1-1 AN ACT 1-2 relating to the creation, administration, powers, duties, 1-3 operation, and financing of the Lake Livingston Special Utility 1-4 District; granting the authority to issue bonds. 1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-6 ARTICLE 1. GENERAL PROVISIONS 1-7 SECTION 1.01. CREATION; LEGISLATIVE DECLARATION. (a) A 1-8 conservation and reclamation district to be known as the Lake 1-9 Livingston Special Utility District is created in Hardin, Liberty, 1-10 Polk, San Jacinto, Trinity, Tyler, and Walker counties, subject to 1-11 approval at a confirmation election under Section 2.04 of this Act. 1-12 The district is a governmental agency and a body politic and 1-13 corporate. 1-14 (b) The district is created under and is essential to the 1-15 accomplishment of the purposes of Section 59, Article XVI, Texas 1-16 Constitution. 1-17 SECTION 1.02. DEFINITIONS. In this chapter: 1-18 (1) "Board" means the board of directors of the 1-19 district. 1-20 (2) "Commission" means the Texas Natural Resource 1-21 Conservation Commission. 1-22 (3) "Director" means a member of the board of 1-23 directors of the district. 1-24 (4) "District" means Lake Livingston Special Utility 2-1 District. 2-2 (5) "Corporation" means Lake Livingston Water Supply 2-3 and Sewer Service Corporation, a corporation organized and existing 2-4 under Article 1434a, Vernon's Texas Civil Statutes. 2-5 (6) "Executive director" means the executive director 2-6 of the commission. 2-7 (7) "Extraterritorial jurisdiction" means the 2-8 extraterritorial jurisdiction of a municipality as determined under 2-9 Chapter 42, Local Government Code. 2-10 (8) "Public agency" means a municipality, the United 2-11 States and its agencies, the state and its agencies, or any 2-12 district or authority created under Section 59, Article XVI, or 2-13 Sections 52(b)(1) and (2), Article III, Texas Constitution. 2-14 SECTION 1.03. PURPOSES OF DISTRICT. The district is created 2-15 for the following purposes: 2-16 (1) to purchase, own, hold, lease, or otherwise 2-17 acquire sources of water supply; to build, operate, and maintain 2-18 facilities for the transportation of water; and to sell water to 2-19 municipalities or other political subdivisions of the state, to 2-20 private business entities, or to individuals; and 2-21 (2) to protect, preserve, and restore the purity and 2-22 the sanitary condition of water within the district. 2-23 SECTION 1.04. Boundaries of District. The district includes 2-24 all the territory within the boundaries of the area covered by 2-25 Certificates of Convenience and Necessity No. 10147 (East Texas 2-26 Hydrotechnology, Inc.), No. 11364 (Paradise Cove), No. 12668 (Green 2-27 Acres), and No. 12633 (Lake Shore Hide-a-Way) and within the 3-1 boundaries of the Riverview Subdivision as described by the plat 3-2 filed with the county clerk of Walker County. 3-3 SECTION 1.05. OPEN MEETINGS. All meetings of the 3-4 corporation or the district shall be held and conducted in 3-5 accordance with Chapter 551, Government Code. 3-6 ARTICLE 2. ADMINISTRATIVE PROVISIONS 3-7 SECTION 2.01. RESOLUTION PROPOSING CREATION OF DISTRICT. 3-8 (a) The board of directors of the corporation shall adopt a 3-9 resolution recommending to the members of the corporation that the 3-10 corporation be converted to the district and that on the 3-11 confirmation of the district as provided below, all of the assets 3-12 of the corporation be conveyed to the district and the corporation 3-13 be dissolved. 3-14 (b) Not later than November 15, 1997, the board of directors 3-15 of the corporation shall submit the resolution to the membership 3-16 for their vote on the question of the conversion of the corporation 3-17 to the district. The vote shall be conducted in accordance with 3-18 the bylaws of the corporation. 3-19 SECTION 2.02. CONSENT OF MUNICIPALITY. The district may 3-20 operate within the corporate limits of a municipality or within the 3-21 extraterritorial jurisdiction of a municipality. The municipality 3-22 may require that the district construct all facilities to serve the 3-23 land in accordance with plans and specifications that are approved 3-24 by the municipality. The municipality may also require that the 3-25 municipality be entitled to inspect facilities being constructed by 3-26 the district within the corporate limits or extraterritorial 3-27 jurisdiction of the municipality. 