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.