1-1 By: Serna, Chavez (Senate Sponsor - Shapleigh) H.B. No. 2300 1-2 (In the Senate - Received from the House May 8, 1997; 1-3 May 9, 1997, read first time and referred to Committee on Natural 1-4 Resources; May 15, 1997, reported favorably by the following vote: 1-5 Yeas 11, Nays 0; May 15, 1997, sent to printer.) 1-6 A BILL TO BE ENTITLED 1-7 AN ACT 1-8 relating to the creation, administration, powers, duties, 1-9 operation, and financing of the Paseo del Este Municipal Utility 1-10 District and to the authorization of bonds and the levy of taxes; 1-11 providing civil penalties. 1-12 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-13 ARTICLE 1. GENERAL PROVISIONS 1-14 SECTION 1.01. CREATION. (a) A conservation and reclamation 1-15 district, to be known as Paseo del Este Municipal Utility District, 1-16 is created. The district is a governmental agency and a body 1-17 politic and corporate. 1-18 (b) The district is created under and is essential to 1-19 accomplish the purposes of Section 59, Article XVI, Texas 1-20 Constitution. 1-21 (c) The district has the powers of a municipal utility 1-22 district as provided by Chapter 54, Water Code, and is governed by 1-23 Chapters 49 and 54, Water Code, unless otherwise provided by this 1-24 Act. 1-25 SECTION 1.02. DEFINITIONS. In this Act: 1-26 (1) "District" means the Paseo del Este Municipal 1-27 Utility District. 1-28 (2) "Board" means the board of directors of the Paseo 1-29 del Este Municipal Utility District or a district resulting from a 1-30 division under Article 8 of this Act. 1-31 SECTION 1.03. BOUNDARIES. (a) Except as provided by 1-32 Subsection (c) of this section, the district includes the territory 1-33 contained within the following area: Section 315 1/2, C. D. 1-34 Stewart Survey, El Paso County, Texas; Section 318, C. D. Stewart 1-35 Survey, El Paso County, Texas; Section 319, C. D. Stewart Survey, 1-36 El Paso County, Texas; the south one-half of Section 18, Texas and 1-37 Pacific Railroad Company Survey, Block 79, Township 3, El Paso 1-38 County, Texas; the northeast one-fourth out of Section 18, Texas 1-39 and Pacific Railroad Company Survey, Block 79, Township 3, El Paso 1-40 County, Texas, SAVE AND EXCEPT 39.37 acres described in a deed of 1-41 record at Volume 2039, Page 1312, Real Property Records of El Paso 1-42 County, Texas; the southwest one-fourth of Section 20, Texas and 1-43 Pacific Railroad Company Survey, Block 79, Township 3, El Paso 1-44 County, Texas; Section 22, Texas and Pacific Railroad Company 1-45 Survey, Block 79, Township 3, El Paso County, Texas, SAVE AND 1-46 EXCEPT: (1) 7.889 acres described in deed from Texas Pacific Land 1-47 Trust to Socorro Independent School District, recorded in Volume 1-48 1302, Page 769, Real Property Records of El Paso County, Texas, (2) 1-49 Tracts 2 and 3, as described in deed from the State of Texas to 1-50 375/10 Texas Land L.P., recorded in Volume 2595, Page 1504, Real 1-51 Property Records of El Paso County, Texas, (3) Tracts 2 and 3, as 1-52 described in deed from the State of Texas to MBJR Trust and Barry 1-53 Lang, recorded in Volume 2595, Page 1517, Real Property Records of 1-54 El Paso County, Texas, and (4) the northwest one-fourth of Section 1-55 22, Texas and Pacific Railroad Company Survey, Block 79, Township 1-56 3, El Paso County, Texas. 1-57 (b) A mistake in the patents or field notes or in copying 1-58 the patents or field notes in the legislative process does not 1-59 affect the organization, existence, or validity of the district, 1-60 the right of the district to issue bonds or refunding bonds or to 1-61 pay the principal of or interest on issued bonds, the right of the 1-62 district to levy and collect taxes, or the legality or operation 1-63 of the district or its governing board. 1-64 (c) The district does not include territory described by 2-1 Subsection (a) of this section that is subject to the outstanding 2-2 indebtedness secured by taxes or net revenues of a special utility 2-3 district created under Section 59, Article XVI, Texas Constitution, 2-4 on the effective date of this Act. If territory described by 2-5 Subsection (a) of this section is subject to a tax or net revenue 2-6 pledged by a special utility district created under Section 59, 2-7 Article XVI, Texas Constitution, the territory that is subject to 2-8 the tax or net revenue is excluded from the territory described by 2-9 Subsection (a) of this section. The exclusion of territory under 2-10 this subsection does not affect the validity of this Act. 2-11 ARTICLE 2. ADMINISTRATIVE PROVISIONS 2-12 SECTION 2.01. BOARD. The district shall be governed by and 2-13 all powers of the district shall be exercised by a board of five 2-14 directors. 2-15 SECTION 2.02. DIRECTOR ELIGIBILITY. Except for initial 2-16 directors, a person must meet the requirements of Section 54.102, 2-17 Water Code, to be eligible to serve as a director. A person must 2-18 be at least 18 years of age and a resident of El Paso County or 2-19 Travis County to be eligible to serve as an initial director. 2-20 Notwithstanding Section 49.052, Water Code, employment with a state 2-21 agency, other than the General Land Office or the School Land 2-22 Board, does not disqualify a person from serving as a director. An 2-23 employee of the district may not serve as a director. 2-24 SECTION 2.03. TERMS OF OFFICE AND APPOINTMENT OF DIRECTORS. 2-25 (a) Except for initial directors, directors serve staggered 2-26 four-year terms, with the terms of two or three directors expiring 2-27 September 1 of each even-numbered year. 2-28 (b) The School Land Board shall appoint five initial 2-29 directors as soon as practicable after the effective date of this 2-30 Act. The School Land Board shall appoint two initial directors to 2-31 serve terms expiring September 1, 2000, and three initial directors 2-32 to serve terms expiring September 1, 2002. If a vacancy occurs, 2-33 the School Land Board shall appoint a successor to fill the vacancy 2-34 and to serve the remainder of the unexpired term. Initial 2-35 directors shall serve until permanent directors are elected under 2-36 Section 2.04 of this Act and qualify for office. 2-37 SECTION 2.04. ELECTION OF PERMANENT DIRECTORS. (a) A 2-38 director serves until the director's successor has qualified. An 2-39 election shall be held for the election of the appropriate number 2-40 of permanent directors on the first Saturday in May of each 2-41 even-numbered year. 2-42 (b) The board shall publish notice of an election under this 2-43 section once a week for two consecutive weeks in a newspaper of 2-44 general circulation in the district beginning not later than 14 2-45 days before the date of the election. 2-46 SECTION 2.05. QUALIFICATION OF DIRECTOR. A director shall 2-47 take the constitutional oath of office and, except for initial 2-48 directors, give bond for the faithful performance of the director's 2-49 duties as required by Section 49.055, Water Code. The cost of a 2-50 bond under this section shall be paid by the district. 