S.B. No. 1396
AN ACT
1-1 relating to altering the annexation status and the regulation of
1-2 development of certain areas in certain municipalities and their
1-3 extraterritorial jurisdiction.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Subchapter D, Chapter 43, Local Government Code,
1-6 is amended by adding Section 43.0751 to read as follows:
1-7 Sec. 43.0751. STRATEGIC PARTNERSHIPS FOR CONTINUATION OF
1-8 CERTAIN DISTRICTS. (a) In this section:
1-9 (1) "District" means a water control and improvement
1-10 district or a municipal utility district created or operating under
1-11 Chapter 51 or 54, Water Code.
1-12 (2) "Limited district" means a district that, pursuant
1-13 to a strategic partnership agreement, continues to exist after
1-14 full-purpose annexation by a municipality in accordance with the
1-15 terms of a strategic partnership agreement.
1-16 (3) "Strategic partnership agreement" means a written
1-17 agreement between a municipality and a district that provides terms
1-18 and conditions under which services will be provided and funded by
1-19 the parties to the agreement and under which the district will
1-20 continue to exist for an extended period of time if the land within
1-21 the district is annexed for limited or full purposes by the
1-22 municipality.
1-23 (b) The governing bodies of a municipality and a district
2-1 shall negotiate and may enter into a written strategic partnership
2-2 agreement for the district. The governing bodies of the
2-3 municipality and the district shall evidence their intention to
2-4 negotiate such an agreement by resolution, each of which
2-5 resolutions shall specify an expiration date if the other governing
2-6 body fails to adopt a resolution under this section on or before
2-7 the specified date. The governing body of a municipality that has
2-8 evidenced its intention by unexpired resolution to enter into
2-9 negotiations with a district for an agreement under this section
2-10 may not initiate proceedings to annex the district under any other
2-11 section of this code prior to the expiration of two years after the
2-12 adoption date of the resolution unless the municipality has
2-13 previously instituted annexation proceedings in granting consent to
2-14 the creation of the district prior to January 1, 1995.
2-15 (c) A strategic partnership agreement shall not be effective
2-16 until adopted by the governing bodies of the municipality and the
2-17 district. The agreement shall be recorded in the deed records of
2-18 the county or counties in which the land included within the
2-19 district is located and shall bind each owner and each future owner
2-20 of land included within the district's boundaries on the date the
2-21 agreement becomes effective.
2-22 (d) Before the governing body of a municipality or a
2-23 district adopts a strategic partnership agreement, it shall conduct
2-24 two public hearings at which members of the public who wish to
2-25 present testimony or evidence regarding the proposed agreement
3-1 shall be given the opportunity to do so. Notice of public hearings
3-2 conducted by the governing body of a municipality under this
3-3 subsection shall be published in a newspaper of general circulation
3-4 in the municipality and in the district. The notice must be in the
3-5 format prescribed by Section 43.123(b) and must be published at
3-6 least once on or after the 20th day before each date. Notice of
3-7 public hearings conducted by the governing body of a district under
3-8 this subsection shall be given in accordance with the district's
3-9 notification procedures for other matters of public importance.
3-10 Any notice of a public hearing conducted under this subsection
3-11 shall contain a statement of the purpose of the hearing, the date,
3-12 time, and place of the hearing, and the location where copies of
3-13 the proposed agreement may be obtained prior to the hearing. The
3-14 governing bodies of a municipality and a district may conduct joint
3-15 public hearings under this subsection, provided that at least one
3-16 public hearing is conducted within the district. A municipality
3-17 may combine the public hearings and notices required by this
3-18 subsection with the public hearings and notices required by Section
3-19 43.124.
3-20 (e) The governing body of a municipality may not annex a
3-21 district for limited purposes under this section or under the
3-22 provisions of Subchapter F until it has adopted a strategic
3-23 partnership agreement with the district. The governing body of a
3-24 municipality may not adopt a strategic partnership agreement before
3-25 the agreement has been adopted by the governing body of the
4-1 affected district.
