By Lindsay                                      S.B. No. 1602

      75R8703 CAG-D                           

                                A BILL TO BE ENTITLED

 1-1                                   AN ACT

 1-2     relating to annexations by a municipality.

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

 1-4           SECTION 1.  Subchapter B, Chapter 43, Local Government Code,

 1-5     is amended by adding Sections 43.0201 and 43.0202 to read as

 1-6     follows:

 1-7           Sec. 43.0201.  TEMPORARY MORATORIUM ON ANNEXATION.  (a)  A

 1-8     municipality may not annex any area until after August 31, 1999.

 1-9           (b)  This section expires September 1, 1999.

1-10           Sec. 43.0202.  STUDY COMMISSION ON MUNICIPAL ANNEXATION.

1-11     (a)  The Study Commission on Municipal Annexation is composed of

1-12     nine members appointed as follows:

1-13                 (1)  three members appointed by the lieutenant

1-14     governor;

1-15                 (2)  three members appointed by the speaker of the

1-16     house;

1-17                 (3)  one member appointed by the county judge of Bexar

1-18     County from the governing body of a municipal utility district

1-19     located wholly in Bexar County;

1-20                 (4)  one member appointed by the county judge of Harris

1-21     County from the governing body of a municipal utility district

1-22     located wholly in Harris County; and

1-23                 (5)  one member appointed by the county judge of Travis

1-24     County from the governing body of a municipal utility district

 2-1     located wholly in Travis County.

 2-2           (b)  Each member of the commission serves at the will of the

 2-3     person who appointed the member.

 2-4           (c)  The commission shall elect a presiding officer and

 2-5     assistant presiding officer from its members.

 2-6           (d)  A member of the commission is not entitled to receive

 2-7     compensation for service on the commission but is entitled to

 2-8     reimbursement of the travel expenses incurred by the member while

 2-9     conducting the business of the commission, as provided by the

2-10     General Appropriations Act.

2-11           (e)  The commission may accept gifts and grants from any

2-12     source to be used to carry out a function of the commission.

2-13           (f)  The commission shall study issues that the commission

2-14     determines have importance to municipal annexation, including

2-15     annexation procedures, reasons and procedures for disannexation,

2-16     and the delivery of services following annexation.  The commission

2-17     may:

2-18                 (1)  appoint an advisory committee to assist the

2-19     commission in studying a specific annexation issue; and

2-20                 (2)  draft proposed legislation to modify existing

2-21     annexation statutes.

2-22           (g)  Not later than December 1, 1998, the commission shall

2-23     issue a report summarizing:

2-24                 (1)  any hearings conducted by the commission;

2-25                 (2)  any studies conducted by the commission;

2-26                 (3)  any legislation proposed by the commission; and

2-27                 (4)  any other findings and recommendations of the

 3-1     commission.

 3-2           (h)  The commission shall promptly deliver copies of the

 3-3     report to the lieutenant governor and the speaker of the house.

 3-4           (i)  The commission shall adopt rules to administer this

 3-5     section.

 3-6           (j)  The commission is abolished, and this section expires

 3-7     June 1, 1999.

 3-8           SECTION 2.  Subchapter B, Chapter 43, Local Government Code,

 3-9     is amended by adding Section 43.0215 to read as follows:

3-10           Sec. 43.0215.  VOTER APPROVAL OF ANNEXATION REQUIRED IN

3-11     CERTAIN MUNICIPALITIES.  (a)  This section applies only to a

3-12     municipality with a population of 250,000 or more.

3-13           (b)  The municipality may not annex an area for full or

3-14     limited purposes unless:

3-15                 (1)  the municipality holds separate elections in the

3-16     area proposed to be annexed and in the municipality, at which the

3-17     qualified voters of the area and the municipality may vote, on the

3-18     question of the annexation; and

3-19                 (2)  a majority of the votes received at both elections

3-20     approve the annexation.

3-21           (c)  This section does not apply to an annexation of an area

3-22     if:

3-23                 (1)  no qualified voters reside in the area; or

3-24                 (2)  the annexation is authorized by or subject to

3-25     another section of this chapter, other than Section 43.021.

