1-1 By: Nixon S.B. No. 1709 1-2 (In the Senate - Filed March 14, 1997; March 24, 1997, read 1-3 first time and referred to Committee on Natural Resources; 1-4 May 1, 1997, reported adversely, with favorable Committee 1-5 Substitute by the following vote: Yeas 8, Nays 0; May 1, 1997, 1-6 sent to printer.) 1-7 COMMITTEE SUBSTITUTE FOR S.B. No. 1709 By: Lindsay 1-8 A BILL TO BE ENTITLED 1-9 AN ACT 1-10 relating to the creation, administration, powers, duties, 1-11 operation, and financing of the Lake Livingston Special Utility 1-12 District; granting the authority to issue bonds. 1-13 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-14 ARTICLE 1. GENERAL PROVISIONS 1-15 SECTION 1.01. CREATION; LEGISLATIVE DECLARATION. (a) A 1-16 conservation and reclamation district to be known as the Lake 1-17 Livingston Special Utility District is created in Hardin, Liberty, 1-18 Polk, San Jacinto, Trinity, Tyler, and Walker counties, subject to 1-19 approval at a confirmation election under Section 2.04 of this Act. 1-20 The district is a governmental agency and a body politic and 1-21 corporate. 1-22 (b) The district is created under and is essential to the 1-23 accomplishment of the purposes of Section 59, Article XVI, Texas 1-24 Constitution. 1-25 SECTION 1.02. DEFINITIONS. In this Act: 1-26 (1) "Board" means the board of directors of the 1-27 district. 1-28 (2) "Commission" means the Texas Natural Resource 1-29 Conservation Commission. 1-30 (3) "Director" means a member of the board of 1-31 directors of the district. 1-32 (4) "District" means Lake Livingston Special Utility 1-33 District. 1-34 (5) "Corporation" means the Lake Livingston Water 1-35 Supply and Sewer Service Corporation, a corporation organized and 1-36 existing under Chapter 76, Acts of the 43rd Legislature, 1st Called 1-37 Session, 1933 (Article 1434a, Vernon's Texas Civil Statutes). 1-38 (6) "Executive director" means the executive director 1-39 of the commission. 1-40 (7) "Extraterritorial jurisdiction" means the 1-41 extraterritorial jurisdiction of a municipality as determined under 1-42 Chapter 42, Local Government Code. 1-43 (8) "Public agency" means a municipality, the United 1-44 States and its agencies, the state and its agencies, or any 1-45 district or authority created under Section 59, Article XVI, or 1-46 Sections 52(b)(1) and (2), Article III, Texas Constitution. 1-47 SECTION 1.03. PURPOSES OF DISTRICT. The district is created 1-48 for the following purposes: 1-49 (1) to purchase, own, hold, lease, or otherwise 1-50 acquire sources of water supply; to build, operate, and maintain 1-51 facilities for the transportation of water; and to sell water to 1-52 municipalities or other political subdivisions of the state, to 1-53 private business entities, or to individuals; and 1-54 (2) to protect, preserve, and restore the purity and 1-55 the sanitary condition of water within the district. 1-56 SECTION 1.04. Boundaries of District. The district includes 1-57 all the territory within the boundaries of the area covered by 1-58 Certificates of Convenience and Necessity No. 10147 (East Texas 1-59 Hydrotechnology, Inc.), No. 11364 (Paradise Cove), No. 12668 (Green 1-60 Acres), and No. 12633 (Lake Shore Hide-a-Way) and within the 1-61 boundaries of the Riverview Subdivision as described by the plat 1-62 filed with the county clerk of Walker County. 1-63 SECTION 1.05. OPEN MEETINGS. All meetings of the 1-64 corporation or the district shall be held and conducted in 2-1 accordance with Chapter 551, Government Code. 2-2 ARTICLE 2. ADMINISTRATIVE PROVISIONS 2-3 SECTION 2.01. RESOLUTION PROPOSING CREATION OF DISTRICT. 2-4 (a) The board of directors of the corporation shall adopt a 2-5 resolution recommending to the members of the corporation that the 2-6 corporation be converted to the district and that on the 2-7 confirmation of the district as provided below, all of the assets 2-8 of the corporation be conveyed to the district and the corporation 2-9 be dissolved. 2-10 (b) Not later than November 15, 1997, the board of directors 2-11 of the corporation shall submit the resolution to the membership 2-12 for a vote on the question of the conversion of the corporation to 2-13 the district. The vote shall be conducted in accordance with the 2-14 bylaws of the corporation. 