1-1 By: Hightower (Senate Sponsor - Nixon) H.B. No. 2448 1-2 (In the Senate - Received from the House May 5, 1997; 1-3 May 6, 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 6, 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 Lake Livingston Special Utility 1-10 District; granting the authority to issue bonds. 1-11 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-12 ARTICLE 1. GENERAL PROVISIONS 1-13 SECTION 1.01. CREATION; LEGISLATIVE DECLARATION. (a) A 1-14 conservation and reclamation district to be known as the Lake 1-15 Livingston Special Utility District is created in Hardin, Liberty, 1-16 Polk, San Jacinto, Trinity, Tyler, and Walker counties, subject to 1-17 approval at a confirmation election under Section 2.04 of this Act. 1-18 The district is a governmental agency and a body politic and 1-19 corporate. 1-20 (b) The district is created under and is essential to the 1-21 accomplishment of the purposes of Section 59, Article XVI, Texas 1-22 Constitution. 1-23 SECTION 1.02. DEFINITIONS. In this chapter: 1-24 (1) "Board" means the board of directors of the 1-25 district. 1-26 (2) "Commission" means the Texas Natural Resource 1-27 Conservation Commission. 1-28 (3) "Director" means a member of the board of 1-29 directors of the district. 1-30 (4) "District" means Lake Livingston Special Utility 1-31 District. 1-32 (5) "Corporation" means Lake Livingston Water Supply 1-33 and Sewer Service Corporation, a corporation organized and existing 1-34 under Article 1434a, Vernon's Texas Civil Statutes. 1-35 (6) "Executive director" means the executive director 1-36 of the commission. 1-37 (7) "Extraterritorial jurisdiction" means the 1-38 extraterritorial jurisdiction of a municipality as determined under 1-39 Chapter 42, Local Government Code. 1-40 (8) "Public agency" means a municipality, the United 1-41 States and its agencies, the state and its agencies, or any 1-42 district or authority created under Section 59, Article XVI, or 1-43 Sections 52(b)(1) and (2), Article III, Texas Constitution. 1-44 SECTION 1.03. PURPOSES OF DISTRICT. The district is created 1-45 for the following purposes: 1-46 (1) to purchase, own, hold, lease, or otherwise 1-47 acquire sources of water supply; to build, operate, and maintain 1-48 facilities for the transportation of water; and to sell water to 1-49 municipalities or other political subdivisions of the state, to 1-50 private business entities, or to individuals; and 1-51 (2) to protect, preserve, and restore the purity and 1-52 the sanitary condition of water within the district. 1-53 SECTION 1.04. Boundaries of District. The district includes 1-54 all the territory within the boundaries of the area covered by 1-55 Certificates of Convenience and Necessity No. 10147 (East Texas 1-56 Hydrotechnology, Inc.), No. 11364 (Paradise Cove), No. 12668 (Green 1-57 Acres), and No. 12633 (Lake Shore Hide-a-Way) and within the 1-58 boundaries of the Riverview Subdivision as described by the plat 1-59 filed with the county clerk of Walker County. 1-60 SECTION 1.05. OPEN MEETINGS. All meetings of the 1-61 corporation or the district shall be held and conducted in 1-62 accordance with Chapter 551, Government Code. 1-63 ARTICLE 2. ADMINISTRATIVE PROVISIONS 1-64 SECTION 2.01. RESOLUTION PROPOSING CREATION OF DISTRICT. 2-1 (a) The board of directors of the corporation shall adopt a 2-2 resolution recommending to the members of the corporation that the 2-3 corporation be converted to the district and that on the 2-4 confirmation of the district as provided below, all of the assets 2-5 of the corporation be conveyed to the district and the corporation 2-6 be dissolved. 2-7 (b) Not later than November 15, 1997, the board of directors 2-8 of the corporation shall submit the resolution to the membership 2-9 for their vote on the question of the conversion of the corporation 2-10 to the district. The vote shall be conducted in accordance with 2-11 the bylaws of the corporation. 2-12 SECTION 2.02. CONSENT OF MUNICIPALITY. The district may 2-13 operate within the corporate limits of a municipality or within the 2-14 extraterritorial jurisdiction of a municipality. The municipality 2-15 may require that the district construct all facilities to serve the 2-16 land in accordance with plans and specifications that are approved 2-17 by the municipality. The municipality may also require that the 2-18 municipality be entitled to inspect facilities being constructed by 2-19 the district within the corporate limits or extraterritorial 2-20 jurisdiction of the municipality. 