01-08-07 Special Called Regular Meeting La Porte Development Corporation and City Council Minutes

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I. The Sales Tax for Economic Development b) Machinery and supplies: the cost of machinery, equipment, inventory, raw materials, and supplies. c) Financial transaction costs: the cost of financing charges, certain interest prior to and during construction, and necessary reserve funds. d) Planning costs: the cost of research and development, engineering and legal services, development of plans and specifications, surveys, and cost estimates; and other expenses necessary or incident to determining the feasibility and practicability of undertaking the project. e) Cleanup costs: the cost of cleaning up contaminated property.190 Nonetheless, a Section 46 corporation may use Section 46 sales tax proceeds to clean up contaminated property only if use of sales tax proceeds for this purpose is approved by the voters in an election called and held for that purpose. The ballot wording that must be used is as follows:191 "The use of sales and use tax proceeds for the cleanup of contaminated property." Due to the definition of the term "project" and of the term "cost" contained in the Development Corporation Act, a strong argument can be made that any expenditure by a Section 46 corporation, other than job training classes, must be related to the acquisition or physical improvement of land, buildings, equipment, or facilities. Of course, an expenditure could also include administrative or planning costs associated with such an acquisition or improvement. Administrative Expenses of a Section 48 Project Section 2 (4) of the Act states that the cost of a project may also include the administrative and other expenses that are incident to placing the project into operation. The law provides that these expenses could include administrative expenses for the acquisition, construction, improvement, expansion, and financing of the project. It is this authority that could be cited for the hiring of administrative staff to implement the work of the Section 48 development corporation with regard to its projects. Accordingly, cities that perform some of the administrative functions for the corporation could cite this authority for reimbursement from Section 46 funds for administrative costs related to projects that city staff oversee. Additionally, Section 48(b) specifically permits a Section 48 corporation to contract with other private corporations to carry out industrial development programs or objectives. Effective June 20, 2003, should a Section 48 corporation contract with a broker, agent or other third party for business recruitment, a written contract approved by the board of directors is required for any payment of a commission, fee, or other thing of value to the third party.192 Failure to enter into a written contract could result in a civil penalty not to exceed $10,000. Additionally, Section 48(a-2) states that the costs of a publicly owned and operated project may include the maintenance and operating costs for the project. The Act, however, allows the voters to object to such an expenditure by submitting a petition of 10 percent of the registered voters of the city. The public has 60 days from the date when notice is first given that the tax will be used for this purpose to submit the petition. Such a petition would ask HANDBOOK on ECONOMIC DEVELOPMENT LAWS/or TEXAS CITIES 40