3-26           (d)  The municipality shall pay for the cost of holding both

3-27     elections.

 4-1           (e)  If a majority of the votes received in either election

 4-2     do not approve the annexation, the municipality may not annex any

 4-3     portion of the proposed area until after the fifth anniversary of

 4-4     the date of the election.

 4-5           SECTION 3.  Subchapter C, Chapter 43, Local Government Code,

 4-6     is amended by adding Sections 43.0541 and 43.0542 to read as

 4-7     follows:

 4-8           Sec. 43.0541.  ANNEXATIONS BY MUNICIPALITY WITH POPULATION OF

 4-9     MORE THAN 250,000.  (a)  A municipality with a population of more

4-10     than 250,000 may not annex a strip of area following the course of

4-11     a road, highway, river, stream, creek, or other natural or

4-12     constructed feature if the commissioners court of the county in

4-13     which a majority of the area is located, by resolution, finds that

4-14     the area:

4-15                 (1)  is composed primarily of commercial property or

4-16     property with a high taxable value;

4-17                 (2)  is part of a larger area in which a sense of

4-18     community exists among a significant number of the residents and

4-19     landowners; and

4-20                 (3)  does not include all parts of the larger area in

4-21     which the sense of community exists.

4-22           (b)  To prevent the annexation, the commissioners court must

4-23     adopt the resolution before the completion of the annexation by the

4-24     municipality.

4-25           (c)  Each finding by a commissioners court under this section

4-26     shall be reviewed by an annexation review committee consisting of:

4-27                 (1)  the county judge;

 5-1                 (2)  a county commissioner designated by the

 5-2     commissioners court;

 5-3                 (3)  a member of the governing body of the municipality

 5-4     designated by that governing body;

 5-5                 (4)  a person appointed by the state representative

 5-6     whose district includes the majority of the area proposed for

 5-7     annexation; and

 5-8                 (5)  a person appointed by the state senator whose

 5-9     district includes the majority of the area proposed for annexation.

5-10           (d)  The designations and appointments to the committee shall

5-11     be made not later than the 14th day after the date of the adoption

5-12     of the commissioners court resolution.

5-13           (e)  The county judge is the presiding officer of the

5-14     committee.  The committee shall meet at the call of the presiding

5-15     officer at a place convenient to the majority of the area proposed

5-16     for annexation.

5-17           (f)  The committee may affirm or reverse the finding of the

5-18     commissioners court.  The committee must issue its decision not

5-19     later than the 60th day after the date of the adoption of the

5-20     commissioners court resolution.  The decision of the committee may

5-21     be appealed to a district court serving the county in which a

5-22     majority of the area proposed for annexation is located.  The

5-23     district court may not substitute its judgment for that of the

5-24     commissioners court or the annexation review committee unless the

5-25     decision by the commissioners court or the committee was arbitrary,

5-26     capricious, unlawful, or not supported by substantial evidence.

5-27           (g)  If the finding of the commissioners court is reversed by

 6-1     the annexation review committee or by a court, the time during

 6-2     which the municipality was prevented from annexing the area as a

 6-3     result of the commissioners court resolution is not included in

 6-4     computing the period within which the municipality must complete

 6-5     the annexation under Section 43.053.

 6-6           Sec. 43.0542.  FAILURE OF MUNICIPALITY TO PROVIDE WATER OR

 6-7     SEWER SERVICES.  (a)  If a municipality fails to provide water or

 6-8     sewer services to an annexed area before the 10th anniversary of

 6-9     the date of the annexation, a municipal ordinance or other

6-10     municipal regulation has no effect in the annexed area until the

6-11     municipality provides water or sewer services to the annexed area.

6-12           (b)  Subsection (a) does not permit a municipality to

6-13     discontinue providing any other municipal service to the annexed

6-14     area.

