BILL ANALYSIS
C.S.H.B. 1104
By: Yost
4-10-95
Committee Report (Substituted)
BACKGROUND
During the interim following the 71st Legislature, the House
Natural Resources Committee, Subcommittee on Districts, travelled
throughout the state to investigate organizational and financial
problems of local water districts. One of the primary problems
identified by the committee was the lack of procedural uniformity
between the different types of districts. Not only were the
numerous special law districts all governed by a variety of
procedural requirements, but even the general law district chapters
were inconsistent. These inconsistencies lead to confusion among
citizens, district board members, and state agency personnel.
Following the 72nd Legislative Session, the Speaker charged the
Natural Resources committee with investigating possible revisions
to the Water Code to provide consistency and clarity in the general
law district chapters. House Bill No. 1266, filed during the 73rd
Legislative Session was the product of that charge as adopted by
the committee. H.B. No. 1266 passed the House and was reported
favorably from the Senate Intergovernmental Relations Committee,
but was not brought before the full Senate during the waning days
of the session. H.B. No. 1104 as filed is virtually identical to
H.B. No. 1266 as it passed the House.
PURPOSE
This bill consolidates the procedural and administrative sections
of the several district chapters into a new Chapter 49, moves the
regional district sections to a new chapter 59, and makes
conforming amendments in each of the general law district chapters.
RULEMAKING AUTHORITY
It is the committees's opinion that this bill does not grant any
additional rulemaking authority to a state officer, institution,
agency or department.
SECTION BY SECTION ANALYSIS
(Unless specified, all Section references are to the Water Code.)
SECTION 1. Amends Section 1.002 to add standard code construction
act language.
SECTION 2. Creates Chapter 49 as follows:
Chapter 49. Provisions Applicable to all Districts
Subchapter A. General Provisions
Section 49.001 Definitions
Defines "district," "commission," "board," "executive
director," "water supply corporation," "director,"
"municipal solid waste," and "river authority."
Specifies that definitions are for the purposes of
Chapter 49 only.
Section 49.002 Applicability
Provides that all other special or general laws take
precedence over this chapter in all areas of conflict.
Section 49.003 Penalty
Provides that districts that fail to file required
reports are subject to a civil penalty.
Section 49.004 Penalty for Violation of District Rules
Allows District Boards to set civil penalties up to
$5000 for violations of district rules. The District
must file suit to collect the penalty, and may also
collect attorneys fees.
Subchapter B. Creation
Section 49.010 Order or Act Creating District
Requires district creation to be reported to Commission.
Subchapter C. Administrative Positions
Section 49.051 Board of Directors
Provides for governing board of a district.
Section 49.052 Disqualification of Directors
Provides for disqualification of directors in certain
districts if that director is related to or has some
other connection to a developer. Specifically states
that this section does not apply to districts that
provide water for irrigation or non-potable water for
any purpose.
Section 49.053 Quorum
Provides for a quorum as a majority of the board
membership. Specifically provides that this section
does not apply to river authorities or certain municipal
water supply districts (hereinafter "river
authorities").
Section 49.054 Officers
Provides for the board to elect officers as necessary,
sets out duties. Does not apply to river authorities.
Section 49.055 Sworn Statement, Bond and Oath of Office
Provides that directors file a sworn statement with
Secretary of State, take an oath of office, and provide
for a $10,000 performance bond. Does not apply to river
authorities.
Section 49.056 General Manager
Allows the board to hire or contract with a general
manager.
Section 49.057 Management Of District
Provides that the board has control of all district
affairs, and provides for adoption of bylaws.
Section 49.058 Conflicts of Interest
Provides that board is subject to conflict of interest
laws.
Section 49.059 Disqualification of Tax Assessor and Collector
Provides for disqualification of tax assessor in certain
districts if the assessor is related to or has some
other connection to a developer.
Section 49.060 Fees of Office
Sets director compensation at $100 per day of service
to a maximum of $6,000 per year, and allows for
reimbursement of expenses. This section takes
precedence over all prior laws.
Section 49.061 Seal
Requires board to adopt a seal.
