing

42

Wholesale Trade

48-49

Transportation and Warehousing

51 (excluding 512131 and 512132)

Information (excluding motion picture theaters and drive-in

motion picture theaters)

523-525

Securities, Commodity Contracts, and Other Financial

Investments and Related Activities; Insurance Carriers and

Related Activities; Funds, Trusts, and Other Financial

Vehicles

5413, 5415, 5416, 5417, and 5419

Architectural, Engineering, and Related Services; Computer

System Design and Related Services; Management, Scientific,

and Technical Consulting Services; Scientific Research and

Development Services; Other Professional, Scientific, and

Technical Services

551

Management of Companies and Enterprises

56142

Telephone Call Centers

922140

Correctional Institutions; or

(B) a job that is included in North American Industry

Classification System (NAICS) sector number 928110, National

Security, for the corresponding index entries for Armed Forces,

Army, Navy, Air Force, Marine Corps, and Military Bases.

(13) "Project" means a project specified as such under

Subchapter C.

(14) "Resolution" means a resolution, order, ordinance, or other

official action by the governing body of a unit.

(15) "Type A corporation" means a corporation governed by

Chapter 504.

(16) "Type B corporation" means a corporation governed by

Chapter 505.

(17) "Unit" means a municipality, county, or district that may

create and use a corporation under this subtitle.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.003. WHO MAY BE USER. The following may be a user

under this subtitle:

(1) an individual, a partnership, a corporation, or any other

private entity organized for profit or not for profit; or

(2) a municipality, county, district, other political

subdivision, public entity, or agency of this state or the

federal government.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.004. LEGISLATIVE FINDINGS; CONSTRUCTION OF SUBTITLE.

(a) The legislature finds that:

(1) the present and prospective right to gainful employment and

the general welfare of the people of this state require as a

public purpose the promotion and development of new and expanded

business enterprises and of job training;

(2) the existence, development, and expansion of business,

commerce, industry, higher education, and job training are

essential to the economic growth of this state and to the full

employment, welfare, and prosperity of residents of this state;

(3) the assistance provided by corporations in promoting higher

education opportunities encourages and fosters the development

and diversification of the economy of this state and the

elimination of unemployment and underemployment in this state;

(4) the means authorized by this subtitle and the assistance

provided by this subtitle, especially with respect to financing,

are in the public interest and serve a public purpose of this

state in promoting the welfare of the residents of this state

economically by securing and retaining business enterprises and

as a result maintaining a higher level of employment, economic

activity, and stability;

(5) community industrial development corporations in this state

have invested substantial money in successful industrial

development projects and have experienced difficulty in

undertaking additional industrial development projects because of

the partial inadequacy of the community industrial development

corporations' money or money potentially available from local

subscription sources and the limitations of local financial

institutions in providing additional and sufficiently large first

mortgage loans; and

(6) communities in this state have been at a critical

disadvantage in competing with communities in other states for

the location or expansion of business enterprises because of the

availability and prevalent use in all other states of financing

and other special incentives, and, for that reason, the issuance

of revenue bonds under this subtitle by a corporation on behalf

of political subdivisions of this state for the promotion and

development of new and expanded business enterprises to provide

and encourage employment and the public welfare is in the public

interest and is a public purpose.

(b) This subtitle shall be construed in conformity with the

intention of the legislature expressed in this section.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.005. ADOPTION OF ALTERNATE PROCEDURE. If a court holds

that a procedure under this subtitle violates the federal or

state constitution, a corporation by resolution may provide an

alternate procedure that conforms to the constitution.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.006. USE OF CORPORATION TO FINANCE PROJECT. A unit may

use a corporation to issue bonds on the unit's behalf to finance

the cost of a project, including a project in a federally

designated empowerment zone or enterprise community or in an

enterprise zone designated under Chapter 2303, Government Code,

to promote and develop new and expanded business enterprises for

the promotion and encouragement of employment and the public

welfare.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.007. LENDING CREDIT OR GRANTING PUBLIC MONEY. (a)

Except as provided by Subsection (b), a unit may not lend its

credit or grant public money or another thing of value in aid of

a corporation.

(b) A municipality may grant public money to a corporation under

a contract authorized by Section 380.002.

(c) The grants, loans, expenditures, and tax exemptions

authorized by this subtitle in connection with a project and

authorized by a corporation in accordance with this subtitle

constitute the making of loans or grants of public money or

constitute other actions authorized by Section 52-a, Article III,

Texas Constitution.

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

885, Sec. 3.01, eff. April 1, 2009.

Amended by:

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

87, Sec. 15.011(a), eff. September 1, 2009.

Sec. 501.008. LIMITATION ON FINANCIAL OBLIGATION. A corporation

may not incur a financial obligation that cannot be paid from:

(1) bond proceeds;

(2) revenue realized from the lease or sale of a project;

(3) revenue realized from a loan made by the corporation to

wholly or partly finance or refinance a project; or

(4) money granted under a contract with a municipality under

Section 380.002.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.009. POLICE POWERS NOT AFFECTED. This subtitle does

not deprive this state or a governmental subdivision of this

state of its police powers over a corporation's property and does

not impair any police power over the property that is otherwise

provided by law to any official or agency of this state or its

governmental subdivisions.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.010. DELEGATION OF UNIT'S SOVEREIGN POWERS PROHIBITED.

