SRC-TNM S.B. 727 75(R)   BILL ANALYSIS


Senate Research Center   S.B. 727
By: Gallegos
Intergovernmental Relations
3-3-97
As Filed


DIGEST 

Currently, the Municipal Annexation Act authorizes in-lieu contracts
between cities and industrial districts located in extraterritorial
jurisdiction (ETJ) areas.  Pursuant to the provision, a city and the owner
of a refinery or other industrial use in an ETJ area can enter into a
contract under which the owner makes negotiated payments to the city, the
city provides stipulated services to the owner, and the district is
immunized from annexation.  In-lieu contracts may be for a term of up to
15 years, and are subject to renewal.  However, the Annexation Act does
not contain a corresponding in-lieu provision for residential Municipal
Utility Districts (MUDs) located in ETJ areas.  Under current law, the
only choice for cities and MUD residents is between annexation and no
annexation. 

S.B. 727 would extend the industrial district concept to MUDs.  It would
create a mechanism by which the mayor of a city with a population over 1.6
million and the board of a MUD located in the city's ETJ can negotiate
in-lieu contracts.  Negotiations would be initiated by either the mayor or
the MUD board, who would then begin good-faith discussions toward
execution of a mutually-beneficial contract.  Contracts may be for a term
of up to 15 years, and are subject to renewal.  The goal of S.B. 727 is to
encourage agreements under which MUDs make voluntary payments to offset
the cost of municipal streets, water systems, and other facilities and
services that benefit the region. 

PURPOSE

As proposed, S.B. 727 outlines provisions regarding contracts between
municipal utility districts located in extraterritorial areas and
municipalities. 

RULEMAKING AUTHORITY

This bill does not grant any additional rulemaking authority to a state
officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Chapter 42C, Local Government Code, by adding Section
42.0441, as follows: 

Sec. 42.0441. JOINT AGREEMENTS BETWEEN MUNICIPAL UTILITY DISTRICTS IN
EXTRATERRITORIAL AREAS AND MUNICIPALITIES.  (a) Provides that it is the
intent of the legislature to enable municipal utility districts in
extraterritorial areas and municipalities to negotiate mutually-agreeable
alternatives to annexation.  Provides that in furtherance of that goal,
this section authorizes municipal utility districts and municipalities to
execute mutually-agreeable contracts providing for the joint funding of
services in lieu of annexation.   

(b) Defines "district," "municipality," and "services."

(c) Authorizes the mayor of a municipality to enter into negotiations with
the board of directors of one or more districts located in the
municipality's extraterritorial jurisdiction. Requires notice of the
mayor's request to initiate negotiations to be submitted to the board of
the district.  Authorizes a district, in its discretion, to agree to enter
into negotiations with the mayor.   

 (d) Requires the board of directors to appoint a designee from the board
to negotiate with the mayor upon electing to enter into negotiations with
the mayor. 

(e) Requires the mayor of a municipality to enter into negotiations with
the board of a district located in the municipality's extraterritorial
jurisdiction upon submission of a petition approved by a majority of the
members of the board.  Requires the mayor to enter into negotiations with
the board not later than 30 days after a valid petition is filed with the
mayor. 

(f) Requires the mayor and the board's designee to negotiate in good faith
upon initiation of negotiations.  Sets forth options for which the mayor
and the board's designee are authorized to, in their discretion, agree to
a written contract. 

(g) Authorizes the governing body of the municipality and the board of a
district to renew or extend a contract for successive periods not to
exceed 15 years. 

(h) Requires a contract agreed to by the mayor of a municipality and the
board of a district to be submitted to the governing body of the
municipality and the board of the  district for final approval.  Requires
the contract to be deemed finally approved and binding on both parties
upon approval by the governing body of the municipality and a majority of
members of the board of the district. 

SECTION 2. Amends Chapter 321.102, Tax Code, by adding Subsection (c-1),
as follows: 

(c-1) Requires the municipal secretary to send by United States registered
or certified mail to the controller a certified copy of the ordinance that
changes the municipality's boundaries and shows the effective date of the
boundary change if the boundaries of a municipality in which the tax
imposed under this chapter are changed pursuant to Chapter 42C, Section
42.0441(e)(2), Local Government Code.  Requires the ordinance to be
accompanied by  a map clearly showing the added territory.  Provides that
the tax takes effect in the added territory on the first day of the first
calendar quarter after the comptroller receives the ordinance and map. 

SECTION 3. Emergency clause.
  Effective date: 90 days after adjournment.