Section 49.062 Offices and Meeting Places
Provides for offices and regular meeting place either
inside or outside the district. Provides for citizen
petition to require meetings be held inside the
district. This section does not apply to river
authorities.
Section 49.063 Notice of Meetings
Provides that notice shall be posted in accordance with
the open meetings act; provides alternative procedures
for districts with a meeting place outside the district.
Section 49.064 Meetings
Provides that all meetings are subject to the open
meetings act; provides exception for committees of less
than a quorum of the board.
Section 49.065 Records
Provides that all records are subject to the open
records act and local government records act.
Section 49.066 Suits
Provides for suits by and against the district, and that
districts or water supply corporations need not pay
court costs. Prohibits suits contesting validity of
bonds or contracts with the United States, which may
only be contested by the Texas Attorney General.
Section 49.067 Contracts
Provides that district shall contract in the name of the
district.
Section 49.068 Contracts With Governmental Agencies
Provides that contracts with governmental agencies may
be negotiated without the use of competitive bids.
Section 49.069 Employee Benefits
Allows district to pay for employee benefits; allows
retirement programs in accordance with Chapter 810,
Government Code. This section does not apply to certain
river authorities.
Section 49.070 Workers' Compensation
Allows district to purchase worker's compensation
insurance.
Section 49.071 District Name Change
Allows the district to petition Commission for a name
change.
Subchapter D. Election Provisions
Section 49.101 General
Provides that all elections be governed by the Election
Code.
Section 49.102 Confirmation and Director Election
Provides for election to confirm creation of the
district and elect directors.
Section 49.103 Terms of Office of Directors
Provides for four year terms; requires board elections
to be set on a uniform election date in either January
or May of even numbered years (this subsection takes
precedence over all prior laws). Also allows district
to elect directors from single member districts.
Section 49.104 Alternative Election Procedures
Allows certain districts to hold early voting and
elections jointly in a common location.
Section 49.105 Vacancies
Provides that vacant director positions be filled by
board appointment; if more than a majority of the board
vacates office the creating agency (Commission or county
commissioners court) would appoint the new members.
Section 49.106 Bond Elections
Requires filing of engineer's report prior to bond
election; allows bond elections to be held in
conjunction with other elections.
Section 49.107 Operation and Maintenance Tax
Allows district to levy operation and maintenance taxes
that must be approved by the voters.
Section 49.108 Contract Elections
Provides for elections to approve contracts supported
by taxes other than operation and maintenance taxes.
Subchapter E. Fiscal Provisions
Section 49.151 Expenditures
Provides for disbursements by check or other instruments
signed by a majority of the directors; allows the board
to delegate this authority to the general manager.
Section 49.152 Purposes For Borrowing Money
Allows district to borrow money for any corporate
purpose.
Section 49.153 Revenue Notes
Allows district to issue revenue notes without an
election; requires Commission approval of notes longer
than three years. This section does not apply to river
authorities.
Section 49.154 Bond anticipation Notes; Tax Anticipation
Notes
Allows board to issue bond and tax anticipation notes
in certain circumstances.
Section 49.155 Repayment of Expenses
Allows district to provide reimbursement or otherwise
pay all costs of the district creation.
Section 49.156 Depository
Requires district to designate one or more depositories.
Also requires funds to be secured in accordance with the
Public Funds Collateral Act.
Section 49.157 Investments
Allows district to invest district funds in accordance
with the Public Funds Investment Act.
Section 49.158 Fiscal Year
Requires board to designate a fiscal year; provides for
changing fiscal year.
Subchapter F. Issuance Of Bonds
Section 49.181 Authority Of Commission Over Issuance Of
District Bonds
Requires Commission approval of district bonds other
than refunding bonds.
Section 49.182 Commission Supervision of Projects and
Improvements
Prohibits substantial alterations in plans and
specifications already approved by the Commission
without prior approval of the Commission.
Section 49.183 Bond Sales
Requires bonds to be sold through competitive sealed
bids. District bonds are subject to a variety of acts
regulating public bonds (Articles 717k, k-2, and q,
Civil Statutes); except for this requirement, this
section does not apply to river authorities.