4-2 (f) A strategic partnership agreement may provide for the
4-3 following:
4-4 (1) limited-purpose annexation of the district under
4-5 the provisions of Subchapter F provided that the district shall
4-6 continue in existence during the period of limited-purpose
4-7 annexation;
4-8 (2) such amendments to the timing requirements of
4-9 Sections 43.123(d)(2) and 43.127(b) as may be necessary or
4-10 convenient to effectuate the purposes of the agreement;
4-11 (3) payments by the municipality to the district for
4-12 services provided by the district;
4-13 (4) annexation of any commercial property in a
4-14 district for full purposes by the municipality, notwithstanding any
4-15 other provision of this code or the Water Code, except for the
4-16 obligation of the municipality to provide, directly or through
4-17 agreement with other units of government, full provision of
4-18 municipal services to annexed territory, in lieu of any annexation
4-19 of residential property or payment of any fee on residential
4-20 property in lieu of annexation of residential property in the
4-21 district authorized by this subsection;
4-22 (5) a full-purpose annexation provision that specifies
4-23 one of the following:
4-24 (A) the date on which the land included within
4-25 the district's boundaries shall be converted from the
5-1 municipality's limited-purpose jurisdiction to its full-purpose
5-2 jurisdiction, provided that such date shall not be later than 10
5-3 years after the effective date of the strategic partnership
5-4 agreement; or
5-5 (B)(i) terms for payment of an annual fee to the
5-6 municipality by the district in lieu of full-purpose annexation,
5-7 the form in which each such payment must be tendered, a method of
5-8 calculating the fee, and the date by which each such payment must
5-9 be made; failure by a district to timely make an annual payment in
5-10 lieu of full-purpose annexation in the amount and form required by
5-11 a strategic partnership agreement shall be the only ground for
5-12 termination of the agreement with respect to annexation at the
5-13 option of the municipality;
5-14 (ii) to determine a reasonable fee to be
5-15 derived from residential property in a district, the municipality
5-16 or the district may request a cost-of-service study by an
5-17 independent third party agreeable to both parties if
5-18 cost-of-service data prepared by the municipality is not
5-19 acceptable. Both parties shall be equally responsible for the cost
5-20 of the study, which shall include an evaluation of the estimated
5-21 annual cost of providing municipal services to the residential
5-22 portion of the district over the next 10 years and the estimated
5-23 annual amount of ad valorem taxes from residential property the
5-24 city would receive on full-purpose annexation of the district over
5-25 the next 10 years. The fee shall not exceed the estimated annual
6-1 amount of residential ad valorem taxes that would be derived by
6-2 full-purpose annexation of the district, less the estimated annual
6-3 amount required to provide municipal services to the residential
6-4 property in the district if annexed for full purposes. A fee
6-5 determined through this methodology is subject to renegotiation
6-6 every 10 years at the request of either party to the agreement
6-7 following the same procedure used to set the fee in the original
6-8 agreement. This methodology does not apply to fees from commercial
6-9 property;
6-10 (6) conversion of the district to a limited district
6-11 including some or all of the land included within the boundaries of
6-12 the district, which conversion shall be effective on the
6-13 full-purpose annexation conversion date established under
6-14 Subdivision (5)(A);
6-15 (7) agreements existing between districts and
6-16 governmental bodies and private providers of municipal services in
6-17 existence on the date a municipality evidences its intention by
6-18 adopting a resolution to negotiate for a strategic partnership
6-19 agreement with the district shall be continued and provision made
6-20 for modifications to such existing agreements; and
6-21 (8) such other lawful terms that the parties consider
6-22 appropriate.