2-21 SECTION 2.03. BOARD OF DIRECTORS. (a) The district is 2-22 governed by a board of seven directors. To serve as a director, a 2-23 person must be at least 18 years old and a qualified voter of the 2-24 district. Two directors must be residents of Polk County, two 2-25 directors must be residents of San Jacinto County, and one director 2-26 must be a resident of Trinity County. 2-27 (b) Temporary directors serve until initial directors are 2-28 elected under Section 2.04 of this Act. 2-29 (c) Initial directors serve until permanent directors are 2-30 elected under Section 2.05 of this Act. 2-31 (d) Permanent directors serve staggered four-year terms. 2-32 (e) Each director must qualify to serve as director in the 2-33 manner provided by Section 49.055, Water Code. 2-34 SECTION 2.04. CONFIRMATION ELECTION; ELECTION OF INITIAL 2-35 DIRECTORS. If the members of the corporation by a simple majority 2-36 approve the resolution to convert to the district, the board of 2-37 directors of the corporation shall call and conduct a confirmation 2-38 and directors election as provided by Subchapter D, Chapter 49, 2-39 Water Code. The board of directors of the corporation shall serve 2-40 as the temporary directors for the confirmation and directors 2-41 election. 2-42 SECTION 2.05. ELECTION OF DIRECTORS. On the first Saturday 2-43 in May of the first even-numbered year after the year in which the 2-44 confirmation election is held, an election shall be held in the 2-45 district for the election at large of three directors who shall 2-46 each serve two-year terms and four directors who shall each serve 2-47 four-year terms. Thereafter, on the same date in each subsequent 2-48 even-numbered year, the appropriate number of directors shall be 2-49 elected to the board. 2-50 ARTICLE 3. POWERS AND DUTIES 2-51 SECTION 3.01. GENERAL POWERS. (a) The district has all of 2-52 the rights, powers, privileges, authority, functions, and duties 2-53 provided by the general law of this state, including Chapters 49 2-54 and 65, Water Code, applicable to special utility districts created 2-55 under Section 59, Article XVI, Texas Constitution. This Act 2-56 prevails over any provision of general law that is in conflict or 2-57 inconsistent with this Act. 2-58 (b) The rights, powers, privileges, authority, functions, 2-59 and duties of the district are subject to the continuing right of 2-60 supervision of the state to be exercised by and through the Texas 2-61 Natural Resource Conservation Commission. 2-62 SECTION 3.02. ADDITIONAL POWERS. The district may purchase, 2-63 construct, acquire, own, operate, maintain, repair, improve, or 2-64 extend inside and outside its boundaries any works, improvements, 2-65 facilities, plants, equipment, and appliances necessary to 2-66 accomplish the purposes for which it was created, including works, 2-67 improvements, facilities, plants, equipment, and appliances 2-68 incident, helpful, or necessary to: 2-69 (1) supply water for municipal uses, domestic uses, 3-1 power and commercial purposes, and other beneficial uses or 3-2 controls; 3-3 (2) collect, transport, process, dispose of, store, or 3-4 control solid waste other than municipal solid waste; 3-5 (3) irrigate the land in the district; and 3-6 (4) alter land elevation in the district where it is 3-7 needed. 3-8 SECTION 3.03. MUNICIPAL SOLID WASTE. The district may not 3-9 collect municipal solid waste as defined by Section 361.003, Health 3-10 and Safety Code, or purchase, construct, acquire, own, operate, 3-11 maintain, repair, improve, or extend a municipal solid waste 3-12 collection and disposal system. 3-13 SECTION 3.04. ADOPTING RULES. (a) The district may adopt 3-14 and enforce reasonable rules to: 3-15 (1) secure and maintain safe, sanitary, and adequate 3-16 plumbing installations, connections, and appurtenances as 3-17 subsidiary parts of the district's sanitary sewer system; 3-18 (2) preserve the purity and the sanitary condition of 3-19 all water controlled by the district; 3-20 (3) prevent waste or the unauthorized use of water 3-21 controlled by the district; 3-22 (4) regulate privileges on any land or easement owned 3-23 or controlled by the district; and 3-24 (5) provide and regulate a safe and adequate 3-25 freshwater distribution system. 3-26 (b) In adopting rules under this Act, the district is 3-27 subject to Subchapter B, Chapter 2001, Government Code, as if the 3-28 district were a state agency. 