Section 49.184 Approval Of Bonds By Attorney General;
Registration Of Bonds
Requires registration of bonds with Attorney General;
once officially certified by the Attorney General the
bonds, and any contracts attached thereto, become
uncontestable.
Section 49.185 Exemptions
This subchapter does not apply to districts that sell
electricity (currently only the Lower Colorado River
Authority).
Subchapter G. Audit of Districts
Section 49.191 Duty To Audit
Requires district to audit financial records. This
section takes precedence over all prior laws.
Section 49.192 Form Of Audit
Requires Commission to establish accounting and audit
manual.
Section 49.193 Financial Reports
Requires district to maintain itemized accounts of
district funds.
Section 49.194 Filing Of Audits, Affidavits, and Financial
Reports
Requires that audits or filing affidavits be filed with
Commission.
Section 49.195 Review By Executive Director
Allows Commission to review all audits.
Section 49.196 Access To And Maintenance Of District Records
Allows Commission access to all district financial
records necessary for review of audit.
Section 49.197 Financially Dormant Districts
Defines financially dormant district and allows such
districts to file dormancy statements in lieu of audit.
Section 49.198 Audit Report Exemption
Allows certain districts to file financial statements
in lieu of audits in certain circumstances.
Section 49.199 Policies And Audits Of Districts
Requires district to adopt a code of ethics, travel
policy, investment policy, professional service
selection policy, uniform method of accounting for
certain bonds, and certain management policies.
Section 49.200 Review And Comment On Budget Of Certain
Districts
Requires districts that provide wholesale water to allow
wholesale customers to review district budgets.
Subchapter H. Powers And Duties
Section 49.211 Powers
Provides for all necessary authority to perform
functions of district; allows district to purchase all
necessary land and improvements.
Section 49.212 Fees And Charges
Provides for all necessary fees or charges for district
services.
Section 49.213 Authority To Issue Contracts
Allows district to contract with any person.
Section 49.214 Conflicts Of Interest In Contracts
Provides that contract conflicts are governed by Chapter
171, Local Government Code.
Section 49.215 Service To Areas Outside The District
Allows district to provide services to areas outside the
district under certain conditions.
Section 49.216 Enforcement By Peace Officers
Allows district to contract for or hire peace officers.
Section 49.217 Operation Of Certain Motor Vehicles On Or Near
Public Facilities
Prohibits motor vehicles from driving on levees, ditches
or other district works unless authorized by the
district. Violation is a Class C Misdemeanor.
Section 49.218 Acquisition Of Property
Allows district or water supply corporation to acquire
real property by purchase, gift or lease as needed for
the purposes of the district; allows acquisition of fee
simple or easements.
Section 49.219 Acquisition Of Existing Facilities
Allows district to acquire existing water facilities by
agreement.
Section 49.220 Right To Use Existing Rights-Of-Way
Allows all districts and water supply corporations to
use existing public rights-of-way.
Section 49.221 Right To Enter Land
Allows district personnel to enter all land in the
district for district business.
Section 49.222 Eminent Domain
Allows district or water supply corporation to acquire
property by condemnation in accordance with Chapter 21,
Property Code, except that no bond is required.
Section 49.223 Costs Of Relocation Of Property
Requires district or water supply corporation to pay for
relocation of any road, utility line or pipeline.
Section 49.224 Power To Condemn Cemeteries
Allows district or water supply corporation to condemn
cemeteries as necessary.
Section 49.225 Leases
Allows district to lease any of its property to any
person.
Section 49.226 Sale Or Exchange Of Surplus Land Or Personal
Property
Provides for disposition of surplus land by public or
private sale.
Section 49.227 Authority To Act Jointly
Allows district or water supply corporation to act
jointly with any other person.
Section 49.228 Damage to Property
Creates Class B Misdemeanor for wilful destruction of
district or water supply corporation property.
Section 49.229 Grants And Gifts
Allows district to accept grants and gifts.
Section 49.230 Area-Wide Wastewater Treatment
Provides that state policy encourages the use of
integrated, area-wide wastewater systems.