A unit may not delegate to a corporation any of the unit's

attributes of sovereignty, including the power to tax, the power

of eminent domain, and the police power.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.011. REFERENCE TO ARTICLES OF INCORPORATION OR

CERTIFICATE OF FORMATION. (a) With respect to a corporation

created under the Development Corporation Act of 1979 (Article

5190.6, Vernon's Texas Civil Statutes) before January 1, 2006, a

reference in any law of this state or in the corporation's

governing documents to "articles of incorporation" means, for

purposes of this subtitle, the corporation's certificate of

formation.

(b) With respect to a corporation that is created under the

Development Corporation Act of 1979 (Article 5190.6, Vernon's

Texas Civil Statutes) before January 1, 2006, and continues to

operate under articles of incorporation, a reference in this

subtitle or any other law of this state or in the corporation's

governing documents to "certificate of formation" means the

corporation's articles of incorporation.

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

885, Sec. 3.01, eff. April 1, 2009.

SUBCHAPTER B. CREATION AND OPERATION OF CORPORATION

Sec. 501.051. AUTHORITY TO CREATE. (a) Three or more

individuals who are qualified voters of a unit may file with the

unit's governing body a written application requesting the unit

to authorize creation of a corporation to act on behalf of the

unit. The governing body may not charge a filing fee for the

application.

(b) A corporation may be created only if the governing body of

the unit by resolution:

(1) determines that the creation of the corporation is

advisable; and

(2) approves the certificate of formation proposed to be used in

organizing the corporation.

(c) A unit may authorize the creation of one or more

corporations if the resolution authorizing the creation of each

corporation specifies the public purpose of the unit to be

furthered by the corporation. The specified public purpose must

be limited to the promotion and development under this subtitle

of enterprises to promote and encourage employment and the public

welfare.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.052. NONMEMBER, NONSTOCK FORM OF CORPORATION. A

corporation is a nonmember, nonstock corporation.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.053. CORPORATION NONPROFIT; NET EARNINGS. (a) A

corporation is nonprofit, and the corporation's net earnings

remaining after payment of its expenses may not benefit an

individual, firm, or corporation, except as provided by

Subsection (b).

(b) If the board of directors determines that sufficient

provision has been made for the full payment of the corporation's

expenses, bonds, and other obligations, any net earnings of the

corporation subsequently accruing shall be paid to the

corporation's authorizing unit.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.054. GENERAL POWERS, PRIVILEGES, AND FUNCTIONS. (a) A

corporation has the powers, privileges, and functions of a

nonprofit corporation incorporated under the Texas Non-Profit

Corporation Act (Article 1396-1.01 et seq., Vernon's Texas Civil

Statutes) or formed under the Texas Nonprofit Corporation Law, as

described by Section 1.008, Business Organizations Code. To the

extent that the provisions governing powers, privileges, and

functions of a nonprofit corporation under those laws are in

conflict with or inconsistent with provisions of this subtitle

governing powers, privileges, and functions of a nonprofit

corporation, the provisions of this subtitle prevail.

(b) A corporation:

(1) has all powers incidental to or necessary for the

performance of the powers provided by Sections 501.059, 501.060,

501.064, 501.153-501.155, 501.159, 501.201(a), 501.208, 501.209,

501.214, and 501.402; and

(2) with respect to a project, may exercise all powers necessary

or appropriate to effect a purpose for which the corporation is

organized, subject to the control of the governing body of the

corporation's authorizing unit.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.055. CONSTITUTED AUTHORITY OR INSTRUMENTALITY. (a) A

corporation is a constituted authority and an instrumentality,

within the meaning of the United States Department of the

Treasury regulations and the Internal Revenue Service rulings

adopted under Section 103, Internal Revenue Code of 1986, as

amended, including regulations and rulings adopted under Section

103, Internal Revenue Code of 1954, and may act on behalf of the

corporation's authorizing unit for the specific public purpose

authorized by the unit.

(b) A corporation is not a political subdivision or a political

corporation for purposes of the laws of this state, including

Section 52, Article III, Texas Constitution.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.056. CONTENTS OF CERTIFICATE OF FORMATION. The

certificate of formation of a corporation must state:

(1) the name of the corporation;

(2) that the corporation is a nonprofit corporation;

(3) the duration of the corporation, which may be perpetual;

(4) the specific purpose for which the corporation is organized

and may issue bonds on behalf of the unit;

(5) that the corporation has no members and is a nonstock

corporation;

(6) any provision consistent with law for the regulation of the

corporation's internal affairs, including any provision required

or permitted by this subtitle to be stated in the bylaws;

(7) the street address of the corporation's initial registered

office and the name of the corporation's initial registered agent

at that address;

(8) the number of directors of the initial board of directors

and the name and address of each initial director;

(9) the name and street address of each organizer; and

(10) that the unit has:

(A) by resolution specifically authorized the corporation to act

on the unit's behalf to further the public purpose stated in the

resolution and the certificate of formation; and

(B) approved the certificate of formation.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.057. FILING OF CERTIFICATE OF FORMATION AND DELIVERY OF

CERTIFICATE EVIDENCING FILING. (a) If the unit's governing body

adopts a resolution under Section 501.051, the certificate of

formation may be filed as provided by this section.