4-1 SECTION 2.03. BOARD OF DIRECTORS. (a) The district is 4-2 governed by a board of seven directors. To serve as a director, a 4-3 person must be at least 18 years old and a qualified voter of the 4-4 district. Two directors must be residents of Polk County, two 4-5 directors must be residents of San Jacinto County, and one director 4-6 must be a resident of Trinity County. 4-7 (b) Temporary directors serve until initial directors are 4-8 elected under Section 2.04 of this Act. 4-9 (c) Initial directors serve until permanent directors are 4-10 elected under Section 2.05 of this Act. 4-11 (d) Permanent directors serve staggered four-year terms. 4-12 (e) Each director must qualify to serve as director in the 4-13 manner provided by Section 49.055, Water Code. 4-14 SECTION 2.04. CONFIRMATION ELECTION; ELECTION OF INITIAL 4-15 DIRECTORS. If the members of the corporation by a simple majority 4-16 approve the resolution to convert to the district, the board of 4-17 directors of the corporation shall call and conduct a confirmation 4-18 and directors election as provided by Subchapter D, Chapter 49, 4-19 Water Code. The board of directors of the corporation shall serve 4-20 as the temporary directors for the confirmation and directors 4-21 election. 4-22 SECTION 2.05. ELECTION OF DIRECTORS. On the first Saturday 4-23 in May of the first even-numbered year after the year in which the 4-24 confirmation election is held, an election shall be held in the 4-25 district for the election at large of three directors who shall 4-26 each serve two-year terms and four directors who shall each serve 4-27 four-year terms. Thereafter, on the same date in each subsequent 5-1 even-numbered year, the appropriate number of directors shall be 5-2 elected to the board. 5-3 ARTICLE 3. POWERS AND DUTIES 5-4 SECTION 3.01. GENERAL POWERS. (a) The district has all of 5-5 the rights, powers, privileges, authority, functions, and duties 5-6 provided by the general law of this state, including Chapters 49 5-7 and 65, Water Code, applicable to special utility districts created 5-8 under Section 59, Article XVI, Texas Constitution. This Act 5-9 prevails over any provision of general law that is in conflict or 5-10 inconsistent with this Act. 5-11 (b) The rights, powers, privileges, authority, functions, 5-12 and duties of the district are subject to the continuing right of 5-13 supervision of the state to be exercised by and through the Texas 5-14 Natural Resource Conservation Commission. 5-15 SECTION 3.02. ADDITIONAL POWERS. The district may purchase, 5-16 construct, acquire, own, operate, maintain, repair, improve, or 5-17 extend inside and outside its boundaries any works, improvements, 5-18 facilities, plants, equipment, and appliances necessary to 5-19 accomplish the purposes for which it was created, including works, 5-20 improvements, facilities, plants, equipment, and appliances 5-21 incident, helpful, or necessary to: 5-22 (1) supply water for municipal uses, domestic uses, 5-23 power and commercial purposes, and other beneficial uses or 5-24 controls; 5-25 (2) collect, transport, process, dispose of, store, or 5-26 control solid waste other than municipal solid waste; 5-27 (3) irrigate the land in the district; and 6-1 (4) alter land elevation in the district where it is 6-2 needed. 6-3 SECTION 3.03. MUNICIPAL SOLID WASTE. The district may not 6-4 collect municipal solid waste as defined by Section 361.003, Health 6-5 and Safety Code, or purchase, construct, acquire, own, operate, 6-6 maintain, repair, improve, or extend a municipal solid waste 6-7 collection and disposal system. 6-8 SECTION 3.04. ADOPTING RULES. (a) The district may adopt 6-9 and enforce reasonable rules to: 6-10 (1) secure and maintain safe, sanitary, and adequate 6-11 plumbing installations, connections, and appurtenances as 6-12 subsidiary parts of the district's sanitary sewer system; 6-13 (2) preserve the purity and the sanitary condition of 6-14 all water controlled by the district; 6-15 (3) prevent waste or the unauthorized use of water 6-16 controlled by the district; 6-17 (4) regulate privileges on any land or easement owned 6-18 or controlled by the district; and 6-19 (5) provide and regulate a safe and adequate 6-20 freshwater distribution system. 6-21 (b) In adopting rules under this Act, the district is 6-22 subject to Subchapter B, Chapter 2001, Government Code, as if the 6-23 district were a state agency. 6-24 SECTION 3.05. EFFECT OF RULES. After the required 6-25 publication, rules adopted by the district under Section 3.04 of 6-26 this Act shall be recognized by the courts as if the rules were 6-27 penal ordinances of a municipality. 