3-29 SECTION 3.05. EFFECT OF RULES. After the required 3-30 publication, rules adopted by the district under Section 3.04 of 3-31 this Act shall be recognized by the courts as if the rules were 3-32 penal ordinances of a municipality. 3-33 SECTION 3.06. PUBLICATION OF RULES. (a) The board shall 3-34 publish a substantive statement of each rule adopted and the 3-35 penalty for a violation once a week for two consecutive weeks in 3-36 one or more newspapers with general circulation in the area in 3-37 which the district is located. 3-38 (b) The substantive statement shall be condensed as far as 3-39 possible to intelligently explain the purpose to be accomplished or 3-40 the act forbidden by each rule. 3-41 (c) The notice must advise that breach of a rule will 3-42 subject the violator to a penalty and that the full text of each 3-43 rule is on file in the principal office of the district, where it 3-44 may be read by any interested person. 3-45 (d) Any number of rules may be included in one notice. 3-46 SECTION 3.07. EFFECTIVE DATE OF RULES. The penalty for 3-47 violation of a rule is not effective and enforceable until the 3-48 fifth day after the date of the last publication of the notice. On 3-49 the fifth day after the date of the last publication, the published 3-50 rule takes effect, and ignorance of the rule is not a defense to a 3-51 prosecution for the enforcement of the penalty. 3-52 SECTION 3.08. PROHIBITION ON ASSESSMENT OR COLLECTION OF 3-53 TAXES. The district may not assess or collect a tax of any kind. 3-54 ARTICLE 4. BONDS AND NOTES 3-55 SECTION 4.01. ISSUANCE OF BONDS AND NOTES. The district may 3-56 issue bonds or notes for the purpose of purchasing, constructing, 3-57 acquiring, owning, operating, repairing, improving, or extending 3-58 any district works, improvements, facilities, plants, equipment, or 3-59 appliances needed to accomplish the purposes listed in Section 1.03 3-60 of this Act, including works, improvements, facilities, plants, 3-61 equipment, or appliances needed to provide a waterworks system, 3-62 sanitary sewer system, storm sewer system, or solid waste disposal 3-63 system, or to provide for the collection of solid waste other than 3-64 municipal solid waste, or for fire-fighting services and 3-65 facilities. 3-66 SECTION 4.02. Form of Bonds and Notes. (a) The district 3-67 may issue bonds or notes in various series or issues. 3-68 (b) Bonds or notes shall mature serially or otherwise not 3-69 more than 40 years from the date of issuance and shall bear 4-1 interest at any rate permitted by the constitution and laws of this 4-2 state. The board shall determine the maturity and the interest 4-3 rate of the bonds and notes. 4-4 (c) The district's bonds and notes and any interest coupons 4-5 are investment securities under Chapter 8, Business & Commerce 4-6 Code, and may be issued registrable as to principal or as to both 4-7 principal and interest. The board may make the bonds redeemable 4-8 before maturity or may include in the bonds a mandatory redemption 4-9 provision. 4-10 (d) The district's bonds or notes may be issued in the form, 4-11 denominations, and manner and under the terms and conditions 4-12 prescribed, and must be signed and executed as provided, by the 4-13 board in the resolution or order authorizing the issuance of the 4-14 bonds or notes. 4-15 SECTION 4.03. Repayment of Bonds or Notes. The board may 4-16 provide for the payment of principal of and interest on and any 4-17 redemption price for the bonds or notes by pledging all or any part 4-18 of the designated revenues to result from the ownership or 4-19 operation of the district's works, improvements, facilities, 4-20 plants, equipment, or appliances or under specific contracts for 4-21 the period the board determines. 4-22 SECTION 4.04. Additional Security for Bonds or Notes. (a) 4-23 The district's bonds or notes, as the board determines, may be 4-24 additionally secured by a deed of trust or mortgage lien on all or 4-25 part of the physical properties of the district, and franchises, 4-26 easements, water rights, and appropriation permits, leases, and 4-27 contracts, and any right appurtenant to those properties, vesting 4-28 in the trustee the power to sell the property for payment of the 4-29 indebtedness, the power to operate the property, and any other 4-30 authority necessary for the further security of the bonds or notes. 