(b) Three originals of the certificate of formation shall be

delivered to the secretary of state. If the secretary of state

determines that the certificate of formation conforms to this

subchapter, the secretary of state shall:

(1) endorse the word "Filed" and the date of the filing on each

original certificate of formation;

(2) file one of the original certificates of formation in the

secretary of state's office;

(3) issue two certificates evidencing the filing of the

certificate of formation;

(4) attach to each certificate evidencing the filing of the

certificate of formation an original of the certificate of

formation; and

(5) deliver a certificate evidencing the filing of the

certificate of formation and the attached certificate of

formation to:

(A) the organizers or the organizers' representatives; and

(B) the governing body of:

(i) the corporation's authorizing unit; or

(ii) any county in the county alliance that authorized the

creation of the corporation, for a county alliance corporation.

(c) The governing body of a county to which a certificate

evidencing the filing of the certificate of formation and the

attached certificate of formation are delivered under Subsection

(b)(5)(B)(ii) shall provide photocopies of the certificate

evidencing the filing of the certificate of formation and the

attached certificate of formation to each other member of the

county alliance.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.058. EFFECT OF ISSUANCE OF CERTIFICATE EVIDENCING

FILING. (a) A corporation's existence begins when the

certificate evidencing the filing of its certificate of formation

is issued.

(b) After the issuance of the certificate evidencing the filing

of the certificate of formation, the formation of the corporation

may not be contested for any reason.

(c) A certificate evidencing the filing of the certificate of

formation is conclusive evidence that:

(1) the organizers and the unit have performed all conditions

precedent for the formation of the corporation; and

(2) the corporation is formed under this subtitle.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.059. CORPORATE SEAL. A corporation may have a

corporate seal and with respect to a project may impress, affix,

or otherwise reproduce the seal or a facsimile of the seal on an

instrument required to be executed by the corporation's

appropriate officers.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.060. MAY SUE AND BE SUED. With respect to a project, a

corporation may sue, be sued, complain, and defend in the

corporation's name.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.061. CORPORATION'S ORGANIZATION NOT RESTRICTED. Except

as provided by this subtitle, no proceeding, notice, or approval

is required for the organization of a corporation.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.062. BOARD OF DIRECTORS. (a) All of the powers of a

corporation are vested in a board of directors consisting of

three or more directors appointed by the governing body of the

corporation's authorizing unit.

(b) A director serves for a term of not more than six years.

(c) The governing body of the corporation's authorizing unit may

remove a director for cause or at will.

(d) A director serves without compensation, but is entitled to

reimbursement for actual expenses incurred in the performance of

the director's duties under this subtitle.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.063. ORGANIZATIONAL MEETING. (a) After issuance of

the certificate evidencing the filing of the certificate of

formation, the board of directors named in the certificate of

formation shall hold an organizational meeting in this state to

adopt bylaws and elect officers and for other purposes.

(b) Not later than the third day before the date of the meeting,

the organizers who call the meeting shall give notice by mail of

the time and place of the meeting to each director named in the

certificate of formation.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.064. BYLAWS. (a) A corporation may adopt and amend

bylaws for the administration and regulation of the corporation's

affairs.

(b) The board of directors shall adopt a corporation's initial

bylaws.

(c) The bylaws and each amendment of the bylaws must:

(1) be consistent with state law and with the certificate of

formation of the corporation; and

(2) be approved by resolution of the governing body of the

corporation's authorizing unit.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.065. OFFICERS. (a) A corporation has the following

officers:

(1) a president;

(2) at least one vice president;

(3) a secretary;

(4) a treasurer; and

(5) other officers or assistant officers considered necessary.

(b) An officer of the corporation is elected or appointed at the

time, in the manner, and for the term prescribed by the

certificate of formation or bylaws, except that an officer's term

may not exceed three years. In the absence of provisions in the

certificate of formation or the bylaws prescribing the selection

or terms of officers, the board of directors shall annually elect

or appoint officers.

(c) A person may hold more than one office, except that the same

person may not hold the offices of president and secretary.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.066. INDEMNIFICATION. (a) In this section, "director

or officer" includes a former director or officer.

(b) Except as provided by Subsection (d), a corporation may

indemnify a director or officer of the corporation for necessary

expenses and costs, including attorney's fees, actually incurred

by the director or officer in connection with a claim asserted

against the director or officer, by action in court or another

forum, by reason of the director's or officer's being or having

been a director or officer of the corporation.

(c) Except as provided by Subsection (d), if a corporation has

not fully indemnified a director or officer under Subsection (b),

the court in a proceeding in which a claim is asserted against

the director or officer or a court having jurisdiction over an

action brought by the director or officer on a claim for

indemnity may assess indemnity against the corporation or the

corporation's receiver or trustee. The assessment must equal the

amount that the director or officer paid to satisfy the judgment

or compromise the claim, including attorney's fees and not

including any amount paid to the corporation, to the extent that:

(1) the amount paid was actually and necessarily incurred; and

(2) the court considers the amount paid reasonable and

equitable.

(d) A corporation may not indemnify a director or officer for a

matter in which the director or officer is guilty of negligence

or misconduct. A court may assess indemnity against the

corporation only if the court finds that the director or officer

was not guilty of negligence or misconduct in the matter for

which indemnity is sought.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.067. INSURANCE AND BENEFITS. (a) Notwithstanding any

law to the contrary and with the consent of the corporation's

authorizing unit, a corporation may obtain:

(1) health benefits coverage, liability coverage, workers'

compensation coverage, and property coverage under the

authorizing unit's insurance policies, through self-funded

coverage, or under coverage provided under an interlocal

agreement with a political subdivision; or

(2) retirement benefits under a retirement program the

authorizing unit participates in or operates.