7-1 SECTION 3.06. PUBLICATION OF RULES. (a) The board shall 7-2 publish a substantive statement of each rule adopted and the 7-3 penalty for a violation once a week for two consecutive weeks in 7-4 one or more newspapers with general circulation in the area in 7-5 which the district is located. 7-6 (b) The substantive statement shall be condensed as far as 7-7 possible to intelligently explain the purpose to be accomplished or 7-8 the act forbidden by each rule. 7-9 (c) The notice must advise that breach of a rule will 7-10 subject the violator to a penalty and that the full text of each 7-11 rule is on file in the principal office of the district, where it 7-12 may be read by any interested person. 7-13 (d) Any number of rules may be included in one notice. 7-14 SECTION 3.07. EFFECTIVE DATE OF RULES. The penalty for 7-15 violation of a rule is not effective and enforceable until the 7-16 fifth day after the date of the last publication of the notice. On 7-17 the fifth day after the date of the last publication, the published 7-18 rule takes effect, and ignorance of the rule is not a defense to a 7-19 prosecution for the enforcement of the penalty. 7-20 SECTION 3.08. PROHIBITION ON ASSESSMENT OR COLLECTION OF 7-21 TAXES. The district may not assess or collect a tax of any kind. 7-22 ARTICLE 4. BONDS AND NOTES 7-23 SECTION 4.01. ISSUANCE OF BONDS AND NOTES. The district may 7-24 issue bonds or notes for the purpose of purchasing, constructing, 7-25 acquiring, owning, operating, repairing, improving, or extending 7-26 any district works, improvements, facilities, plants, equipment, or 7-27 appliances needed to accomplish the purposes listed in Section 1.03 8-1 of this Act, including works, improvements, facilities, plants, 8-2 equipment, or appliances needed to provide a waterworks system, 8-3 sanitary sewer system, storm sewer system, or solid waste disposal 8-4 system, or to provide for the collection of solid waste other than 8-5 municipal solid waste, or for fire-fighting services and 8-6 facilities. 8-7 SECTION 4.02. Form of Bonds and Notes. (a) The district 8-8 may issue bonds or notes in various series or issues. 8-9 (b) Bonds or notes shall mature serially or otherwise not 8-10 more than 40 years from the date of issuance and shall bear 8-11 interest at any rate permitted by the constitution and laws of this 8-12 state. The board shall determine the maturity and the interest 8-13 rate of the bonds and notes. 8-14 (c) The district's bonds and notes and any interest coupons 8-15 are investment securities under Chapter 8, Business & Commerce 8-16 Code, and may be issued registrable as to principal or as to both 8-17 principal and interest. The board may make the bonds redeemable 8-18 before maturity or may include in the bonds a mandatory redemption 8-19 provision. 8-20 (d) The district's bonds or notes may be issued in the form, 8-21 denominations, and manner and under the terms and conditions 8-22 prescribed, and must be signed and executed as provided, by the 8-23 board in the resolution or order authorizing the issuance of the 8-24 bonds or notes. 8-25 SECTION 4.03. Repayment of Bonds or Notes. The board may 8-26 provide for the payment of principal of and interest on and any 8-27 redemption price for the bonds or notes by pledging all or any part 9-1 of the designated revenues to result from the ownership or 9-2 operation of the district's works, improvements, facilities, 9-3 plants, equipment, or appliances or under specific contracts for 9-4 the period the board determines. 9-5 SECTION 4.04. Additional Security for Bonds or Notes. (a) 9-6 The district's bonds or notes, as the board determines, may be 9-7 additionally secured by a deed of trust or mortgage lien on all or 9-8 part of the physical properties of the district, and franchises, 9-9 easements, water rights, and appropriation permits, leases, and 9-10 contracts, and any right appurtenant to those properties, vesting 9-11 in the trustee the power to sell the property for payment of the 9-12 indebtedness, the power to operate the property, and any other 9-13 authority necessary for the further security of the bonds or notes. 9-14 (b) The trust indenture, regardless of the existence of the 9-15 deed of trust or mortgage lien on any property, may: 9-16 (1) include provisions prescribed by the board for the 9-17 security of the bonds or notes and the preservation of the trust 9-18 estate; 9-19 (2) provide for amendment or modification; 9-20 (3) condition the right to spend district money or 9-21 sell district property on approval of a registered professional 9-22 engineer selected as provided in the trust indenture; and 9-23 (4) provide for investment of district money. 