During the Regular Session of the 83rd Texas Legislature, H.B. 1025 appropriated $225 million for county road repair for damages from oil and gas activity. S.B. 1747 creates the grant process to distribute funds to counties through the Texas Department of Transportation, which was scheduled to consider these rules in October or November.
A county must establish a designated County Energy Transportation Reinvestment Zone (CETRZ) under section 222.1071 of the Texas Transportation Code to be eligible for a grant, pursuant to Chapter 256 of the Texas Transportation Code, for one or more transportation infrastructure projects (TIPs) from the Texas Department of Transportation (TxDOT). All projects funded by a grant must be located within a CETRZ. A county may establish more than one CETRZ. Practical suggestion: Before establishing a CETRZ, evaluate the county roads and determine those most likely to benefit from a grant project; provide this information to the CETRZ advisory board.
Each CETRZ must be composed of a contiguous geographic area. Practical suggestion: The Central Appraisal District may provide assistance in preparing the description of the CETRZ area.
The following steps are required to establish a CETRZ:
- 7 days prior to Commissioners Court’s public hearing on creation of CETRZ, publish notice of public hearing in general circulation newspaper in county.
- 30 days prior to designating CETRZ, Commissioners Court holds public hearing on creation of CETRZ and its benefits to county and property in proposed CETRZ, where interested persons may speak for or against proposed CETRZ.
- Commissioners Court, after proper notice, has a hearing and enters order
– First determining that an area is affected by oil and gas activities and would benefit from funding under Ch. 256;
– Then designating “contiguous” area within county’s jurisdiction to be CETRZ to promote one or more TIPs;
– Sufficiently describing boundaries of CETRZ to reasonably identify territory in CERTZ;
– Stating CERTZ is effective immediately upon adoption of order;
– Stating base year is either year of adoption of order or some year in future; and
– Establishing ad valorem tax increment account for CETRZ or providing for establishment of joint ad valorem tax increment account, if applicable.
– If two or more counties are designating CERTZ for TIPs, finding that:
– TIPs benefit property and residents in CERTZ;
– Creation of CERTZ serves public purpose of county; and
– Detailing which county is responsible for each TIP.
– Dedicating all of “captured appraised value of real property” in CETRZ to TIPs;
– Creating and stating terms and duties of Advisory Board for CETRZ for establishment, administration and expenditures of CETRZ, whose members County Judge appoints and Commissioners Court approves, and are comprised of:
– Up to three oil and gas company representatives performing activities in county and being local taxpayers; and
– two public members.
– Determining tax increment for CETRZ (which is the same as a Transportation Reinvestment Zone):
– the amount of county ad valorem taxes levied and collected for that year on the “captured appraised value of real property” taxable by the county and located in an CETRZ;
– the “captured appraised value of real property” taxable by a county for a year is the total appraised value of all real property taxable by the county and located in a CETRZ for that year less the tax increment base of the county; and
– the “tax increment base of a county” is the total appraised value of all real property taxable by the county and located in a CETRZ for the year in which the zone was designated.
– Stating CETRZ terminates on Dec. 31 of 10th year after designation of CETRZ, unless Commissioners Court enters order extending CETRZ;
– Stating Commissioners Court’s extension, if any, of CETRZ shall be no more than five years; and
– Stating it shall comply with all applicable laws under Chapter 222 of Texas Transportation Code.
Practical reminder: While the revenue in the tax increment fund is excluded from the calculation of the effective tax rate and the rollback rate, creating a CETRZ will commit all of the increased tax revenue from property in the CETRZ to transportation infrastructure projects (road and bridge budget) for 10 years.
The county’s grant application to TxDOT will require:
- Road condition report under section 251.018 of Texas Transportation Code, including the new statutory requirement stating the primary cause, if reasonably ascertained, of degradation of road, culvert or bridge; Practical suggestion: Prepare a revised report containing this new information (likely damage from overweight oil and gas truck traffic).
- Copy of Order Establishing CETRZ;
- Plan containing:
– List of TIPs to be funded by grant;
– Description of scope of TIPs to be funded by grant;
– Providing for matching funds (20 percent of grant or 10 percent if TxDOT determines county is economically disadvantaged);
– Meeting any other requirements of TxDOT.
County’s second or subsequent grant application must:
- Provide the Road Condition Report for the previous year;
- Certify all previous grants spent in accordance with Plan; and
- Provide accounting of how previous grants spent, including administrative costs.
Practical suggestion: While awaiting application forms and projected amount of grant eligibility for your county, begin review of county roads for possible projects and potential boundaries of CETRZ. Do not expend county funds until final grant award is received.
For more information, please call me at 1-800-733-0699.