2-15 SECTION 2.02. CONSENT OF MUNICIPALITY. The district may 2-16 operate within the corporate limits of a municipality or within the 2-17 extraterritorial jurisdiction of a municipality. The municipality 2-18 may require that the district construct all facilities to serve the 2-19 land in accordance with plans and specifications that are approved 2-20 by the municipality. The municipality may also require that the 2-21 municipality be entitled to inspect facilities being constructed by 2-22 the district within the corporate limits or extraterritorial 2-23 jurisdiction of the municipality. 2-24 SECTION 2.03. BOARD OF DIRECTORS. (a) The district is 2-25 governed by a board of seven directors. To serve as a director, a 2-26 person must be at least 18 years old and a qualified voter of the 2-27 district. Two directors must be residents of Polk County, two 2-28 directors must be residents of San Jacinto County, and one director 2-29 must be a resident of Trinity County. 2-30 (b) Temporary directors serve until initial directors are 2-31 elected under Section 2.04 of this Act. 2-32 (c) Initial directors serve until permanent directors are 2-33 elected under Section 2.05 of this Act. 2-34 (d) Permanent directors serve staggered four-year terms. 2-35 (e) Each director must qualify to serve as director in the 2-36 manner provided by Section 49.055, Water Code. 2-37 SECTION 2.04. CONFIRMATION ELECTION; ELECTION OF INITIAL 2-38 DIRECTORS. If the members of the corporation by a simple majority 2-39 approve the resolution to convert to the district, the board of 2-40 directors of the corporation shall call and conduct a confirmation 2-41 and directors election as provided by Subchapter D, Chapter 49, 2-42 Water Code. The board of directors of the corporation shall serve 2-43 as the temporary directors for the confirmation and directors 2-44 election. 2-45 SECTION 2.05. ELECTION OF DIRECTORS. On the first Saturday 2-46 in May of the first even-numbered year after the year in which the 2-47 confirmation election is held, an election shall be held in the 2-48 district for the election at large of three directors who shall 2-49 each serve two-year terms and four directors who shall each serve 2-50 four-year terms. Thereafter, on the same date in each subsequent 2-51 even-numbered year, the appropriate number of directors shall be 2-52 elected to the board. 2-53 ARTICLE 3. POWERS AND DUTIES 2-54 SECTION 3.01. GENERAL POWERS. (a) The district has all of 2-55 the rights, powers, privileges, authority, functions, and duties 2-56 provided by the general law of this state, including Chapters 49 2-57 and 65, Water Code, applicable to special utility districts created 2-58 under Section 59, Article XVI, Texas Constitution. This Act 2-59 prevails over any provision of general law that is in conflict or 2-60 inconsistent with this Act. 2-61 (b) The rights, powers, privileges, authority, functions, 2-62 and duties of the district are subject to the continuing right of 2-63 supervision of the state to be exercised by and through the 2-64 commission. 2-65 SECTION 3.02. ADDITIONAL POWERS. The district may purchase, 2-66 construct, acquire, own, operate, maintain, repair, improve, or 2-67 extend inside and outside its boundaries any works, improvements, 2-68 facilities, plants, equipment, and appliances necessary to 2-69 accomplish the purposes for which it was created, including works, 3-1 improvements, facilities, plants, equipment, and appliances 3-2 incident, helpful, or necessary to: 3-3 (1) supply water for municipal uses, domestic uses, 3-4 power and commercial purposes, and other beneficial uses or 3-5 controls; 3-6 (2) collect, transport, process, dispose of, store, or 3-7 control solid waste other than municipal solid waste; 3-8 (3) irrigate the land in the district; and 3-9 (4) alter land elevation in the district where it is 3-10 needed. 3-11 SECTION 3.03. MUNICIPAL SOLID WASTE. The district may not 3-12 collect municipal solid waste as defined by Section 361.003, Health 3-13 and Safety Code, or purchase, construct, acquire, own, operate, 3-14 maintain, repair, improve, or extend a municipal solid waste 3-15 collection and disposal system. 3-16 SECTION 3.04. ADOPTING RULES. (a) The district may adopt 3-17 and enforce reasonable rules to: 3-18 (1) secure and maintain safe, sanitary, and adequate 3-19 plumbing installations, connections, and appurtenances as 3-20 subsidiary parts of the district's sanitary sewer system; 3-21 (2) preserve the purity and the sanitary condition of 3-22 all water controlled by the district; 3-23 (3) prevent waste or the unauthorized use of water 3-24 controlled by the district; 3-25 (4) regulate privileges on any land or easement owned 3-26 or controlled by the district; and 3-27 (5) provide and regulate a safe and adequate 3-28 freshwater distribution system. 