Section 49.231 Standby Fees
Allows certain districts to charge standby fees;
provides specific requirements for adoption of fees,
including Commission hearing. Provides that Chapter
395, Local Government Code, does not apply to standby
fees.
Section 49.232 Impact Fees
Requires district that imposes impact fees to comply
with Chapter 395, Local Government Code.
Subchapter I. Construction Contracts
Section 49.271 Contracts For Construction Work
Provides requirements for construction contracts, and
allows board to adopt minimum criteria for
qualifications for bidders. Requires bidders to submit
a cashiers check or bidder's bond as a good faith
deposit.
Section 49.272 Reports Furnished To Prospective Bidders
Requires district to provide copies of engineer's report
or plans on request.
Section 49.273 Contract Award
Provides for contract award. Requires contracts of
$25,000 or more to be published for bid; allows district
to solicit three bids for contracts of $15,000 to
$25,000, and allows contract by negotiation on smaller
contracts. Also provides that the Local Government Code
governs high technology procurements.
Section 49.274 Emergency Approval Of District Projects
Allows Districts to negotiate emergency repair
contracts; requires District to submit report to
Commission.
Section 49.275 Contractor's Bond
Requires contractor to provide bond in accordance with
Article 5160, Revised Statutes.
Section 49.276 Payment For Construction Work
Provides for partial or installment payments for
construction work.
Section 49.277 Inspection Of And Reports On Construction Work
Provides that the board shall have control of district
construction projects.
Subchapter J. Annexation Or Exclusion Of Land
Section 49.301 Adding Land By Petition Of Landowner
Provides for adding property contiguous to district on
petition of the landowner; allows district to require
petitioners to assume part of debt obligations.
Section 49.302 Adding Land By Petition Of Less Than All The
Landowners
Requires district to hold a hearing on the petition.
Also requires an election if land to be added is subject
to debt obligations.
Section 49.303 Excluding Land From District
Allows district to exclude land on its own motion prior
to election to authorize bonds; requires hearing on
exclusion if petitioned by an affected landowner.
Section 49.304 Hearing To Announce Proposed Exclusions And To
Receive Petitions
Requires board to hold exclusion hearing if petitioned
to do so, or allows board to hold hearing on its own
motion.
Section 49.305 Petition
Provides for petition requirements.
Section 49.306 Grounds For Exclusion
Provides grounds for exclusion, including that retaining
land is unnecessary or would impair or destroy property
value, or that providing services to the land would
present an undue economic burden on the district.
Section 49.307 Hearing And Order Excluding Land
Provides for conduct of hearing and administrative
findings of board.
Section 49.308 Suit To Review Exclusion
Allows any affected landowner to file suit to appeal the
district action.
Section 49.309 Exclusion of Nonirrigated Property
Provides definitions of "nonirrigated property" and
"district" for the purposes of Sections 49.309 through
49.314.
Section 49.310 Authority to Exclude Land
Provides for authority to exclude land from district by
petition of the land owner. Requires notice and hearing
by district.
Section 49.311 Consent from Holders of Indebtedness
Requires bondholders to consent to the exclusion.
Section 49.312 Results of Exclusion
Removes property from district subject to all previously
owed taxes or other obligations.
Section 49.313 District Facilities on Excluded Property
Provides that all District facilities on the excluded
property remain the property and responsibility of the
District.
Section 49.314 Water Allocations
Allows potable water supplier to apply to the Commission
to convert a proportional amount of water rights to
municipal use.
Subchapter K. Dissolution
Section 49.321 Dissolution Authority
Allows Commission to dissolve inactive districts.
Section 49.322 Notice Of Hearing
Provides for notice of dissolution hearing.
Section 49.323 Investigation
Requires Commission to investigate the district to be
dissolved.
Section 49.324 Order Of Dissolution
Allows Commission to order dissolution if certain
criteria are met.
Section 49.325 Certified Copy Of Order
Requires filing order in county deed records.
Section 49.326 Appeals
Allows a de novo appeal of Commission action.
Section 49.327 Assets Escheat To State
Requires all assets of the dissolved district to escheat
to the state.
