Economic Development - The MDD Vol. 2 Copperas Cove
By Matt Russell
Special to Leader-Press
Last week we took a look at 15 questions and answers concerning the Municipal Development District (MDD) from the City of Brownwood Texas. My last article contained information provided to the citizens of Brownwood prior to their moving to the voting polls last year. Brownwood voted to transition from their Economic Development Corporation (EDC) (Type 4A) to an MDD. This week we will examine these same 15 questions and answers as they pertain to the City of Copperas Cove.
If you missed last week’s printing and discussion concerning the EDC (Type A or B) and the MDD, here is some of what we discussed. The MDD’s mission is Economic Development, yet with a broader range of capabilities then an EDC type A or B. Over the years since the creation of the EDC (Type A&B) state legislators realized the EDC was excessively restrictive. The EDC (Type A or B) hampers the efforts of local governments to create effective economic development. In 1997 the state legislators created the MDD. They did so in order to provide local municipalities with a more comprehensive and flexible organization. An organization able to generate a multitude of economic development.
Prior to heading to the polls this November please keep in mind the below:
- This year more than 40 Texas cities transitioned from their EDC (Type A or B) and to the MDD.
- An MDD can do everything an EDC can do, and more.
- An EDC (Type A or B) is limited to industry and Corporate development.
- An EDC (Type A or B) cannot engage retail businesses; it’s a Texas State Law.
- The CCEDC has had difficulties in attracting industrial or corporate organizations.
- An MDD does not have the same State report requirements as an EDC (Type A or B).
- A future CCMDD will have a written charter (bylaws).
- A future CCMDD will produce and adhere to the same controls and reporting requirements to the City, and the State, as the current CCEDC (Type 4A).
- An MDD can create economic development across industry, Corporate and the retail business landscape.
The below questions and answers concern an MDD. They reflect an MDD as it pertains to the City of Copperas Cove.
1. WHAT IS A MUNICIPAL DEVELOPMENT DISTRICT (MDD)?
A Municipal Development District is a special purpose district created for the purpose of generating economic development and growth opportunities within the boundaries of the district. The proposed Copperas Cove MDD boundaries are the city limits and ETJ of Copperas Cove.
2. WHAT ARE THE DIFFERENCES BETWEEN A TYPE A ECONOMIC DEVELOPMENT CORPORATION (EDC) AND A MUNICIPAL DEVELOPMENT DISTRICT (MDD)?
The City currently has a Type A EDC. The Type A EDC is essentially limited to funding economic development projects that create or retain primary jobs associated with manufacturing and industrial companies. The MDD can fund these Type A projects, along with projects that promote or develop new or expanded business enterprises, which include retail businesses; projects that enhance professional and amateur (including children’s) sports, athletic, entertainment, tourist, convention and public park purposes and events; projects enhancing housing; and convention center facilities.
3. WILL THERE BE AN INCREASED TAX BURDEN IF THE TYPE A EDC IS DISSOLVED AND THE MDD IS CREATED BY THE VOTERS?
No, there will be no additional taxes imposed on the citizens. Currently, the Type A EDC is funded by a sales tax of three-eighths of one percent of sales and use tax. That sales tax will be dissolved and the MDD will be funded by the same sales tax of three-eighths of one percent. The sales tax will not increase over time. This is the same sales tax rate currently being utilized by the CCEDC (Type A).
4. HOW DO OTHER CITIES FINANCE THEIR ECONOMIC DEVELOPMENT PROJECTS?
More than 500 small and mid-size Texas cities have authorized the funding of economic development projects with a dedicated portion of sales tax. They chose from a variety of programs based on the needs and goals of their community.
5. HOW IS THE DISTRICT CREATED?
- create an MDD, a city must call an election through an ordinance that defines the proposed boundaries of the district, which are the city limits and extraterritorial Jurisdiction (ETJ) of Copperas Cove. The ballot at this election must be printed to allow voting for or against the proposition. In the ordinance calling the election, the city may specify that the district boundaries will automatically conform to future changes in the city’s boundaries. If the voters turn down creation of the district, a subsequent election to establish a district may not be held within a year of the first election.
