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                                  * * * * *