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.