2-51 SECTION 2.06. MEETINGS AND BOARD ACTIONS. (a) The board 2-52 may establish regular meetings to conduct the business of the 2-53 district and may hold special meetings if necessary as determined 2-54 by the board. The board shall hold a meeting under this section 2-55 within the district unless the board, by a majority vote at a 2-56 public meeting, decides to hold the meeting outside of the 2-57 district. 2-58 (b) A majority of the directors shall constitute a quorum of 2-59 the board. A vote of a majority of the quorum present is necessary 2-60 to take board action. The board may adopt bylaws to govern the 2-61 affairs of the district and may adopt a seal for the district. The 2-62 board may provide in the bylaws that, except for initial directors, 2-63 a director shall receive compensation of $20 for attending a 2-64 meeting of the board. A director may not be paid more than $40 for 2-65 meetings held in a calendar month. 2-66 SECTION 2.07. ORGANIZATION OF BOARD OF DIRECTORS. The board 2-67 shall elect a president and vice president from members of the 2-68 board. The board may elect other officers as are deemed necessary 2-69 by the board. The president is the chief executive officer of the 3-1 district and the presiding officer of the board and has the same 3-2 right to vote as other members of the board. The vice president 3-3 shall perform the duties and exercise the powers of the president 3-4 if the president is absent, fails to act, or refuses to act. The 3-5 board shall appoint a secretary and treasurer. The secretary and 3-6 treasurer may be, but are not required to be, members of the board. 3-7 One person may serve as both secretary and treasurer. The 3-8 treasurer shall give bond in an amount required by the board. The 3-9 condition of the bond shall be that the treasurer will faithfully 3-10 account for all money that comes into the custody of the treasurer. 3-11 The board shall require a bond under this section of at least 3-12 $100,000 if the district has authorized the issuance of bonds. If 3-13 the district has not authorized the issuance of bonds, the board 3-14 shall require a bond of at least $5,000. 3-15 SECTION 2.08. CONFLICT OF INTEREST: CONTRACT. A director 3-16 who is financially interested in a contract that is proposed to be 3-17 executed by the board for the purchase of property or services or 3-18 for the construction of facilities shall disclose the director's 3-19 interest to the board and may not vote on the acceptance of the 3-20 contract. 3-21 SECTION 2.09. DISTRICT EMPLOYEES. The board is authorized 3-22 to employ a general manager and consulting engineers, financial 3-23 consultants, attorneys, and auditors. The general manager shall be 3-24 responsible for: 3-25 (1) administering the board's directives; 3-26 (2) maintaining district records, including minutes of 3-27 board meetings; 3-28 (3) coordinating with federal, state, and local 3-29 agencies; 3-30 (4) developing plans and programs for the board's 3-31 approval; 3-32 (5) hiring, supervising, training, and discharging the 3-33 district's employees; 3-34 (6) obtaining technical, scientific, legal, fiscal, or 3-35 other professional services for the district; and 3-36 (7) performing other duties as assigned by the board. 3-37 SECTION 2.10. EMPLOYEE BONDS. (a) The general manager and 3-38 each employee of the district who is charged with the collection, 3-39 custody, or payment of district money shall execute a fidelity bond 3-40 in an amount determined by the board and in a form and with a 3-41 surety approved by the board. 3-42 (b) The district shall pay the premium on a bond under this 3-43 section. 3-44 SECTION 2.11. PRINCIPAL OFFICE. (a) If the district has 3-45 not issued bonds, the district may maintain its principal office in 3-46 El Paso County or Travis County. If the district maintains its 3-47 principal office in Travis County, the district shall maintain 3-48 duplicates of district records in El Paso County and make the 3-49 duplicate records available for inspection during regular business 3-50 hours. 3-51 (b) If the district has issued bonds, the district shall 3-52 maintain its principal office in El Paso County. 3-53 SECTION 2.12. RECORDS. (a) The district shall keep at its 3-54 principal office: 3-55 (1) a complete and accurate account of the district's 3-56 business transactions in accordance with generally accepted 3-57 accounting methods; 3-58 (2) a complete and accurate record of the minutes of 3-59 board meetings; and 3-60 (3) contracts, documents, and other records of the 3-61 district. 3-62 (b) The district shall permit reasonable public inspection 3-63 of the district's records during regular business hours. 3-64 SECTION 2.13. SUIT. The district may sue and be sued in the 3-65 district's corporate name. 3-66 ARTICLE 3. AUTHORITY OF DISTRICT 3-67 SECTION 3.01. POWERS AND DUTIES. (a) The district shall: 3-68 (1) administer and enforce the provisions of this Act; 3-69 (2) use the facilities and powers of the district to 4-1 accomplish the purposes of this Act; 4-2 (3) coordinate water, wastewater, and drainage 4-3 services within the district; and 4-4 (4) control and abate water pollution within the 4-5 district. 4-6 (b) When designing utility infrastructure and related 4-7 systems, the district shall submit for review to a municipality 4-8 with a population in excess of 300,000, according to the most 4-9 recent federal census, and with a municipal boundary that is 4-10 contiguous to the district the district's design plans and 4-11 specifications for the utility infrastructure and related systems. 4-12 The district shall pay to the municipality a fee for conducting the 4-13 review if the municipality has established a fee that has general 4-14 application for comparable reviews. The municipality shall 4-15 complete the review of the design plans and specifications not 4-16 later than the 60th day after the date on which the plans and 4-17 specifications are delivered to the municipality. In constructing 4-18 the utility infrastructure, the district shall meet or exceed the 4-19 construction standards for materials and installation 4-20 specifications of a municipality with a population in excess of 4-21 300,000, according to the most recent federal census, and with a 4-22 municipal boundary that is contiguous to the district. 4-23 (c) Subject to the authority of the Texas Natural Resource 4-24 Conservation Commission, the district has the authority to control 4-25 and abate water pollution within the district. The authority of 4-26 the district under this subsection does not reduce or eliminate the 4-27 authority of a municipality to control and abate water pollution 4-28 within the district under state or federal law. 4-29 (d) Except as provided by this Act, the district has the 4-30 powers, rights, and privileges necessary and convenient for 4-31 accomplishing the purposes of this Act as provided by general law 4-32 relating to a municipal utility district or water control and 4-33 improvement district created under Section 59, Article XVI, Texas 4-34 Constitution. 