BILL ANALYSIS


                                                        H.B. 1935
                                            By: Lewis, R. (Nixon)
                                                Natural Resources
                                                          5-21-95
                              Senate Committee Report (Unamended)
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 nonprofit water supply or
sewer service corporations. Some nonprofit 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 nonprofit corporations to
convert to special utility districts, did not include such utility
districts under Section 13.255(j). As a result, there is no statute
allowing the orderly expansion of utility service by a municipality
that annexes previously unincorporated areas.

PURPOSE

As proposed, H.B. 1935 allows for the expansion of utility service
by municipalities into areas being served by nonprofit corporations
which have converted to special utility districts.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not grant any
additional rulemaking authority to a state officer, institution, or
agency.

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Section 13.255(j), Water Code, to include in the
provisions to which this section shall apply, a case where the
retail public utility that is authorized to serve in the
certificated area that is annexed or incorporated by the
municipality is a special utility district under Chapter 65, Water
Code.

SECTION 2. Amends Section 13.255, Water Code, by adding Subsection
(l), to require the compensation provided under Subsection (g) to
be determined by a qualified individual or firm to serve as
independent appraiser, who shall be selected by the affected retail
public utility. Requires the determination of compensation by the
independent appraiser to be binding on the Texas Water Commission
(commission). Requires the costs of the independent appraiser to be
borne by the municipality.

SECTION 3. Amends Section 13.255, Water Code, by adding Subsection
(m), to require the commission to deny an application for single
certification by a municipality that fails to demonstrate
compliance with the commission's minimum requirements for public
drinking water systems.

SECTION 4. Amends Section 13.255(g), Water Code, to require the
value of real property to be determined according to standards set
forth in Chapter 21, Property Code, rather than by the commission
or the court, governing actions in eminent domain. Includes in the
required provisions of the factors ensuring that the compensation
to a retail public utility for the taking, damaging, and/or loss of
personal property: the value of the service facilities, rather than
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 that 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 costs to
consumers of the retail public utility remaining after the single
certification; certain legal expenses and professional fees; and
factors relevant to maintaining the current financial integrity of
the retail public utility. Makes nonsubstantive changes.

SECTION 5. Emergency clause.
           Effective date: upon passage.