(b) Health benefits coverage may be extended to the

corporation's directors and employees, and to the dependents of

the directors and employees.

(c) Workers' compensation benefits may be extended to the

corporation's directors, employees, and volunteers.

(d) Liability coverage may be extended to protect the

corporation and the corporation's directors and employees.

(e) Retirement benefits may be extended to the corporation's

employees.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.068. BOARD MEETINGS; NOTICE OF MEETING. (a) A board

of directors may hold a regular meeting in this state with or

without notice as prescribed by the corporation's bylaws.

(b) A board of directors may hold a special meeting with notice

as prescribed by the corporation's bylaws.

(c) A director's attendance at a board meeting constitutes a

waiver of notice of the meeting, unless the director attends the

meeting for the express purpose of objecting to the transaction

of any business at the meeting because the meeting has not been

lawfully called or convened.

(d) Unless required by the corporation's bylaws, notice or

waiver of notice of a board meeting is not required to specify

the business to be transacted at the meeting or the purpose of

the meeting.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.069. WAIVER OF NOTICE. If a notice is required to be

given to a director of a corporation under this subtitle or the

corporation's certificate of formation or bylaws, a written

waiver of the notice signed by the person entitled to the notice

is equivalent to giving the required notice. The waiver may be

given before or after the time that would have been stated in the

notice.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.070. ACTION OF BOARD; QUORUM. (a) A quorum of a board

of directors is the lesser of:

(1) a majority of the number of directors:

(A) established by the corporation's bylaws; or

(B) stated in the corporation's certificate of formation, if the

bylaws do not establish the number of directors; or

(2) the number of directors, not less than three, established as

a quorum by the certificate of formation or bylaws.

(b) The act of a majority of the directors present at a meeting

at which a quorum is present is an act of the board of directors,

unless the act of a larger number is required by the certificate

of formation or bylaws of the corporation.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.071. ACTION WITHOUT MEETING. (a) An action that may

be taken at a meeting of a board of directors, including an

action required by this subtitle to be taken at a meeting, may be

taken without a meeting if each director signs a written consent

providing the action to be taken.

(b) The consent has the same effect as a unanimous vote and may

be stated as such in a document filed with the secretary of state

under this subtitle.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.072. OPEN MEETINGS AND PUBLIC INFORMATION. A board of

directors is subject to the open meetings law, Chapter 551,

Government Code, and the public information law, Chapter 552,

Government Code.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.073. SUPERVISION BY AUTHORIZING UNIT. (a) The

corporation's authorizing unit will approve all programs and

expenditures of a corporation and annually review any financial

statements of the corporation.

(b) A corporation's authorizing unit is entitled to access to

the corporation's books and records at all times.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.074. PURCHASING. A corporation may use the reverse

auction procedure defined by Section 2155.062(d), Government

Code, for purchasing.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.075. EXEMPTION FROM TAXATION. (a) The activities of a

corporation affect all the residents of the corporation's

authorizing unit by the corporation's assuming to a material

extent what otherwise might be an obligation or duty of the

authorizing unit, and therefore the corporation is an institution

of purely public charity within the tax exemption of Section 2,

Article VIII, Texas Constitution.

(b) A corporation is exempt from the tax imposed by Chapter 171,

Tax Code, only if the corporation is exempted by that chapter.

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

885, Sec. 3.01, eff. April 1, 2009.

SUBCHAPTER C. AUTHORIZED PROJECTS

Sec. 501.101. PROJECTS RELATED TO CREATION OR RETENTION OF

PRIMARY JOBS. In this subtitle, "project" includes the land,

buildings, equipment, facilities, expenditures, targeted

infrastructure, and improvements that are:

(1) for the creation or retention of primary jobs; and

(2) found by the board of directors to be required or suitable

for the development, retention, or expansion of:

(A) manufacturing and industrial facilities;

(B) research and development facilities;

(C) military facilities, including closed or realigned military

bases;

(D) transportation facilities, including airports, hangars,

railports, rail switching facilities, maintenance and repair

facilities, cargo facilities, related infrastructure located on

or adjacent to an airport or railport facility, marine ports,

inland ports, mass commuting facilities, and parking facilities;

(E) sewage or solid waste disposal facilities;

(F) recycling facilities;

(G) air or water pollution control facilities;

(H) facilities for furnishing water to the public;

(I) distribution centers;

(J) small warehouse facilities capable of serving as

decentralized storage and distribution centers;

(K) primary job training facilities for use by institutions of

higher education; or

(L) regional or national corporate headquarters facilities.

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

885, Sec. 3.01, eff. April 1, 2009.

Amended by:

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

87, Sec. 15.012(a), eff. September 1, 2009.

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

150, Sec. 1, eff. September 1, 2009.

