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 * * * * *