3-29 (b) In adopting rules under this Act, the district is 3-30 subject to Subchapter B, Chapter 2001, Government Code, as if the 3-31 district were a state agency. 3-32 SECTION 3.05. EFFECT OF RULES. After the required 3-33 publication, rules adopted by the district under Section 3.04 of 3-34 this Act shall be recognized by the courts as if the rules were 3-35 penal ordinances of a municipality. 3-36 SECTION 3.06. PUBLICATION OF RULES. (a) The board shall 3-37 publish a substantive statement of each rule adopted and the 3-38 penalty for a violation once a week for two consecutive weeks in 3-39 one or more newspapers with general circulation in the area in 3-40 which the district is located. 3-41 (b) The substantive statement shall be condensed as far as 3-42 possible to intelligently explain the purpose to be accomplished or 3-43 the act forbidden by each rule. 3-44 (c) The notice must advise that breach of a rule will 3-45 subject the violator to a penalty and that the full text of each 3-46 rule is on file in the principal office of the district, where it 3-47 may be read by any interested person. 3-48 (d) Any number of rules may be included in one notice. 3-49 SECTION 3.07. EFFECTIVE DATE OF RULES. The penalty for 3-50 violation of a rule is not effective and enforceable until the 3-51 fifth day after the date of the last publication of the notice. On 3-52 the fifth day after the date of the last publication, the published 3-53 rule takes effect, and ignorance of the rule is not a defense to a 3-54 prosecution for the enforcement of the penalty. 3-55 SECTION 3.08. PROHIBITION ON ASSESSMENT OR COLLECTION OF 3-56 TAXES. The district may not assess or collect a tax of any kind. 3-57 ARTICLE 4. BONDS AND NOTES 3-58 SECTION 4.01. ISSUANCE OF BONDS AND NOTES. The district may 3-59 issue bonds or notes for the purpose of purchasing, constructing, 3-60 acquiring, owning, operating, repairing, improving, or extending 3-61 any district works, improvements, facilities, plants, equipment, or 3-62 appliances needed to accomplish the purposes listed in Section 1.03 3-63 of this Act, including works, improvements, facilities, plants, 3-64 equipment, or appliances needed to provide a waterworks system, 3-65 sanitary sewer system, storm sewer system, or solid waste disposal 3-66 system, or to provide for the collection of solid waste other than 3-67 municipal solid waste, or for fire-fighting services and 3-68 facilities. 3-69 SECTION 4.02. Form of Bonds and Notes. (a) The district 4-1 may issue bonds or notes in various series or issues. 4-2 (b) Bonds or notes shall mature serially or otherwise not 4-3 more than 40 years from the date of issuance and shall bear 4-4 interest at any rate permitted by the constitution and laws of this 4-5 state. The board shall determine the maturity and the interest 4-6 rate of the bonds and notes. 4-7 (c) The district's bonds and notes and any interest coupons 4-8 are investment securities under Chapter 8, Business & Commerce 4-9 Code, and may be issued registrable as to principal or as to both 4-10 principal and interest. The board may make the bonds redeemable 4-11 before maturity or may include in the bonds a mandatory redemption 4-12 provision. 4-13 (d) The district's bonds or notes may be issued in the form, 4-14 denominations, and manner and under the terms and conditions 4-15 prescribed, and must be signed and executed as provided, by the 4-16 board in the resolution or order authorizing the issuance of the 4-17 bonds or notes. 4-18 SECTION 4.03. Repayment of Bonds or Notes. The board may 4-19 provide for the payment of principal of and interest on and any 4-20 redemption price for the bonds or notes by pledging all or any part 4-21 of the designated revenues to result from the ownership or 4-22 operation of the district's works, improvements, facilities, 4-23 plants, equipment, or appliances or under specific contracts for 4-24 the period the board determines. 4-25 SECTION 4.04. Additional Security for Bonds or Notes. 4-26 (a) The district's bonds or notes, as the board determines, may be 4-27 additionally secured by a deed of trust or mortgage lien on all or 4-28 part of the physical properties of the district, and franchises, 4-29 easements, water rights, and appropriation permits, leases, and 4-30 contracts, and any right appurtenant to those properties, vesting 4-31 in the trustee the power to sell the property for payment of the 4-32 indebtedness, the power to operate the property, and any other 4-33 authority necessary for the further security of the bonds or notes. 