Sec. 501.102. PROJECTS RELATED TO CERTAIN JOB TRAINING. In this

subtitle, "project" includes job training required or suitable

for the promotion of development and expansion of business

enterprises and other enterprises described by this subtitle, as

provided by Section 501.162.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.103. CERTAIN INFRASTRUCTURE IMPROVEMENT PROJECTS. In

this subtitle, "project" includes expenditures that are found by

the board of directors to be required or suitable for

infrastructure necessary to promote or develop new or expanded

business enterprises, limited to:

(1) streets and roads, rail spurs, water and sewer utilities,

electric utilities, or gas utilities, drainage, site

improvements, and related improvements;

(2) telecommunications and Internet improvements; or

(3) beach remediation along the Gulf of Mexico.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.104. PROJECTS RELATED TO CERTAIN MILITARY BASES OR

MISSIONS. In this subtitle, "project" includes the

infrastructure, improvements, land acquisition, buildings, or

expenditures that:

(1) are for the creation or retention of primary jobs or jobs

that are included in North American Industry Classification

System (NAICS) sector number 926120, Regulation and

Administration of Transportation Programs, for the corresponding

index entry for Coast Guard (except the Coast Guard Academy); and

(2) are found by the board of directors to be required or

suitable for:

(A) promoting or supporting a military base in active use to

prevent the possible future closure or realignment of the base;

(B) attracting new military missions to a military base in

active use; or

(C) redeveloping a military base that has been closed or

realigned, including a military base closed or realigned

according to the recommendation of the Defense Base Closure and

Realignment Commission under the Defense Base Closure and

Realignment Act of 1990 (10 U.S.C. Section 2687 note).

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.105. CAREER CENTER PROJECTS OUTSIDE OF JUNIOR COLLEGE

DISTRICT. In this subtitle, "project" includes the land,

buildings, equipment, facilities, improvements, and expenditures

found by the board of directors to be required or suitable for

use for a career center, if the area to be benefited by the

career center is not located in the taxing jurisdiction of a

junior college district.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.106. AIRPORT FACILITIES OR OTHER PROJECTS BY

CORPORATIONS AUTHORIZED BY CERTAIN BORDER MUNICIPALITIES. (a)

This section applies only to a corporation authorized to be

created by a municipality, any part of which is located within 25

miles of an international border.

(b) For a corporation to which this section applies, in this

subtitle, "project" includes the land, buildings, facilities,

infrastructure, and improvements that:

(1) the corporation's board of directors finds are required or

suitable for the development or expansion of airport facilities;

or

(2) are undertaken by the corporation if the municipality that

authorized the creation of the corporation has, at the time the

corporation approves the project as provided by this subtitle:

(A) a population of less than 50,000; or

(B) an average rate of unemployment that is greater than the

state average rate of unemployment during the most recent

12-month period for which data is available that precedes the

date the project is approved.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.107. INFRASTRUCTURE PROJECTS BY CORPORATIONS AUTHORIZED

BY MUNICIPALITIES IN CERTAIN BORDER COUNTIES. (a) This section

applies only to a corporation that:

(1) is authorized to be created by a municipality wholly or

partly located in a county that:

(A) is bordered by the Rio Grande;

(B) has a population of at least 500,000; and

(C) has wholly or partly within its boundaries at least four

municipalities each of which has a population of at least 25,000;

and

(2) does not support a project, as defined by this subchapter,

with sales and use tax revenue collected under Chapter 504 or

505.

(b) For a corporation to which this section applies, in this

subtitle, "project" includes expenditures found by the board of

directors to be required or suitable for infrastructure necessary

to promote or develop new or expanded business enterprises,

including airports, ports, and sewer or solid waste disposal

facilities.

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

885, Sec. 3.01, eff. April 1, 2009.

SUBCHAPTER D. CORPORATE POWERS AND LIMITATIONS RELATING TO

PROJECTS

Sec. 501.151. AUTHORITY TO FINANCE PROJECT. A corporation is a

constituted authority for the purpose of financing one or more

projects.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.152. DEFINITION OF COST WITH RESPECT TO PROJECT. In

this subtitle, "cost," with respect to a project, means the cost

of the acquisition, cleanup, construction, reconstruction,

improvement, or expansion of a project, including:

(1) the cost of acquiring all land, rights-of-way, property

rights, easements, and interests;

(2) the cost of all machinery and equipment;

(3) financing charges;

(4) the cost of inventory, raw materials, and other supplies;

(5) research and development costs;

(6) interest accruing before and during construction and until

the first anniversary of the date the construction is completed,

regardless of whether capitalized;

(7) necessary reserve funds;

(8) the cost of estimates, including estimates of cost and

revenue;

(9) the cost of engineering or legal services;

(10) the cost of plans, specifications, or surveys;

(11) other expenses necessary or incident to determining the

feasibility and practicability of acquiring, cleaning,

constructing, reconstructing, improving, and expanding the

project;

(12) administrative expenses; and

(13) other expenditures necessary or incident to:

(A) acquiring, cleaning, constructing, reconstructing,

improving, and expanding the project;

(B) placing the project in operation; and

(C) financing or refinancing the project, including refunding

any outstanding obligations, mortgages, or advances issued, made,

or given by a person for a cost described by this section.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.153. LEASE OR SALE OF PROJECT. (a) A corporation may:

(1) lease all or any part of a project to a user, for the rental

and on the terms that the corporation's board of directors

considers advisable and not in conflict with this subtitle; or

(2) sell, by installment payments or otherwise, and convey all

or any part of a project to a user for the purchase price and on

the terms the corporation's board of directors considers

advisable and not in conflict with this subtitle.

