By:  Gallegos, et al.                                  S.B. No. 727

                                A BILL TO BE ENTITLED

                                       AN ACT

 1-1     relating to contracts between municipal utility districts located

 1-2     in extraterritorial areas and municipalities.

 1-3           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

 1-4           SECTION 1.  Subchapter C, Chapter 42, Local Government Code,

 1-5     is amended by adding Section 42.0441 to read as follows:

 1-6           Sec. 42.0441.  JOINT AGREEMENTS BETWEEN MUNICIPAL UTILITY

 1-7     DISTRICTS IN EXTRATERRITORIAL AREAS AND MUNICIPALITIES.  (a)  It is

 1-8     the intent of the legislature to enable municipal utility districts

 1-9     in extraterritorial areas and municipalities to negotiate mutually

1-10     agreeable alternatives to annexation.  In furtherance of that goal,

1-11     this section authorizes municipal utility districts and

1-12     municipalities to execute mutually agreeable contracts providing

1-13     for the joint funding of services in lieu of annexation.

1-14           (b)  For purposes of this section:

1-15                 (1)  "District" means a municipal utility district,

1-16     water control and improvement district, or other district created

1-17     under Section 59, Article XVI, Texas Constitution.

1-18                 (2)  "Municipality" means a municipality with a

1-19     population of more than 1.6 million.

1-20                 (3)  "Services" means services delivered within the

1-21     area of a district or services provided by a municipality for the

1-22     benefit of persons outside the municipality.

1-23           (c)  Before a municipality initiates annexation proceedings

 2-1     to annex area in a district located in the municipality's

 2-2     extraterritorial jurisdiction, the mayor of the municipality shall

 2-3     submit a request to the board of directors of the district to

 2-4     initiate negotiations under this section.  A district may in its

 2-5     discretion agree to enter into negotiations with the mayor.

 2-6           (d)  On electing to enter into negotiations with the mayor,

 2-7     the board of directors shall appoint a designee from the board to

 2-8     negotiate with the mayor.

 2-9           (e)  The mayor of a municipality shall enter into

2-10     negotiations with the board of a district located in the

2-11     municipality's extraterritorial jurisdiction on submission of a

2-12     petition approved by a majority of the members of the board.  The

2-13     mayor shall enter into negotiations with the board not later than

2-14     30 days after a valid petition is filed with the mayor.

2-15           (f)  On initiation of negotiations, the mayor and the board's

2-16     designee shall negotiate in good faith.  The mayor and the board's

2-17     designee may, in their discretion, agree to a written contract that

2-18     includes one or more of the following options:

2-19                 (1)  a provision that guarantees the continuation of

2-20     the extraterritorial status of the defined area and its immunity

2-21     from annexation by the municipality for a period not to exceed 15

2-22     years;

2-23                 (2)  a provision for revenue sharing between the

2-24     municipality and the district that compensates for police

2-25     protection, fire protection, construction or maintenance of water

 3-1     or wastewater facilities, construction or maintenance of roads or

 3-2     streets, parks, playgrounds, or any other facility, building, or

 3-3     service;

 3-4                 (3)  a provision that imposes the municipality's sales

 3-5     and excise tax within the boundaries of the district pursuant to

 3-6     the provisions of Chapter 321, Tax Code;

 3-7                 (4)  a provision that imposes a property assessment as

 3-8     authorized under Chapter 372 for the purpose of achieving public

 3-9     service and cost-sharing equity between the area within the

3-10     district and property located within the boundaries of the

3-11     municipality; if an assessment is imposed by mutual agreement, the

3-12     municipality is authorized to establish a local government

3-13     corporation within the district pursuant to Subchapter D, Chapter

3-14     431, Transportation Code, for the purpose of administrating the

3-15     assessment;

3-16                 (5)  a provision imposing a water and sewer surcharge;

3-17     or

3-18                 (6)  provisions that include other terms, conditions,

3-19     and considerations that the parties consider appropriate.

3-20           (g)  The governing body of the municipality and the board of

3-21     a district may renew or extend a contract for successive periods

3-22     not to exceed 15 years each.

3-23           (h)  A contract agreed to by the mayor of a municipality and

3-24     the board of a district shall be submitted to:

3-25                 (1)  the governing body of the municipality and the

 4-1     board of the district; and

 4-2                 (2)  the qualified voters of the district in an

 4-3     election held for the purpose of approving the contract.

 4-4           (i)  At least 50 percent of the qualified voters of the

 4-5     district must participate in the election under Subsection (h)(2)

 4-6     for the election to be valid.

 4-7           (j)  The contract is binding on the municipality and the

 4-8     district if:

 4-9                 (1)  the governing body of the municipality and a

4-10     majority of the members of the board of the district approve the

4-11     contract; and

4-12                 (2)  a majority of the qualified voters voting in an

4-13     election required by this section approve the contract.

4-14           (k)  If a majority of the qualified voters voting in an

4-15     election required by this section do not approve the contract, the

4-16     result of the election may not be interpreted as consent to

4-17     annexation by the municipality.

4-18           (l)  If a municipality and a district enter into negotiations

4-19     under this section, the governing body of the municipality may not

4-20     initiate proceedings to annex the district under any other section

4-21     of this code before September 1 of the second year after:

4-22                 (1)  the year the notice of the mayor's request to

4-23     initiate negotiations is submitted to the board of the district as

4-24     provided by Subsection (c); or

4-25                 (2)  the year the mayor entered negotiations with the

 5-1     district after the district submitted a petition as provided by

 5-2     Subsection (e).

 5-3           SECTION 2.  Chapter 321.102, Tax Code, is amended by adding

 5-4     Subsection (c-1) to read as follows:

 5-5           (c-1)  If the boundaries of a municipality in which the tax

 5-6     imposed under this chapter are changed pursuant to Section

 5-7     42.0441(f)(3), Local Government Code, the municipal secretary shall

 5-8     send by United States registered or certified mail to the

 5-9     comptroller a certified copy of the ordinance that changes the

5-10     municipality's boundaries and shows the effective date of the

5-11     boundary change.  The ordinance must be accompanied by a map

5-12     clearly showing the added territory.  The tax takes effect in the

5-13     added territory on the first day of the first calendar quarter

5-14     after the comptroller receives the ordinance and map.

5-15           SECTION 3.  The importance of this legislation and the

5-16     crowded condition of the calendars in both houses create an

5-17     emergency and an imperative public necessity that the

5-18     constitutional rule requiring bills to be read on three several

5-19     days in each house be suspended, and this rule is hereby suspended.