Bill not drafted by TLC or Senate E&E.

      Line and page numbers may not match official copy.

      By Lewis of Orange                              H.B. No. 2236

                                A BILL TO BE ENTITLED

 1-1                                   AN ACT

 1-2     relating to the operation, administration, and financing of utility

 1-3     districts.

 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

 1-5           SECTION 1.  Section 49.057(e), Water Code, is amended to read

 1-6     as follows:

 1-7           (e)  The board shall require an officer, employee, or

 1-8     consultant who routinely collects, pays, or handles any funds of

 1-9     the district, such as the bookkeeper, financial advisor, or system

1-10     operator, to furnish good and sufficient bond, payable to the

1-11     district, in an amount determined by the board to be sufficient to

1-12     safeguard the district.  The board may require a bond from such

1-13     other consultants as the board deems necessary.  The bond shall be

1-14     conditioned on the faithful performance of that person's duties and

1-15     on accounting for all funds and property of the district.  Such

1-16     bond shall be signed or endorsed by a surety company authorized to

1-17     do business in the state.

1-18           SECTION 2.  Section 49.103(e), Water Code, is amended to read

1-19     as follows:

1-20           (e)  Section 49.002 notwithstanding, in all areas of conflict

1-21     the provisions of Subsections (a) and (b) shall take precedence

1-22     over all prior statutory enactments.

1-23           SECTION 3.  Section 49.103, Water Code, is amended by adding

1-24     Subsection (g) to read as follows:

 2-1           (g)  Those districts which are required by this subsection to

 2-2     convert to four year terms and/or change election dates may extend

 2-3     the terms of directors currently in office to the next appropriate

 2-4     election date in an even numbered year.  Those districts which may

 2-5     have non-staggered terms as a result of compliance with prior

 2-6     requirements may draw lots to determine which positions shall serve

 2-7     the longer terms necessary to convert to four year staggered terms.

 2-8           SECTION 4.  Section 49.106, Water Code, is amended by adding

 2-9     Subsection (d) to read as follows:

2-10           (d)  A bond election may be called as a result of an

2-11     agreement to annex additional land into the district.

2-12           SECTION 5.  Section 49.181 (h)(4), Water Code, is amended to

2-13     read as follows:

2-14           (h)(4)  the district is governed by a board of directors

2-15     appointed in whole or in part by the governor, a state agency, or

2-16     the governing body or chief elected official of a municipality or

2-17     county and does not provide or propose to provide water, sewer,

2-18     drainage, reclamation or flood control services to residential

2-19     retail customers as its principal function.

2-20           SECTION 6.  Sec. 49.198(a), Water Code, is amended to read as

2-21     follows:

2-22           (a)  A district [that is not collecting taxes] may elect to

2-23     file annual financial reports with the executive director in lieu

2-24     of the district's compliance with Section 49.191 provided:

2-25                 (1)  the district had no bonds or other long-term (more

2-26     than one year) liabilities outstanding during the fiscal period;

2-27                 (2)  the district did not have gross receipts from

2-28     operations, loans, taxes, or contributions in excess of $100,000

2-29     during the fiscal period; and

2-30                 (3)  the district's cash and temporary investments were

 3-1     not in excess of $100,000 at any time during the fiscal period.

 3-2           SECTION 7.  Section 49.218, Water Code, is amended to read as

 3-3     follows:

 3-4           Sec. 49.218.  Acquisition of Property.  (a)  A district or a

 3-5     water supply corporation may acquire land, any interest in land,

 3-6     materials, waste grounds, easements, rights-of-way, equipment,

 3-7     contract or permit rights or interests, and other property, real or

 3-8     personal, considered necessary for the purpose of accomplishing any

 3-9     one or more of the district's or water supply corporation's

3-10     purposes provided in this code or in any other law.

3-11           (b)  A district or water supply corporation shall have the

3-12     right to acquire property by gift, grant, or purchase, and the

3-13     right to acquire property shall include property considered

3-14     necessary for the construction, improvement, extension,

3-15     enlargement, operation, or maintenance of the plants, works,

3-16     improvements, facilities, equipment, or appliances of a district or

3-17     an water supply corporation.