(b) A corporation may grant a lessee an option to purchase all

or any part of a project when all bonds of the corporation

delivered to provide those facilities have been paid or provision

has been made for the bonds' final payment. This subsection is

procedurally exclusive for authority to convey or grant an option

to purchase all or part of a project, and reference to another

law is not required.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.154. CONVEYANCE OF PROPERTY TO INSTITUTION OF HIGHER

EDUCATION. With respect to a project, a corporation may donate,

exchange, convey, sell, or lease land, improvements, or any other

interest in real property, fixtures, furnishings, equipment, or

personal property to an institution of higher education for a

legal purpose of the institution, on the terms the corporation's

board of directors considers advisable and not in conflict with

this subtitle.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.155. LOAN TO FINANCE PROJECT. (a) A corporation may

make a secured or unsecured loan to a user for the purpose of

providing temporary or permanent financing or refinancing of all

or part of the cost of a project, including the refunding of an

outstanding obligation, mortgage, or advance issued, made, or

given by a person for the cost of a project.

(b) For a loan made under this section, a corporation may charge

and collect interest on the terms the corporation's board of

directors considers advisable and not in conflict with this

subtitle.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.156. AGREEMENT MUST BENEFIT CORPORATION. An agreement

relating to a project must be for the benefit of the corporation.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.157. DEFAULT ON AGREEMENT; ENFORCEMENT. An agreement

relating to a project must provide that if a default occurs in

the payment of the principal of or the interest or premium on the

bonds or in the performance of any agreement contained in a

proceeding, mortgage, or instrument, the payment or performance

may be enforced by:

(1) mandamus; or

(2) the appointment of a receiver in equity with the power to:

(A) charge and collect rents, purchase price payments, and loan

payments; and

(B) apply the revenue from the project in accordance with the

resolution, mortgage, or instrument.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.158. PERFORMANCE AGREEMENTS. (a) A corporation may

not provide a direct incentive to or make an expenditure on

behalf of a business enterprise under a project as defined by

Subchapter C of this chapter or by Subchapter D, Chapter 505,

unless the corporation enters into a performance agreement with

the business enterprise.

(b) A performance agreement between a corporation and business

enterprise must:

(1) provide, at a minimum, for a schedule of additional payroll

or jobs to be created or retained and capital investment to be

made as consideration for any direct incentives provided or

expenditures made by the corporation under the agreement; and

(2) specify the terms under which repayment must be made if the

business enterprise does not meet the performance requirements

specified in the agreement.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.159. POWERS CONCERNING PROJECTS; JURISDICTION. (a) A

corporation may acquire, by construction, devise, purchase, gift,

lease, or otherwise, or any one or more of those methods and may

construct, improve, maintain, equip, and furnish one or more

projects undertaken by another corporation or located within this

state, including within the coastal waters of this state, and

within or partially within the limits of the authorizing unit of

the corporation or within the limits of another unit, if the

governing body of the other corporation or the unit requests the

corporation to exercise its powers within that unit.

(b) A corporation may recover the costs of an investment under

Subsection (a) from a unit or another corporation under a

contract with a limited or unlimited duration.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.160. OWNING OR OPERATING PROJECT AS BUSINESS. (a)

Except as provided by Subsection (d), a corporation may not own

or operate a project as a business other than:

(1) as a lessor, seller, or lender; or

(2) according to the requirements of any trust agreement

securing the credit transaction.

(b) The user under a lease, sale, or loan agreement relating to

a project is considered the owner of the project for purposes of

ad valorem taxes, sales and use taxes, or any other taxes imposed

by this state or a political subdivision of this state.

(c) Purchasing and holding a mortgage, deed of trust, or other

security interest or contracting for the servicing of a mortgage,

deed of trust, or other security interest is not considered the

operation of a project.

(d) A corporation has all the powers necessary to own and

operate a project as a business if the project is a military

installation or military facility that has been closed or

realigned, including a military installation or facility closed

or realigned under the Defense Base Closure and Realignment Act

of 1990 (10 U.S.C. Section 2687 note), as amended.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.161. CERTAIN ECONOMIC INCENTIVES PROHIBITED. (a) In

this section, "related party" means a person who owns at least 80

percent of the business enterprise to which the sales and use tax

would be rebated as part of an economic incentive.

(b) Notwithstanding any other provision of this subtitle, a

corporation may not offer to provide an economic incentive for a

business enterprise whose business consists primarily of

purchasing taxable items using a resale certificate and then

reselling those items to a related party.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.162. USE OF TAX REVENUE FOR JOB TRAINING. A

corporation may spend tax revenue received under this subtitle

for job training offered through a business enterprise only if

the business enterprise has committed in writing to:

(1) create new jobs that pay wages that are at least equal to

the prevailing wage for the applicable occupation in the local

labor market area; or

(2) increase its payroll to pay wages that are at least equal to

the prevailing wage for the applicable occupation in the local

labor market area.

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

885, Sec. 3.01, eff. April 1, 2009.

SUBCHAPTER E. CORPORATE POWERS AND LIMITATIONS RELATING TO BONDS

Sec. 501.201. AUTHORITY TO ISSUE BONDS. (a) A corporation may

issue bonds to defray all or part of the cost of a project,

regardless of whether the bonds are wholly or partly exempt from

federal income taxation.

(b) Except as limited by this subtitle or rules and guidelines

of the economic development office, a corporation has full

authority with respect to bonds.