9-24 (c) Any purchaser under a sale under the deed of trust or 9-25 mortgage lien, if one is given, is the absolute owner of the 9-26 property, facilities, and rights purchased and is entitled to 9-27 maintain and operate them. 10-1 SECTION 4.05. Method for Issuance of Bonds and Notes. Bonds 10-2 or notes may be issued by resolution or order of the board. 10-3 SECTION 4.06. Provisions of Bonds or Notes. (a) In an 10-4 order or resolution authorizing the issuance of bonds or notes, 10-5 including refunding bonds, the board may provide for the flow of 10-6 funds, the establishment and maintenance of the interest and 10-7 sinking fund, the reserve fund, and other funds, and may enter into 10-8 additional covenants relating to the bonds or notes and the pledged 10-9 revenues and to the operation and maintenance of those works, 10-10 improvements, facilities, plants, equipment, or appliances the 10-11 revenues of which are pledged, including provision for the 10-12 operation of, or the leasing of all or any part of, the 10-13 improvements and for the use or pledge of money derived from the 10-14 operation contracts and leases, as the board considers appropriate. 10-15 (b) An order or resolution of the board authorizing the 10-16 issuance of bonds or notes also may prohibit the further issuance 10-17 of bonds, notes, or other obligations payable from the pledged 10-18 revenue or may reserve the right to issue additional bonds to be 10-19 secured by a pledge of and payable from the revenue on a parity 10-20 with or subordinate to the lien and pledge in support of the bonds 10-21 being issued, subject to any conditions set forth in the order or 10-22 resolution. 10-23 (c) An order or resolution of the board issuing bonds or 10-24 notes may include other provisions and covenants determined by the 10-25 board that are not prohibited by the Texas Constitution or by this 10-26 Act. 10-27 (d) The board may adopt and have executed any other 11-1 proceedings or instruments necessary and convenient in the issuance 11-2 of bonds or notes. 11-3 SECTION 4.07. Use of Bond or Note Proceeds. The district 11-4 may use bond or note proceeds to pay interest and administrative 11-5 and operating expenses expected to accrue during the period of 11-6 construction. The period of construction under this section may 11-7 not exceed three years as provided by the bond order or resolution. 11-8 The district also may use bond or note proceeds to pay expenses 11-9 incurred and to be incurred in the issuance, sale, and delivery of 11-10 the bonds or notes. 11-11 SECTION 4.08. Sale or Exchange of Bonds. (a) The board 11-12 shall sell the bonds on the best terms and for the best possible 11-13 price, but the bonds may not be sold for less than 95 percent of 11-14 their face value. 11-15 (b) The district may exchange bonds for property acquired by 11-16 purchase or in payment of the contract price of work done or 11-17 services performed for the use and benefit of the district. 11-18 SECTION 4.09. Refunding Bonds. (a) The district may issue 11-19 bonds to refund all or any part of its outstanding bonds, notes, or 11-20 other obligations, including matured but unpaid interest coupons. 11-21 (b) Refunding bonds shall mature serially or otherwise not 11-22 more than 40 years from their date and shall bear interest at any 11-23 rate or rates permitted by the constitution and laws of this state. 11-24 (c) Refunding bonds may be payable from the same source as 11-25 the bonds, notes, or other obligations being refunded or from other 11-26 sources. 11-27 (d) The refunding bonds shall be approved by the attorney 12-1 general and shall be registered by the comptroller on the surrender 12-2 and cancellation of the bonds being refunded. 12-3 (e) An order or resolution authorizing the issuance of 12-4 refunding bonds may provide that the refunding bonds will be sold 12-5 and the proceeds deposited in the place or places at which the 12-6 bonds being refunded are payable, and the refunding bonds may be 12-7 issued before the cancellation of the bonds being refunded provided 12-8 an amount sufficient to pay the principal of and interest on the 12-9 bonds being refunded to their maturity dates, or to their option 12-10 dates if the bonds have been properly called for payment before 12-11 maturity according to their terms, is deposited in the place or 12-12 places at which the bonds being refunded are payable. The 12-13 comptroller shall register the refunding bonds without the 12-14 surrender and cancellation of bonds being refunded. 