3-18           (c)  A district or water supply corporation may acquire

3-19     either the fee simple title to or an easement on all land, both

3-20     public and private, either inside or outside its boundaries and may

3-21     acquire the title to or an easement on property other than land

3-22     held in fee.

3-23           (d)  A district or water supply corporation may also lease

3-24     property from others for its use on such terms and conditions as

3-25     the board of the district or the board of directors of the water

3-26     supply corporation may determine to be advantageous.

3-27           SECTION 8.  Section 49.226, Water Code is amended to read as

3-28     follows:

3-29           Sec. 49.226.  Sale or Exchange of Surplus Land or Personal

3-30     Property.  (a)  Any personal property valued at more than $300, or

 4-1     a[A]ny land or interest in land[, or personal property] owned by

 4-2     the district which is found by the board to be surplus and is not

 4-3     needed by the district may be sold under order of the board either

 4-4     by public or private sale, or the land, interest in land, or

 4-5     personal property may be exchanged for other land, interest in

 4-6     land, or personal property needed by the district.  Except as

 4-7     provided in Subsection (b), land, interest in land, or personal

 4-8     property must be exchanged for like fair market value, which value

 4-9     may be determined by the district.

4-10           (b)  Any property dedicated to or acquired by the district

4-11     without expending district funds may be abandoned or released to

4-12     the original grantor, the grantor's heirs, assigns, executors, or

4-13     successors upon terms and conditions deemed necessary or

4-14     advantageous to the district and without receiving compensation for

4-15     such abandonment or release.  District property may also be

4-16     abandoned, released, exchanged, or transferred to another district,

4-17     municipality, county, countywide agency, or authority upon terms

4-18     and conditions deemed necessary or advantageous to the district.

4-19     Narrow strips of property resulting from boundary or surveying

4-20     conflicts or similar causes, or from insubstantial encroachments by

4-21     abutting property owners, may be abandoned, released, exchanged, or

4-22     transferred to such abutting owners upon terms and conditions

4-23     deemed necessary or advantageous to the district.  Chapter 272,

4-24     Local Government Code, shall not apply to this subsection.

4-25           (c)  Before either a public or private sale of real property

4-26     not required by the district, the district shall give notice of the

4-27     intent to sell by publishing notice once a week for two consecutive

4-28     weeks in one or more newspapers with general circulation in the

4-29     district.

4-30           (d)  If the district has outstanding bonds secured by a

 5-1     pledge of tax revenues, the proceeds of the sale of property not

 5-2     required by the district shall be applied to retire outstanding

 5-3     bonds of the district when required by the district's applicable

 5-4     bond resolutions.

 5-5           (e)  If the district does not have any outstanding bonds, the

 5-6     proceeds derived from the sale of the personal property or land not

 5-7     required by the district may be used for any lawful purpose.

 5-8           SECTION 9.  Subchapter I, Chapter 49, Water Code is retitled

 5-9     to read as follows:

5-10           SUBCHAPTER I.   [CONSTRUCTION] CONTRACTS FOR MATERIALS,

5-11     MACHINERY, CONSTRUCTION, ETC.

5-12           SECTION 10.  Section 49.273, Water Code, is amended to read

5-13     as follows:

5-14           Sec. 49.273.  [CONSTRUCTION] CONTRACT AWARD.  (a)  The board

5-15     shall contract for the purchase of equipment, materials, machinery,

5-16     and construction, repair or renovation of district facilities in

5-17     accordance with this section.  The bidding documents, plans,

5-18     specifications, and other data needed to bid on the project must be

5-19     available at the time of the first advertisement and the

5-20     advertisement shall state the location at which these documents may

5-21     be reviewed.

5-22           (b)  A construction contract may cover all the work to be

5-23     provided by the district or the various elements of the work may be

5-24     segregated for the purpose of receiving bids and awarding

5-25     contracts.  A contract may provide that the work will be

5-26     constructed in stages over a period of years.