(c) Except as otherwise provided by this subtitle, a corporation

may issue bonds under this subtitle without obtaining the consent

or approval of any department, division, or agency of this state,

other than the attorney general under Chapter 1202, Government

Code.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.202. TERMS. Bonds issued by a corporation must be

dated and must mature in not more than 40 years.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.203. SECURITIES COMMISSIONER PERMIT TO SELL SECURITIES

REQUIRED. A corporation may not sell or offer for sale bonds or

other securities until the securities commissioner grants a

permit authorizing the corporation to offer and sell the bonds or

other securities under the registration provisions of The

Securities Act (Article 581-1 et seq., Vernon's Texas Civil

Statutes), except as exempted from registration by rule or order

of the State Securities Board. Appeal from an adverse decision

of the securities commissioner or the State Securities Board is

under the administrative procedure law, Chapter 2001, Government

Code. The substantial evidence rule applies in an appeal under

this subsection.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.204. AUTHORIZING UNIT'S APPROVAL OF BONDS. (a) A

corporation may not deliver bonds, including refunding bonds,

unless the governing body of the corporation's authorizing unit

adopts a resolution, not earlier than the 60th day before the

date the bonds are delivered, specifically approving the

corporation's resolution providing for the issuance of the bonds.

(b) If the corporation is authorized to be created by a county

alliance, the resolution required by Subsection (a) must be

adopted by the commissioners courts of at least three-fifths of

the members of the county alliance.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.205. BOND COUNSEL AND FINANCIAL ADVISORS. Bond counsel

and financial advisors participating in a bond issue must be

mutually acceptable to the corporation and the user.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.206. MONEY USED TO PAY BONDS. The principal of and

interest on bonds issued by a corporation are payable only from

the money provided for that payment and from the revenue of the

project or projects for which the bonds were authorized.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.207. BONDS NOT DEBT OF STATE OR AUTHORIZING UNIT. (a)

Bonds issued under this subtitle are not a debt or pledge of the

faith and credit of this state, the authorizing unit of the

corporation issuing the bonds, or any other political

corporation, subdivision, or agency of this state.

(b) The revenue bonds issued under this subtitle must contain on

their face a statement to the effect that:

(1) neither this state, the authorizing unit of the corporation

issuing the bonds, nor any other political corporation,

subdivision, or agency of this state is obligated to pay the

principal of or the interest on the bonds; and

(2) neither the faith and credit nor the taxing power of this

state, the authorizing unit of the corporation issuing the bonds,

or any other political corporation, subdivision, or agency of

this state is pledged to the payment of the principal of or the

interest on the bonds.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.208. BOND SECURITY; DEFAULT. (a) The principal of and

interest on any bonds issued by a corporation shall be secured by

a pledge of the revenues and receipts derived by the corporation

from the lease or sale of the project financed by the bonds or

from the loan made by the corporation with respect to the project

financed or refinanced by the bonds.

(b) As security for the payment of the principal of and interest

on any bonds issued by a corporation and any agreements made in

connection with the issuance of bonds, the corporation may:

(1) mortgage and pledge any or all of the corporation's projects

or any part of a project, including the project financed or

refinanced and any enlargements of and additions to the project,

owned before or acquired after the time of the mortgage or

pledge; and

(2) assign any mortgage and repledge any security conveyed to

the corporation to secure any loan made by the corporation, and

pledge the revenues and receipts from the assigned mortgage or

security.

(c) The resolution authorizing the issuance of bonds and any

mortgage covering all or part of the project financed may include

any agreement or provision that the board of directors considers

advisable and not in conflict with this subtitle and that relates

to:

(1) the maintenance of the project covered by the bonds or

mortgage;

(2) the fixing and collection of rents;

(3) purchase price payments;

(4) loan payments;

(5) the creation and maintenance of special funds from those

revenues; or

(6) the rights and remedies available in the event of a default.

(d) A mortgage to secure bonds may also provide that, in the

event of a default in the payment of the bonds or a violation of

another agreement contained in the mortgage, the mortgage may be

foreclosed and the mortgaged property may be sold in any manner

permitted by law. The mortgage may provide that a trustee under

the mortgage or the holder of any of the bonds secured by the

mortgage may purchase property at a foreclosure sale if the

trustee or holder is the highest bidder.

(e) A pledge, agreement, or mortgage made for the benefit or

security of any of the corporation's bonds continues in effect

until the principal of and interest on the bonds benefited or

secured by the pledge, agreement, or mortgage have been fully

paid.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.209. TRUST AGREEMENT. (a) Bonds issued under this

subtitle may be secured by a trust agreement between the

corporation and a trust company or bank having the powers of a

trust company. The trust company or bank may be located in or

outside of this state.

(b) The trust agreement may:

(1) pledge or assign the lease, sale, or loan revenues to be

received with respect to a project from a lessee, purchaser, or

borrower for the payment of the principal of and interest and any

premium on the bonds as the bonds become due and payable;

(2) provide for the creation and maintenance of reserves for a

purpose described by Subdivision (1);

(3) state the rights and remedies of the bondholders and the

trustee;

(4) restrict the individual right of action by bondholders in a

manner that is customary in trust agreements or trust indentures

securing bonds and debentures of private corporations; and

(5) include any additional provision that the corporation

considers reasonable and proper for the security of the

bondholders.

(c) The trust agreement or a resolution approving the issuance

of the bonds may provide for the protection and enforcement of

the rights and remedies of the bondholders as may be reasonable

and proper and not in violation of law, including covenants

providing the duties relating to:

(1) the acquisition of property and the construction,

improvement, maintenance, repair, operation, and insurance of the

project in connection with which the bonds are authorized; and

(2) the custody, protection, and application of all money.