Subchapter L. Fire Departments
Section 49.351 Fire Departments
Allows certain districts to establish a fire department
if approved in an election; allows issuance of bonds;
allows two districts to operate jointly, and allows a
district to contract for fire services. Requires
Commission to hold hearing to approve fire service plan.
Subchapter M. Notices, Reports, And Bankruptcy
Section 49.451 Posting Signs In The District
Requires certain districts to post permanent notices of
the existence of the district.
Section 49.452 Notice To Purchasers
Requires any person selling property within certain
districts to provide notice that the property is in a
district along with certain other information pertinent
to the land to be sold.
Section 49.453 Notice Form From District
Requires district to maintain copies of notice.
Section 49.454 Notice Of Unpaid Standby Fees
Requires certain districts to provide upon request a
list of unpaid standby fees.
Section 49.455 Filing Information
Requires certain districts to file financial information
related to the notice described in 49.454 in the county
records.
Section 49.456 Bankruptcy of Districts; Authority of
Commission
Prohibits certain districts from filing for bankruptcy.
Allows the Commission to authorize district bankruptcy
proceedings.
SECTION 3. Creates Chapter 59
This new chapter is virtually identical to Subchapter M of the
existing Chapter 50; the only changes are conforming
amendments to the rest of this bill.
SECTION 4. Amends Section 51.0711(a) (Conforming amendments)
SECTION 5. Amends Section 51.072 Qualifications For Director
(Conforming amendments)
SECTION 6. Amends Section 51.076(a) and (f) (Conforming
amendments)
SECTION 7. Amends Section 51.750(d) (Conforming amendments)
SECTION 8. Amends Section 52.005 (Conforming amendments)
SECTION 9. Amends Section 52.115 Meetings (Conforming amendments)
SECTION 10. Amends Section 52.294(c), (d), and (e) (Conforming
amendments)
SECTION 11. Amends Section 53.040 Elected Supervisors Take Office
(Conforming amendments)
SECTION 12. Amends Section 53.042 Newly Elected Supervisors--Term
Of Office
(Conforming amendments)
SECTION 13. Amends Section 53.062 Board Of Supervisors
(Conforming amendments)
SECTION 14. Amends Section 53.088 Status Of The District
(Conforming amendments)
SECTION 15. Amends Section 53.172 Ordering Bond Election
(Conforming amendments)
SECTION 16. Amends Section 54.025 Qualification Of Temporary
Directors (Conforming amendments)
SECTION 17. Amends Section 54.036 Directors To Continue Serving
(Conforming amendments)
SECTION 18. Amends Section 54.203 Municipal Solid Waste
Adds the word "municipal" to this section allowing
Chapter 54 districts to own and operate solid waste
disposal systems to clarify the type of waste that may
be disposed of in a district system.
SECTION 19. Amends Section 54.729(a) to clarify that more than two
districts may consolidate.
SECTION 20. Amends Section 54.730(a) to clarify that more than two
districts may consolidate.
SECTION 21. Amends Section 54.732 to clarify that more than two
districts may consolidate.
SECTION 22. Amends Section 54.733 to clarify that more than two
districts may consolidate.
SECTION 23. Amends Chapter 54
Adds several new sections to Chapter 54 relating to
substituting land in the district for land outside the
district.
SECTION 24. Amends Section 55.101 Board Of Directors (Conforming
amendments)
SECTION 25. Amends Section 55.102 Qualifications Of Directors
(Conforming amendments)
SECTION 26. Amends Section 55.721 Exclusion Of Nonagricultural
And Nonirrigable Land From District (Conforming amendments)
SECTION 27. Amends Section 56.064 Election Of Directors
(Conforming amendments)
SECTION 28. Amends Section 57.053 Term Of Office, Removal, And
Succession (Conforming amendments)
SECTION 29. Amends Section 57.060 Petition (Conforming
amendments)
SECTION 30. Amends Section 57.061 Procedure For Election
(Conforming amendments)
SECTION 31. Amends Section 57.207 Declaring Result Of Election
(Conforming amendments)
SECTION 32. Amends Section 58.072 Qualifications (Conforming
amendments)
SECTION 33. Amends Chapter 60 by adding a new Section 60.002 to
subject navigation districts to the audit requirements of
Subchapter G, Chapter 49 as added by this bill.