6-15           SECTION 4.  Subchapter C, Chapter 43, Local Government Code,

6-16     is amended by adding Section 43.0562 to read as follows:

6-17           Sec. 43.0562.  SERVICE PLAN FOR CERTAIN WATER DISTRICT

6-18     ANNEXATION.  (a)  This section applies only to a municipality with

6-19     a population of 225,000 or more that proposes to annex an area that

6-20     includes, in whole or in part, any area in the boundaries of a

6-21     municipal utility district or a water district regulated,

6-22     established, or operating under Title 4, Water Code.

6-23           (b)  In addition to any requirements of Section 43.056, a

6-24     municipality shall, before it begins an annexation under this

6-25     chapter, comply with the requirements of this section.

6-26           (c)  Before the 90th day before the date of an annexation and

6-27     before the publication of the notice of the first hearing required

 7-1     under Section 43.052, the governing body of a municipality shall

 7-2     publish a service plan that provides for the extension of full

 7-3     municipal services to an annexed area.

 7-4           (d)  In developing the service plan, the municipality must

 7-5     negotiate the terms of the plan with the governing board of a

 7-6     municipal utility district or water district located in the area

 7-7     proposed to be annexed.  If the municipality and the governing

 7-8     board of the district cannot reach agreement on any portion of a

 7-9     service plan, the issue shall be submitted for arbitration under

7-10     Chapter 171, Civil Practice and Remedies Code.

7-11           (e)  The service plan must provide that every  municipal

7-12     service described in the plan for the area to be annexed be

7-13     provided in a manner that ensures the services are equal to or

7-14     better than the services provided to the area immediately before

7-15     annexation.  An annexation may not occur if any service proposed in

7-16     the plan is less than the service provided immediately before the

7-17     annexation.  The service must also be provided to each portion of

7-18     the area to be annexed in the exact way that the service is

7-19     provided to any other portion of the area to be annexed.

7-20           (f)  In addition to the requirements for a service plan under

7-21     Section 43.056, a service plan under this chapter must include:

7-22                 (1)  a description of the emergency medical services to

7-23     be provided to the area that includes a description of:

7-24                       (A)  service delivery times, including dispatch

7-25     and response times;

7-26                       (B)  equipment and supplies, including types of

7-27     ambulance units, types of medical equipment with which units are

 8-1     equipped, and the ability of emergency services providers to use

 8-2     the equipment and supplies;

 8-3                       (C)  staffing and qualifications of emergency

 8-4     medical service workers;

 8-5                       (D)  communications provided to units in the

 8-6     area, including the use of 911 systems or other emergency

 8-7     communication systems;

 8-8                       (E)  mutual aid agreements the municipality

 8-9     entered;

8-10                       (F)  any special apparatus or services, including

8-11     emergency education training; and

8-12                       (G)  other detailed direct comparisons between

8-13     any aspect of emergency medical services and the services proposed

8-14     to be provided by the municipality; and

8-15                 (2)  a description of the fire protection services to

8-16     be provided to the area that includes a description of:

8-17                       (A)  service delivery times, including average

8-18     dispatch and average response times;

8-19                       (B)  the types of fire protection equipment and

8-20     capabilities, including whether the equipment meets industry

8-21     standards at the time of the annexation, is capable of comparable

8-22     or multiple functions, and is capable of stand-alone operations and

8-23     whether any reserve equipment is in fact operational;

8-24                       (C)  the organization and staffing of fire

8-25     protection units in the area, including whether the organization is

8-26     capable of addressing the immediate needs of the area, whether

8-27     sufficient well-trained personnel exist, and the certification and

 9-1     training levels of the personnel;

 9-2                       (D)  the cost of providing the fire protection

 9-3     services;

 9-4                       (E)  any mutual aid agreements the municipality

 9-5     has made or will make;

 9-6                       (F)  any special apparatus or services, including

 9-7     hazardous materials units or vehicles, water, technical, or

 9-8     vehicular rescue units or training, and emergency education

 9-9     training; and

9-10                       (G)  other detailed direct comparisons between

9-11     any aspect of fire protection services in the area immediately

9-12     before annexation and the services proposed to be provided by the

9-13     municipality.

