By:  Barrientos                                       S.B. No. 1396
                                 A BILL TO BE ENTITLED
                                        AN ACT
    1-1  relating to altering the annexation status of land in certain
    1-2  municipal utility districts and authorizing the collection of
    1-3  municipal sales taxes in the districts.
    1-4        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
    1-5        SECTION 1.  Chapter 43, Local Government Code, is amended by
    1-6  adding Subchapter H to read as follows:
    1-7            SUBCHAPTER H.  ALTERATION OF ANNEXATION STATUS
    1-8        Sec. 43.201.  DEFINITIONS.  In this subchapter:
    1-9              (1)  "Consent agreement" means an agreement between a
   1-10  district and a municipality under Section 42.042.
   1-11              (2)  "Limited-purpose annexation" means annexation
   1-12  authorized under Section 43.121.
   1-13        Sec. 43.202.  APPLICABILITY.  This subchapter applies to:
   1-14              (1)  a municipal utility district operating under
   1-15  Chapter 54, Water Code, that:
   1-16                    (A)  was annexed for full purposes by a
   1-17  municipality as a condition of the municipality granting consent to
   1-18  the creation of the district;
   1-19                    (B)  was annexed by the municipality on the same
   1-20  date as at least five other districts; and
   1-21                    (C)  has not had on the eighth anniversary of the
   1-22  district's annexation by the municipality more than 10 percent of
   1-23  the housing units or commercial square footage authorized in its
    2-1  consent agreement constructed; and
    2-2              (2)  a municipality that has:
    2-3                    (A)  annexed territory for limited purposes;
    2-4                    (B)  disannexed territory that previously was
    2-5  annexed for limited purposes; and
    2-6                    (C)  previously disannexed territory in a
    2-7  municipal utility district originally annexed for full purposes on
    2-8  the same date as a district to which this section applies.
    2-9        Sec. 43.203.  ALTERATION OF ANNEXATION STATUS.  (a)  The
   2-10  governing body of a district by resolution may petition a
   2-11  municipality to alter the annexation status of land in the district
   2-12  from full-purpose annexation to limited-purpose annexation.
   2-13        (b)  On receipt of the district's petition, the governing
   2-14  body of the municipality shall enter into negotiations with the
   2-15  district for an agreement to alter the status of annexation that
   2-16  must:
   2-17              (1)  specify the period, which may not be less than 10
   2-18  years beginning on January 1 of the year following the date of the
   2-19  agreement, in which limited-purpose annexation is in effect;
   2-20              (2)  provide that, at the expiration of the period, the
   2-21  district's annexation status will automatically revert to
   2-22  full-purpose annexation without following procedures provided by
   2-23  Sections 43.051 through 43.055 or any other procedural requirement
   2-24  for annexation not in effect on January 1, 1995; and
   2-25              (3)  specify the financial obligations of the district
    3-1  during and after the period of limited-purpose annexation for:
    3-2                    (A)  facilities constructed by the municipality
    3-3  that are in or that serve the district;
    3-4                    (B)  debt incurred by the district for water and
    3-5  sewer infrastructure that will be assumed by the municipality at
    3-6  the end of the period of limited-purpose annexation; and
    3-7                    (C)  use of the municipal sales taxes collected
    3-8  by the municipality for facilities or services in the district.
    3-9        (c)  If an agreement is not reached within 90 days after the
   3-10  date the municipality receives a petition submitted by a district:
   3-11              (1)  the district's status is automatically altered
   3-12  from full-purpose annexation to limited-purpose annexation for a
   3-13  period of not less than 10 years, beginning January 1 of the year
   3-14  following the date of the submission of a petition; and
   3-15              (2)  on the expiration of the 10-year period of
   3-16  Subdivision (1), notwithstanding any other provision of law, the
   3-17  district may be  restored to full-purpose annexation at the option
   3-18  of the municipality, provided that the municipality assumes all
   3-19  obligations otherwise assigned by law to a municipality that
   3-20  annexes a district; and
   3-21              (3)  the municipality may collect a waste and
   3-22  wastewater surcharge for customers in the district after
   3-23  restoration of full-purpose annexation provided that:
   3-24                    (A)  notice of such proposed surcharge is
   3-25  provided to the board of a district six months prior to restoration
    4-1  of full-purpose annexation;
    4-2                    (B)  the surcharge does not exceed the cost of a
    4-3  post-annexation surcharge to any other district annexed by the
    4-4  municipality; and
    4-5                    (C)  the surcharge is in effect only during the
    4-6  period in which bonds issued by the district or refunded by the
    4-7  municipality are not fully retired.
    4-8        (d)  The municipality shall have no responsibility to
    4-9  reimburse the developer of the district or its successors for more
   4-10  than $800,000 for engineering and construction costs to design and
   4-11  build internal water treatment and distribution facilities,
   4-12  wastewater treatment and collection facilities, or drainage
   4-13  facilities, whether temporary or permanent, installed after
   4-14  September 1, 1995.  Any obligation to reimburse the developer may
   4-15  be paid in installments over a three-year period.
   4-16        (e)  During the period of limited-purpose annexation:
   4-17              (1)  the district must comply with other items in its
   4-18  consent agreement with the municipality;
   4-19              (2)  the municipality:
   4-20                    (A)  must continue to provide wholesale water and
   4-21  sewer service as provided by the consent agreement; and
   4-22                    (B)  is relieved of service obligations in the
   4-23  district that are not provided to other territory annexed for
   4-24  limited purposes or required by the annexation alteration agreement
   4-25  between the municipality and the district; and
    5-1              (3)  retail sales in the boundaries of the district
    5-2  will be treated for municipal sales tax purposes as if the district
    5-3  were annexed by the municipality for full purposes.
    5-4        (f)  This section does not apply to land or facilities in a
    5-5  district to which the municipality granted a property tax abatement
    5-6  before September 1, 1995.
    5-7        SECTION 2.  This Act takes effect September 1, 1995.
    5-8        SECTION 3.  The importance of this legislation and the
    5-9  crowded condition of the calendars in both houses create an
   5-10  emergency and an imperative public necessity that the
   5-11  constitutional rule requiring bills to be read on three several
   5-12  days in each house be suspended, and this rule is hereby suspended.