6-23 (g) A strategic partnership agreement that provides for the
6-24 creation of a limited district under Subsection (f)(6) shall
6-25 include provisions setting forth the following:
7-1 (1) the boundaries of the limited district;
7-2 (2) the functions of the limited district and the term
7-3 during which the limited district shall exist after full-purpose
7-4 annexation, which term may be renewed successively by the governing
7-5 body of the municipality, provided that no such original or renewed
7-6 term shall exceed 10 years;
7-7 (3) the name by which the limited district shall be
7-8 known; and
7-9 (4) the procedure by which the limited district may be
7-10 dissolved prior to the expiration of any term established under
7-11 Subdivision (2).
7-12 (h) On the full-purpose annexation conversion date set forth
7-13 in the strategic partnership agreement pursuant to Subsection
7-14 (f)(5)(A), the land included within the boundaries of the district
7-15 shall be deemed to be within the full-purpose boundary limits of
7-16 the municipality without the need for further action by the
7-17 governing body of the municipality. The full-purpose annexation
7-18 conversion date established by a strategic partnership agreement
7-19 may be altered only by mutual agreement of the district and the
7-20 municipality. However, nothing herein shall prevent the
7-21 municipality from terminating the agreement and instituting
7-22 proceedings to annex the district, on request by the governing body
7-23 of the district, on any date prior to the full-purpose annexation
7-24 conversion date established by the strategic partnership agreement.
7-25 Land annexed for limited or full purposes under this section shall
8-1 not be included in calculations prescribed by Section 43.055(a).
8-2 (i) A district that is negotiating for or that has adopted a
8-3 strategic partnership agreement shall not incur additional debt,
8-4 liabilities, or obligations, to construct additional utility
8-5 facilities, or sell or otherwise transfer property without prior
8-6 approval of the municipality, which approval shall not be
8-7 unreasonably withheld or delayed. An action taken in violation of
8-8 this subsection is void.
8-9 (j) Except as limited by this section or the terms of a
8-10 strategic partnership agreement, a district that has been annexed
8-11 for limited purposes by a municipality and a limited district shall
8-12 have and may exercise all functions, powers, and authority
8-13 otherwise vested in a district.
8-14 (k) A municipality that has annexed a district for limited
8-15 purposes under this section may impose a retail sales tax within
8-16 the boundaries of the district.
8-17 (l) An agreement or a decision made under this section and
8-18 an action taken under the agreement by the parties to the agreement
8-19 are not subject to approval or an appeal brought under the Water
8-20 Code unless it is an appeal of a utility rate charged by a
8-21 municipality to customers outside the corporate boundaries of the
8-22 municipality.
8-23 (m) A municipality that may annex a district for limited
8-24 purposes to implement a strategic partnership agreement under this
8-25 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
9-4 September 1, 1997, or on the date on or before which the
9-5 municipality and any district may have separately agreed that
9-6 annexation would not take place whichever is later.
9-7 SECTION 2. Chapter 43, Local Government Code, is amended by
9-8 adding Subchapter H to read as follows:
9-9 SUBCHAPTER H. ALTERATION OF ANNEXATION STATUS
9-10 Sec. 43.201. DEFINITIONS. In this subchapter:
9-11 (1) "Consent agreement" means an agreement between a
9-12 district and a municipality under Section 42.042.
9-13 (2) "Limited-purpose annexation" means annexation
9-14 authorized under Section 43.121.
9-15 Sec. 43.202. APPLICABILITY. This subchapter applies to:
9-16 (1) a municipal utility district operating under
9-17 Chapter 54, Water Code, that:
9-18 (A) was annexed for full purposes by a
9-19 municipality as a condition of the municipality granting consent to
9-20 the creation of the district;
9-21 (B) was annexed by the municipality on the same
9-22 date as at least five other districts; and
9-23 (C) has not had on the eighth anniversary of the
9-24 district's annexation by the municipality more than 10 percent of
9-25 the housing units or commercial square footage authorized in its
10-1 consent agreement constructed; and
10-2 (2) a municipality that has:
10-3 (A) annexed territory for limited purposes;
10-4 (B) disannexed territory that previously was
10-5 annexed for limited purposes; and
10-6 (C) previously disannexed territory in a
10-7 municipal utility district originally annexed for full purposes on
10-8 the same date as a district to which this section applies.
