By: Jetton, Troxclair (Senate Sponsor - Creighton) H.B. No. 2815

(In the Senate - Received from the House May 15, 2023; May 15, 2023, read first time and referred to Committee on Local Government; May 21, 2023, reported adversely, with favorable Committee Substitute by the following vote: Yeas 8, Nays 0; May 21, 2023, sent to printer.) Click here to see the committee vote

COMMITTEE SUBSTITUTE FOR H.B. No. 2815 By: Springer

COMMITTEE VOTE

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BettencourtX

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A BILL TO BE ENTITLED

AN ACT

relating to the powers, authorities, duties, and responsibilities of certain conservation and reclamation districts.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 375.022, Local Government Code, is amended by adding Subsections (d) and (e) to read as follows:

(d) The petition may request that a succeeding board of directors be elected under Section 375.0645 instead of being appointed under Section 375.064.

(e) On receipt by the commission of a petition that complies with this section, the commission shall issue a notice indicating that the petition is administratively complete and may conduct a hearing on the petition in the manner provided by Section 49.011, Water Code, if the commission determines that a hearing is necessary.

SECTION 2. Section 375.025(c), Local Government Code, is amended to read as follows:

(c) If [after the hearing] the commission finds that the petition is sufficient and conforms to the requirements of Section 375.022(c) and that the district is feasible [and necessary] and would benefit the public, the commission by order shall make that finding and grant the petition. In determining if the project is feasible [and necessary] and would benefit the public, the commission shall consider:

(1) the availability of comparable services from other systems, including special districts, municipalities, and regional authorities; and

(2) the reasonableness of the proposed public purpose projects and services.

SECTION 3. Subchapter D, Chapter 375, Local Government Code, is amended by adding Section 375.0645 to read as follows:

Sec. 375.0645. ELECTION OF DIRECTORS. (a) This section applies only to a district created by order of the commission providing for an elected board of directors as requested in the petition requesting creation of the district as provided by Section 375.022(d).

(b) The commission shall appoint the initial directors under Section 375.026, and subsequent directors are elected in the manner provided by Subchapter D, Chapter 49, Water Code.

(c) An elected director is entitled to receive fees of office and reimbursement for actual expenses as provided by Section 49.060, Water Code.

(d) Sections 375.069 and 375.070 do not apply to an elected director.

(e) Section 49.052(f), Water Code, does not exempt an elected director from disqualification under that section.

(f) Sections 375.064, 375.161, and 375.243 do not apply to a district with an elected board.

SECTION 4. Section 375.065, Local Government Code, is amended to read as follows:

Sec. 375.065. REMOVAL OF DIRECTOR. The governing body of the municipality after notice and hearing may remove a director appointed by the municipality for misconduct or failure to carry out the director's duties on petition by a majority of the remaining directors.

SECTION 5. Section 375.067(a), Local Government Code, is amended to read as follows:

(a) As soon as practicable after a director is appointed or elected as provided by this subchapter, the director shall execute a $10,000 bond payable to the district and conditioned on the faithful performance of the director's duties.

SECTION 6. Section 375.068, Local Government Code, is amended to read as follows:

Sec. 375.068. OFFICERS. After directors are appointed or elected as provided by this subchapter and have qualified by executing a bond and taking the oath, they shall organize by electing a president, a vice-president, a secretary, and any other officers the board considers necessary.

SECTION 7. Section 375.071, Local Government Code, is amended to read as follows:

Sec. 375.071. QUORUM. (a) One-half of the serving directors constitutes a quorum, and a concurrence of a majority of a quorum of directors is required for any official action of the district.

(b) If at least two-thirds of the directors execute a written consent at any time, a majority of a quorum at a board meeting may [The written consent of at least two-thirds of the directors is required to] authorize the levy of assessments, the levy of taxes, the imposition of impact fees, or the issuance of bonds. A director may execute a written consent outside of a board meeting.

SECTION 8. Section 375.161(b), Local Government Code, is amended to read as follows:

(b) This section does not apply to a tax or assessment, if a tax is authorized or approved by the voters of the district, or to a required payment for a service provided by the district, including water and sewer services.

SECTION 9. Section 375.208, Local Government Code, is amended to read as follows:

Sec. 375.208. COMMISSION APPROVAL. A district must obtain approval of the commission as provided by Section 49.181 [Chapter 54], Water Code, only if the [it issues] bonds are to provide water, sewage, or drainage facilities. [Except as expressly provided by this section and Sections 375.062 and 375.064, a district is not subject to the jurisdiction of the commission.]