9-14           (g)  In determining whether municipal service providers

9-15     provide service equal to or better than that provided by a

9-16     voluntary provider, a voluntary provider is considered equal to a

9-17     municipal service provider if the voluntary provider is trained or

9-18     certified under state law and has complied with any continuing

9-19     education requirements.

9-20           (h)  In determining whether service delivery or response

9-21     times are equal to or better than services immediately before

9-22     annexation, the service plan shall use the service delivery or

9-23     response times of the emergency medical or fire protection

9-24     organization operating in the area.

9-25           (i)  A fire protection or emergency service mutual aid

9-26     agreement that existed before the date of the service plan shall be

9-27     continued under the service plan for a period of not less than 10

 10-1    years.

 10-2          (j)  If a municipality enters into an agreement with any

 10-3    party to provide services under the plan required by this section,

 10-4    the municipality shall provide the party with compatible

 10-5    communication equipment that allows the party to communicate, in

 10-6    any manner the party determines is necessary, directly with the

 10-7    municipality's service provider.

 10-8          (k)  The service plan shall allow a resident of the area

 10-9    proposed to be annexed to vote in any election.  If a municipality

10-10    holds an election and the residents of an annexed area are not

10-11    allowed to vote in the election, the results of the election are

10-12    void.  This subsection does not apply to:

10-13                (1)  an election on the question of the creation of a

10-14    municipal special district or authority in which no part of the

10-15    area annexed is part of the proposed special district or authority

10-16    and the creation of which would not create any liability for which

10-17    a resident of the annexed area would be requested to pay in any

10-18    way, including through the payment of any municipal tax;

10-19                (2)  a local option election conducted under Chapter

10-20    251, Alcoholic Beverage Code, in which no part of the area annexed

10-21    is part of the area affected by the election; or

10-22                (3)  an election for a single-member district of the

10-23    municipality, in which no part of the area annexed is part of the

10-24    area within the district.

10-25          (l)  A municipality shall hold three or more public hearings

10-26    at which persons interested in the service plan are given an

10-27    opportunity to be heard. Each hearing shall be separated by 30 or

 11-1    more days from the date of a previous hearing. The hearing shall be

 11-2    held between 7 p.m. and 9 p.m. at a site designated by the

 11-3    municipal utility districts in the area proposed for annexation.

 11-4          (m)  A hearing conducted under this section shall be

 11-5    conducted by a visiting state judge and a written record of the

 11-6    proceedings shall be maintained.

 11-7          (n)  Not later than the 30th day after the date of the last

 11-8    hearing, the municipality and a municipal utility district shall

 11-9    agree on an independent third party to review the service plan to

11-10    determine if the plan meets the requirements of this section. If

11-11    the third party determines that the service plan does not meet the

11-12    requirements, the service plan is void and the municipality shall

11-13    develop a new service plan under this section.

11-14          (o)  If the municipality, in annexing an area, either renders

11-15    useless for its primary function an emergency service provider's or

11-16    fire protection provider's land, buildings, or equipment in the

11-17    area to be annexed or in an adjacent area, or, using eminent domain

11-18    powers, condemns a provider's land or buildings, the municipality

11-19    shall pay to the provider, not later than the 30th day before the

11-20    date of the annexation, the value of the land, building, or

11-21    equipment that is determined by the average of three independent

11-22    appraisals.  The municipality shall pay the cost of the appraisals.

11-23    A service plan adopted under this section shall list any land,

11-24    buildings, or equipment affected and shall allow providers to add

11-25    additional affected property to the list.

11-26          SECTION 5.  Sections 43.0751(b), (d), (e), and (f), Local

11-27    Government Code, are amended to read as follows:

 12-1          (b)  The governing bodies of a municipality with a population

 12-2    of 225,000 or more and a district shall negotiate and shall [may]

