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

         Substitute the following for S.B. No. 727:

         By Bosse                                           C.S.S.B. No. 727

                                A BILL TO BE ENTITLED

 1-1                                   AN ACT

 1-2     relating to contracts between municipal utility districts located

 1-3     in extraterritorial areas and municipalities.

 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

 1-5           SECTION 1.   Subchapter C, Chapter 42, Local Government Code,

 1-6     is amended by adding Section 42.0441 to read as follows:

 1-7           Sec. 42.0441.  JOINT AGREEMENTS BETWEEN CERTAIN DISTRICTS AND

 1-8     OTHER DEFINED AREAS IN EXTRATERRITORIAL AREA AND MUNICIPALITIES.

 1-9     (a)  It is the intent of the legislature to enable certain

1-10     conservation and reclamation districts and other organizations

1-11     representing defined areas in extraterritorial areas and

1-12     municipalities to negotiate mutually agreeable alternatives to

1-13     annexation.  In furtherance of that goal, this section authorizes

1-14     districts and local organizations and municipalities to execute

1-15     mutually agreeable contracts providing for the joint funding of

1-16     services in lieu of annexation.  A municipality to which this

1-17     section applies is not subject to any mandatory provisions of

1-18     Section 43.0751.

1-19           (b)  For purposes of this section:

1-20                 (1)  "District" means a municipal utility district,

1-21     water control and improvement district, or other district created

1-22     under either Section 59, Article XVI, or Section 52, Article III,

1-23     Texas Constitution.

1-24                 (2)  "Municipality" means a municipality with a

 2-1     population of more than 1.6 million.

 2-2                 (3)  "Local organization" means a community

 2-3     association, homeowners association, or other formally organized

 2-4     nonprofit corporation or association representing a clearly defined

 2-5     geographical area in the extraterritorial jurisdiction of the

 2-6     municipality.

 2-7                 (4)  "Services" means services delivered within the

 2-8     area of a district or services provided by a municipality for the

 2-9     benefit of persons outside the municipality.

2-10           (c)  Either the mayor of a municipality or the governing body

2-11     of a district may submit a written request to the other to initiate

2-12     negotiations under this section.  To initiate negotiations, the

2-13     recipient must respond affirmatively to the request to negotiate in

2-14     writing within 30 days of delivery.  The request or the response

2-15     may condition negotiations upon the agreement of other districts to

2-16     negotiate.

2-17           (d)  On electing to enter into negotiations with the mayor,

2-18     the board of directors shall appoint a designee from the board to

2-19     negotiate with the mayor.

2-20           (e)  On initiation of negotiations, the mayor and the board's

2-21     designee shall negotiate in good faith.  The mayor and the board's

2-22     designee may, in their discretion, agree to a written contract that

2-23     guarantees the continuation of the extraterritorial status of the

2-24     district and its immunity from annexation by the municipality for a

2-25     period not to exceed 15 years; a provision for revenue sharing

2-26     between the municipality and the district that compensates the

2-27     municipality for police protection, construction or maintenance of

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

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

 3-3     or service; and other terms, conditions and considerations that the

 3-4     parties consider appropriate.  If consented to by the district in

 3-5     the agreement, the municipality shall also be authorized to impose

 3-6     one or more of the following:

 3-7                 (1)  impose the municipality's sales and use tax within

 3-8     the boundaries of the district pursuant to the provisions of

 3-9     Chapter 321, Tax Code;

3-10                 (2)  impose a property assessment as authorized, and

3-11     for the purposes described, in Chapter 372 and for the purpose of

3-12     achieving public service and cost-sharing equity between the area

3-13     within the district and the municipality; provided that a petition

3-14     is not required to establish the assessment.  If an assessment is

3-15     imposed hereunder, the municipality is authorized to establish a

3-16     local government corporation within the district pursuant to

3-17     Subchapter D, Chapter 431, Transportation Code, for the purpose of

3-18     administering this assessment;

3-19                 (3)  a water fee surcharge sufficient to equalize water

3-20     rates within the district to those within the municipality; and

3-21                 (4)  the municipality's exercise within the boundaries

3-22     of the district powers provided in Subsection 2 of Article 1175,

3-23     Revised Civil Statutes, including without limitation the

3-24     enforcement of all franchising and right of way access requirements

3-25     and the collection of franchise fees from electric, gas,

3-26     telecommunications, and cable television providers, oil and gas

3-27     transmission or distribution pipelines, or other public utilities,

 4-1     making use of streets, alleys or public ways within the district,

 4-2     all on the same terms as if the district were included within the

 4-3     municipality.

 4-4           (f)  The governing body of the municipality and the board of

 4-5     a district may renew or extend a contract for successive periods

 4-6     not to exceed 15 years each.

 4-7           (g)  If a municipality and a district enter into negotiations

 4-8     under this section, the governing body of the municipality may not

 4-9     initiate proceedings to annex the district under any other section

4-10     of this code until either the mayor or the district delivers to the

4-11     other a notice terminating negotiations or 12 months after the

4-12     initial request or petition for negotiation is made, whichever

4-13     shall last occur.

4-14           (h)  Upon approval of the proposed contract by the governing

4-15     bodies of the municipality and the district, the municipality shall

4-16     publish a notice in a newspaper of general circulation in the

4-17     district summarizing the general terms of the contract.  Unless the

4-18     municipality receives a petition signed by at least 10% of the

4-19     electors within the district within 30 days of publication

4-20     requesting an election, the contract shall be deemed final and

4-21     binding on both parties.  If a petition  is timely received, the

4-22     contract shall be submitted to the voters of the district for

4-23     approval on the next applicable uniform election date.  If the

4-24     agreement is approved by a majority of those voting at such

4-25     election, the contract shall be binding on both the district and

4-26     the municipality.

4-27           (i)  If a majority of the qualified voters voting in an

 5-1     election required by this section does not approve the contract,

 5-2     the result of the election may not be interpreted as a request for

 5-3     annexation by the municipality.

 5-4           (j)  The municipality may enter into a contract as described

 5-5     in this section with the governing body of a local organization on

 5-6     behalf of the defined area in the municipality's extraterritorial

 5-7     jurisdiction represented by the local organization, provided that,

 5-8     on the next uniform election date, the contract is approved by a

 5-9     majority of those voting at a special election held in the defined

5-10     area of the local organization.  Subsection (g) shall not apply to

5-11     negotiations with a local organization under this section.

5-12           SECTION 2.  Chapter 321.102, Tax Code, is amended by adding

5-13     Subsection (c-1) to read as follows:

5-14           (c-1)  If the boundaries of a municipality in which the tax

5-15     imposed under this chapter are changed pursuant to Section

5-16     42.0441(e)(1), Local Government Code, the municipal secretary shall

5-17     send by United States registered or certified mail to the

5-18     comptroller a certified copy of the ordinance that changes the

5-19     municipality's boundaries and shows the effective date of the

5-20     boundary change.  The ordinance must be accompanied by a map

5-21     clearly showing the added territory.  The tax takes effect in the

5-22     added territory on the first day of the first calendar quarter

5-23     after the comptroller receives the ordinance and map.

5-24           SECTION 3.  The importance of this legislation and the

5-25     crowded condition of the calendars in both houses create an

5-26     emergency and an imperative public necessity that the

5-27     constitutional rule requiring bills to be read on three several

 6-1     days in each house be suspended, and this rule is hereby suspended.