4-31 (b) The trust indenture, regardless of the existence of the 4-32 deed of trust or mortgage lien on any property, may: 4-33 (1) include provisions prescribed by the board for the 4-34 security of the bonds or notes and the preservation of the trust 4-35 estate; 4-36 (2) provide for amendment or modification; 4-37 (3) condition the right to spend district money or 4-38 sell district property on approval of a registered professional 4-39 engineer selected as provided in the trust indenture; and 4-40 (4) provide for investment of district money. 4-41 (c) Any purchaser under a sale under the deed of trust or 4-42 mortgage lien, if one is given, is the absolute owner of the 4-43 property, facilities, and rights purchased and is entitled to 4-44 maintain and operate them. 4-45 SECTION 4.05. Method for Issuance of Bonds and Notes. Bonds 4-46 or notes may be issued by resolution or order of the board. 4-47 SECTION 4.06. Provisions of Bonds or Notes. (a) In an 4-48 order or resolution authorizing the issuance of bonds or notes, 4-49 including refunding bonds, the board may provide for the flow of 4-50 funds, the establishment and maintenance of the interest and 4-51 sinking fund, the reserve fund, and other funds, and may enter into 4-52 additional covenants relating to the bonds or notes and the pledged 4-53 revenues and to the operation and maintenance of those works, 4-54 improvements, facilities, plants, equipment, or appliances the 4-55 revenues of which are pledged, including provision for the 4-56 operation of, or the leasing of all or any part of, the 4-57 improvements and for the use or pledge of money derived from the 4-58 operation contracts and leases, as the board considers appropriate. 4-59 (b) An order or resolution of the board authorizing the 4-60 issuance of bonds or notes also may prohibit the further issuance 4-61 of bonds, notes, or other obligations payable from the pledged 4-62 revenue or may reserve the right to issue additional bonds to be 4-63 secured by a pledge of and payable from the revenue on a parity 4-64 with or subordinate to the lien and pledge in support of the bonds 4-65 being issued, subject to any conditions set forth in the order or 4-66 resolution. 4-67 (c) An order or resolution of the board issuing bonds or 4-68 notes may include other provisions and covenants determined by the 4-69 board that are not prohibited by the Texas Constitution or by this 5-1 Act. 5-2 (d) The board may adopt and have executed any other 5-3 proceedings or instruments necessary and convenient in the issuance 5-4 of bonds or notes. 5-5 SECTION 4.07. Use of Bond or Note Proceeds. The district 5-6 may use bond or note proceeds to pay interest and administrative 5-7 and operating expenses expected to accrue during the period of 5-8 construction. The period of construction under this section may 5-9 not exceed three years as provided by the bond order or resolution. 5-10 The district also may use bond or note proceeds to pay expenses 5-11 incurred and to be incurred in the issuance, sale, and delivery of 5-12 the bonds or notes. 5-13 SECTION 4.08. Sale or Exchange of Bonds. (a) The board 5-14 shall sell the bonds on the best terms and for the best possible 5-15 price, but the bonds may not be sold for less than 95 percent of 5-16 their face value. 5-17 (b) The district may exchange bonds for property acquired by 5-18 purchase or in payment of the contract price of work done or 5-19 services performed for the use and benefit of the district. 5-20 SECTION 4.09. Refunding Bonds. (a) The district may issue 5-21 bonds to refund all or any part of its outstanding bonds, notes, or 5-22 other obligations, including matured but unpaid interest coupons. 5-23 (b) Refunding bonds shall mature serially or otherwise not 5-24 more than 40 years from their date and shall bear interest at any 5-25 rate or rates permitted by the constitution and laws of this state. 5-26 (c) Refunding bonds may be payable from the same source as 5-27 the bonds, notes, or other obligations being refunded or from other 5-28 sources. 5-29 (d) The refunding bonds shall be approved by the attorney 5-30 general and shall be registered by the comptroller on the surrender 5-31 and cancellation of the bonds being refunded. 