4-35 (e) The powers granted to the district by this Act are 4-36 cumulative of powers granted by other law. 4-37 SECTION 3.02. DISTRICT RULES. (a) The district may adopt 4-38 and enforce rules reasonably required to implement this Act, 4-39 including rules governing procedure and practice before the board. 4-40 (b) The district shall keep a record of the district's rules 4-41 and provide a copy of the rules to a person on written request. 4-42 SECTION 3.03. INSPECTIONS AND INVESTIGATIONS. In addition 4-43 to the powers provided by Section 49.221, Water Code, the district 4-44 may enter public or private property located within the district 4-45 for purposes of inspecting and investigating conditions of the 4-46 property relating to the district's authorized purposes. The 4-47 district shall conduct an inspection or investigation in accordance 4-48 with provisions and restrictions applicable to the Texas Natural 4-49 Resource Conservation Commission. 4-50 SECTION 3.04. HEARINGS AND ORDERS. (a) The board may: 4-51 (1) hold hearings, receive evidence from a party in 4-52 interest who appears before the board, compel the attendance of a 4-53 witness, and make findings of fact and determinations relating to 4-54 the administration of this Act or an order or rule of the board; 4-55 and 4-56 (2) delegate the authority to take testimony and 4-57 administer oaths in a hearing held by the district to a member of 4-58 the board or an employee of the district. 4-59 (b) An order of the board must: 4-60 (1) be in the name of the district; and 4-61 (2) be attested to by the appropriate members of the 4-62 board under the district's rules. 4-63 SECTION 3.05. CIVIL PENALTY; INJUNCTION. (a) A person who 4-64 violates a rule, permit, or order of the district is subject to a 4-65 civil penalty of not less than $50 and not more than $1,000 for 4-66 each violation or each day of a continuing violation. 4-67 (b) The district may sue to enjoin a threatened or present 4-68 activity or to recover the penalty in a district court in the 4-69 county in which the violation occurred. A penalty recovered under 5-1 this subsection shall be paid to the district. 5-2 SECTION 3.06. PERMITS; CONTRACTS; COOPERATIVE AGREEMENTS. 5-3 (a) The district is authorized to obtain water appropriation 5-4 permits, construction permits, and other water and wastewater 5-5 discharge permits from the Texas Natural Resource Conservation 5-6 Commission or from permit owners. The district is authorized to 5-7 acquire water or a water supply from a person, firm, corporation, 5-8 municipal corporation, or public agency, the state, the United 5-9 States, or any agency of the state or the United States. The board 5-10 may contract with one or more substantial users of water to acquire 5-11 a water supply under an agreed allocation of storage space between 5-12 the district and the user or the district may contract for the 5-13 district's water supply independently. The district is authorized 5-14 to collect, transport, process, dispose of, and control all 5-15 domestic, industrial, and communal wastes, whether in fluid, solid, 5-16 or composite state. The district is authorized to contract with a 5-17 person, firm, corporation, municipal corporation, or public agency, 5-18 the state, the United States, or any agency of the state or the 5-19 United States for the collection, transportation, processing, 5-20 disposition, and control of all domestic, industrial, and communal 5-21 wastes. The authority of the district under this subsection 5-22 includes the authority to enter into contracts involving 5-23 coordinated infrastructure or regional utility plans. The district 5-24 may not unilaterally require a person, firm, corporation, municipal 5-25 corporation, public agency, or other entity to fund or construct 5-26 utility infrastructure for purposes of extending utilities to the 5-27 district. 5-28 (b) The district may enter into a contract with the state, a 5-29 municipality, an entity created under Section 59, Article XVI, 5-30 Texas Constitution, or another entity to supply water or to provide 5-31 services relating to domestic, industrial, or commercial waste. 5-32 The district is authorized to contract with a person, a 5-33 municipality, or an entity created under Section 59, Article XVI, 5-34 Texas Constitution, to rent, lease, or operate water production, 5-35 water supply, water filtration or purification, and water supply 5-36 facilities and facilities to provide services relating to the 5-37 wastes of the person, municipality, or entity for a consideration 5-38 as agreed to by the district and the person, municipality, or 5-39 entity. A contract under this subsection may provide that the 5-40 contract continues in effect until specified bonds or notes and 5-41 refunding bonds issued in lieu of the bonds or notes are paid. A 5-42 municipality or entity described by this subsection is authorized 5-43 to enter into a contract with the district to fix, charge, and 5-44 collect fees, rates, charges, rentals, or other amounts for a 5-45 service or facility provided under a contract with the district and 5-46 may pledge amounts that are sufficient to make the payments 5-47 required under the contract. 5-48 (c) For purposes of land use planning, the district shall 5-49 encourage owners and developers of land located within the district 5-50 to use and develop the land and buildings in compliance with 5-51 building, housing, and fire codes, subdivision and zoning 5-52 regulations, thoroughfare, water conservation, and land use plans, 5-53 and other land development and safety regulations of an adjacent 5-54 municipality with a population in excess of 300,000, according to 5-55 the most recent federal census. 5-56 SECTION 3.07. FACILITIES. (a) In addition to the authority 5-57 provided by Sections 49.218 and 54.201, Water Code, the district 5-58 may purchase, construct, acquire, own, lease, operate, maintain, 5-59 repair, improve, and extend, at any location within or outside of 5-60 the district, land, or an interest in land, a work, an improvement, 5-61 a facility, a plant, equipment, or an appliance that is incident, 5-62 helpful, or necessary to provide for: 5-63 (1) the control, storage, preservation, transmission, 5-64 treatment, and distribution and use of storm water and floodwater, 5-65 the water of rivers and streams, and underground water for 5-66 municipal, domestic, industrial, and other beneficial uses; and 5-67 (2) the collection, transportation, processing, 5-68 disposition, and control of domestic, industrial, or commercial 5-69 wastes. 