AN ACT 1-1 relating to the creation of intermunicipal commuter rail districts; 1-2 authorizing a tax; granting authority to issue bonds and power of 1-3 eminent domain. 1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-5 SECTION 1. Chapter 13, Title 112, Revised Statutes, is 1-6 amended by adding Article 6550c-1 to read as follows: 1-7 Art. 6550c-1. INTERMUNICIPAL COMMUTER RAIL DISTRICTS 1-8 Sec. 1. DEFINITIONS. In this article: 1-9 (1) "Commission" means the Texas Transportation 1-10 Commission. 1-11 (2) "Commuter rail facility" means any property 1-12 necessary for the transportation of passengers and baggage between 1-13 points in a district. The term includes rolling stock, 1-14 locomotives, stations, parking areas, and rail lines. 1-15 (3) "Creating municipality" means a municipality 1-16 described by Section 2(a) of this article. 1-17 (4) "Department" means the Texas Department of 1-18 Transportation. 1-19 (5) "District" means an intermunicipal commuter rail 1-20 district created under this article. 1-21 (6) "System" means all of the commuter rail and 1-22 intermodal facilities leased or owned by or operated on behalf of a 1-23 district created under this article. 2-1 Sec. 2. CREATION OF DISTRICT. (a) A district may be 2-2 created to provide commuter rail service between two 2-3 municipalities: 2-4 (1) each of which has a population of more than 2-5 450,000; and 2-6 (2) that are located not farther than 100 miles apart 2-7 as determined by the department. 2-8 (b) A district is created on passage of a resolution 2-9 favoring the creation of the district by the governing body of each 2-10 creating municipality and the governing body of each county in 2-11 which a creating municipality is located. 2-12 (c) The following political subdivisions may become a part 2-13 of a district created under Subsection (b) of this section with the 2-14 approval of the governing body of the political subdivision: 2-15 (1) a county located adjacent to a county in which a 2-16 creating municipality is located; and 2-17 (2) a municipality with a population of more than 2-18 18,000 located in a county described by Subdivision (1) of this 2-19 subsection. 2-20 (d) For purposes of this article, a municipality is located 2-21 in a county only if 90 percent or more of the population of the 2-22 municipality resides in that county according to the most recent 2-23 federal census. 2-24 Sec. 3. BOARD. (a) A district is governed by a board of 2-25 directors. The board is responsible for the management, operation, 3-1 and control of the district. 3-2 (b) The board is composed of the following members: 3-3 (1) two public members appointed by the commission; 3-4 (2) one elected member of the governing body of each 3-5 political subdivision that has become a part of the district under 3-6 Section 2 of this article; 3-7 (3) one elected member appointed by the regional 3-8 planning organization of which a creating municipality is a part; 3-9 (4) one member appointed by each creating municipality 3-10 to represent the business community of the municipality; 3-11 (5) one member appointed by each authority created 3-12 under Chapter 451, Transportation Code, that serves a creating 3-13 municipality; 3-14 (6) one member appointed by each county in which a 3-15 creating municipality is located to represent transportation 3-16 providers that provide service to rural areas in the county; and 3-17 (7) one member appointed by all other board members to 3-18 represent all municipalities in the district that do not otherwise 3-19 have representation on the board and who shall be an elected 3-20 official of one of those municipalities. 3-21 (c) A vacancy on the board is filled in the same manner as 3-22 the original appointment. Each member serves a term of two years. 3-23 (d) The members of the board shall elect one member as 3-24 presiding officer. The presiding officer may select another member 3-25 to preside in the absence of the presiding officer. 4-1 (e) The presiding officer shall call at least one meeting of 4-2 the board a year and may hold other meetings as the presiding 4-3 officer determines are appropriate. 4-4 (f) A member of the board is not entitled to compensation 4-5 for serving as a member but is entitled to reimbursement for 4-6 reasonable expenses incurred while serving as a member. 4-7 (g) The board shall adopt rules for its proceedings and 4-8 appoint an executive committee and may employ and compensate 4-9 persons to carry out the powers and duties of the district. 4-10 (h) Chapter 171, Local Government Code, applies to a board 4-11 member of a district. 4-12 Sec. 4. POWERS AND DUTIES OF DISTRICT. (a) A district 4-13 created under this article is a public body and a political 4-14 subdivision of the state exercising public and essential 4-15 governmental functions and has all the powers necessary or 4-16 convenient to carry out the purposes of this article. A district, 4-17 in the exercise of powers under this article, is performing only 4-18 governmental functions and is a governmental unit within the 4-19 meaning of Chapter 101, Civil Practice and Remedies Code. 4-20 (b) A district is subject every 12th year to review under 4-21 Chapter 325, Government Code (Texas Sunset Act). 