5-32 (e) An order or resolution authorizing the issuance of 5-33 refunding bonds may provide that the refunding bonds will be sold 5-34 and the proceeds deposited in the place or places at which the 5-35 bonds being refunded are payable, and the refunding bonds may be 5-36 issued before the cancellation of the bonds being refunded provided 5-37 an amount sufficient to pay the principal of and interest on the 5-38 bonds being refunded to their maturity dates, or to their option 5-39 dates if the bonds have been properly called for payment before 5-40 maturity according to their terms, is deposited in the place or 5-41 places at which the bonds being refunded are payable. The 5-42 comptroller shall register the refunding bonds without the 5-43 surrender and cancellation of bonds being refunded. 5-44 (f) A refunding may be accomplished in one or in several 5-45 installment deliveries. Refunding bonds and their interest coupons 5-46 are investment securities under Chapter 8, Business & Commerce 5-47 Code. 5-48 (g) In lieu of the method set forth in this section, a 5-49 district may refund bonds, notes, or other obligations as provided 5-50 by the general laws of this state. 5-51 SECTION 4.10. Obligations; Legal Investment; Security for 5-52 Funds. (a) Bonds, notes, and other obligations issued by the 5-53 district are legal and authorized investments for all banks, 5-54 savings banks, trust companies, savings and loan associations, 5-55 insurance companies, fiduciaries, trustees, and guardians, and for 5-56 interest and sinking funds and other public funds of the state and 5-57 its agencies, including the permanent school fund, and counties, 5-58 cities, school districts, and other political subdivisions of the 5-59 state. 5-60 (b) The district's bonds, notes, and other obligations are 5-61 eligible to secure deposits of public funds of the state and its 5-62 agencies and counties, cities, school districts, and other 5-63 political subdivisions of the state. The bonds, notes, and other 5-64 obligations are lawful and sufficient security to the extent of 5-65 their market value if accompanied by all unmatured interest coupons 5-66 attached to them. 5-67 SECTION 4.11. Mandamus by Bondholders. In addition to other 5-68 rights and remedies provided by law, if the district defaults in 5-69 the payment of principal of, interest on, or redemption price for 6-1 its bonds when due, fails to make payments into any fund created 6-2 in the order or resolution authorizing the issuance of the bonds, 6-3 or defaults in the observation or performance of any other 6-4 covenants, conditions, or obligations stated in the resolution or 6-5 order authorizing the issuance of the bonds, the owners of any of 6-6 the bonds are entitled to a writ of mandamus issued by a court of 6-7 competent jurisdiction compelling the district and its officials to 6-8 observe and perform the covenants, obligations, or conditions 6-9 prescribed in the order or resolution authorizing the issuance of 6-10 the district's bonds. 6-11 SECTION 4.12. Cancellation of Unsold Bonds. (a) The board 6-12 by order or resolution may provide for the cancellation of all or 6-13 any part of any bonds that have been submitted to and approved by 6-14 the attorney general and registered by the comptroller but not yet 6-15 sold and may provide for the issuance of new bonds in lieu of the 6-16 old bonds in the manner provided by this Act for the issuance of 6-17 the original bonds, including approval of the bonds by the attorney 6-18 general and registration of the bonds by the comptroller. 6-19 (b) The order or resolution of the board shall describe the 6-20 bonds to be canceled and the new bonds to be issued in lieu of the 6-21 old bonds. 6-22 (c) A certified copy of the order or resolution of the board 6-23 providing for the cancellation of the old bonds, together with the 6-24 old bonds, shall be delivered to the comptroller, who shall cancel 6-25 and destroy the old bonds and make a record of the cancellation. 6-26 ARTICLE 5. CONSOLIDATION OF DISTRICTS 6-27 SECTION 5.01. CONSOLIDATION. The district may consolidate 6-28 with any district governed by Chapter 65, Water Code, in 6-29 accordance with Section 65.723 et seq., Water Code. 6-30 ARTICLE 6. EMERGENCY 6-31 SECTION 6.01. EMERGENCY. The importance of this legislation 6-32 and the crowded condition of the calendars in both houses create an 6-33 emergency and an imperative public necessity that the 6-34 constitutional rule requiring bills to be read on three several 6-35 days in each house be suspended, and this rule is hereby suspended, 6-36 and that this Act take effect and be in force from and after its 6-37 passage, and it is so enacted. 6-38 * * * * *