6-1 (b) The district may: 6-2 (1) enter into a contract with a person, firm, 6-3 corporation, municipality, entity created under Section 59, Article 6-4 XVI, Texas Constitution, municipal corporation, public agency, or 6-5 other political subdivision of the state; and 6-6 (2) perform any other act consistent with the powers 6-7 of the district and necessary to fulfill the purposes of this Act. 6-8 SECTION 3.08. ACQUISITION AND DISPOSITION OF PROPERTY. The 6-9 district may use a public roadway, street, alley, or easement in El 6-10 Paso County to accomplish the purposes of the district. The 6-11 district is not required to obtain a franchise or other 6-12 governmental agreement to use a roadway, street, alley, or easement 6-13 that is owned by a municipality that is adjacent to the district 6-14 with a population in excess of 300,000, according to the most 6-15 recent federal census, if, before using the roadway, street, alley, 6-16 or easement, the district obtains written consent of the 6-17 municipality to the particular use. The district shall pay a fee 6-18 to a municipality for the use of the roadway, street, alley, or 6-19 easement that equals the lesser of the district's pro rata share, 6-20 based on actual area encumbered, of the fair market value or the 6-21 initial purchase price for the roadway, street, alley, or easement. 6-22 SECTION 3.09. RELOCATION OF FACILITIES. The district may 6-23 relocate, raise, reroute, or change the grade of, or alter the 6-24 construction of, a highway, railroad, electric transmission line, 6-25 pipeline, canal, or drainage ditch, if deemed necessary by the 6-26 board. The district shall pay for any relocation, raising, 6-27 rerouting, changing, or altering under this section, unless 6-28 otherwise agreed in writing by the interested parties. The cost of 6-29 replacement is limited to the comparable replacement of any 6-30 replaced facility, less the replaced facility's net salvage value. 6-31 ARTICLE 4. GENERAL FISCAL PROVISIONS 6-32 SECTION 4.01. DISBURSEMENT OF MONEY. The district may 6-33 disburse money only by check, draft, order, or other instrument 6-34 signed by a person authorized in the bylaws of the district or by 6-35 board resolution. 6-36 SECTION 4.02. FEES AND CHARGES. The district may establish 6-37 fees and charges not to exceed the amounts necessary to enable the 6-38 district to fulfill the obligations of the district as provided by 6-39 this Act. 6-40 SECTION 4.03. LOANS AND GRANTS. (a) The district may apply 6-41 for and receive a loan or grant from the state or the United 6-42 States, or any agency of the state or the United States, or from a 6-43 private entity, for purposes of exercising the powers of the 6-44 district. 6-45 (b) The district may not enter into an agreement under this 6-46 section that violates state or federal law. 6-47 SECTION 4.04. FISCAL YEAR. The board shall establish a 6-48 fiscal year for the district. 6-49 SECTION 4.05. DEPOSITORY BANKS. (a) The board, as provided 6-50 by this section, shall designate at least one bank to serve as a 6-51 depository for the funds of the district. Subject to Section 6-52 49.156, Water Code, the funds of the district shall be deposited in 6-53 a depository bank designated under this subsection. 6-54 (b) Before designating a depository bank, the board shall 6-55 publish notice at least once in a newspaper of general circulation 6-56 in the district to solicit applications from banks interested in 6-57 serving as a depository for the district. The notice shall include 6-58 the time and place of the board meeting at which the board proposes 6-59 to designate a depository bank. The board shall prescribe the term 6-60 of service of a depository bank designated under Subsection (a) of 6-61 this section. 6-62 (c) The board shall review an application received under 6-63 Subsection (b) of this section, including examining the management 6-64 and condition of each bank submitting an application. In reviewing 6-65 an application under this subsection, the board may consider: 6-66 (1) the terms and conditions proposed by a bank for 6-67 handling the district's money; 6-68 (2) the management of the bank; and 6-69 (3) the ability of the bank to handle the district's 7-1 money. 7-2 (d) A bank is not disqualified from being a depository under 7-3 this section because an officer or a director of the bank is a 7-4 member of the board. 7-5 (e) An officer or a director of a bank is not disqualified 7-6 from being a member of the board. 7-7 (f) If the board does not receive an application under this 7-8 section, the board may designate a bank as depository on terms that 7-9 the board finds proper. 7-10 ARTICLE 5. BOND AND TAX PROVISIONS 7-11 SECTION 5.01. TAXES; REVENUE BONDS. (a) For purposes of 7-12 exercising the authority of the district as provided by this Act, 7-13 the district may issue bonds or other obligations that are: 7-14 (1) secured by ad valorem taxes; 7-15 (2) secured by a pledge of all or part of the revenues 7-16 accruing to the district, including revenues received from the sale 7-17 of water or other products, the rendition of service, tolls, 7-18 charges, and any other source of revenue, other than ad valorem 7-19 taxes; and 7-20 (3) secured by both a pledge of all or part of the 7-21 revenues described by Subdivision (2) of this subsection and ad 7-22 valorem taxes. 7-23 (b) An obligation issued by the district shall be authorized 7-24 by resolution of the board, issued in the name of the district, 7-25 signed by the president or vice president, attested to by the 7-26 secretary, and bear the seal of the district. The signatures of 7-27 the president or vice president and the secretary may be printed or 7-28 lithographed on the obligation. The seal of the district may be 7-29 impressed, printed, or lithographed on the obligation. An 7-30 obligation issued by the district: 7-31 (1) shall be in a form prescribed by the board; 7-32 (2) may be in any denomination; 7-33 (3) shall mature serially or otherwise not later than 7-34 50 years from the date of issuance; 7-35 (4) may bear any interest rate; 7-36 (5) may be sold at a price and under terms determined 7-37 by the board to be the most advantageous available; 7-38 (6) may, in the discretion of the board, be made 7-39 callable before maturity at times and prices as provided in the 7-40 obligation; 7-41 (7) may be made registrable as to principal or 7-42 principal and interest; and 7-43 (8) may be secured by an indenture of trust with a 7-44 corporate trustee. 7-45 (c) An obligation under this section may be issued in more 7-46 than one series as required to carry out the purposes of this Act. 7-47 A pledge of revenue may reserve the right to issue additional 7-48 obligations under conditions specified on the pledge. An 7-49 additional obligation is on a parity with or subordinate to the 7-50 original obligation. 7-51 (d) The district is an "issuer" as defined by Section 1, 7-52 Chapter 656, Acts of the 68th Legislature, Regular Session, 1983 7-53 (Article 717q, Vernon's Texas Civil Statutes). 