BILL ANALYSIS H.B. 1935 By: R. Lewis 4-18-95 Committee Report (Amended) BACKGROUND Section 13.255 of the Texas Water Code is designed to allow orderly expansion of utility service by municipalities into previously unincorporated areas generally served by non-profit water supply or sewer service corporations. Some non-profit water supply or sewer service corporations have converted to special utility districts in order to qualify for tax exempt and various other types of funding. The legislature, when allowing the non-profits to convert to special utility districts, unintentionally failed to include such utility districts under Section 13.255(j). As a result, there is currently no statutory means available which would allow the orderly expansion of utility service by a municipality which annexes previously unincorporated areas. PURPOSE To correct the unintended omission of special utility districts from the provisions of section 13.255 of the Water Code and allow for the orderly expansion of utility service by municipalities into areas being served by non-profit corporations which have converted to special utility districts. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS Section 1. Amends Section 13.255(j), Water Code, by adding special utility districts which have converted from a non-profit water supply or sewer service corporation in order that municipalities may expand utility service. Section 2. Emergency clause. EXPLANATION OF AMENDMENTS COMMITTEE AMENDMENT NO.1: (1) On page 1, lines 11-12, deletes the words "that converted from a nonprofit water supply or sewer service corporation", thus making Section 13.255(j), Water Code, applicable to any special utility district. (2) Adds a new Section 2 to read as follows: Section 13.255, Water Code, is amended to add a new subsection (1) to read as follows: (1) The compensation provided under subsection (g) shall be determined by a qualified individual or firm to serve as independent appraiser, who shall be selected by the affected retail public utility. The determination of compensation by the independent appraiser shall be binding on the commission. The costs of the independent appraiser shall be borne by the municipality. (3) Adds a new Section 3 to read as follows: Section 3. Section 13.255, Water Code, is amended to add a new subsection (m) to read as follows: (m) The commission shall deny an application for single certification by a municipality which fails to demonstrate compliance with the commission's minimum requirements for public drinking water systems. (4) Adds a new Section 4 to read as follows: Section 4. Section 13.255(g), Water Code, is amended to read as follows: (g) For the purpose of implementing this section, the value of real property shall be determined [by the commission and/or the court] according to the standards set forth in Chapter 21, Property Code, governing actions in eminent domain; the value of personal property shall be determined according to the [rules to be promulgated by the commission pursuant to the] factors in this subsection. The factors ensuring [Such rules shall assure] that the compensation to a retail public utility for the taking, [and] damaging, and/or loss of personal property, including the retail public utility's business, is just and adequate, [and] shall, at a minimum, include [take into account the following factors]: impact on the existing indebtedness of the retail public utility and its ability to repay that debt, the value of the service facilities [personal and real property] of the retail public utility located within the area in question, the amount of any expenditures for planning, design or construction of service facilities outside the incorporated or annexed area which are allocable to service to the area in question, the amount of the retail public utility's contractual obligations allocable to the area in question, any demonstrated impairment of service or increase of cost to consumers of the retail public utility remaining after the single certification, the impact on future revenues and expenses of the retail public utility, necessary and reasonable legal expenses and professional fees, factors relevant to maintaining the current financial integrity of the retail public utility, and other relevant factors. (5) Renumbers Section 2 appropriately. SUMMARY OF COMMITTEE ACTION H.B.1935 was considered by the committee in a public hearing on April 18, 1995. The following person testified in favor of the bill: Mr. Tommy Duck, representing Texas Rural Water Association. The following person testified against the bill: Ms. Pam Thompson, representing herself and CODA (Citizens Organized to Defend Austin). The following persons testified on the bill: None (0). The committee considered one (1) amendment to the bill. The amendment was adopted without objection. The bill was reported favorably as amended, with the recommendation that it do pass and be printed and be sent to the Committee on Local and Consent Calendars, by a record vote of 8 ayes, 0 nays, 0 pnv, and 1 absent.