4-22 (c) A district may sue and be sued in all courts of 4-23 competent jurisdiction, may institute and prosecute suits without 4-24 giving security for costs, and may appeal from a judgment without 4-25 giving supersedeas or cost bond. An action at law or in equity 5-1 against the district must be brought in the county in which a 5-2 principal office of the district is located, except that in eminent 5-3 domain proceedings, suit must be brought in the county in which the 5-4 land is located. 5-5 (d) A district may acquire by grant, purchase, gift, devise, 5-6 lease, or otherwise and may hold, use, sell, lease, or dispose of 5-7 real and personal property, licenses, patents, rights, and 5-8 interests necessary, convenient, or useful for the full exercise of 5-9 any of its powers under this article. 5-10 (e) A district may acquire, construct, develop, own, 5-11 operate, and maintain intermodal and commuter rail facilities 5-12 inside, or connect political subdivisions in, the district. For 5-13 these purposes and with the consent of any municipality, county, or 5-14 other political subdivision, the district may use streets, alleys, 5-15 roads, highways, and other public ways of any municipality, county, 5-16 or other political subdivision and may relocate, raise, reroute, 5-17 change the grade of, or alter, at the expense of the district, the 5-18 construction of any street, alley, highway, road, railroad, 5-19 electric lines and facilities, telegraph and telephone properties 5-20 and facilities, pipelines and facilities, conduits and facilities, 5-21 and other properties, whether publicly or privately owned, as 5-22 necessary or useful in the construction, reconstruction, repair, 5-23 maintenance, and operation of the system. A district may not use 5-24 or alter a road or highway in the state highway system without the 5-25 permission of the commission or a railroad without permission of 6-1 the railroad. A district may at its discretion acquire by purchase 6-2 any interest in real property for the acquisition, construction, or 6-3 operation of any commuter rail facility on terms and at a price as 6-4 agreed to between the district and the owner. The governing body 6-5 of any municipality, county, other political subdivision, or public 6-6 agency may make conveyance of title or rights and easements to any 6-7 property needed by the district to effect its purposes in 6-8 connection with the acquisition, construction, or operation of the 6-9 system. 6-10 (f) A district has the right of eminent domain to acquire 6-11 lands in fee simple and any interest less than fee simple in, on, 6-12 under, or above lands, including easements, rights-of-way, and 6-13 rights of use of airspace or subsurface space. The power of 6-14 eminent domain under this section does not apply, however, to land 6-15 under the jurisdiction of the department or a metropolitan transit 6-16 authority or a rail line owned by a common carrier or municipality. 6-17 The district shall, to the extent possible, use existing rail or 6-18 intermodal transportation corridors for the alignment of its 6-19 system. Proceedings for the exercise of the power of eminent 6-20 domain are begun by the adoption by the board of a resolution 6-21 declaring the public necessity for the acquisition by the district 6-22 of the property or interest described in the resolution and that 6-23 the acquisition is necessary and proper for the construction, 6-24 extension, improvement, or development of commuter rail facilities 6-25 and is in the public interest. The resolution of the district is 7-1 conclusive evidence of the public necessity of the proposed 7-2 acquisition and that the real or personal property or interest in 7-3 property is necessary for public use. 7-4 (g) A district may make agreements with any other public 7-5 utility, private utility, communication system, common carrier, 7-6 state agency, or transportation system for the joint use of 7-7 facilities, installations, or properties within or outside the 7-8 district and establish through routes, joint fares, and, subject to 7-9 approval of any tariff-regulating body having jurisdiction, 7-10 divisions of tariffs. 7-11 (h) A district may adopt rules to govern the operation of 7-12 the district, its employees, the system, service provided by the 7-13 district, and any other necessary matter concerning its purposes, 7-14 including rules regarding health, safety, alcohol or beverage 7-15 service, food service, and telephone and utility services, to 7-16 protect the health, safety, and general welfare of residents of the 7-17 district. 7-18 (i) A district may make joint ownership agreements with any 7-19 person. 7-20 (j) A district shall establish and maintain rates or other 7-21 compensation for the use of the facilities of the system acquired, 7-22 constructed, operated, regulated, or maintained by the district 7-23 that is reasonable and nondiscriminatory and, together with grants 7-24 received by the district, is sufficient to produce revenues 7-25 adequate: 8-1 (1) to pay all expenses necessary to the operation and 8-2 maintenance of the properties and facilities of the district; 8-3 (2) to pay the interest on and principal of all bonds 8-4 issued by the district under this article and payable in whole or 8-5 in part from the revenues, as they become due and payable; and 8-6 (3) to fulfill the terms of any agreements made with 8-7 the holders of bonds or with any person in their behalf. 