7-54 (e) A board resolution authorizing an obligation or a trust 7-55 indenture under this section may include additional terms to 7-56 provide for a corporate trustee or receiver to take possession of 7-57 facilities of the district in the event of default by the district 7-58 relating to the obligation or trust indenture. The additional 7-59 terms, if any, constitute a contract between the district and the 7-60 owner of the obligation. 7-61 (f) The district may not issue bonds that are secured by or 7-62 otherwise encumber permanent school fund land located within the 7-63 district. 7-64 SECTION 5.02. BOND ANTICIPATION NOTES. The district may 7-65 issue bond anticipation notes for purposes of exercising the powers 7-66 of the district. Bond anticipation notes may be secured by a 7-67 pledge of all or part of the revenues of the district. The 7-68 district may authorize the issuance of bonds to pay the principal 7-69 of and interest on bond anticipation notes issued under this 8-1 section. Bond anticipation notes shall be secured by a pledge of 8-2 all or part of the revenues of the district and may be issued on a 8-3 parity with or subordinate to outstanding bonds of the issuer. If 8-4 the resolution or trust agreement authorizing the issuance of bond 8-5 anticipation notes contains a covenant that the notes are payable 8-6 from the proceeds of subsequently issued bonds, the district is not 8-7 required to demonstrate that the revenues that may be pledged to 8-8 the notes are sufficient to pay the principal of and interest on 8-9 the notes for purposes of receiving approval of the attorney 8-10 general or registration by the comptroller. 8-11 SECTION 5.03. REFUNDING BONDS. (a) The district may issue 8-12 refunding bonds to refund outstanding bonds and interest as 8-13 authorized by this Act. 8-14 (b) Refunding bonds may: 8-15 (1) be issued to refund one or more series of 8-16 outstanding bonds; 8-17 (2) combine the pledges for the outstanding bonds for 8-18 the security of the refunding bonds; or 8-19 (3) be secured by additional revenues. 8-20 (c) Refunding bonds may be issued without holding an 8-21 election to authorize the issuance of the bonds. The provisions of 8-22 this Act relating to the issuance of other bonds by the district, 8-23 security for the bonds, approval by the attorney general, and 8-24 remedies of the holders of the bonds apply to refunding bonds. 8-25 (d) Refunding bonds shall be registered by the comptroller 8-26 on surrender and cancellation of the bonds to be refunded or, if 8-27 the resolution authorizing the issuance of refunding bonds provides 8-28 that the bonds shall be sold and the proceeds deposited in the bank 8-29 where the bonds to be refunded are payable, the refunding bonds may 8-30 be issued in an amount sufficient to pay the principal and interest 8-31 of the bonds to be refunded to their option or maturity date. The 8-32 comptroller shall register the refunding bonds without concurrent 8-33 surrender and cancellation of the bonds to be refunded. 8-34 SECTION 5.04. APPROVAL AND REGISTRATION OF BONDS. District 8-35 bond review and approval is governed by Subchapter F, Chapter 49, 8-36 Water Code. 8-37 SECTION 5.05. BONDS ARE AUTHORIZED INVESTMENTS. All bonds 8-38 and notes of the district are legal and authorized investments for 8-39 banks, savings banks, trust companies, savings and loan 8-40 associations, insurance companies, fiduciaries, trustees, and 8-41 guardians and for the sinking funds of municipalities, counties, 8-42 school districts, or other political corporations or subdivisions 8-43 of the state. Bonds and notes of the district are eligible to 8-44 secure the deposit of any and all public funds of the state and any 8-45 and all public funds of municipalities, counties, school districts, 8-46 or other political corporations or subdivisions of the state. 8-47 Bonds and notes of the district are lawful and sufficient security 8-48 for the deposits to the extent of their value. 8-49 SECTION 5.06. TAXATION. (a) Except for land owned by the 8-50 permanent school fund, the board may levy and collect ad valorem 8-51 taxes on land within the district for maintenance, improvements, 8-52 and administration relating to the district in amounts approved by 8-53 the qualified voters of the district in an election held for that 8-54 purpose. 8-55 (b) A maintenance tax or an administration tax shall not 8-56 exceed the maximum approved rate and an approved rate shall remain 8-57 in effect unless a different rate is approved by the qualified 8-58 voters in a subsequent election. 8-59 SECTION 5.07. PROPERTY: RENDITION; VALUATION; LEVY. 8-60 (a) Except as provided by this section, the rendition and 8-61 assessment of property for taxation, the equalization of values, 8-62 and the collection of taxes for the benefit of the district shall 8-63 be conducted in accordance with the law applicable to counties to 8-64 the extent possible. 8-65 (b) The tax assessor-collector of each county shall act as 8-66 the tax assessor-collector for the district for district property 8-67 located in the county. The tax assessor-collector in each county 8-68 shall place on the county tax rolls a column or columns as 8-69 necessary to show the taxes, including the amount of taxes, levied 9-1 by the district, based on the value of the property as approved and 9-2 equalized. The fee charged by each county tax assessor-collector 9-3 for assessing and collecting taxes is one percent of the taxes 9-4 collected and shall be paid and disbursed by the district in the 9-5 same manner as other fees of office. 9-6 (c) The mechanisms available to enforce the collection of 9-7 state and county taxes may be used by the district to enforce the 9-8 collection of taxes levied by the district. The district is 9-9 entitled to require the officers of each county to enforce and 9-10 collect the taxes due to the district in that county as provided 9-11 for the enforcement of state and county taxes. 9-12 (d) Taxes assessed and levied for the benefit of the 9-13 district shall be payable and shall become delinquent at the same 9-14 time, in the same manner, and subject to the same discount for 9-15 advance payment as taxes levied by and for the benefit of the 9-16 county in which the property is taxable. The fee for collecting 9-17 delinquent taxes through prosecution of suit is 15 percent of the 9-18 taxes collected by the suit, to be paid and disbursed by the 9-19 district in the same manner as other fees of office. 9-20 (e) At the same time that the commissioners court levies 9-21 county taxes, the board shall levy a tax on all taxable property in 9-22 the district that is subject to taxation. The board shall 9-23 immediately certify the tax rate to the tax assessor-collector of 9-24 each county that contains territory within the district. 9-25 ARTICLE 6. ADDITION OF LAND TO DISTRICT 9-26 SECTION 6.01. ANNEXATION. Notwithstanding any other law, 9-27 additional territory may be added to the district as provided by 9-28 Sections 6.02, 6.03, and 6.04 of this Act. 9-29 SECTION 6.02. PETITION. (a) An owner or owners of land, 9-30 whether or not contiguous to the territory of the district, may 9-31 file with the board a petition requesting that the land described 9-32 in the petition by metes and bounds or by lot and block number, if 9-33 there is a recorded plat of the area, be included in the district. 