1-1        By:  Barrientos                                 S.B. No. 1396
    1-2        (In the Senate - Filed March 13, 1995; March 20, 1995, read
    1-3  first time and referred to Committee on Natural Resources;
    1-4  April 28, 1995, reported adversely, with favorable Committee
    1-5  Substitute by the following vote:  Yeas 7, Nays 0; April 28, 1995,
    1-6  sent to printer.)
    1-7  COMMITTEE SUBSTITUTE FOR S.B. No. 1396              By:  Barrientos
    1-8                         A BILL TO BE ENTITLED
    1-9                                AN ACT
   1-10  relating to altering the annexation status of land in certain
   1-11  municipal utility districts and authorizing the collection of
   1-12  municipal sales taxes in the districts.
   1-13        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
   1-14        SECTION 1.  Chapter 43, Local Government Code, is amended by
   1-15  adding Subchapter H to read as follows:
   1-16            SUBCHAPTER H.  ALTERATION OF ANNEXATION STATUS
   1-17        Sec. 43.201.  DEFINITIONS.  In this subchapter:
   1-18              (1)  "Consent agreement" means an agreement between a
   1-19  district and a municipality under Section 42.042.
   1-20              (2)  "Limited-purpose annexation" means annexation
   1-21  authorized under Section 43.121.
   1-22        Sec. 43.202.  APPLICABILITY.  This subchapter applies to:
   1-23              (1)  a municipal utility district operating under
   1-24  Chapter 54, Water Code, that:
   1-25                    (A)  was annexed for full purposes by a
   1-26  municipality as a condition of the municipality granting consent to
   1-27  the creation of the district;
   1-28                    (B)  was annexed by the municipality on the same
   1-29  date as at least five other districts; and
   1-30                    (C)  has not had on the eighth anniversary of the
   1-31  district's annexation by the municipality more than 10 percent of
   1-32  the housing units or commercial square footage authorized in its
   1-33  consent agreement constructed; and
   1-34              (2)  a municipality that has:
   1-35                    (A)  annexed territory for limited purposes;
   1-36                    (B)  disannexed territory that previously was
   1-37  annexed for limited purposes; and
   1-38                    (C)  previously disannexed territory in a
   1-39  municipal utility district originally annexed for full purposes on
   1-40  the same date as a district to which this section applies.
   1-41        Sec. 43.203.  ALTERATION OF ANNEXATION STATUS.  (a)  The
   1-42  governing body of a district by resolution may petition a
   1-43  municipality to alter the annexation status of land in the district
   1-44  from full-purpose annexation to limited-purpose annexation.
   1-45        (b)  On receipt of the district's petition, the governing
   1-46  body of the municipality shall enter into negotiations with the
   1-47  district for an agreement to alter the status of annexation that
   1-48  must:
   1-49              (1)  specify the period, which may not be less than 10
   1-50  years beginning on January 1 of the year following the date of the
   1-51  agreement, in which limited-purpose annexation is in effect;
   1-52              (2)  provide that, at the expiration of the period, the
   1-53  district's annexation status will automatically revert to
   1-54  full-purpose annexation without following procedures provided by
   1-55  Sections 43.051 through 43.055 or any other procedural requirement
   1-56  for annexation not in effect on January 1, 1995; and
   1-57              (3)  specify the financial obligations of the district
   1-58  during and after the period of limited-purpose annexation for:
   1-59                    (A)  facilities constructed by the municipality
   1-60  that are in or that serve the district;
   1-61                    (B)  debt incurred by the district for water and
   1-62  sewer infrastructure that will be assumed by the municipality at
   1-63  the end of the period of limited-purpose annexation; and
   1-64                    (C)  use of the municipal sales taxes collected
   1-65  by the municipality for facilities or services in the district.
   1-66        (c)  If an agreement is not reached within 90 days after the
   1-67  date the municipality receives a petition submitted by a district:
   1-68              (1)  the district's status is automatically altered
    2-1  from full-purpose annexation to limited-purpose annexation for a
    2-2  period of not less than 10 years, beginning January 1 of the year
    2-3  following the date of the submission of a petition; and
    2-4              (2)  on the expiration of the 10-year period of
    2-5  Subdivision (1), notwithstanding any other provision of law, the
    2-6  district may be  restored to full-purpose annexation at the option
    2-7  of the municipality, provided that the municipality assumes all
    2-8  obligations otherwise assigned by law to a municipality that
    2-9  annexes a district; and
   2-10              (3)  the municipality may collect a waste and
   2-11  wastewater surcharge for customers in the district after
   2-12  restoration of full-purpose annexation provided that:
   2-13                    (A)  notice of such proposed surcharge is
   2-14  provided to the board of a district six months prior to restoration
   2-15  of full-purpose annexation;
   2-16                    (B)  the surcharge does not exceed the cost of a
   2-17  post-annexation surcharge to any other district annexed by the
   2-18  municipality; and
   2-19                    (C)  the surcharge is in effect only during the
   2-20  period in which bonds issued by the district or refunded by the
   2-21  municipality are not fully retired.
   2-22        (d)  The municipality shall have no responsibility to
   2-23  reimburse the developer of the district or its successors for more
   2-24  than $800,000 for engineering and construction costs to design and
   2-25  build internal water treatment and distribution facilities,
   2-26  wastewater treatment and collection facilities, or drainage
   2-27  facilities, whether temporary or permanent, installed after
   2-28  September 1, 1995.  Any obligation to reimburse the developer may
   2-29  be paid in installments over a three-year period.
   2-30        (e)  During the period of limited-purpose annexation:
   2-31              (1)  the district must comply with other items in its
   2-32  consent agreement with the municipality;
   2-33              (2)  the municipality:
   2-34                    (A)  must continue to provide wholesale water and
   2-35  sewer service as provided by the consent agreement; and
   2-36                    (B)  is relieved of service obligations in the
   2-37  district that are not provided to other territory annexed for
   2-38  limited purposes or required by the annexation alteration agreement
   2-39  between the municipality and the district; and
   2-40              (3)  retail sales in the boundaries of the district
   2-41  will be treated for municipal sales tax purposes as if the district
   2-42  were annexed by the municipality for full purposes.
   2-43        (f)  This section does not apply to land or facilities in a
   2-44  district to which the municipality granted a property tax abatement
   2-45  before September 1, 1995.
   2-46        SECTION 2.  This Act takes effect September 1, 1995.
   2-47        SECTION 3.  The importance of this legislation and the
   2-48  crowded condition of the calendars in both houses create an
   2-49  emergency and an imperative public necessity that the
   2-50  constitutional rule requiring bills to be read on three several
   2-51  days in each house be suspended, and this rule is hereby suspended.
   2-52                               * * * * *