10-9 Sec. 43.203. ALTERATION OF ANNEXATION STATUS. (a) The
10-10 governing body of a district by resolution may petition a
10-11 municipality to alter the annexation status of land in the district
10-12 from full-purpose annexation to limited-purpose annexation.
10-13 (b) On receipt of the district's petition, the governing
10-14 body of the municipality shall enter into negotiations with the
10-15 district for an agreement to alter the status of annexation that
10-16 must:
10-17 (1) specify the period, which may not be less than 10
10-18 years beginning on January 1 of the year following the date of the
10-19 agreement, in which limited-purpose annexation is in effect;
10-20 (2) provide that, at the expiration of the period, the
10-21 district's annexation status will automatically revert to
10-22 full-purpose annexation without following procedures provided by
10-23 Sections 43.051 through 43.055 or any other procedural requirement
10-24 for annexation not in effect on January 1, 1995; and
10-25 (3) specify the financial obligations of the district
11-1 during and after the period of limited-purpose annexation for:
11-2 (A) facilities constructed by the municipality
11-3 that are in or that serve the district;
11-4 (B) debt incurred by the district for water and
11-5 sewer infrastructure that will be assumed by the municipality at
11-6 the end of the period of limited-purpose annexation; and
11-7 (C) use of the municipal sales taxes collected
11-8 by the municipality for facilities or services in the district.
11-9 (c) If an agreement is not reached within 90 days after the
11-10 date the municipality receives a petition submitted by a district:
11-11 (1) the district's status is automatically altered
11-12 from full-purpose annexation to limited-purpose annexation for a
11-13 period of not less than 10 years, beginning January 1 of the year
11-14 following the date of the submission of a petition, unless the
11-15 voters of the district have approved the dissolution of the
11-16 district through an election authorized by this section; and
11-17 (2) on the expiration of the 10-year period of
11-18 Subdivision (1), notwithstanding any other provision of law, the
11-19 district may be restored to full-purpose annexation at the option
11-20 of the municipality, provided that the municipality assumes all
11-21 obligations otherwise assigned by law to a municipality that
11-22 annexes a district; and
11-23 (3) the municipality may collect a waste and
11-24 wastewater surcharge for customers in the district after
11-25 restoration of full-purpose annexation provided that:
12-1 (A) notice of such proposed surcharge is
12-2 provided to the board of a district six months prior to restoration
12-3 of full-purpose annexation;
12-4 (B) the surcharge does not exceed the cost of a
12-5 post-annexation surcharge to any other district annexed by the
12-6 municipality; and
12-7 (C) the surcharge is in effect only during the
12-8 period in which bonds issued by the district or refunded by the
12-9 municipality are not fully retired.
12-10 (d) Upon the request of any residents of a district subject
12-11 to this section the municipality may conduct an election on a
12-12 uniform election date at which election voters who are residents of
12-13 the district may vote for or against a ballot proposal to dissolve
12-14 the district. If more than one district was created on the same
12-15 date and the districts are contiguous, the election shall be a
12-16 combined election of all such districts, with a majority of votes
12-17 cast by all residents of the districts combined required for
12-18 dissolution of the districts. If a majority of votes are in favor
12-19 of dissolution, the date of dissolution shall be December 31 of the
12-20 same year in which the election is held. Upon dissolution of the
12-21 district, all property and obligations of a dissolved district
12-22 become the responsibility of the municipality.
12-23 (e) The municipality shall have no responsibility to
12-24 reimburse the developer of the district or its successors for more
12-25 than reasonable and actual engineering and construction costs to
13-1 design and build internal water treatment and distribution
13-2 facilities, wastewater treatment and collection facilities, or
13-3 drainage facilities, whether temporary or permanent, installed
13-4 after September 1, 1995. Any obligation to reimburse the developer
13-5 may be paid in installments over a three-year period.