9-34 (b) A petition under Subsection (a) of this section shall be 9-35 signed and executed in the manner provided by law for the 9-36 conveyance of real estate. 9-37 (c) The board shall hear and consider a petition received 9-38 under Subsection (a) of this section and may add to the district 9-39 the land described in the petition if: 9-40 (1) the board determines that adding the land to the 9-41 district is advantageous to the district; and 9-42 (2) the water system and other improvements of the 9-43 district are sufficient or will be sufficient to provide service to 9-44 the land added to the district without injuring the land in the 9-45 district before the petition is granted. 9-46 SECTION 6.03. NOTICE AND HEARING. (a) A petition 9-47 requesting that the district annex a defined area shall be filed 9-48 with the secretary of the board and shall be signed by: 9-49 (1) a majority in value of the owners of land in the 9-50 defined area, as shown by the tax rolls of the county or counties 9-51 in which the defined area is located, if the number of landowners 9-52 in the defined area is 50 or less; or 9-53 (2) 50 landowners if the number of landowners in the 9-54 defined area is more than 50. 9-55 (b) The board shall issue an order setting a time and place 9-56 to hear a petition filed under Subsection (a) of this section. The 9-57 hearing shall be held not earlier than the 15th day after the date 9-58 on which the board issues the order. 9-59 (c) The secretary shall issue a notice providing the time 9-60 and place of the hearing set under Subsection (b) of this section 9-61 and describing the area proposed to be annexed. Notice of the 9-62 hearing shall be given by: 9-63 (1) posting copies of the notice in three public 9-64 places in the district and in one public place in the area proposed 9-65 to be annexed for at least seven days before the date of the 9-66 hearing; and 9-67 (2) publishing a copy of the notice in a newspaper of 9-68 general circulation in the county or counties in which the area 9-69 proposed to be annexed is located at least seven days before the 10-1 date of the hearing. 10-2 (d) If the board finds that the proposed annexation is 10-3 feasible and practicable and would benefit the district and the 10-4 area proposed to be added to the district, the board may by order 10-5 receive all or a part of the proposed area as an addition to and 10-6 part of the district. An order issued by the board under this 10-7 subsection shall describe the area added to the district and be 10-8 entered in the minutes. 10-9 SECTION 6.04. ANNEXATION ORDER. (a) A copy of the order 10-10 adding land to the district shall be signed by a majority of the 10-11 members of the board, attested to by the secretary of the board, 10-12 and filed and recorded in the deed records of the county or 10-13 counties in which the district is located. 10-14 (b) On the date that the order is recorded as required by 10-15 Subsection (a) of this section, the area described in the order is 10-16 included in the territory of the district. 10-17 ARTICLE 7. EXCLUSION OF LAND FROM DISTRICT 10-18 SECTION 7.01. PETITION. (a) Notwithstanding any other law, 10-19 the board may, if there is no outstanding board order relating to 10-20 an election for the authorization of bonds payable in whole or in 10-21 part from taxes and the district does not have outstanding 10-22 indebtedness secured by taxes or net revenues of the district, 10-23 order a hearing to be held to exclude land from the district on 10-24 petition of a landowner or on motion of the board. 10-25 (b) A petition to exclude land from the district must 10-26 specifically describe the land to be excluded by metes and bounds 10-27 or by reference to a plat recorded in the plat records of the 10-28 county or counties in which the land is located. The petition must 10-29 be signed by at least 10 percent of the owners of land in the area 10-30 to be excluded or, if the number of owners of land is more than 50, 10-31 by at least five of the owners of land. The petition must be filed 10-32 with the district before the seventh day preceding the date the 10-33 hearing is held to consider the petition. The petition must 10-34 clearly state the grounds supporting the exclusion of the land from 10-35 the district. The board may consider only the grounds stated in 10-36 the petition. 10-37 SECTION 7.02. NOTICE AND HEARING. (a) The board shall hold 10-38 a hearing on petition of a landowner to exclude land from the 10-39 district. 10-40 (b) Notice of hearing under this section shall be published 10-41 by the board once a week for two consecutive weeks in one or more 10-42 newspapers of general circulation in the district. The first 10-43 notice shall be published not earlier than the 40th day or later 10-44 than the 14th day preceding the date of the hearing. 10-45 (c) The board may not exclude land from the district unless 10-46 the board determines that: 10-47 (1) the district has no obligations that will be 10-48 impaired by the exclusion of the land; 10-49 (2) the district will incur no obligations as a result 10-50 of the exclusion; and 10-51 (3) the exclusion is in the best interests of the 10-52 district. 10-53 (d) The board, after considering all engineering data and 10-54 other evidence presented at the hearing and making the 10-55 determinations required by Subsection (c) of this section, shall 10-56 enter an order excluding the land from the district and redefining 10-57 the boundaries of the district as appropriate. If land proposed to 10-58 be excluded contains water or wastewater customers of the district, 10-59 the customers remain customers of the district. Owners of lots 10-60 within the land proposed to be excluded in which water and 10-61 wastewater facilities have been extended retain the right to 10-62 connect to the district's water and wastewater system and become 10-63 district customers. 10-64 SECTION 7.03. EFFECTIVE DATE OF ORDER EXCLUDING LAND. 10-65 (a) Except as provided by Subsection (c) of this section, an order 10-66 of the board excluding land from the district on petition signed by 10-67 the owner or owners of land that is proposed to be excluded takes 10-68 effect on the date on which the board enters the order. 