SECTION 34. Amends Chapter 60 by adding a new Section 60.350 to
subject navigation districts to the provisions of Sections 49.181
and 49.183 relating to bond issuance and sales as added by this
bill.
SECTION 35. Amends Section 65.103 Election Of Directors; Terms Of
Office (Conforming amendments)
SECTION 36. Amends Chapter 65 by adding Section 65.235 Prohibition
On Assessment Or Collection Of Taxes (Conforming amendments)
SECTION 37. Amends Section 66.101 Board Of Directors (Conforming
amendments)
SECTION 38. Amends Section 66.310(b) (Conforming amendments)
SECTION 39. Repeals Chapter 50 except for Subchapter H, which is
continued only for contracts issued under that subchapter.
SECTION 40. Repeals sections of Chapter 51
SECTION 41. Repeals sections of Chapter 52
SECTION 42. Repeals sections of Chapter 53
SECTION 43. Repeals sections of Chapter 54
SECTION 44. Repeals sections of Chapter 55
SECTION 45. Repeals sections of Chapter 56
SECTION 46. Repeals sections of Chapter 57
SECTION 47. Repeals sections of Chapter 58
SECTION 48. Repeals sections of Chapter 65
SECTION 49. Repeals sections of Chapter 66
SECTION 50. Effective date September 1, 1995 and conversion of
elections to January and May election dates.
SECTION 51. Emergency clause.
COMPARISON OF ORIGINAL TO SUBSTITUTE
The Substitute moved Section 2 (repeal of Chapter 50) to Section 39
and renumbered all the intervening sections. The Substitute also
(1) clarified that the definitions in Section 49.001 of the Water
Code could not be used in any other statute, (2) changed the
retirement plan provisions in Section 49.049 of the Water Code to
reference Chapter 810, Government Code, (3) removed a redundant
definition from Section 59.071 of the Water Code, (4) removed the
proposed Section 54.739 relating to the annexation authority of
certain cities and renumbered proposed Sections 54.740 through
54.748 accordingly, (5) changed the words "river authority" to the
words "special water authority" throughout the bill, (6) added a
provision allowing districts to contract for laboratory services,
(7) added a definition of "potable water", and (8) added a
provision exempting special law districts and authorities from the
provisions of Section 49.103.
SUMMARY OF COMMITTEE ACTION
H.B.1104 was considered by the committee in a public hearing on
April 3, 1995.
The following persons testified in favor of the bill:
Mr. Joe B. Allen, representing himself and Association of
Water Board Directors;
Mr. C.E. Williams, representing Panhandle Ground Water
Conservation District;
Mr. Lee Arrington, representing South Plains Underground Water
Conservation District;
Mr. Allan J. Lange, representing Lipan-Kickapoo Water
Conservation District;
Mr. Scott Holland, representing Irion County Water
Conservation District;
Mr. David Harper, representing himself and Central Texas
Association of Utility Districts;
Mr. Wayne Halbert, representing himself and Texas Irrigation
Council;
Mr. Gregory M. Ellis, representing himself;
Mr. Wayne Owen, representing Tarrant County Water Control and
Improvement District No. 1.
The following person testified against the bill:
Mr. Michael L. Erdmann, representing City of Austin, Water and
Wastewater Department.
The following person testified on the bill: None (0).
The committee considered a complete substitute for the bill. Four
(4) amendments were offered to the substitute. All four (4) of
those amendments were adopted without objection. The Chair
directed the committee staff to incorporate those four (4) adopted
amendments to the substitute into another substitute for H.B.1104.
The bill was left pending.
H.B.1104 was considered by the committee in a public hearing on
April 10, 1995.
No testimony was received. The committee considered a complete
substitute for the bill. The substitute was adopted without
objection. The bill was reported favorably as substituted, with
the recommendation that it do pass and be printed, by a record vote
of 6 ayes, 0 nays, 0 pnv, 3 absent.