13-6 (f) During the period of limited-purpose annexation:
13-7 (1) the district may not use bond proceeds to pay for
13-8 impact fees but must comply with other items in its consent
13-9 agreement with the municipality;
13-10 (2) the municipality:
13-11 (A) must continue to provide wholesale water and
13-12 sewer service as provided by the consent agreement; and
13-13 (B) is relieved of service obligations in the
13-14 district that are not provided to other territory annexed for
13-15 limited purposes or required by the annexation alteration agreement
13-16 between the municipality and the district; and
13-17 (3) retail sales in the boundaries of the district
13-18 will be treated for municipal sales tax purposes as if the district
13-19 were annexed by the municipality for full purposes.
13-20 (g) This section does not allow a change in annexation
13-21 status for land or facilities in a district to which the
13-22 municipality granted a property tax abatement before September 1,
13-23 1995.
13-24 SECTION 3. Chapter 4, Title 28, Revised Statutes, is amended
13-25 by adding Article 1010a to read as follows:
14-1 Art. 1010a. DEVELOPMENT REGULATION
14-2 Sec. 1. This article applies only to a home-rule
14-3 municipality that:
14-4 (1) has a charter provision allowing for
14-5 limited-purpose annexation; and
14-6 (2) has annexed territory for a limited purpose.
14-7 Sec. 2. In this article:
14-8 (1) "Affected area" means an area that is:
14-9 (A) within a municipality or a municipality's
14-10 extraterritorial jurisdiction;
14-11 (B) within a county other than the county in
14-12 which a majority of the territory of the municipality is located;
14-13 (C) within the boundaries of one or more school
14-14 districts other than the school district in which a majority of the
14-15 territory of the municipality is located; and
14-16 (D) within the area of or within 1,500 feet of
14-17 the boundary of an assessment road district in which there are two
14-18 state highways.
14-19 (2) "Assessment road district" means a road district
14-20 that has issued refunding bonds and that has imposed assessments on
14-21 each parcel of land under Section 4.438A, County Road and Bridge
14-22 Act (Article 6702-1, Vernon's Texas Civil Statutes).
14-23 (3) "State highway" means a highway that is part of
14-24 the state highway system under Section 2, Chapter 186, General
14-25 Laws, Acts of the 39th Legislature, Regular Session, 1925 (Article
15-1 6674b, Vernon's Texas Civil Statutes).
15-2 Sec. 3. (a) A municipality may not deny, limit, delay, or
15-3 condition the use or development of land, any part of which is
15-4 within an affected area, because of:
15-5 (1) traffic or traffic operations that would result
15-6 from the proposed use or development of the land; or
15-7 (2) the effect that the proposed use or development of
15-8 the land would have on traffic or traffic operations.
15-9 (b) In this section, an action to deny, limit, delay, or
15-10 condition the use or development of land includes a decision or
15-11 action by the governing body of the municipality or a commission,
15-12 board, department, agency, office, or employee of the municipality
15-13 related to zoning, subdivision, site planning, the construction or
15-14 building permit process, or any other municipal process, approval,
15-15 or permit.
15-16 (c) This article does not prevent a municipality from
15-17 exercising its authority to require the dedication of right-of-way.
15-18 Sec. 4. (a) A provision in any covenant or agreement
15-19 relating to land in an affected area made before, on, or after the
15-20 effective date of this article that would have the effect of
15-21 denying, limiting, delaying, or conditioning the use or development
15-22 of the land because of its effect on traffic or traffic operations
15-23 may not be enforced by a municipality.
15-24 (b) This article controls over any other law relating to
15-25 municipal regulation of land use or development based on traffic.
16-1 SECTION 4. This Act takes effect September 1, 1995.
16-2 SECTION 5. The importance of this legislation and the
16-3 crowded condition of the calendars in both houses create an
16-4 emergency and an imperative public necessity that the
16-5 constitutional rule requiring bills to be read on three several
16-6 days in each house be suspended, and this rule is hereby suspended.