BILL ANALYSIS



S.B. 1396
By: Barrientos (Dukes/Maxey)
May 13, 1995
Committee Report (Unamended)


BACKGROUND

In the 1980s, consent agreements required certain municipal utility
districts (MUD) to be annexed into the city at their creation. 
This subjected the residents to dual taxation by both the city and
the MUD which can cause the lots and homes in the district to lose
their economic competitiveness.

PURPOSE

As proposed, this bill authorizes alteration of the annexation
status of certain municipal 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 Chapter 43, Local Government Code, by adding
           Subchapter H, as follows:

          SUBCHAPTER H.  ALTERATION OF ANNEXATION STATUS

           Sec.  43.201.  DEFINITIONS.  Defines "consent agreement"
           and "limited purpose annexation."

           Sec.  43.202.  APPLICABILITY.  Makes this chapter
           applicable to a municipal utility district (district)
           operating under Chapter 54, Water Code, that was annexed
           by a municipality under certain conditions, and a
           municipality that has annexed territory for limited
           purposes, disannexed territory that was previously
           annexed for limited purposes, and previously disannexed
           territory in certain MUDs originally annexed for full
           purposes.

           Sec.  43.203.  ALTERATION OF ANNEXATION STATUS.  (a)
           Authorizes a governing body of a district, by
           resolution, to petition a municipality to alter the
           annexation status of land in the district from full
           purpose annexation to limited purpose annexation.

           (b) Requires the governing body of the municipality, on
           receipt of the district's petition, to enter into
           negotiations with the district for an agreement to alter
           the status of annexation.  Sets forth information
           required to be included in the agreement.

           (c) Provides that the district's status is automatically
           altered from a full purpose to limited purpose
           annexation for at least a 10-year period starting
           January 1 of the year following the date of the
           submission of the district's petition, if an agreement
           is not reached within 90 days after the municipality
           receives a petition submitted by adistrict.  Authorizes
           the district, on the expiration of that 10-year period,
           to be restored to full purpose annexation at the option
           of the municipality, provided that the municipality
           assumes all obligations otherwise assigned by law to a
           municipality that annexes a district.  Authorizes the
           municipality to collect a waste and wastewater surcharge
           for customers in the district after restoration of full
           purpose annexation provided that the surcharge meets
           certain criteria.

           (d) Prohibits the municipality from having any
           responsibility to reimburse the developer of the
           district or a successor for more than $800,000 for
           engineering and construction costs to design and build
           internal water treatment and distribution facilities and
           wastewater treatment and collection facilities or
           drainage facilities installed after the effective date
           of this Act.  Authorizes any obligation to reimburse the
           developer to be paid in installments over a three-year
           period.

           (e) Requires the district to comply with other items in
           its consent agreement during the period of limited
           purpose annexation.  Requires the municipality to
           continue to provide wholesale water and sewer service
           as provided by the consent agreement.  Provides that the
           municipality is relieved of any service obligations in
           the district which are not provided to other territory
           annexed for limited purposes or required by the
           agreement between the municipality and the district. 
           Provides that during the period of limited purpose
           annexation, retail sales in the boundaries of the
           district will be treated for municipal sales tax service
           as if the district were annexed by the municipality for
           full purposes.

           (f) Provides that this section does not apply to land
           or facilities in a district to which the municipality
           has granted a property tax abatement before September
           1, 1995.

SECTION 2  Effective date: September 1, 1995.

SECTION 3  Emergency clause.

SUMMARY OF COMMITTEE ACTION

S.B. 1396 was considered by the committee in a formal meeting on
May 12, 1995.

The bill was reported favorably without amendment, 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, 1 absent.