BILL ANALYSIS


                                                    C.S.S.B. 1396
                                                   By: Barrientos
                                                Natural Resources
                                                         04-28-95
                                   Committee Report (Substituted)
BACKGROUND

In the 1980s, consent agreements required 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, C.S.S.B. 1396 authorizes alteration of the annexation
status of a municipal utility district.

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 and disannexed territory for
     certain reasons.
     
     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.