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.