SECTION 10. Section 49.011(a), Water Code, is amended to read as follows:

(a) On receipt by the commission of all required documentation associated with an application for creation of a district by the commission under Chapter 36, 50, 51, 54, 55, 58, 65, or 66 of this code or Chapter 375, Local Government Code, the commission shall issue a notice indicating that the application is administratively complete.

SECTION 11. Section 49.060, Water Code, is amended by amending Subsection (a) and adding Subsection (a-2) to read as follows:

(a) A director is entitled to receive fees of office [of not more than $150 a day] for each day the director actually spends performing the duties of a director. The board by resolution shall set the fees of office. The board may not set the fees of office at an amount greater than the amount of the per diem set by the Texas Ethics Commission for members of the legislature under Section 24a, Article III, Texas Constitution. In this subsection, "performing the duties of a director" means substantive performance of the management or business of the district, including participation in board and committee meetings and other activities involving the substantive deliberation of district business and in pertinent educational programs. The phrase does not include routine or ministerial activities such as the execution of documents, self-preparation for meetings, or other activities requiring a minimal amount of time.

(a-2) Notwithstanding Subsection (a-1), an authority created by special law, by resolution of the board, may not set the annual limit on the fees of office described by that subsection at an amount greater than the amount a director would receive for 60 days of service a year at the maximum daily rate authorized by Subsection (a).

SECTION 12. Section 49.065, Water Code, is amended by adding Subsection (d) to read as follows:

(d) Subsection (b) applies to a personal e-mail address of a director only if the district does not make available to the public an official e-mail address for the director or the district. In this subsection, "personal e-mail address" means an e-mail address that is not paid for by district money and is not used primarily for the transaction of official business of the district.

SECTION 13. Section 49.102, Water Code, is amended by amending Subsection (j) and adding Subsections (k) and (l) to read as follows:

(j) The provisions of this section requiring a confirmation election do not apply to a [shall not be applicable to any] district exercising the powers of Chapter 375, Local Government Code, or any district created by a special Act of the legislature that does not require a confirmation election.

(k) Notwithstanding any other law, if the board determines that it is in the best interest of the district and the voters of the district for the district to administer an election under this section, the district shall establish precincts and designate polling locations inside the boundaries of the district.

(l) Section 43.075, Local Government Code, does not apply to a district until the board declares the district is created under Subsection (e) of this section.

SECTION 14. Section 49.106, Water Code, is amended by amending Subsection (e) and adding Subsection (f) to read as follows:

(e) A district's authorization to issue bonds resulting from an election held under this section, or any other law that allows for the qualified voters of a district to authorize the issuance of bonds by a district, remains in effect after the election unless the district is dissolved [or is annexed by another district].

(f) The board may submit new bond authorization and refunding bond authorization in a single proposition at an election.

SECTION 15. Section 49.181, Water Code, is amended by adding Subsection (f-1) to read as follows:

(f-1) For the purposes of evaluating the financial feasibility of a project financed by a bond, the commission shall consider:

(1) a district located wholly or partly in Austin, Brazos, Chambers, Grimes, Liberty, Walker, or Wharton County as if the district were located in Harris County; and

(2) a district located wholly or partly in Bastrop, Bell, Blanco, Burnet, Caldwell, Gillespie, Kendall, Lee, or Milam County as if the district were located in Travis County.

SECTION 16. Section 49.23602(c), Water Code, is amended to read as follows:

(c) If the board of a district adopts a combined debt service, contract, and operation and maintenance tax rate that exceeds the district's mandatory tax election rate, an election must be held in accordance with the procedures provided by Sections 26.07(c)-(g), Tax Code, to determine whether to approve the adopted tax rate. If the adopted tax rate is not approved at the election, the district's tax rate is the voter-approval tax rate. An election is not required if the adopted tax rate is less than or equal to the voter-approval tax rate.

SECTION 17. Section 49.271, Water Code, is amended by amending Subsection (e) and adding Subsection (f) to read as follows:

(e) A [district] contract for construction work may include economic incentives for early completion of the work or economic disincentives for late completion of the work.

(f) The provisions of this section apply to a contract for construction work entered into by a third party on behalf of a district.

SECTION 18. Subchapter J, Chapter 49, Water Code, is amended by adding Section 49.316 to read as follows:

Sec. 49.316. DIVISION OF DISTRICT. (a) The board, on its own motion or on receipt of a petition signed by the owner or owners of a majority of the assessed value of the real property in the district, may adopt an order dividing the district.

(b) An order dividing a district may create one or more new districts and may provide for the continuation of the district.

(c) An order dividing the district shall:

(1) name any new district;

(2) include the metes and bounds description of the territory of each of the districts;

(3) appoint temporary directors for any new district; and

(4) provide for the division of assets and liabilities between the districts.