 12-3    enter into a written strategic partnership agreement for the

 12-4    district having a term of five or more years.  The governing body

 12-5    of a municipality  must make a written determination of the need

 12-6    for full purpose annexation and must have entered into a strategic

 12-7    partnership agreement with a district for 10 or more years before

 12-8    the date the municipality annexes any portion of the district for

 12-9    full purposes.  The governing bodies of the municipality and the

12-10    district shall evidence their intention to negotiate such an

12-11    agreement by resolution, each of which resolutions shall specify an

12-12    expiration date if the other governing body fails to adopt a

12-13    resolution under this section on or before the specified date.  The

12-14    governing body of a municipality that has evidenced its intention

12-15    by unexpired resolution to enter into negotiations with a district

12-16    for an agreement under this section may not initiate proceedings to

12-17    annex the district under any other section of this code prior to

12-18    the expiration of five [two] years after the adoption date of the

12-19    resolution unless the municipality has previously instituted

12-20    annexation proceedings in granting consent to the creation of the

12-21    district prior to January 1, 1995.

12-22          (d)  Before the governing body of a municipality or a

12-23    district adopts a strategic partnership agreement, it shall conduct

12-24    three [two] public hearings at which members of the public who wish

12-25    to present testimony or evidence regarding the proposed agreement

12-26    shall be given the opportunity to do so.  The hearings shall be

12-27    conducted by a visiting state judge jointly selected by the

 13-1    municipality and the district.  Notice of public hearings conducted

 13-2    by the governing body of a municipality under this subsection shall

 13-3    be published in a newspaper of general circulation in the

 13-4    municipality and in the district.  The notice must be in the format

 13-5    prescribed by Section 43.123(b) and must be published at least once

 13-6    on or after the 20th day before each date.  Notice of public

 13-7    hearings conducted by the governing body of a district under this

 13-8    subsection shall be given in accordance with the district's

 13-9    notification procedures for other matters of public importance.

13-10    Any notice of a public hearing conducted under this subsection

13-11    shall contain a statement of the purpose of the hearing, the date,

13-12    time, and place of the hearing, and the location where copies of

13-13    the proposed agreement may be obtained prior to the hearing.  The

13-14    governing bodies of a municipality and a district may conduct joint

13-15    public hearings under this subsection, provided that at least one

13-16    public hearing is conducted within the district.  A municipality

13-17    may combine the public hearings and notices required by this

13-18    subsection with the public hearings and notices required by Section

13-19    43.124.

13-20          (e)  The governing body of a municipality may not annex a

13-21    district for full or limited purposes under this chapter [section

13-22    or under the provisions of Subchapter F] until it has adopted a

13-23    strategic partnership agreement with the district.  The governing

13-24    body of a municipality may not adopt a strategic partnership

13-25    agreement before the agreement has been adopted by the governing

13-26    body of the affected district.

13-27          (f)  A strategic partnership agreement may provide for the

 14-1    following:

 14-2                (1)  limited-purpose annexation of the district under

 14-3    the provisions of Subchapter F  provided that the district shall

 14-4    continue in existence during the period of limited-purpose

 14-5    annexation;

 14-6                (2)  such amendments to the timing requirements of

 14-7    Sections 43.123(d)(2) and 43.127(b) as may be necessary or

 14-8    convenient to effectuate the purposes of the agreement;

 14-9                (3)  payments by the municipality to the district for

14-10    services provided by the district;

14-11                (4)  annexation of any commercial property in a

14-12    district for full purposes by the municipality, notwithstanding any

14-13    other provision of this code or the Water Code, except for the

14-14    obligation of the municipality to provide, directly or through

14-15    agreement with other units of government, full provision of

14-16    municipal services to annexed territory, in lieu of any annexation

14-17    of residential property or payment of any fee on residential

14-18    property in lieu of annexation of residential property in the

14-19    district authorized by this subsection;

14-20                (5)  a full-purpose annexation provision that specifies

14-21    one of the following:

14-22                      (A)  the date on which the land included within

14-23    the district's boundaries shall be converted from the

14-24    municipality's limited-purpose jurisdiction to its full-purpose

14-25    jurisdiction, provided that such date shall not be later than 10

14-26    years after the effective date of the strategic partnership

14-27    agreement;  or

 15-1                      (B)(i)  terms for payment of an annual fee to the

 15-2    municipality by the district in lieu of full-purpose annexation,

 15-3    the form in which each such payment must be tendered, a method of

 15-4    calculating the fee, and the date by which each such payment must

 15-5    be made;  failure by a district to timely make an annual payment in

 15-6    lieu of full-purpose annexation in the amount and form required by

 15-7    a strategic partnership agreement shall be the only ground for

 15-8    termination of the agreement with respect to annexation at the

 15-9    option of the municipality;

