BILL ANALYSIS



C.S.H.B. 2038
By: Brady
4-3-95
Committee Report (Substituted)


BACKGROUND
In December, 1994, the Oak Ridge Municipal Utility District and the
City of Oak Ridge North each passed resolutions endorsing
legislation to merge the two entities.  Such a merger would create
a more effective system which would provide savings to common
overhead, operating expenses and duplicate services.

Under the bill, the Oak Ridge Municipal Utility District's Board of
Directors may dissolve the district upon a vote of the majority of
the resident electors.  To complete the merger, the City of Oak
Ridge North must agree to assume the district's debts, take
ownership of the district's assets, perform the district's
functions, and provide all services previously provided by the
district.

PURPOSE
As proposed, HB 2038 provides for the dissolution of the Oak Ridge
Municipal Utility District and allows its assets and obligations to
be assumed by the City of Oak Ridge North.

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 Chapter 615, Acts of the 60th Legislature by
adding Section 25 to allow              the Oak Ridge Municipal
Utility District and the City of Oak Ridge North            to
merge.

     Section 25. (a) Outlines procedure for the district's board to
dissolve the Municipal Utility               District.

           (b) Outlines qualifications for municipality to be able
to assume district's debts              and assets. 

           (c) Assesses ad valorem tax not to exceed pro rata share
of district's debt service              on outstanding bonds.

           (d) Provides that the municipality may not levy an ad
valorem tax to pay annual               debt service obligations on
the district's outstanding bonds on property that,               at the time the district is dissolved, is not within the
district.

           (e) Allows municipality to charge for water and sewer
services to areas that are              within the district but not
within the municipality's boundaries at the time            of
dissolution rates not to exceed 125 percent of the rates charged to
               residents of the municipality as necessary to
provide services to those areas.

SECTION 2.  Emergency clause.


COMPARISON OF ORIGINAL TO SUBSTITUTE
Subsection (e) of the newly-created Section 25 (Section 1, page 3,
lines 10-14, of the Substitute) was added to the substituted
version, replacing original subsections (e) and (f) of the newly-created Section 25 in the introduced version of the bill.  Those
sections of the introduced version of the bill read as follows:
     (e)  Except as provided by Subsection (f), the municipality
may charge for water and sewer services to areas that, at the time
the district is dissolved, are within the district but not within
the municipality's boundaries rates that are higher than rates
charged within the municipality's boundaries as necessary to
provide services to those areas and may charge those areas their
pro rata shares of new debt service obligations incurred by the
municipality after dissolution of the district and related to the
provision of water and sewer services.
     (f)  Before the second anniversary of the date of the
dissolution of the district, the municipality may not charge for
water and sewer services to areas that, at the time the district id
dissolved, are within the district but not within the
municipality's boundaries rates that exceed the total effective
cost of services, after applying any available income tax
deductions related to the services, in the areas immediately before
dissolution. 
     The correlative section of the Substitute, which replaces
these two sections, simply provides that, at the time the district
is dissolved, the municipality may charge those specified areas
rates not to exceed 125 percent of the rates charged to residents
of the municipality as necessary to provide services to those
specified areas.


SUMMARY OF COMMITTEE ACTION
H.B.2038 was considered by the committee in a public hearing on
April 3, 1995.
The following persons testified in favor of the bill:
     Mr. Gary S. North, representing himself and as President of
Oak Ridge M.U.D.;
     Mr. Gary A. Louie, representing himself and City Council of
Oak Ridge North.
The following persons testified against the bill: None (0).
The following persons testified on the bill: None (0).
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 and be sent to the
Committee on Local and Consent Calendars, by a record vote of 7
ayes, 0 nays, 0 pnv, 2 absent.