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