10-69 (b) Except as provided by Subsection (c) of this section, an 11-1 order excluding land from the district on petition signed by less 11-2 than all the owners of land that is proposed to be excluded takes 11-3 effect: 11-4 (1) on the day immediately following the date on which 11-5 a petition under Section 7.04 of this Act must be received by the 11-6 board if the district does not receive a petition under that 11-7 section; or 11-8 (2) on the day immediately following the date on which 11-9 the election returns are canvassed if the exclusion is ratified at 11-10 an election under Section 7.04 of this Act. 11-11 (c) An order excluding land from the district under this 11-12 section may not take effect unless all taxes levied and assessed by 11-13 the district within the land that is proposed to be excluded are 11-14 paid in full. 11-15 SECTION 7.04. PETITION FOR RATIFICATION ELECTION. (a) If 11-16 the board issues an order excluding land on petition signed by less 11-17 than all the owners of land in the area proposed to be excluded, 11-18 the board shall publish a notice that describes the excluded land 11-19 and states that the exclusion will become final unless the board 11-20 receives, not later than the 25th day after the date on which the 11-21 board issues the order, a petition requesting a ratification 11-22 election. A petition under this subsection must be signed by at 11-23 least 10 percent of the qualified voters residing in the area that 11-24 is proposed to be excluded from the district. 11-25 (b) If the board receives a petition under Subsection (a) of 11-26 this section, the order excluding land from the district is not 11-27 effective unless the exclusion is approved by a majority vote of 11-28 the residents of the district at a ratification election held for 11-29 that purpose. 11-30 (c) A ratification election, including notice of the 11-31 election and the qualifications of the voters, shall be conducted 11-32 as provided by Subchapter J, Chapter 49, Water Code. 11-33 ARTICLE 8. DIVISION OF DISTRICT 11-34 SECTION 8.01. CONDITIONS OF DIVISION. (a) The board may, 11-35 if the district does not have outstanding indebtedness secured by 11-36 taxes or net revenues, divide the territory of the district into 11-37 two or more districts. The board may not divide the territory of 11-38 the district if the division results in a district with territory 11-39 of less than 100 acres. On petition of a landowner or on motion of 11-40 the board, the board may consider a proposal to divide the original 11-41 district or any district subsequently created by division. 11-42 (b) The board may not divide territory of the district if 11-43 the division results in numerous utility providers within the 11-44 original territory of the district. The board may divide territory 11-45 of the district for purposes of encouraging and promoting orderly 11-46 development within the original territory of the district and 11-47 facilitating dependable and efficient utility service at affordable 11-48 rates to customers of the district. 11-49 SECTION 8.02. PROVISIONS RELATING TO NEW DISTRICTS. 11-50 (a) Before the board may divide territory of the district or any 11-51 district resulting from a division under this article, the board 11-52 shall: 11-53 (1) determine the terms of the division, including a 11-54 plan to pay and perform the outstanding obligations of the 11-55 district; and 11-56 (2) prepare a metes and bounds description of the 11-57 proposed division. 11-58 (b) Except as provided by Section 8.03 of this Act, if the 11-59 board divides territory under this article, the board shall be 11-60 divided in an appropriate manner consistent with the division of 11-61 the district. 11-62 (c) Districts resulting from a division under this article 11-63 shall be designated in an appropriate manner. 11-64 (d) A district resulting from a division under this article 11-65 shall obtain authorization for the issuance of bonds payable wholly 11-66 or partially from ad valorem taxes by a majority vote of the 11-67 qualified voters of the district voting in an election called and 11-68 held for that purpose. 11-69 (e) A district resulting from a division under this article 12-1 shall be required to obtain authorization for a maintenance tax by 12-2 a majority vote of the qualified voters of the district voting in 12-3 an election called and held for that purpose. 12-4 SECTION 8.03. APPOINTMENT AND ELECTION OF DIRECTORS. (a) A 12-5 district resulting from a division under this article is a separate 12-6 district and shall be governed as a separate district. 12-7 (b) The board shall continue to act on behalf of the 12-8 district for 90 days after the date on which a division under this 12-9 article is approved for purposes of closing the district's affairs. 12-10 (c) The board shall appoint two initial directors for a 12-11 district resulting from a division under this article to serve 12-12 terms expiring September 1 of the first even-numbered year after 12-13 creation of the district, and three initial directors to serve 12-14 terms expiring September 1 of the second even-numbered year after 12-15 creation of the district. A member of the board may be appointed 12-16 as a director of a district resulting from a division under this 12-17 article. 12-18 (d) If a vacancy occurs on the board of directors of a 12-19 district resulting from a division under this article, the board of 12-20 directors of that district shall appoint a successor to serve for 12-21 the remainder of the unexpired term. 12-22 (e) A successor to the board of directors of a district 12-23 resulting from a division under this article shall be elected as 12-24 provided by Section 2.04 of this Act. 12-25 SECTION 8.04. PAYMENT OF DISTRICT DEBTS. A division of 12-26 territory of the district under this article may not impair the 12-27 current obligations or bond authorizations of the district. The 12-28 debts of the district may be paid by taxes, revenues, or 12-29 assessments levied on land in the district or by contributions from 12-30 each district resulting from a division under this article on terms 12-31 stated in the division proposed by the board under Section 8.02 of 12-32 this Act. 12-33 SECTION 8.05. AUTHORITY OF DISTRICTS RESULTING FROM A 12-34 DIVISION. A district resulting from a division under this article 12-35 shall have the power to incur and pay debts created by that 12-36 district, the power and authority granted to the district created 12-37 under this Act, and the authority to enter into contracts with 12-38 other districts resulting from a division under this article for 12-39 purposes of providing water and wastewater services or other 12-40 appropriate purpose. 12-41 SECTION 8.06. ASSUMPTION OF OBLIGATIONS. A district 12-42 resulting from a division under this article shall assume the 12-43 obligations of the district under an agreement or resolution 12-44 consenting to the creation of the district unless the agreement or 12-45 resolution imposes obligations that limit the powers and authority 12-46 of the district to issue bonds for a purpose authorized by this 12-47 Act. The remaining obligations of the district shall be divided on 12-48 a pro rata basis among the districts resulting from a division 12-49 under this article based on the number of acres in a district or on 12-50 terms agreed to by the districts resulting from a division under 12-51 this article. 