1-1     By:  Armbrister                                       S.B. No. 1865

 1-2           (In the Senate - Filed March 14, 1997; March 24, 1997, read

 1-3     first time and referred to Committee on Intergovernmental

 1-4     Relations; April 8, 1997, reported favorably by the following vote:

 1-5     Yeas 11, Nays 0; April 8, 1997, sent to printer.)

 1-6                            A BILL TO BE ENTITLED

 1-7                                   AN ACT

 1-8     relating to the operation, administration, and financing of utility

 1-9     districts.

1-10           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

1-11           SECTION 1.  Subsection (e), Section 49.057, Water Code, is

1-12     amended to read as follows:

1-13           (e)  The board shall require an officer, employee, or

1-14     consultant who routinely collects, pays, or handles any funds of

1-15     the district, such as the bookkeeper, financial advisor, or system

1-16     operator, to furnish good and sufficient bond, payable to the

1-17     district, in an amount determined by the board to be sufficient to

1-18     safeguard the district.  The board may require a bond from other

1-19     consultants as the board deems necessary.  The bond shall be

1-20     conditioned on the faithful performance of that person's duties and

1-21     on accounting for all funds and property of the district.  Such

1-22     bond shall be signed or endorsed by a surety company authorized to

1-23     do business in the state.

1-24           SECTION 2.  Section 49.103, Water Code, is amended by

1-25     amending Subsection (e) and adding Subsection (g) to read as

1-26     follows:

1-27           (e)  Section 49.002 notwithstanding, in all areas of conflict

1-28     the provisions of Subsections (a) and [Subsection] (b) shall take

1-29     precedence over all prior statutory enactments.

1-30           (g)  The districts that are required by this section to

1-31     convert to four-year terms or change election dates may extend the

1-32     terms of directors currently in office to the next appropriate

1-33     election date in an even-numbered year.  The directors in districts

1-34     that may have nonstaggered terms as a result of compliance with

1-35     prior requirements may draw lots to determine which directors shall

1-36     serve the longer terms necessary to convert to four-year staggered

1-37     terms.

1-38           SECTION 3.  Section 49.106, Water Code, is amended by adding

1-39     Subsection (d) to read as follows:

1-40           (d)  A bond election may be called as a result of an

1-41     agreement to annex additional land into the district.

1-42           SECTION 4.  Subsection (h), Section 49.181, Water Code, is

1-43     amended to read as follows:

1-44           (h)  This section does not apply to a district if:

1-45                 (1)  the district's boundaries include one entire

1-46     county;

1-47                 (2)  the district was created by a special Act of the

1-48     legislature and:

1-49                       (A)  the district is located entirely within one

1-50     county;

1-51                       (B)  entirely within one or more home-rule

1-52     municipalities;

1-53                       (C)  the total taxable value of the real property

1-54     and improvements to the real property zoned by one or more

1-55     home-rule municipalities for residential purposes and located

1-56     within the district does not exceed 25 percent of the total taxable

1-57     value of all taxable property in the district, as shown by the most

1-58     recent certified appraisal tax roll prepared by the appraisal

1-59     district for the county; and

1-60                       (D)  the district was not required by law to

1-61     obtain commission approval of its bonds before the effective date

1-62     of this section;

1-63                 (3)  the district is a special water authority; or

1-64                 (4)  the district is governed by a board of directors

 2-1     appointed in whole or in part by the governor, a state agency, or

 2-2     the governing body or chief elected official of a municipality or

 2-3     county and does not provide or propose to provide water, [and]

 2-4     sewer, drainage, reclamation, or flood control services to

 2-5     residential retail customers as its principal function.

