BILL ANALYSIS S.B. 731 By: Galloway (Brady) 4-24-95 Committee Report (Unamended) BACKGROUND The Oak Ridge Municipal Utility District and the City of Oak Ridge North each passed resolutions in 1994 endorsing legislation to merge the two entities into one more cost-effective system. PURPOSE To authorize a municipality to dissolve the Oak Ridge Municipal District and assume its assets and obligations. 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, Regular Session, 1967, by adding Section 25, as follows: Sec. 25. (a) Authorizes the board of directors of the Oak Ridge Municipal District (district) to issue an order that dissolves the district after: (1) the board calls and conducts an election to authorize dissolution of the district in the manner provided by Chapter 54, Water Code, for an election to approve issuance of bonds; (2) a majority of the resident electors who vote in an election authorized by Subdivision (1) vote on the dissolution of the district; (3) the board creates a special reserve fund consisting of a sum certain from money contained in the district's bond retirement fund; and (4) a qualified municipality issues an ordinance by which, on a specified date, the municipality agrees to perform certain functions. (b) Provides that a municipality is qualified to assume the districts debts, liabilities, and obligations and assume ownership of the district's assets and facilities if: (1) the municipality has a better investment grade credit rating from Standard & Poor's Investor Services, Inc., on its outstanding bonds; and (2) the combined debt principal of the municipality and the district does not exceed 12 percent of the total assessed valuation of the municipality's property. (c) Requires the municipality that assumes the district's debts, liabilities, and obligations and assumes ownership of the district's assets and facilities to levy an ad valorem tax for bond debt service as authorized by the district at the time of the district's dissolution on all property formerly in the district. Prohibits a tax on the property outside the municipality's boundaries at the time of the district's dissolution from exceeding that area's pro rata share of the annual debt service obligations on the district's outstanding bonds. (d) Prohibits the municipality from levying 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) Authorizes the municipality to charge for water and sewer services to areas that are within the district but not within the municipality's boundaries 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. SUMMARY OF COMMITTEE ACTION S.B.731 was considered by the committee in a public hearing on April 24, 1995. The following person testified in favor of the bill: Mr. Gary A. Louie, Mayor, City of Oak Ridge North, representing himself. The following person testified against the bill: Ms. Kerstan Whitlow, representing herself. The following persons testified on the bill: None (0). The bill was reported favorably without amendment, with the recommendation that it do pass and be printed, by a record vote of 8 ayes, 0 nays, 0 pnv, 1 absent.