6. WHAT WILL THE BALLOT LOOK LIKE WHEN I GO TO THE VOTING BOOTH?
Authorizing the creation of the Copperas Cove Municipal Development District and the imposition of a sales and use tax at the rate of three-eights (3/8) percent for the purpose of financing development projects beneficial to the district.
7. WHO WILL PAY FOR THE MDD?
Anyone making a purchase of taxable items in the Copperas Cove MDD will pay the sales tax including purchases made by individuals who live outside of the district shopping and eating in the district.
8. WILL THE SALES TAX RATE IN COPPERAS COVE BE HIGHER THAN OTHER AREA CITIES BECAUSE OF THE TAX LEVIED BY THE BOUNDARIES OF THE MDD?
No. Again, there is no change in the amount of tax collected, and the sales tax rates in surrounding cities are as follows: Killeen 8.25%, Belton 8.25%, Georgetown 8.25%, Austin 8.25%, Harker Heights 8.25%, Temple 8.25%, Waco 8.25%, and Lampasas 8.25%. If adopted, the sales tax rate in the City of Copperas Cove will remain at 8.25% (which includes the 6.25% state sales tax). The rate will not increase and will remain consistent with surrounding communities.
9. WHAT WILL THE PROCEEDS FROM THE SALES TAX BE USED FOR?
State law authorizes expenditure of MDD funds for a variety of economic development activities including industrial and manufacturing projects, retail development projects, recreational and/or community facilities projects, housing projects and convention center facilities and related improvements.
10. WHO OVERSEES THE MDD?
A board of at least four directors governs the District. The Copperas Cove City Council will appoint the board. In addition, the City Council will adopt policies and guidelines that will govern the actions of the MDD board, including requiring that all actions of the board be subject to review by the City Council.
11. WHO DETERMINES HOW THE FUNDS ARE SPENT?
The MDD board of directors must adopt a budget for each year at a public meeting open to the public. Once the MDD board approves the budget, the budget will be presented to the City Council for final approval.
12. CAN THE MDD SALES BE REPEALED?
The sales tax can be repealed if a majority of the registered voters in the district vote to repeal the sales tax.
13. HOW DO WE KNOW THE FUNDS WERE SPENT FOR THEIR AUTHORIZED PURPOSES?
State law requires the District to have an annual audit by an independent auditor. The audit and other District records are open to public inspection during normal business hours.
14. IF APPROVED, WHEN WOULD THE MDD BECOME EFFECTIVE?
This is a two-step process. First, voters will move to the polls in October (early voting) and on November 7 to vote for or against establishing an MDD. If voters approve the MDD, then the city can establish a May 2018 election (this is the earliest this can occur) for the dissolution of the CCEDC (Type 4A). Upon the dissolution of the CCEDC, the CCMDD would become funded. The CCMDD would assume all assets and debts associated with the CCEDC (Type 4A).
15. HOW CAN I GET MORE INFORMATION ABOUT THE PROPOSED MDD?
The legislation governing MDDs can be found in Chapter 377 of the Local Government Code. Chapter 377 is available online at: http://www.statutes.legis.state.tx.us/Docs/LG/htm/LG.377.htm
Key points to take away: The CCEDC (Type 4A) cannot contact, negotiate with, nor bring in a retail business. To do so would be against State law. An EDC (Type A or B) can only entertain industrial and corporate organizations. The retail businesses you see in Copperas Cove are the direct results of the City Manager and the City Staff. Look around our city and count the industrial and corporate rooftops. I think we would be hard pressed to find many.
The views and opinions expressed in this article and /or electronic communication are my personal views and opinions and do not reflect the views and opinion of the City of Copperas Cove or that of the governing body of the City of Copperas Cove.