15-10                            (ii)  to determine a reasonable fee to be

15-11    derived from residential property in a district, the municipality

15-12    or the district may request a cost-of-service study by an

15-13    independent third party agreeable to both parties if

15-14    cost-of-service data prepared by the municipality is not

15-15    acceptable.  The municipality is [Both parties shall be equally]

15-16    responsible for the cost of the study, which shall include an

15-17    evaluation of the estimated annual cost of providing municipal

15-18    services to the residential portion of the district over the next

15-19    10 years and the estimated annual amount of ad valorem taxes from

15-20    residential property the city would receive on full-purpose

15-21    annexation of the district over the next 10 years.  The governing

15-22    board of a district may contribute to the cost of any study.  The

15-23    fee shall not exceed the  estimated annual amount of residential ad

15-24    valorem taxes that would be derived by full-purpose annexation of

15-25    the district, less the estimated annual amount required to provide

15-26    municipal services to the residential property in the district if

15-27    annexed for full purposes.  A fee determined through this

 16-1    methodology is subject to renegotiation every 10 years at the

 16-2    request of either party to the agreement, or every five years if

 16-3    agreed to by all parties to the agreement, following the same

 16-4    procedure used to set the fee in the original agreement.  This

 16-5    methodology does not apply to fees from commercial property;

 16-6                (6)  conversion of the district to a limited district

 16-7    including some or all of the land included within the boundaries of

 16-8    the district, which conversion shall be effective on the

 16-9    full-purpose annexation conversion date established under

16-10    Subdivision (5)(A);

16-11                (7)  agreements existing between districts and

16-12    governmental bodies and private providers of municipal services in

16-13    existence on the date a municipality evidences its intention by

16-14    adopting a resolution to negotiate for a strategic partnership

16-15    agreement with the district shall be continued and provision made

16-16    for modifications to such existing agreements; [and]

16-17                (8)  such other lawful terms that the parties consider

16-18    appropriate; and

16-19                (9)  the addition of other political subdivisions to

16-20    the agreement to allow the provision of the  highest quality of

16-21    services at the lowest fee to residents of the district.

16-22          SECTION 6.  Chapter 43, Local Government Code, is amended by

16-23    adding Subchapter I to read as follows:

16-24                    SUBCHAPTER I.  ANNEXATION PLANNING

16-25          Sec. 43.301.  APPLICATION.  This chapter applies to a

16-26    municipality with a population of 225,000 or more.

16-27          Sec. 43.302.  RESTRICTIONS ON ANNEXATION OR REGULATION.  A

 17-1    municipality may not annex or regulate any area under this chapter

 17-2    except if the annexation or regulation conforms to an annexation

 17-3    plan adopted under this subchapter.

 17-4          Sec. 43.303.  ANNEXATION PLAN.  (a)  A municipality shall

 17-5    prepare an annexation plan that describes any proposed annexations

 17-6    or regulations in the municipality's extraterritorial jurisdiction

 17-7    for a 10-year period following the publication of the plan. A

 17-8    municipality may modify the plan annually.

 17-9          (b)  The plan adopted by the municipality shall require that

17-10    the annexation or regulation of an area occur in a manner that:

17-11                (1)  is orderly;

17-12                (2)  treats all areas in the municipality's

17-13    extraterritorial jurisdiction in the same manner;

17-14                (3)  provides all necessary or requested information to

17-15    residents of the area to be annexed or regulated in a timely

17-16    manner;

17-17                (4)  is fiscally responsible to residents of the

17-18    municipality and the area to be annexed or regulated;

17-19                (5)  requires the municipality to cooperate with the

17-20    residents of the area and any other political subdivision located,

17-21    in whole or in part, in the area; and

17-22                (6)  follows a logical and progressive manner.

