By Barrientos S.B. No. 1395 Substitute the following for S.B. No. 1395: By Combs C.S.S.B. No. 1395 A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to authorizing agreements affecting annexation between 1-3 certain political subdivisions of the state. 1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-5 SECTION 1. Subchapter C, Chapter 42, Local Government Code, 1-6 is amended by adding Section 42.048 to read as follows: 1-7 Sec. 42.048. REGIONAL ECONOMIC DEVELOPMENT AGREEMENTS. 1-8 (a) The governing bodies of neighboring municipalities and 1-9 districts as defined in Section 43.0751 of this code may enter into 1-10 a regional economic development agreement for contiguous, 1-11 unincorporated territory that is partially within the 1-12 extraterritorial jurisdiction of each municipality that is a party 1-13 to the agreement. A regional economic development agreement may 1-14 provide for the following: 1-15 (1) the boundaries of the area covered by the 1-16 agreement; 1-17 (2) the duration of the agreement, and means for 1-18 renewing or terminating the agreement; 1-19 (3) apportionment of the area covered by the agreement 1-20 into service areas assigned to participating municipalities; 1-21 (4) a regional economic development board composed of 1-22 representatives of parties to an agreement to provide planning for 1-23 service delivery to the territory covered by the agreement; 1-24 (5) revenue sharing among participating municipalities 2-1 in order to reduce destructive competition for commercial and 2-2 industrial tax base; and 2-3 (6) such other lawful terms as the parties consider 2-4 appropriate. 2-5 (b) A municipality may annex for limited purposes a service 2-6 area assigned to that municipality by a regional economic 2-7 development agreement adopted under this section in order to 2-8 provide planning and zoning in the service area, notwithstanding 2-9 the limitations imposed by Section 43.121(a) of this code. 2-10 SECTION 2. Subchapter D, Chapter 43, Local Government Code, 2-11 is amended by adding Section 43.0751 and Section 43.0752 to read as 2-12 follows: 2-13 Sec. 43.0751 STRATEGIC PARTNERSHIPS FOR CONTINUATION OF 2-14 CERTAIN DISTRICTS. (a) In this section: 2-15 (1) "District" means a water control and improvement 2-16 district or a municipal utility district created or operating under 2-17 Chapter 51 or Chapter 54, Water Code. 2-18 (2) "Limited district" means a district that, pursuant 2-19 to a strategic partnership agreement, continues to exist after full 2-20 purpose annexation by a municipality in accordance with the terms 2-21 of a strategic partnership agreement. 2-22 (3) "Strategic partnership agreement" means a written 2-23 agreement between a municipality and district that provides terms 2-24 and conditions under which services will be provided and funded by 2-25 the parties to the agreement and under which the district will 2-26 continue to exist for an extended period of time if the land within 2-27 the district is annexed for limited or full purposes by the 3-1 municipality. 3-2 (b) The governing bodies of a municipality and a district 3-3 shall negotiate and may enter into a written strategic partnership 3-4 agreement for the district. The governing bodies of the 3-5 municipality and the district shall evidence their intention to 3-6 negotiate such an agreement by resolution, each of which 3-7 resolutions shall specify an expiration date if the other governing 3-8 body fails to adopt a resolution under this section on or before 3-9 the specified date. The governing body of a municipality that has 3-10 evidenced its intention by unexpired resolution to enter into 3-11 negotiations with a district for an agreement under this section 3-12 may not initiate proceedings to annex the district under any other 3-13 section of this code prior to the expiration of two years after the 3-14 adoption date of the resolution unless the municipality has 3-15 previously instituted annexation proceedings in granting consent to 3-16 the creation of the district prior to January 1, 1995. 3-17 (c) A strategic partnership agreement shall not be effective 3-18 until adopted by the governing bodies of the municipality and the 3-19 district. The agreement shall be recorded in the deed records of 3-20 the county or counties in which the land included within the 3-21 district is located and shall bind each owner and each future owner 3-22 of land included within the district's boundaries on the date the 3-23 agreement becomes effective. 3-24 (d) Before the governing body of a municipality or a 3-25 district adopts a strategic partnership agreement, it shall conduct 3-26 two public hearings at which members of the public who wish to 3-27 present testimony or evidence regarding the proposed agreement 4-1 shall be given the opportunity to do so. Notice of public hearings 4-2 conducted by the governing body of a municipality under this 4-3 subsection shall be published in a newspaper of general circulation 4-4 in the municipality and in the district. The notice must be in the 4-5 format prescribed by Section 43.123(b) of this code, and must be 4-6 published at least once on or after the 20th day before each date. 4-7 Notice of public hearings conducted by the governing body of a 4-8 district under this subsection shall be given