8-8 (k) A district may make contracts, leases, and agreements 8-9 with, and accept grants and loans from, the United States of 8-10 America, its departments and agencies, the state, its agencies and 8-11 political subdivisions, and public or private corporations and 8-12 persons and may generally perform all acts necessary for the full 8-13 exercise of the powers vested in it. The commission may enter an 8-14 interlocal agreement with a district under which a district may 8-15 exercise a power or duty of the commission for the development and 8-16 efficient operation of intermodal corridors in the district. A 8-17 district may acquire rolling stock or other property under 8-18 conditional sales contracts, leases, equipment trust certificates, 8-19 or any other form of contract or trust agreement. Any revenue bond 8-20 indenture may provide limitations on the exercise of the powers 8-21 granted by this section, and the limitations apply so long as any 8-22 of the revenue bonds issued pursuant to the indenture are 8-23 outstanding and unpaid. 8-24 (l) A district by resolution may adopt rules governing the 8-25 use, operation, and maintenance of the system and shall determine 9-1 all routings and change them when the board considers it advisable. 9-2 (m) A district may lease the commuter rail facilities or any 9-3 part to, or contract for the use or operation of the commuter rail 9-4 facilities or any part by, any operator. A district shall 9-5 encourage to the maximum extent practicable the participation of 9-6 private enterprise in the operation of commuter rail facilities. 9-7 The term of an operating contract under this subsection may not 9-8 exceed 20 years. 9-9 (n) A district may contract with any county or other 9-10 political subdivision of the state for the district to provide 9-11 commuter rail transportation services to any area outside the 9-12 boundaries of the district on such terms and conditions as the 9-13 parties agree to. 9-14 (o) A district may purchase an additional insured provision 9-15 to any liability insurance contract. 9-16 (p) Before beginning the operation of commuter rail 9-17 facilities, the board of a district shall adopt an annual operating 9-18 budget specifying the anticipated revenues and expenses of the 9-19 district for the remainder of the fiscal year, and the district 9-20 shall adopt an operating budget for each succeeding fiscal year. 9-21 The fiscal year of the district ends September 30 unless changed by 9-22 the board. The board shall hold a public hearing before adopting 9-23 each budget except the initial budget. Notice of each hearing must 9-24 be published at least seven days before the date of the hearing in 9-25 a newspaper of general circulation in the district. A budget may 10-1 be amended at any time if notice of the proposed amendment is given 10-2 in the notice of meeting. An expenditure that is not budgeted may 10-3 not be made. 10-4 (q) A district is eligible to participate in the Texas 10-5 County and District Retirement System. 10-6 (r) The board of a district shall by resolution name one or 10-7 more banks for the deposit of district funds. District funds are 10-8 public funds and may be invested in securities permitted by Chapter 10-9 2256, Government Code. To the extent funds of the district are not 10-10 insured by the Federal Deposit Insurance Corporation or its 10-11 successor, they shall be collateralized in the manner provided for 10-12 county funds. 10-13 Sec. 5. BONDS AND NOTES. (a) A district may issue revenue 10-14 bonds and notes from time to time and in such amounts as its board 10-15 considers necessary or appropriate for the acquisition, purchase, 10-16 construction, reconstruction, repair, equipping, improvement, or 10-17 extension of its commuter rail facilities. All bonds and notes are 10-18 fully negotiable and may be made redeemable before maturity, at the 10-19 option of the issuing district and at prices and under terms and 10-20 conditions the issuing district determines in the resolution 10-21 authorizing the bonds or notes, and may be sold at public or 10-22 private sale, as the board determines. 10-23 (b) A district shall submit all bonds and notes authorized 10-24 to be issued and the records relating to their issuance to the 10-25 attorney general for examination before delivery. If the attorney 11-1 general determines that they have been issued in accordance with 11-2 the constitution and this article and that they will be binding 11-3 obligations of the district issuing them, the attorney general 11-4 shall approve them, and the comptroller shall register them. Bonds 11-5 and notes issued under this article are incontestable after 11-6 approval, registration, and sale and delivery of the bonds to the 11-7 purchaser. 11-8 (c) To secure the payment of the bonds or notes, the 11-9 district may encumber and pledge all or any part of the revenues of 11-10 its commuter rail facilities, may mortgage and encumber all or any 11-11 part of the properties of the commuter rail facilities and 11-12 everything pertaining to them acquired or to be acquired, and may 11-13 prescribe the terms and provisions of the bonds and notes in any 11-14 manner not inconsistent with this article. If not prohibited by 11-15 the resolution or indenture relating to outstanding bonds or notes, 11-16 a district may encumber separately any item of real estate or 11-17 personalty. 