5-27           (c)  A construction contract may provide for the payment of a

5-28     total sum that is the completed cost of the work or may be based on

5-29     bids to cover cost of units of the various elements entering into

5-30     the work as estimated and approximately specified by the district's

 6-1     engineers, or a contract may be let and awarded in any other form

 6-2     or composite of forms and to any responsible person or persons

 6-3     that, in the board's judgment, will be most advantageous to the

 6-4     district and result in the best and most economical completion of

 6-5     the district's proposed plants, improvements, facilities, works,

 6-6     equipment, and appliances.

 6-7           (d)  For [construction] contracts for $25,000 or more, the

 6-8     board shall advertise the letting of the contract, including the

 6-9     general conditions, time, and place of opening of sealed bids.  The

6-10     notice shall be published in one or more newspapers circulated in

6-11     each county in which part of the district is located.  If one

6-12     newspaper meets both of these requirements, publication in such

6-13     newspaper is sufficient.  If there are more than four counties in

6-14     the district, notice may be published in any newspaper with general

6-15     circulation in the district.  The notice shall be published once a

6-16     week for three consecutive weeks before the date that the bids are

6-17     opened, and the first publication shall be not later than the 21st

6-18     day before the date of the opening of the sealed bids.

6-19           (e)  For [construction] contracts for $15,000 or more but

6-20     less than $25,000, the board shall solicit written competitive bids

6-21     on uniform written specifications from at least three bidders.

6-22           (f)  For [construction] contracts of less than $15,000, the

6-23     board is not required to advertise or seek competitive bids.

6-24           (g)  The board may not subdivide work to avoid the

6-25     advertising requirements specified in this section. Repair of

6-26     district facilities by the district's operator is not subject to

6-27     competitive bidding unless the costs of a single repair exceed the

6-28     advertising requirements specified in this section.

6-29           (h)  The board may not accept bids that include substituted

6-30     items unless the substituted items were included in the original

 7-1     bid proposal and all bidders had the opportunity to bid on the

 7-2     substituted items or unless notice is given to all bidders at a

 7-3     mandatory pre-bid conference.

 7-4           (i)  Change orders to contracts may be issued only as a

 7-5     result of unanticipated conditions encountered during construction

 7-6     or changes in regulatory criteria or to facilitate project

 7-7     coordination with other political entities.

 7-8           (j)  The provisions of this subchapter do not apply to

 7-9     contracts for personal or professional services or for a utility

7-10     service operator or to contracts made by a district engaged in the

7-11     distribution and sale of electric energy to the public.

7-12           (k)  The provisions of this subchapter do not apply to high

7-13     technology procurements.  The provisions of Sections 252.021(a) and

7-14     252.042, Local Government Code, shall apply to high technology

7-15     procurements.

7-16           (l)  The provisions of this subchapter do not apply to

7-17     equipment, materials and machinery purchased at an auction open to

7-18     the public.

7-19           SECTION 11.  Section 49.301(b), Water Code, is amended to

7-20     read as follows:

7-21           (b)  If the district has bonds, notes, or other obligations

7-22     outstanding or bonds payable in whole or in part from taxes that

7-23     have been voted but are unissued, the board shall [may] require the

7-24     petitioner or petitioners to assume their share of the outstanding

7-25     bonds, notes, or other obligations and the voted but unissued tax

7-26     bonds of the district and authorize the board to levy a tax on

7-27     their property in each year while any of the bonds, notes, or other

7-28     obligations payable in whole or in part from taxation are

7-29     outstanding to pay their share of the indebtedness.

7-30           SECTION 12.  Section 49.301, Water Code is amended by adding

 8-1     Subsection (g) to read as follows:

 8-2           (g)  The order adding the proposed territory to the district

 8-3     need not include all of the land described in the petition if at

 8-4     the hearing a modification or change is found necessary or

 8-5     desirable by the board.