12-52 SECTION 8.07. NOTICE TO TEXAS NATURAL RESOURCE CONSERVATION 12-53 COMMISSION. The district shall provide written notice of a plan to 12-54 divide the district under this article to the Texas Natural 12-55 Resource Conservation Commission not later than the 30th day after 12-56 the date on which the board of the district decides to divide the 12-57 district. 12-58 ARTICLE 9. ANNEXATION AND DISSOLUTION OF DISTRICT 12-59 SECTION 9.01. ANNEXATION. (a) Notwithstanding any other 12-60 law, a municipality may annex the district, including districts 12-61 resulting from a division under Article 8 of this Act, only if the 12-62 municipality: 12-63 (1) assumes the outstanding indebtedness of the 12-64 district or districts; 12-65 (2) dissolves the district or districts not later than 12-66 six months after the date of annexation; 12-67 (3) assumes the assets, including all accounts 12-68 receivable and the right to collect outstanding taxes, delinquent 12-69 taxes, and other indebtedness of the district or districts; 13-1 (4) refrains from imposing municipal taxes on property 13-2 located within the district or districts before the dissolution of 13-3 the district or districts; 13-4 (5) provides municipal utility, emergency medical, 13-5 fire, police, garbage collection, and other standard municipal 13-6 services to the residents of the district or districts at the same 13-7 rate as is charged to residents within the municipality, or 13-8 residents of similar developments; and 13-9 (6) complies with regional land use planning within 13-10 the district. 13-11 (b) Notwithstanding Subsection (a)(5) of this section, a 13-12 municipality that annexes and dissolves the district or districts 13-13 may impose water supply fees, impact fees, and other assessments 13-14 allowed by state law on property previously located within the 13-15 district or districts, except for property that has received a 13-16 utility service allocation by the district or districts or property 13-17 in which site development has been authorized or commenced. 13-18 (c) The district or districts shall transfer all assets of 13-19 the district or districts to a municipality that annexes and 13-20 dissolves the district or districts, as provided by instruments 13-21 approved by the municipality and district or districts. 13-22 ARTICLE 10. AFFORDABLE HOUSING 13-23 SECTION 10.01. AFFORDABLE HOUSING. (a) It is in the best 13-24 interest of the state to encourage the development of affordable 13-25 housing for the citizens of the state. To the extent that 13-26 territory of the district can be used to accomplish this purpose in 13-27 a manner that is consistent with the constitutional and statutory 13-28 provisions relating to the management of lands dedicated to the 13-29 permanent school fund, the legislature directs that 15 percent of 13-30 all residential development within the district shall be developed 13-31 to provide affordable housing. A minimum of five percent of the 13-32 residential housing units within the district shall be used to 13-33 provide affordable housing, to be located in different residential 13-34 areas within the district. The affordable housing shall be 13-35 dispersed evenly throughout the district to the extent possible and 13-36 may not be concentrated in areas that consist primarily of 13-37 affordable housing units. 13-38 (b) On the sale of permanent school fund land in the 13-39 district that may be used for residential purposes, the School Land 13-40 Board shall, through the imposition of restrictive covenants or by 13-41 deed restriction, restrict property use in a manner that requires 13-42 construction of affordable housing in a percentage sufficient to 13-43 satisfy the requirements of this section. 13-44 (c) In this section, "affordable housing" means housing for 13-45 residents having low or very low income levels, as determined 13-46 periodically by the United States Department of Housing and Urban 13-47 Development, based on the El Paso Standard Metropolitan Statistical 13-48 Area. 13-49 ARTICLE 11. MISCELLANEOUS PROVISIONS 13-50 SECTION 11.01. TAX EXEMPTION. The purposes stated in this 13-51 Act are for the benefit of the people of the state, including the 13-52 improvement of property and industry. The district, in carrying 13-53 out the purposes of this Act, is performing an essential public 13-54 function under the constitution and is not required to pay a tax or 13-55 assessment on a project of the district or on the bonds or notes 13-56 issued by the district under this Act, including the transfer of, 13-57 the income from, and the profits made on the sale of issued bonds 13-58 and notes. 13-59 SECTION 11.02. INITIAL ELECTION. Notwithstanding Section 13-60 2.04 of this Act, the district shall hold its first election for 13-61 permanent directors on the first Saturday in May 2000. 13-62 SECTION 11.03. FINDINGS RELATING TO PROCEDURAL REQUIREMENTS. 13-63 (a) The proper and legal notice of the intention to introduce this 13-64 Act, setting forth the general substance of this Act, has been 13-65 published as provided by law, and the notice and a copy of this Act 13-66 have been furnished to all persons, agencies, officials, or 13-67 entities to which they are required to be furnished by the 13-68 constitution and other laws of this state, including the governor, 13-69 who has submitted the notice and Act to the Texas Natural Resource 14-1 Conservation Commission. 14-2 (b) The Texas Natural Resource Conservation Commission has 14-3 filed its recommendations relating to this Act with the governor, 14-4 lieutenant governor, and speaker of the house of representatives 14-5 within the required time. 14-6 (c) All requirements of the constitution and laws of this 14-7 state and the rules and procedures of the legislature with respect 14-8 to the notice, introduction, and passage of this Act are fulfilled 14-9 and accomplished. 14-10 SECTION 11.04. SEVERABILITY. If any word, phrase, clause, 14-11 sentence, paragraph, section, or other part of this Act or the 14-12 application of this Act to any person or circumstance is ever held 14-13 to be invalid or unconstitutional by a court of competent 14-14 jurisdiction in this state, the remainder of the Act and the 14-15 application of that word, phrase, clause, sentence, paragraph, 14-16 section, or other part of this Act to other persons or 14-17 circumstances are not affected by that holding. To the extent of a 14-18 conflict between a provision of this Act and any other law or 14-19 statute, this Act controls. 14-20 SECTION 11.05. EMERGENCY. The importance of this 14-21 legislation and the crowded condition of the calendars in both 14-22 houses create an emergency and an imperative public necessity that 14-23 the constitutional rule requiring bills to be read on three several 14-24 days in each house be suspended, and this rule is hereby suspended, 14-25 and that this Act take effect and be in force from and after its 14-26 passage, and it is so enacted. 14-27 * * * * *