Bill not drafted by TLC or Senate E&E.

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         By:  Gallegos                                 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.

 1-8           (a)  It is the intent of the legislature to enable municipal

 1-9     utility districts in extraterritorial areas and municipalities to

1-10     negotiate mutually-agreeable alternatives to annexation.  In

1-11     furtherance of that goal, this section authorizes municipal utility

1-12     districts and municipalities to execute mutually-agreeable

1-13     contracts providing for the joint funding of services in lieu of

1-14     annexation.

1-15           (b)  For purposes of this section:

1-16                 (1)  "District" means a municipal utility district,

1-17     water control and improvement district, or other district created

1-18     under Article XVI, Section 59 of the Texas Constitution.

1-19                 (2)  "Municipality" means a municipality over 1.6

1-20     million population.

1-21                 (3)  "Services" means services delivered within the

1-22     area of a district or services provided by a municipality for the

1-23     benefit of persons outside the municipality.

 2-1           (c)  The mayor of a municipality may enter into negotiations

 2-2     with the board of directors of one or more districts located in the

 2-3     municipality's extraterritorial jurisdiction.  Notice of the

 2-4     mayor's request to initiate negotiations shall be submitted to the

 2-5     board of the district.  A district may in its discretion agree to

 2-6     enter into negotiations with the mayor.

 2-7           (d)  Upon electing to enter into negotiations with the mayor,

 2-8     the board of directors shall appoint a designee from the board to

 2-9     negotiate with the mayor.

2-10           (e)  The mayor of a municipality shall enter into

2-11     negotiations with the board of a district located in the

2-12     municipality's extraterritorial jurisdiction upon submission of a

2-13     petition approved by a majority of the members of the board.  The

2-14     mayor shall enter into negotiations with the board not later than

2-15     30 days after a valid petition is filed with the mayor.

2-16           (f)  Upon initiation of negotiations, the mayor and the

2-17     board's designee shall negotiate in good faith.  The mayor and the

2-18     board's designee may, in their discretion, agree to a written

2-19     contract that includes one or more of the following options:

2-20                 (1)  a provision that guarantees the continuation of

2-21     the extraterritorial status of the defined area and its immunity

2-22     from annexation by the municipality for a period not to exceed 15

2-23     years;

2-24                 (2)  a provision for revenue-sharing between the

2-25     municipality and the district that compensates for police

 3-1     protection, fire protection, construction or maintenance of water

 3-2     or wastewater facilities, construction or maintenance of roads or

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

 3-4     service;

 3-5                 (3)  a provision that imposes the municipality's sales

 3-6     and excise tax within the boundaries of the district, pursuant to

 3-7     the provisions of Chapter 321 of the Tax Code;

 3-8                 (4)  a provision that imposes a property assessment (as

 3-9     authorized under Chapter 372, Local Government Code) for the

3-10     purpose of achieving public service and cost sharing equity between

3-11     the area within the district and property located within the

3-12     boundaries of the municipality.  If such assessment is imposed by

3-13     mutual agreement, the municipality is authorized to establish a

3-14     local government corporation within the district pursuant to

3-15     Subchapter D, Chapter 431, Transportation Code, for the purpose of

3-16     administrating said assessment;

3-17                 (5)  a provision imposing a water and sewer surcharge;

3-18     or

3-19                 (6)  provisions that include other terms, conditions

3-20     and considerations that the parties consider appropriate.

3-21           (g)  The governing body of the municipality and the board of

3-22     a district may renew or extend a contract for successive periods

3-23     not to exceed 15 years.

3-24           (h)  A contract agreed to by the mayor of a municipality and

3-25     the board of a district shall be submitted to the governing body of

 4-1     the municipality and the board of the district for final approval.

 4-2     Upon approval by the governing body of the municipality and a

 4-3     majority of members of the board of the district, the contract

 4-4     shall be deemed finally approved and binding on both parties.

 4-5           SECTION 2.  Chapter 321.102, Tax Code, is amended by adding a

 4-6     new subsection (c-1) to read as follows:

 4-7           (c-1)  If the boundaries of a municipality in which the tax

 4-8     imposed under this chapter are changed pursuant to Subchapter (C),

 4-9     Chapter 42, Sec. 42.0441(e)(2), Local Government Code, the

4-10     municipal secretary shall send by United States registered or

4-11     certified mail to the controller a certified copy of the ordinance

4-12     that changes the municipality's boundaries and shows the effective

4-13     date of the boundary change.  The ordinance must be accompanied by

4-14     a map clearly showing the added territory.  The tax takes effect in

4-15     the added territory on the first day of the first calendar quarter

4-16     after the comptroller receives the ordinance and map.

4-17           SECTION 3.  The importance of this legislation and the

4-18     crowded condition of the calendars in both houses create an

4-19     emergency and an imperative public necessity that the

4-20     constitutional rule requiring bills to be read on three several

4-21     days in each house be suspended, and this rule is hereby suspended.