17-23          Sec. 43.304.  CONTENTS OF PLAN.  (a)  The plan shall:

17-24                (1)  describe the municipality's method of determining

17-25    the areas in the municipality's extraterritorial jurisdiction that

17-26    will be annexed or regulated in the five years following the date

17-27    the plan is prepared;

 18-1                (2)  require that a municipality contact the existing

 18-2    service providers in an area the municipality proposes to annex and

 18-3    jointly develop any service plan required under Section 43.056;

 18-4                (3)  include the requirements of a planning study and

 18-5    regulatory plan for each proposed annexation similar to the study

 18-6    and plan described by Section 43.123; and

 18-7                (4)  require the municipality to describe the ability

 18-8    of residents of the affected area to vote in any municipal election

 18-9    or to participate in municipal government.

18-10          (b)  A plan may not propose to annex or regulate an area in

18-11    the extraterritorial jurisdiction of the municipality if the area

18-12    is not directly adjacent to the boundaries of the municipality.  An

18-13    area is not directly adjacent to the boundaries of a municipality

18-14    if the area is adjacent to the boundaries of the municipality by a

18-15    strip of area in the municipality that follows the course of a

18-16    road, highway, river, stream, or creek, and that has a width of

18-17    less than 1,000 feet at any point in the strip of area.

18-18          (c)  A plan shall require that a municipality must conduct an

18-19    economic impact study before annexing an area. The study shall

18-20    measure the economic impact on the municipality and the area

18-21    proposed to be annexed. The study shall follow procedures similar

18-22    to those adopted by state agencies in conducting an economic impact

18-23    analysis. The study shall be conducted by an independent entity

18-24    selected by the municipality and an entity representing the

18-25    interests of the area proposed to be annexed. If a municipal

18-26    utility district or other special district exists in the area, the

18-27    district shall be the representative entity.

 19-1          SECTION 7.  Subchapter Z, Chapter 43, Local Government Code,

 19-2    is amended by adding Section 43.905 to read as follows:

 19-3          Sec. 43.905.  OVERSIGHT OF CERTAIN ANNEXATIONS.  (a)  This

 19-4    section applies only to an annexation:

 19-5                (1)  by a municipality with a population of 225,000 or

 19-6    more; and

 19-7                (2)  of an area that contains any portion of a

 19-8    municipal utility district.

 19-9          (b)  An annexation oversight committee shall be established

19-10    for each area annexed by a municipality under this chapter.

19-11          (c)  The committee shall be composed of five members. Two

19-12    members of the committee must be members of the governing body of

19-13    any municipal utility  district located in the extraterritorial

19-14    jurisdiction of the most populous municipality in the state that

19-15    has a population less than the population of the annexing

19-16    municipality and shall be appointed by the county judge of the

19-17    county in which a majority of the district is located.  Two members

19-18    of the committee must be members of the governing body of the next

19-19    two most populous municipalities in the state that have a

19-20    population less than the population of the annexing municipality,

19-21    and each of those municipal governing bodies shall appoint one

19-22    member.  The presiding officer of the committee must be a visiting

19-23    judge jointly appointed by the governing body of the annexing

19-24    municipality and the governing bodies of all the municipal utility

19-25    districts located in whole or in part in the annexed area.  If a

19-26    person who is required to appoint a member of the committee has not

19-27    appointed the member before the 45th day after the date of the

 20-1    annexation, the member shall be jointly appointed by the annexing

 20-2    municipality and the municipal utility districts.

 20-3          (d)  The committee may meet after the 90th day following the

 20-4    effective date of the annexation but before the 270th day following

 20-5    the effective date of the annexation.

 20-6          (e)  The annexing municipality shall:

 20-7                (1)  pay each member of the committee a $25 per diem

 20-8    for each day the member engages in the business of the committee;

 20-9                (2)  reimburse the actual expenses of each member of

20-10    the committee; and

20-11                (3)  pay the costs of the operation of the committee.