in accordance with 4-9 the district's notification procedures for other matters of public 4-10 importance. Any notice of a public hearing conducted under this 4-11 subsection shall contain a statement of the purpose of the hearing, 4-12 the date, time and place of the hearing, and the location where 4-13 copies of the proposed agreement may be obtained prior to the 4-14 hearing. The governing bodies of a municipality and a district may 4-15 conduct joint public hearings under this subsection, provided that 4-16 at least one public hearing is conducted within the district. A 4-17 municipality may combine the public hearings and notices required 4-18 by this subsection with the public hearings and notices required by 4-19 Section 43.124 of this code. 4-20 (e) The governing body of a municipality may not annex a 4-21 district for limited purposes under this section or under provision 4-22 of Subchapter F, Chapter 43 of this code until it has adopted a 4-23 strategic partnership agreement with the district. The governing 4-24 body of a municipality may not adopt a strategic partnership 4-25 agreement before the agreement has been adopted by the governing 4-26 body of the affected district. 4-27 (f) A strategic partnership agreement may provide for the 5-1 following: 5-2 (1) limited purpose annexation of the district under 5-3 the provisions of Subchapter F, Chapter 43 of the Local Government 5-4 Code, provided that the district shall continue in existence during 5-5 the period of limited purpose annexation; 5-6 (2) such amendments to the timing requirements of 5-7 Sections 43.123(d)(2) and 43.127(b) of this code as may be 5-8 necessary or convenient to effectuate the purposes of the 5-9 agreement; 5-10 (3) payments by the municipality to the district for 5-11 services provided by the district; 5-12 (4) annexation of any commercial property in a 5-13 district for full purposes by the municipality, notwithstanding any 5-14 other provision of this code or the Water Code, except for the 5-15 obligation of the municipality to provide, directly or through 5-16 agreement with other units of government, full provision of 5-17 municipal services to annexed territory, in lieu of any annexation 5-18 of residential property or payment of any fee on residential 5-19 property in lieu of any annexation of residential property in the 5-20 district authorized by this subsection; 5-21 (5) a full-purpose annexation provision that specifies 5-22 the date on which the land included within the district's 5-23 boundaries shall be converted from the municipality's limited 5-24 purpose jurisdiction to its full-purpose jurisdiction, provided 5-25 that such date shall not be later than ten (10) years after the 5-26 effective date of the strategic partnership agreement; or 5-27 (6) (A) terms for payment of an annual fee to the 6-1 municipality by the district in lieu of full purpose annexation, 6-2 the form in which each such payment must be tendered, a method of 6-3 calculating the fee, and the date by which each such payment must 6-4 be made. Failure by a district to timely make an annual payment in 6-5 lieu of full purpose annexation in the amount and form required by 6-6 a strategic partnership agreement shall be the only grounds for 6-7 termination of the agreement with respect to annexation at the 6-8 option of the municipality. 6-9 (B) To determine a reasonable fee to be derived 6-10 from residential property in a district, the municipality or the 6-11 district may request a cost-of-service study by an independent 6-12 third party agreeable to both parties if cost-of-service data 6-13 prepared by the municipality is not acceptable. Both parties shall 6-14 be equally responsible for the cost of the study, which shall 6-15 include an evaluation of the estimated annual cost of providing 6-16 municipal services to the residential portion of the district over 6-17 the next ten years, and the estimated annual amount of ad valorem 6-18 taxes from residential property the city would receive when the 6-19 district is annexed for full purposes. The fee shall not exceed 6-20 the estimated annual amount of residential ad valorem taxes that 6-21 would be derived by full purpose annexation of the district, less 6-22 the estimated annual amount required to provide municipal services 6-23 to the residential property in the district if annexed for full 6-24 purposes. A fee determined through this methodology is subject to 6-25 renegotiation every ten years at the request of either party to the 6-26 agreement following the same procedure used to set the fee in the 6-27 original agreement. This methodology does not apply to fees from 7-1 commercial property. Any fee paid under Section 43.7051(f)(6)(a) 7-2 shall not exceed an amount equal to fifteen per cent of a sum 7-3 calculated by applying the municipality's tax rate to the assessed 7-4 value of real property within the district. 7-5 (7) conversion of the district to a limited district 7-6 including some or all of the land included within the boundaries of 7-7 the district, which conversion shall be effective on the 7-8 full-purpose annexation conversion date established under (5); 7-9 (8) agreements existing between districts and 7-10 governmental bodies and private providers of municipal services in 7-11 existence on the date a municipality evidences its intention by 7-12 adopting a resolution to negotiate for a strategic partnership 7-13 resolution with the district shall be continued and provision made 7-14 for modifications to such existing agreements; and 7-15 (9) such other lawful terms that the parties consider 7-16 appropriate. 