12-15 (f) A refunding may be accomplished in one or in several 12-16 installment deliveries. Refunding bonds and their interest coupons 12-17 are investment securities under Chapter 8, Business & Commerce 12-18 Code. 12-19 (g) In lieu of the method set forth in this section, a 12-20 district may refund bonds, notes, or other obligations as provided 12-21 by the general laws of this state. 12-22 SECTION 4.10. Obligations; Legal Investment; Security for 12-23 Funds. (a) Bonds, notes, and other obligations issued by the 12-24 district are legal and authorized investments for all banks, 12-25 savings banks, trust companies, savings and loan associations, 12-26 insurance companies, fiduciaries, trustees, and guardians, and for 12-27 interest and sinking funds and other public funds of the state and 13-1 its agencies, including the permanent school fund, and counties, 13-2 cities, school districts, and other political subdivisions of the 13-3 state. 13-4 (b) The district's bonds, notes, and other obligations are 13-5 eligible to secure deposits of public funds of the state and its 13-6 agencies and counties, cities, school districts, and other 13-7 political subdivisions of the state. The bonds, notes, and other 13-8 obligations are lawful and sufficient security to the extent of 13-9 their market value if accompanied by all unmatured interest coupons 13-10 attached to them. 13-11 SECTION 4.11. Mandamus by Bondholders. In addition to other 13-12 rights and remedies provided by law, if the district defaults in 13-13 the payment of principal of, interest on, or redemption price for 13-14 its bonds when due, fails to make payments into any fund created 13-15 in the order or resolution authorizing the issuance of the bonds, 13-16 or defaults in the observation or performance of any other 13-17 covenants, conditions, or obligations stated in the resolution or 13-18 order authorizing the issuance of the bonds, the owners of any of 13-19 the bonds are entitled to a writ of mandamus issued by a court of 13-20 competent jurisdiction compelling the district and its officials to 13-21 observe and perform the covenants, obligations, or conditions 13-22 prescribed in the order or resolution authorizing the issuance of 13-23 the district's bonds. 13-24 SECTION 4.12. Cancellation of Unsold Bonds. (a) The board 13-25 by order or resolution may provide for the cancellation of all or 13-26 any part of any bonds that have been submitted to and approved by 13-27 the attorney general and registered by the comptroller but not yet 14-1 sold and may provide for the issuance of new bonds in lieu of the 14-2 old bonds in the manner provided by this Act for the issuance of 14-3 the original bonds, including approval of the bonds by the attorney 14-4 general and registration of the bonds by the comptroller. 14-5 (b) The order or resolution of the board shall describe the 14-6 bonds to be canceled and the new bonds to be issued in lieu of the 14-7 old bonds. 14-8 (c) A certified copy of the order or resolution of the board 14-9 providing for the cancellation of the old bonds, together with the 14-10 old bonds, shall be delivered to the comptroller, who shall cancel 14-11 and destroy the old bonds and make a record of the cancellation. 14-12 ARTICLE 5. CONSOLIDATION OF DISTRICTS 14-13 SECTION 5.01. CONSOLIDATION. The district may consolidate 14-14 with any district governed by Chapter 65, Water Code, in 14-15 accordance with Section 65.723 et seq., Water Code. 14-16 ARTICLE 6. EMERGENCY 14-17 SECTION 6.01. EMERGENCY. The importance of this legislation 14-18 and the crowded condition of the calendars in both houses create an 14-19 emergency and an imperative public necessity that the 14-20 constitutional rule requiring bills to be read on three several 14-21 days in each house be suspended, and this rule is hereby suspended, 14-22 and that this Act take effect and be in force from and after its 14-23 passage, and it is so enacted. _______________________________ _______________________________ President of the Senate Speaker of the House I certify that H.B. No. 2448 was passed by the House on May 2, 1997, by the following vote: Yeas 142, Nays 0, 2 present, not voting. _______________________________ Chief Clerk of the House I certify that H.B. No. 2448 was passed by the Senate on May 22, 1997, by the following vote: Yeas 31, Nays 0. _______________________________ Secretary of the Senate APPROVED: _____________________ Date _____________________ Governor