11-18 (d) All bonds and notes are legal and authorized investments 11-19 for banks, trust companies, savings and loan associations, and 11-20 insurance companies. The bonds and notes are eligible to secure 11-21 the deposit of public funds of the state, cities, towns, villages, 11-22 counties, school districts, or other political corporations or 11-23 subdivisions of the state. The bonds and notes are lawful and 11-24 sufficient security for the deposits to the extent of the principal 11-25 amount or market value of the bonds or notes, whichever is less. 12-1 Sec. 6. COMPETITIVE BIDS. A contract in the amount of more 12-2 than $15,000 for the construction of improvements or the purchase 12-3 of material, machinery, equipment, supplies, or any other property 12-4 except real property may be let only on competitive bids after 12-5 notice published, at least 15 days before the date set for 12-6 receiving bids, in a newspaper of general circulation in the 12-7 district. A board may adopt rules governing the taking of bids and 12-8 the awarding of contracts. This section does not apply to: 12-9 (1) personal or professional services; 12-10 (2) the acquisition of existing rail transportation 12-11 systems; or 12-12 (3) a contract with a common carrier to construct 12-13 lines and to operate commuter rail service on lines owned in whole 12-14 or in part by the carrier. 12-15 Sec. 7. EXEMPTION FROM TAXES. The property, material 12-16 purchases, revenues, and income of a district and the interest on 12-17 bonds and notes issued by a district are exempt from all taxes 12-18 levied by the state or a political subdivision of the state. 12-19 Sec. 8. TRANSPORTATION INFRASTRUCTURE. (a) This section 12-20 applies only to a local government which is a member of a district, 12-21 other than a school district, that is authorized to impose ad 12-22 valorem taxes on real property. 12-23 (b) A district may enter into an interlocal contract with a 12-24 local government member for the financing of transportation 12-25 infrastructure that is constructed or that is to be constructed in 13-1 the territory of the local government by the district. 13-2 (c) The agreement must include: 13-3 (1) the duration of the agreement; 13-4 (2) a description of each transportation 13-5 infrastructure project or proposed project; 13-6 (3) a map showing the location of each project; and 13-7 (4) an estimate of the cost of each project. 13-8 (d) The agreement may establish one or more transportation 13-9 infrastructure zones. The district and the local government may 13-10 agree that, at one or more specified times, the local government 13-11 will pay to the district an amount that is calculated on the basis 13-12 of increased ad valorem tax collections in a zone that are 13-13 attributable to increased values of property located in the zone 13-14 resulting from an infrastructure project. The amount may not 13-15 exceed an amount that is equal to 30 percent of the increase in ad 13-16 valorem tax collections for the specified period. 13-17 (e) Money received by the district under this section may be 13-18 used: 13-19 (1) to provide a local match for the acquisition of 13-20 right-of-way in the territory of the local government; or 13-21 (2) for design, construction, operation, or 13-22 maintenance of transportation facilities in the territory of the 13-23 local government. 13-24 Sec. 9. SALES AND USE TAXES. A district shall collect or 13-25 cause to be collected sales and use taxes on items sold on district 14-1 property. The sales and use tax shall be collected at the rate of 14-2 the highest combination of state and local sales and use taxes 14-3 imposed in any local governmental jurisdiction which is a member of 14-4 a district. After deducting the state share of sales and use 14-5 taxes, the comptroller shall remit to a district the local sales 14-6 and use tax collected on the district's property. 14-7 SECTION 2. The importance of this legislation and the 14-8 crowded condition of the calendars in both houses create an 14-9 emergency and an imperative public necessity that the 14-10 constitutional rule requiring bills to be read on three several 14-11 days in each house be suspended, and this rule is hereby suspended, 14-12 and that this Act take effect and be in force from and after its 14-13 passage, and it is so enacted. _______________________________ _______________________________ President of the Senate Speaker of the House I hereby certify that S.B. No. 657 passed the Senate on April 9, 1997, by the following vote: Yeas 31, Nays 0; and that the Senate concurred in House amendment on May 15, 1997, by a viva-voce vote. _______________________________ Secretary of the Senate I hereby certify that S.B. No. 657 passed the House, with amendment, on May 13, 1997, by a non-record vote. _______________________________ Chief Clerk of the House Approved: _______________________________ Date _______________________________ Governor