(d) The board may adopt an order dividing the district before or after the date the board holds an election to confirm the district's creation.

(e) The district may be divided only if the district:

(1) has never issued any bonds; and

(2) is not imposing ad valorem taxes.

(f) A new district created by the division of the district may not, at the time the new district is created, contain any land outside the area of the district at the time of creation.

(g) On or before the 30th day after the date of adoption of an order dividing the district, the district shall file the order with the commission and record the order in the real property records of each county in which the district is located.

(h) A new district created by the division of the district shall hold a confirmation and directors' election.

(i) If the creation of a new district is confirmed, the new district shall provide the election date and results to the commission.

(j) A new district created by the division of the district must hold an election as required by this chapter to obtain voter approval before the district may impose a maintenance tax or issue bonds payable wholly or partly from ad valorem taxes.

(k) Municipal consent to the creation of the district and to the inclusion of land in the district acts as municipal consent to the creation of any new district created by the division of the district and to the inclusion of land in the new district.

(l) The district may continue to rely on confirmation, directors', bond, and tax elections held before the division.

SECTION 19. Subchapter O, Chapter 51, Water Code, is amended by adding Section 51.7131 to read as follows:

Sec. 51.7131. ALTERNATIVE SUBSTITUTION PROCEDURES. Notwithstanding this subchapter, a district may substitute land in the manner provided by Sections 54.739-54.747.

SECTION 20. Section 53.029(e), Water Code, is amended to read as follows:

(e) A district that has adopted the rights, authority, privileges, and functions of a road district in the manner provided by Subsection (c) may, following approval of a construction contract by the district's governing body, reimburse expenditures as provided by Sections 257.003(a), [and] (b), and (d), Transportation Code, without any additional approval or determination under Section 257.003, Transportation Code.

SECTION 21. Section 54.016, Water Code, is amended by adding Subsection (f-1) to read as follows:

(f-1) An agreement between a municipality and a municipal utility district is an allocation agreement only if:

(1) the agreement strictly complies with the requirements of Subsection (f); and

(2) the agreement is specifically designated by the parties to the agreement as an "allocation agreement" under Subsection (f).

SECTION 22. Sections 54.234(d) and (e), Water Code, are amended to read as follows:

(d) If the commission issues an order approving the petition, the district may undertake a road project if:

(1) the municipality or county with platting jurisdiction [that will operate and maintain the road] has approved the plans and specifications of the road project; or

(2) the Texas Transportation Commission has approved the plans and specifications of the road project, if the state is to operate and maintain the road.

(e) Notwithstanding any other law and except [Except] as provided by Subsection (d), a district is not required to obtain approval from the Texas Transportation Commission to acquire, construct, convey, or finance the road project.

SECTION 23. Section 57.053, Water Code, is amended by amending Subsection (a) and adding Subsection (d) to read as follows:

(a) A vacancy on an appointed board is filled by the appointment of a director by a majority vote of the commissioners court. [A director appointed to fill a vacancy must be a person qualified for election as a director under Section 57.059.] The commissioners court shall appoint directors so that the board will always have full membership.

(d) A director appointed to fill a vacancy must be a person qualified to serve as a director under Section 57.059.

SECTION 24. Section 57.059, Water Code, is amended to read as follows:

Sec. 57.059. QUALIFICATIONS FOR [ELECTED] DIRECTORS. To be qualified to serve [for election] as a director, a person must:

(1) be at least 18 years old;

(2) own land subject to taxation in the district or be a qualified voter in the district; [property taxpaying elector of the precinct and county from which he is elected] and

(3) if the director is elected, be a qualified voter of the precinct in the district established by the commissioners court under Section 57.058 from which the director is elected [be eligible under the constitution and laws of this state to hold the office to which he is elected].

SECTION 25. The following provisions are repealed:

(1) Sections 375.023 and 375.024, Local Government Code;

(2) Sections 375.025(a) and (b), Local Government Code;

(3) Section 54.030(b), Water Code, as amended by Chapter 539 (H.B. 2914), Acts of the 86th Legislature, Regular Session, 2019;

(4) Section 54.032(a), Water Code, as amended by Chapter 539 (H.B. 2914), Acts of the 86th Legislature, Regular Session, 2019;

(5) Section 54.033(a), Water Code, as amended by Chapter 539 (H.B. 2914), Acts of the 86th Legislature, Regular Session, 2019; and

(6) Section 54.103, Water Code.

SECTION 26. This Act takes effect immediately if it receives a vote of two-thirds of all the members elected to each house, as provided by Section 39, Article III, Texas Constitution. If this Act does not receive the vote necessary for immediate effect, this Act takes effect September 1, 2023.

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