7-17 (g) A strategic partnership agreement that provides for the 7-18 creation of a limited district under (f)(1) shall include 7-19 provisions setting forth the following: 7-20 (1) the boundaries of the limited districts; 7-21 (2) the functions of the limited district and the term 7-22 during which the limited district shall exist after full purpose 7-23 annexation, which term may be renewed successively by the governing 7-24 body of the municipality, provided that no such original or renewed 7-25 term shall exceed ten (10) years; 7-26 (3) the name by which the limited district shall be 7-27 known; and 8-1 (4) the procedure by which the limited district may be 8-2 dissolved prior to the expiration of any term established under 8-3 (g)(2). 8-4 (h) On the full-purpose annexation conversion date set forth 8-5 in the strategic partnership agreement pursuant to (f)(5) of this 8-6 section, the land included within the boundaries of the district 8-7 shall be deemed to be within the full-purpose boundary limits of 8-8 the municipality without the need for further action by the 8-9 governing body of the municipality. The full-purpose annexation 8-10 conversion date established by a strategic partnership agreement 8-11 may be altered only by mutual agreement of the district and the 8-12 municipality. However, nothing herein shall prevent the 8-13 municipality from terminating the agreement and instituting 8-14 proceeding to annex the district, upon request by the governing 8-15 body of the district, on any date prior to the full-purpose 8-16 annexation conversion date established by the strategic partnership 8-17 agreement. Land annexed for limited or full purposes under this 8-18 section shall not be included in calculations prescribed by Section 8-19 43.0555(a) of this code. 8-20 (i) Except as limited by this section or terms of as 8-21 strategic partnership agreement, a district that has been annexed 8-22 for limited purposes by a municipality and a limited district shall 8-23 have and may exercise all functions, powers and authority otherwise 8-24 vested in a district. 8-25 (j) A municipality that may annex a district for limited 8-26 purposes to implement a strategic partnership agreement under this 8-27 section shall not annex for full purposes any territory within a 9-1 district created pursuant to a consent agreement with that 9-2 municipality executed before August 27, 1979. The prohibition on 9-3 annexation established by this subsection shall expire on September 9-4 1, 1997, or on the date on or before which the municipality and any 9-5 district may have separately agreed that annexation would not take 9-6 place whichever is later. 9-7 Sec. 43.0752. ELECTIONS RELATING TO AGREEMENTS. (a) If a 9-8 proposed strategic partnership agreement is rejected by the 9-9 governing body of a district and approved by the governing body of 9-10 a municipality, the governing body of the district immediately 9-11 shall order an election to be held in the area of the district on 9-12 the issue of adopting the proposed agreement. The election shall 9-13 be held on the first uniform election date that is after the 30th 9-14 day after the date of the adoption of the plan by the governing 9-15 body of the municipality. 9-16 (b) The ballot shall provide for voting for or against the 9-17 proposed strategic partnership agreement. The ballot proposition 9-18 shall describe the proposed rates of services and taxes to be paid 9-19 to the municipality or the district under the agreement. 9-20 (c) If a strategic partnership agreement is approved by both 9-21 the governing bodies of the municipality and the district and if a 9-22 number of voters within the area of the district equal to 5 percent 9-23 of the eligible voters of the district who voted in the most recent 9-24 gubernatorial election petition the district board, an election 9-25 shall be held in the area of the district on the issue of adopting 9-26 the proposed agreement. The election shall be held on the first 9-27 uniform election date that is after the 30th day after the date the 10-1 governing body of the district certifies the validity of the 10-2 petition. The ballot language shall be printed in the same manner 10-3 as provided by Subsection (b) and must contain a comparison of the 10-4 property tax rates and rates for service offered by the district 10-5 and the municipality. 10-6 (d) The district shall bear the cost of an election under 10-7 Subsection (a) or (c). 10-8 (e) If, at any election held under Subsection (a) or (c), a 10-9 majority of the votes received are against the adoption of a 10-10 strategic partnership agreement, the agreement is terminated. 10-11 SECTION 3. The importance of this legislation and the 10-12 crowded condition of the calendars in both houses create an 10-13 emergency and an imperative public necessity that the 10-14 constitutional rule requiring bills to be read three several days 10-15 in each house be suspended, and this rule is hereby suspended.