economyEconomic Development

Establishing the Corporation

Development Corporations

For both Type A and Type B, the Development Corporation Act requires cities to establish a corporation to administer the sales and use tax funds. The corporation must file a certificate of formation with the Secretary of State. The articles of incorporation must state that the corporation is governed by the Development Corporation Act of 1979 found in Chapters 501-505 of the Local Government Code.

Board of Directors

The boards of directors of both Type A and Type B EDCs serve at the pleasure of the city council and may be removed and replaced at any time and without cause. All funding agreements approved by an EDC must also be approved by the city council. The composition of a corporation's board of directors and the length of a member's term differ between Type A and Type B.

Under Type A

The city council must appoint a board of directors with at least five members to serve terms up to six years. The statute does not specify qualifications for Type A corporation board members.

Under Type B

The city council must appoint a board of seven directors — up to four of whom can be employees or officers of the city or city council members — to serve two-year terms. If the city's population is 20,000 or more, the directors must be residents of the city. For cities with fewer than 20,000 residents, directors must be residents of the county where the majority of the city is located, or reside within 10 miles of the city and in a county that borders the county where a majority of the city is located


This information should not be construed as, and is not a substitute for, legal advice.

Cities are urged to consult the Attorney General's Economic Development Handbook and their own legal counsel for any questions or interpretations of economic development laws.