4-34 (b) The trust indenture, regardless of the existence of the 4-35 deed of trust or mortgage lien on any property, may: 4-36 (1) include provisions prescribed by the board for the 4-37 security of the bonds or notes and the preservation of the trust 4-38 estate; 4-39 (2) provide for amendment or modification; 4-40 (3) condition the right to spend district money or 4-41 sell district property on approval of a registered professional 4-42 engineer selected as provided in the trust indenture; and 4-43 (4) provide for investment of district money. 4-44 (c) Any purchaser under a sale under the deed of trust or 4-45 mortgage lien, if one is given, is the absolute owner of the 4-46 property, facilities, and rights purchased and is entitled to 4-47 maintain and operate them. 4-48 SECTION 4.05. Method for Issuance of Bonds and Notes. Bonds 4-49 or notes may be issued by resolution or order of the board. 4-50 SECTION 4.06. Provisions of Bonds or Notes. (a) In an 4-51 order or resolution authorizing the issuance of bonds or notes, 4-52 including refunding bonds, the board may provide for the flow of 4-53 funds, the establishment and maintenance of the interest and 4-54 sinking fund, the reserve fund, and other funds, and may enter into 4-55 additional covenants relating to the bonds or notes and the pledged 4-56 revenues and to the operation and maintenance of those works, 4-57 improvements, facilities, plants, equipment, or appliances the 4-58 revenues of which are pledged, including provision for the 4-59 operation of, or the leasing of all or any part of, the 4-60 improvements and for the use or pledge of money derived from the 4-61 operation contracts and leases, as the board considers appropriate. 4-62 (b) An order or resolution of the board authorizing the 4-63 issuance of bonds or notes also may prohibit the further issuance 4-64 of bonds, notes, or other obligations payable from the pledged 4-65 revenue or may reserve the right to issue additional bonds to be 4-66 secured by a pledge of and payable from the revenue on a parity 4-67 with or subordinate to the lien and pledge in support of the bonds 4-68 being issued, subject to any conditions set forth in the order or 4-69 resolution. 5-1 (c) An order or resolution of the board issuing bonds or 5-2 notes may include other provisions and covenants determined by the 5-3 board that are not prohibited by the Texas Constitution or by this 5-4 Act. 5-5 (d) The board may adopt and have executed any other 5-6 proceedings or instruments necessary and convenient in the issuance 5-7 of bonds or notes. 5-8 SECTION 4.07. Use of Bond or Note Proceeds. The district 5-9 may use bond or note proceeds to pay interest and administrative 5-10 and operating expenses expected to accrue during the period of 5-11 construction. The period of construction under this section may 5-12 not exceed three years as provided by the bond order or resolution. 5-13 The district also may use bond or note proceeds to pay expenses 5-14 incurred and to be incurred in the issuance, sale, and delivery of 5-15 the bonds or notes. 5-16 SECTION 4.08. Sale or Exchange of Bonds. (a) The board 5-17 shall sell the bonds on the best terms and for the best possible 5-18 price, but the bonds may not be sold for less than 95 percent of 5-19 their face value. 5-20 (b) The district may exchange bonds for property acquired by 5-21 purchase or in payment of the contract price of work done or 5-22 services performed for the use and benefit of the district. 5-23 SECTION 4.09. Refunding Bonds. (a) The district may issue 5-24 bonds to refund all or any part of its outstanding bonds, notes, or 5-25 other obligations, including matured but unpaid interest coupons. 5-26 (b) Refunding bonds shall mature serially or otherwise not 5-27 more than 40 years from their date and shall bear interest at any 5-28 rate or rates permitted by the constitution and laws of this state. 5-29 (c) Refunding bonds may be payable from the same source as 5-30 the bonds, notes, or other obligations being refunded or from other 5-31 sources. 5-32 (d) The refunding bonds shall be approved by the attorney 5-33 general and shall be registered by the comptroller on the surrender 5-34 and cancellation of the bonds being refunded. 