SRC-SLL S.B. 1709 75(R)   BILL ANALYSIS


Senate Research Center   S.B. 1709
By: Nixon
Natural Resources
4-29-97
As Filed


DIGEST 

In April of 1995, a nonprofit corporation was formed in order to secure
bonds to purchase a water system currently in bankruptcy.  Subsequently,
it was realized that if this entity became a special utility district it
could qualify for tax-exempt status.  This status would recognize a
savings in excess of two million dollars over the period of the loan for
the customers of this water system.  This bill will create and provide
regulations regarding the administration, powers, duties, operations, and
financing of the Lake Livingston Special Utility District. 

PURPOSE

As proposed, S.B. 1709 creates and provides regulations regarding the
administration, powers, duties, operations, and financing of the Lake
Livingston Special Utility District. 

RULEMAKING AUTHORITY

Rulemaking authority is granted to the Lake Livingston Special Utility
District in SECTION 3.03 of this bill. 

SECTION BY SECTION ANALYSIS

ARTICLE 1.  GENERAL PROVISIONS

SECTION 1.01. CREATION OF THE DISTRICT.  Authorizes Lake Livingston
Special Utility District (district) to be created pursuant to the
provisions of this Act and under and subject to the authority, conditions,
and restrictions of, and is considered a conservation and reclamation
district under, Article XVI, Section 59, of the Texas Constitution.
Provides that the district will be a government agency and a body politic
and corporate. 

SECTION 1.02. DEFINITIONS.  Defines "district," "board," "director,"
"commission," "executive director," "city," "extraterritorial
jurisdiction," "public agency," and "corporation." 

SECTION 1.03. PURPOSES OF THE DISTRICT.  Authorizes the district to be
created for certain purposes. 

SECTION 1.04. COMPOSITION OF DISTRICT.  Sets forth the boundaries of the
district. 

SECTION 1.05. OPEN MEETINGS.  Requires all meeting of the Lake Livingston
Water Supply and Sewer Service Corporation (corporation) and the district
to be held and conducted in accordance with Chapter 551, Government Code. 

ARTICLE 2.  ADMINISTRATIVE PROVISIONS

SECTION 2.01. RESOLUTION PROPOSING CREATION OF DISTRICT.  Sets forth
regulations regarding the adoption  of a resolution proposing creation of
the district. 

SECTION 2.02. CONSENT OF CITY.  Authorizes a district to operate within
the corporate limits of a city or within the extraterritorial jurisdiction
of a city, provided that a city may require that the district construct
all facilities to serve the land in accordance with plans and
specifications that are  approved by the city.  Authorizes the city to
require that the city be entitled to inspect facilities being constructed
by a district within the corporate limits or extraterritorial jurisdiction
of the city. 

SECTION 2.03. Requires the board of directors of the corporation, if the
members of the corporation approve the resolution on the question of
converting to the district by a simple majority, to call for and conduct a
confirmation and director election as provided in Chapter 49D of the Water
Code.  Requires the board of directors of the corporation to serve as the
temporary directors for the confirmation and director election. 

SECTION 2.04. Requires the district, for election of directors, to be
divided into three numbered single-member precincts, one precinct each for
Polk County,  Trinity County, and San Jacinto County.  Requires two
directors to be elected from Polk County, two directors from the San
Jacinto precinct, one from the Trinity County precinct, and two directors
elected at large. 

SECTION 2.05. Provides that the district's powers, rights, duties, and
functions are exercised by a board of directors (board). 

SECTION 2.06. Requires the board to consist of seven members all of whom
must reside in the district.  Requires a person, in order to serve as a
director, to be at least 18 years old, a resident citizen of this state,
and a qualified voter of the district. 

ARTICLE 3.  POWERS AND DUTIES

SECTION 3.01. POWERS.  Sets forth the powers of the district.

SECTION 3.02. SOLID WASTE.    Prohibits a district from collecting
municipal solid waste as defined in Section 361.003, Health and Safety
Code, or purchase, construct, acquire, own, operate, maintain, repair,
improve, and extend a municipal solid waste collection and disposal
system. 