 8-6           SECTION 13.  Section 49.302(f), Water Code, is amended to

 8-7     read as follows:

 8-8           (f)  A copy of the order annexing land to the district,

 8-9     [signed by a majority of the members of the board] and attested by

8-10     the secretary of the board, shall be filed and recorded in the deed

8-11     records of the county or counties in which the district is located

8-12     if the land is finally annexed to the district.

8-13           SECTION 14.  Section 49.455(b)(5), Water Code is amended to

8-14     read as follows:

8-15           (b)(5)  the aggregate initial principal amount of all bonds

8-16     of the district payable in whole or in part from taxes (excluding

8-17     refunding bonds and any bonds or portion of bonds payable solely

8-18     from revenues received or expected to be received pursuant to a

8-19     contract with a governmental entity) that have been previously

8-20     issued [and remain outstanding];

8-21           SECTION 15.  Subchapter F, Chapter 49, Water Code, is amended

8-22     by adding Section 49.186 to read as follows:

8-23           Sec. 49.186.  OBLIGATIONS, LEGAL INVESTMENT; SECURITY FOR

8-24     FUNDS.  All bonds, notes, and other obligations issued by a

8-25     district shall be legal and authorized investments for all banks,

8-26     trust companies, building and loan associations, savings and loan

8-27     associations, insurance companies of all kinds and types,

8-28     fiduciaries, and trustees, and for all interest and sinking funds

8-29     and other public funds of the State of Texas, and all agencies,

8-30     subdivisions, and instrumentalities of the state including all

 9-1     counties, cities, towns, villages, school districts, and all other

 9-2     kinds and types of districts, public agencies, and bodies politic.

 9-3     A district's bonds, notes, and other obligations shall be eligible

 9-4     and lawful security for all deposits of public funds of the State

 9-5     of Texas, and all agencies, subdivisions, and instrumentalities of

 9-6     the state including all counties, cities, towns, villages, school

 9-7     districts, and all other kinds and types of districts, public

 9-8     agencies, and bodies politic, to the extent of the market value of

 9-9     the bonds, notes, and other obligations when accompanied by any

9-10     unmatured interest coupons attached to them.

9-11           SECTION 16.  REPEALER.  The following provisions of the Water

9-12     Code ares repealed:

9-13           Sections 51.409, 53.071, 54.511, and 54.515.

9-14           SECTION 17.  Section 54.102, Water Code, is amended to read

9-15     as follows:

9-16           Sec. 54.102.  QUALIFICATIONS FOR DIRECTORS.  To be qualified

9-17     to serve as a director, a person shall be at least 18 [21] years

9-18     old, a resident citizen of the State of Texas, and either own land

9-19     subject to taxation in the district or be a qualified voter within

9-20     the district.

9-21           SECTION 18.  Section 54.802(b), Water Code, is amended to

9-22     read as follows:

9-23           (b)  The board shall adopt a proposed plan for improvements

9-24     in the defined area or to serve the designated property in the

9-25     manner provided by Section[s] 49.106 [54.506-54.507] of this code.

9-26           SECTION 19.  Section 54.806(a), Water Code, is amended to

9-27     read as follows:

9-28           (a)  Before the adopted plans may become effective, they must

9-29     be approved by the voters in the defined area or within the

9-30     boundaries of the designated property.  The election shall be

 10-1    conducted as provided by Chapter 49, Section 49.106 of this Code

 10-2    [this chapter] for an election to authorize the issuance of bonds.

 10-3          SECTION 20.  Section 49.196, Water Code, is amended by adding

 10-4    Subsection (c) to read as follows:

 10-5          (c)  No conservation and reclamation district or entity

 10-6    organized under Article III, Section 52 or Article XVI, Section 59

 10-7    of the Texas Constitution shall be subject to the requirements of

 10-8    Section 140.006, Local Government Code.

 10-9          SECTION 21.  Section 42.042(e), Local Government Code, is

10-10    amended to read as follows:

10-11          (e)  If the consent to initiate proceedings to create the

10-12    political subdivision is obtained, [the proceedings must be

10-13    initiated within six months after the date of the consent and must

10-14    be finally completed within 18 months after the date of the

10-15    consent.  Failure to comply with either time requirement terminates

10-16    the consent.] such consent will be valid until withdrawn by the

10-17    governing body.