(d) A bank or trust company incorporated under the laws of this

state that acts as depository of the bond proceeds or of revenues

may furnish indemnifying bonds or pledge securities as required

by the corporation.

(e) All expenses incurred in carrying out the trust agreement

may be treated as a part of the cost of operating the project.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.210. FINANCIAL ASSURANCE OR RESPONSIBILITY REQUIREMENTS

FOR CERTAIN PROJECTS. (a) The resolution or mortgage described

by Section 501.208(c) may contain any agreement or provision for

satisfying the financial assurance or responsibility requirements

applicable to a project for which a permit is required under

Chapter 361, Health and Safety Code, or Chapter 27, Water Code,

including a requirement relating to construction, proper

operation, liability coverage, emergency response capability,

well plugging, closure, and post-closure care.

(b) Evidence of the passage of a resolution by a governing body

approving or agreeing to approve the issuance of bonds for the

purpose of satisfying the financial assurance or responsibility

requirements applicable to the project is an adequate

demonstration that sufficient financial resources will be

available to comply with all existing financial assurance or

responsibility requirements.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.211. USE OF BOND PROCEEDS. (a) The proceeds of the

bonds of each issue shall be:

(1) used to pay or make a loan in the amount of all or part of

the cost of the project or projects for which the bonds were

authorized; and

(2) disbursed in the manner and under any restrictions provided

in the resolution authorizing the issuance of the bonds or in any

trust agreement securing the bonds.

(b) Bond proceeds may be used to:

(1) pay all costs incurred in issuing the bonds;

(2) pay interest on the bonds for any time determined by the

board of directors of the corporation issuing the bonds; and

(3) establish reserve funds and sinking funds for the bonds.

(c) If the proceeds of the bonds of any series issued for a

project exceed the cost of the project for which the bonds were

issued, the surplus shall be:

(1) deposited to the credit of the sinking fund for the bonds;

or

(2) used to purchase bonds in the open market.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.212. INTERIM BONDS. (a) Before the preparation of

definitive bonds, the corporation may, under like restrictions,

issue interim bonds that may be exchanged for definitive bonds

when the definitive bonds are executed and available for

delivery.

(b) The corporation may issue interim bonds with or without

coupons.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.213. REFUNDING BONDS. (a) A corporation may provide

by resolution for the issuance of refunding bonds:

(1) to refund outstanding bonds issued under this subtitle for a

project, including the payment of any redemption premium on the

bonds and the interest accrued or to accrue to the date of

redemption; and

(2) if considered advisable by the corporation, additionally to

finance improvements, extensions, or enlargements to the project

for which the bonds being refunded were issued or for another

project.

(b) The provisions of this subtitle relating to other bonds

govern the issuance, maturities, and other details of the

refunding bonds, the rights of the holders of the refunding

bonds, and the rights, duties, and obligations of the corporation

with respect to the same to the extent those provisions may be

applicable.

(c) The corporation may issue the refunding bonds in exchange

for outstanding bonds or may sell the refunding bonds and use the

proceeds to redeem outstanding bonds.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.214. SALE OR EXCHANGE OF BONDS. With respect to a

project, a corporation may:

(1) sell bonds; or

(2) exchange bonds for property, labor, services, material, or

equipment comprising a project or incidental to the acquisition

of a project.

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

885, Sec. 3.01, eff. April 1, 2009.

SUBCHAPTER F. ADMINISTRATION BY ECONOMIC DEVELOPMENT OFFICE

Sec. 501.251. STATE STANDARDS FOR PROJECT ELIGIBILITY. The

economic development office shall adopt rules providing minimum

standards for project eligibility.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.252. STATE STANDARDS AND GUIDELINES FOR LEASE, SALE, OR

LOAN AGREEMENTS. (a) The economic development office shall

adopt rules:

(1) providing minimum standards for lease, sale, and loan

agreements entered into under this subtitle; and

(2) providing guidelines with respect to the business

experience, financial resources, and responsibilities of the

lessee, purchaser, or borrower under a lease, sale, or loan

agreement entered into under this subtitle.

(b) The economic development office may adopt rules governing

the terms of a loan made by a corporation to a bank or other

lending institution the proceeds of which are reloaned as

permanent or temporary financing of a project.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.253. RULES FOR SMALL BUSINESS PROGRAMS. The economic

development office shall adopt rules governing programs for small

businesses receiving loans guaranteed wholly or partly by the

United States Small Business Administration or another federal

agency.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.254. FILING OF RULES AND GUIDELINES WITH SECRETARY OF

STATE. Rules and guidelines adopted by the economic development

office and amendments to the rules and guidelines take effect

only after the filing of the rules and guidelines or amendments

with the secretary of state.

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

885, Sec. 3.01, eff. April 1, 2009.

Sec. 501.255. APPROVAL OF LEASE, SALE, OR LOAN AGREEMENT. (a)

A lease, sale, or loan agreement entered into under this subtitle

must be approved by the economic development office. The

economic development office may not approve an agreement unless

the office affirmatively finds that the project sought to be

financed furthers the public purposes of this subtitle.

(b) The corporation may appeal an adverse ruling or decision of

the economic development office under Subsection (a) to a

district court of Travis County. The substantial evidence rule

applies in an appeal under this subsection.

(c) A corporation:

(1) may enter into a lease, sale, or loan agreement under this

subtitle without obtaining the consent or approval of any

department, division, or agency of this state except as otherwise

provided by this subtitle; and