SECTION 3.03. ADOPTING RULES.  Authorizes the district to adopt and
enforce reasonable rules concerning certain matters. 

SECTION 3.04. EFFECT OF RULES.  Requires rules adopted by the district
under SECTION 3.03 of this Act, after the required publication, to be
recognized by the courts as if the rules were penal ordinances of a city. 

SECTION 3.05. PUBLICATION OF RULES.  Sets forth regulations regarding
publication of rules adopted by the district. 

SECTION 3.06. EFFECTIVE DATE OF RULES.  Provides that the penalty for
violation of a  rule is not effective and enforceable until five days
after the last publication of notice.  Provides that, five days after the
last publication, the published rule takes effect and ignorance of the
rule is not a defense to a prosecution for the enforcement of the penalty. 

SECTION 3.07. PROHIBITION ON ASSESSMENT OR COLLECTION OF TAXES.  Provides
that Section 49.017, Water Code, does not apply to the district. 

ARTICLE 4.  BONDS AND NOTES

SECTION 4.01. ISSUANCE OF BONDS AND NOTES.  Sets forth regulations
regarding the issuance of bonds and notes by the district. 

SECTION 4.02. FORM OF BONDS AND NOTES.  Sets forth regulations regarding
the form of bonds and notes issued by the district. 

SECTION 4.03. MANNER OF REPAYMENT OF BONDS OR NOTES.  Sets forth
regulations regarding the manner of repayment of bonds or notes. 

SECTION 4.04. ADDITIONAL SECURITY FOR BONDS OR NOTES.  Sets forth
regulations  regarding additional security for bonds or notes. 

SECTION 4.05. METHOD FOR ISSUANCE OF BONDS AND NOTES.  Authorizes bonds or
notes to be issued by resolution or order of the board. 

SECTION 4.06. PROVISIONS OF BONDS OR NOTES.  Sets forth provisions that
may be contained in an order or resolution authorizing the issuance of
bonds or notes. 

SECTION 4.07. USE OF BOND OR NOTE PROCEEDS.  Sets forth regulations
regarding the use of bond or note proceeds by the district. 

SECTION 4.08. SALE OR EXCHANGE OF BONDS.  Requires the board to sell the
bonds on the best terms and for the best possible price, but the bonds may
not be sold for less than 95 percent of their face value. 

SECTION 4.09. REFUNDING BONDS.  Sets forth regulations regarding the
refunding of bonds. 

SECTION 4.10. OBLIGATIONS; LEGAL INVESTMENT; SECURITY FOR FUNDS.  Provides
that bonds, notes, and other obligations issued by a district are legal
and authorized investments for certain entities and persons.  Provides
that the district's bonds, notes, and other obligations are eligible to
secure deposits of certain entities.  Provides that the bonds, notes, and
other obligations are lawful and sufficient security to the extent of
their market value if accompanied by all unmatured interest coupons
attached to them. 

SECTION 4.11. MANDAMUS BY BONDHOLDERS.  Provides that the owners of any of
the bonds are entitled to a writ of mandamus issued by a court of
competent jurisdiction, in addition to other rights and remedies,
compelling the district and its officials to observe and perform the
covenants, obligations, or conditions prescribed in the order or
resolution authorizing the issuance of the district's bonds if the
district makes certain defaults or failures. 
 
SECTION 4.12. CANCELLATION OF UNSOLD BONDS.  Sets forth regulations
regarding the cancellation of bonds by the board. 

SECTION 4.13. CANCELLATION OF UNSOLD BONDS.  Sets forth regulations
regarding the cancellation of bonds by the board. 

ARTICLE 5.  CONSOLIDATION OF DISTRICTS

Authorizes the district to consolidate with any district governed by
Chapter 65 of the Water Code in accordance with the procedures provided in
Section 65.723, et seq., Water Code, as may be amended. 

ARTICLE 6.  MISCELLANEOUS

SECTION 6.01. Severability clause.

SECTION 6.02. Emergency clause.
   Effective date: upon passage.