10-18          SECTION 22.  Subchapter B, Chapter 41, Election Code, is

10-19    amended by adding Section 41.033 to read as follows:

10-20          Sec. 41.033.  EARLY CLOSING OF POLLS FOR ELECTIONS INVOLVING

10-21    FEWER THAN FIFTY QUALIFIED VOTERS.  In an election involving fewer

10-22    than fifty qualified voters, notwithstanding any provision of law

10-23    to the contrary, the presiding judges present at the polling place

10-24    may determine to close the polls at any time that the number of

10-25    ballots cast equals the number of qualified voters eligible to vote

10-26    in the election.

10-27          SECTION 23.  Section 6.003 (b)(1), Civil Practice Remedies

10-28    Code, is amended to read as follows:

10-29          (b)(1)  a water improvement, a water control and improvement

10-30    district, a conservation and reclamation district, a water control

 11-1    and preservation district organized under state law, or any entity

 11-2    organized under Article III, Section 52 or Article XVI, Section 59

 11-3    of the Texas Constitution.

 11-4          SECTION 24.  Section 16.061 (a), Civil Practice Remedies

 11-5    Code, is amended to read as follows:

 11-6          (a)  a right of action of this state or any political

 11-7    subdivision thereof, including, but not limited to, a county, an

 11-8    incorporated city or town, a navigation district, a municipal

 11-9    utility district, a conservation and reclamation district, a port

11-10    authority, an entity acting under Chapter 341, Acts of the 57th

11-11    Legislature, Regular Session, 1961. (Article 1187f, Vernon's Texas

11-12    Civil Statutes), a school district, or any entity organized under

11-13    Article III, Section 52 or Article XVI, Section 59 of the Texas

11-14    Constitution is not barred by any of the following sections:

11-15    16.001-16.004, 16.006, 16.007, 16.021-16.028, 16.030-16.032,

11-16    16.035-16.037, 16.051, 16.062, 16.063, 16.065-16.067, 16.070,

11-17    16.071, 31.006, or 71.021.

11-18          SECTION 25.  Section 26.012(8), Property Tax Code, is amended

11-19    to read as follows:

11-20                (8)  "Debt Service" means the total amount expended or

11-21    to be expended by a taxing unit from property tax revenues to pay

11-22    principal of and interest on debts, other payments required by

11-23    contract to secure the debts or payments required on debts

11-24    anticipated to be incurred in the following calendar year.

11-25          SECTION 26.  Section 26.04(e)(3)(A), Property Tax Code, is

11-26    amended to read as follows:

11-27                      (A)  the amount of principal and interest that

11-28    will be paid to service the unit's debts in the next year from

11-29    property tax revenue, including payments of lawfully incurred

11-30    contractual obligations providing security for the payment of the

 12-1    principal of and interest on bonds, payments required on debts

 12-2    anticipated to be incurred in the following calendar year and other

 12-3    evidences of indebtedness issued on behalf of the unit by another

 12-4    political subdivisions.

 12-5          SECTION 27.  Section 191.0525(d), Natural Resources Code, is

 12-6    amended to read as follows:

 12-7          (d)  A project for a county, [or] municipality, or other

 12-8    political subdivision requires advance project review only if the

 12-9    project affects a cumulative area larger than five acres or

12-10    disturbs a cumulative area of more than 5,000 cubic yards,

12-11    whichever measure is triggered first, or if the project is inside a

12-12    designated historic district or recorded archeological site.

12-13          SECTION 28.  EMERGENCY.  The importance of this legislation

12-14    and the crowded condition of the calendars in both houses create an

12-15    emergency and an imperative public necessity that the

12-16    constitutional rule requiring bills to be read on three several

12-17    days in each house be suspended, and this rule is hereby suspended,

12-18    and that this Act take effect and be in force from and after its

12-19    passage, and it is so enacted.