20-12          (f)  The committee shall review the municipality's compliance

20-13    with any service plan for the annexed area adopted under this

20-14    chapter.  The committee shall establish procedures to allow persons

20-15    in the annexed area to bring complaints to the committee for

20-16    investigation and rules for the investigation and resolution of the

20-17    complaints.

20-18          (g)  If a majority of the committee determines that the

20-19    municipality has failed to provide a service required under a

20-20    service plan, the committee may issue a warning to the municipality

20-21    to comply with the service plan within 10 days after the date the

20-22    warning is issued.  If the municipality does not remedy the

20-23    noncompliance with the service plan within the 10-day period, a

20-24    majority of the committee may fine the municipality not more than

20-25    $500 for each day of a violation.  If the fine is not paid within

20-26    seven business days after the date it is imposed,  the municipality

20-27    shall be assessed a fee of $200 for each day the payment is late.

 21-1          (h)  The municipality may appeal a fine to the district court

 21-2    of the county in which the majority of the municipality is located.

 21-3    The court shall review the imposition of the fine under a

 21-4    substantial evidence rule.

 21-5          (i)  A fine or late fee paid by the municipality under this

 21-6    section shall be equally distributed to each homeowners association

 21-7    whose boundaries are wholly or partly in the annexed area.

 21-8          (j)  The committee may also resolve any disputes between the

 21-9    municipality and any service provider with which the municipality

21-10    has contracted under the service plan.

21-11          (k)  On the 270th day after the effective date of the

21-12    annexation, the committee shall make a final determination if the

21-13    municipality is in compliance with the service plans adopted under

21-14    this chapter.  If the committee determines that a municipality has

21-15    not provided services required under a service plan, the finding by

21-16    the committee is final against the municipality and the

21-17    municipality may not challenge the finding in any subsequent

21-18    disannexation proceeding.  If the committee determines the

21-19    municipality is in compliance, the finding is not admissible in any

21-20    subsequent disannexation proceeding and is not binding on any

21-21    party.  The terms of office for committee members expire

21-22    immediately following the committee's determination under this

21-23    subsection.

21-24          (l)  The committee may also act as an arbitration panel, if

21-25    requested by any party, of a commercial matter required to be

21-26    resolved as a result of the annexation.

21-27          (m)  If disannexation occurs, the committee shall act as an

 22-1    arbitration panel to determine the apportionment of any asset,

 22-2    debt, bond, or other financial instrument between the municipality

 22-3    and any other political subdivision. If the committee makes a

 22-4    determination under this subsection, the provisions of this chapter

 22-5    relating to restrictions on the release of an annexed area from a

 22-6    municipality's taxing authority do not apply.

 22-7          SECTION 8.  Before November 1, 1997, the lieutenant governor,

 22-8    the speaker of the house, and the county judges shall appoint

 22-9    members to the Study Commission on Municipal Annexation as provided

22-10    by Section 43.0202, Local Government Code, as added by this Act.

22-11          SECTION 9.  Section 43.0201, Local Government Code, as added

22-12    by this Act, applies to any action by a municipality to annex an

22-13    area, regardless of whether the annexation proceeding was initiated

22-14    before the effective date of this Act.

22-15          SECTION 10.  The changes in law made by Sections 43.0215,

22-16    43.0541, 43.0542, and 43.905, Local Government Code, as added by

22-17    this Act, apply only to an annexation in process on or initiated

22-18    after the effective date of this Act.

22-19          SECTION 11.  A municipality shall adopt a plan under

22-20    Subchapter I, Chapter 43, Local Government Code, as added by this

22-21    Act, not later than January 1, 1998. A municipality may not annex

22-22    an area or impose a new regulation on an area until the

22-23    municipality has adopted a plan under this section.

22-24          SECTION 12.  The importance of this legislation and the

22-25    crowded condition of the calendars in both houses create an

22-26    emergency and an imperative public necessity that the

22-27    constitutional rule requiring bills to be read on three several

 23-1    days in each house be suspended, and this rule is hereby suspended,

 23-2    and that this Act take effect and be in force from and after its

 23-3    passage, and it is so enacted.