5-35 (e) An order or resolution authorizing the issuance of 5-36 refunding bonds may provide that the refunding bonds will be sold 5-37 and the proceeds deposited in the place or places at which the 5-38 bonds being refunded are payable, and the refunding bonds may be 5-39 issued before the cancellation of the bonds being refunded provided 5-40 an amount sufficient to pay the principal of and interest on the 5-41 bonds being refunded to their maturity dates, or to their option 5-42 dates if the bonds have been properly called for payment before 5-43 maturity according to their terms, is deposited in the place or 5-44 places at which the bonds being refunded are payable. The 5-45 comptroller shall register the refunding bonds without the 5-46 surrender and cancellation of bonds being refunded. 5-47 (f) A refunding may be accomplished in one or in several 5-48 installment deliveries. Refunding bonds and their interest coupons 5-49 are investment securities under Chapter 8, Business & Commerce 5-50 Code. 5-51 (g) In lieu of the method set forth in this section, a 5-52 district may refund bonds, notes, or other obligations as provided 5-53 by the general laws of this state. 5-54 SECTION 4.10. Obligations; Legal Investment; Security for 5-55 Funds. (a) Bonds, notes, and other obligations issued by the 5-56 district are legal and authorized investments for all banks, 5-57 savings banks, trust companies, savings and loan associations, 5-58 insurance companies, fiduciaries, trustees, and guardians, and for 5-59 interest and sinking funds and other public funds of the state and 5-60 its agencies, including the permanent school fund, and counties, 5-61 cities, school districts, and other political subdivisions of the 5-62 state. 5-63 (b) The district's bonds, notes, and other obligations are 5-64 eligible to secure deposits of public funds of the state and its 5-65 agencies and counties, cities, school districts, and other 5-66 political subdivisions of the state. The bonds, notes, and other 5-67 obligations are lawful and sufficient security to the extent of 5-68 their market value if accompanied by all unmatured interest coupons 5-69 attached to them. 6-1 SECTION 4.11. Mandamus by Bondholders. In addition to other 6-2 rights and remedies provided by law, if the district defaults in 6-3 the payment of principal of, interest on, or redemption price for 6-4 its bonds when due, fails to make payments into any fund created in 6-5 the order or resolution authorizing the issuance of the bonds, or 6-6 defaults in the observation or performance of any other covenants, 6-7 conditions, or obligations stated in the resolution or order 6-8 authorizing the issuance of the bonds, the owners of any of the 6-9 bonds are entitled to a writ of mandamus issued by a court of 6-10 competent jurisdiction compelling the district and its officials to 6-11 observe and perform the covenants, obligations, or conditions 6-12 prescribed in the order or resolution authorizing the issuance of 6-13 the district's bonds. 6-14 SECTION 4.12. Cancellation of Unsold Bonds. (a) The board 6-15 by order or resolution may provide for the cancellation of all or 6-16 any part of any bonds that have been submitted to and approved by 6-17 the attorney general and registered by the comptroller but not yet 6-18 sold and may provide for the issuance of new bonds in lieu of the 6-19 old bonds in the manner provided by this Act for the issuance of 6-20 the original bonds, including approval of the bonds by the attorney 6-21 general and registration of the bonds by the comptroller. 6-22 (b) The order or resolution of the board shall describe the 6-23 bonds to be canceled and the new bonds to be issued in lieu of the 6-24 old bonds. 6-25 (c) A certified copy of the order or resolution of the board 6-26 providing for the cancellation of the old bonds, together with the 6-27 old bonds, shall be delivered to the comptroller, who shall cancel 6-28 and destroy the old bonds and make a record of the cancellation. 6-29 ARTICLE 5. CONSOLIDATION OF DISTRICTS 6-30 SECTION 5.01. CONSOLIDATION. The district may consolidate 6-31 with any district governed by Chapter 65, Water Code, in accordance 6-32 with Section 65.723 et seq., Water Code. 6-33 ARTICLE 6. EMERGENCY 6-34 SECTION 6.01. EMERGENCY. The importance of this legislation 6-35 and the crowded condition of the calendars in both houses create an 6-36 emergency and an imperative public necessity that the 6-37 constitutional rule requiring bills to be read on three several 6-38 days in each house be suspended, and this rule is hereby suspended, 6-39 and that this Act take effect and be in force from and after its 6-40 passage, and it is so enacted. 6-41 * * * * *