 2-6           SECTION 5.  Subchapter F, Chapter 49, Water Code, is amended

 2-7     by adding Section 49.186 to read as follows:

 2-8           Sec. 49.186.  OBLIGATIONS, LEGAL INVESTMENT; SECURITY FOR

 2-9     FUNDS.  All bonds, notes, and other obligations issued by a

2-10     district shall be legal and authorized investments for all banks,

2-11     trust companies, building and loan associations, savings and loan

2-12     associations, insurance companies of all kinds and types,

2-13     fiduciaries, and trustees, and for all interest and sinking funds

2-14     and other public funds of the State of Texas, and all agencies,

2-15     subdivisions, and instrumentalities of the state including all

2-16     counties, cities, towns, villages, school districts, and all other

2-17     kinds and types of districts, public agencies, and bodies politic.

2-18     A district's bonds, notes, and other obligations shall be eligible

2-19     and lawful security for all deposits of public funds of the State

2-20     of Texas, and all agencies, subdivisions, and instrumentalities of

2-21     the state, including all counties, cities, towns, villages, school

2-22     districts, and all other kinds and types of districts, public

2-23     agencies, and bodies politic, to the extent of the market value of

2-24     the bonds, notes, and other obligations when accompanied by any

2-25     unmatured interest coupons attached to them.

2-26           SECTION 6.  Section 49.196, Water Code, is amended by adding

2-27     Subsection (c) to read as follows:

2-28           (c)  No conservation and reclamation district or entity

2-29     organized under Section 52, Article III, or Section 59, Article

2-30     XVI, Texas Constitution, shall be subject to the requirements of

2-31     Section 140.006, Local Government Code.

2-32           SECTION 7.  Subsection (a), Section 49.198, Water Code, is

2-33     amended to read as follows:

2-34           (a)  A district [that is not collecting taxes] may elect to

2-35     file annual financial reports with the executive director in lieu

2-36     of the district's compliance with Section 49.191 provided:

2-37                 (1)  the district had no bonds or other long-term (more

2-38     than one year) liabilities outstanding during the fiscal period;

2-39                 (2)  the district did not have gross receipts from

2-40     operations, loans, taxes, or contributions in excess of $100,000

2-41     during the fiscal period; and

2-42                 (3)  the district's cash and temporary investments were

2-43     not in excess of $100,000 at any time during the fiscal period.

2-44           SECTION 8.  Subsection (a), Section 49.218, Water Code, is

2-45     amended to read as follows:

2-46           (a)  A district or a water supply corporation may acquire

2-47     land, any interest in land, materials, waste grounds, easements,

2-48     rights-of-way, equipment, contract or permit rights or interests,

2-49     and other property, real or personal, considered necessary for the

2-50     purpose of accomplishing any one or more of the district's or water

2-51     supply corporation's purposes provided in this code or in any other

2-52     law.

2-53           SECTION 9.  Subsection (a), Section 49.226, Water Code, is

2-54     amended to read as follows:

2-55           (a)  Any personal property valued at more than $300, or any

2-56     [Any] land or[,] interest in land[, or personal property] owned by

2-57     the district which is found by the board to be surplus and is not

2-58     needed by the district may be sold under order of the board either

2-59     by public or private sale, or the land, interest in land, or

2-60     personal property may be exchanged for other land, interest in

2-61     land, or personal property needed by the district.  Except as

2-62     provided in Subsection (b), land, interest in land, or personal

2-63     property must be exchanged for like fair market value, which value

2-64     may be determined by the district.

2-65           SECTION 10.  The heading of Subchapter I, Chapter 49, Water

2-66     Code, is amended to read as follows:

2-67              SUBCHAPTER I.  [CONSTRUCTION] CONTRACTS FOR MATERIALS,

2-68                        MACHINERY, CONSTRUCTION, ETC.

2-69           SECTION 11.  Section 49.273, Water Code, is amended by

 3-1     amending the section heading and Subsections (a), (d), (e), (f),

 3-2     and (g) and adding Subsection (l) to read as follows:

 3-3           Sec. 49.273.  [CONSTRUCTION] CONTRACT AWARD.  (a)  The board

 3-4     shall contract for the purchase of equipment, materials, machinery,

 3-5     and construction, repair, or renovation of district facilities in

 3-6     accordance with this section.  The bidding documents, plans,

 3-7     specifications, and other data needed to bid on the project must be

 3-8     available at the time of the first advertisement and the

 3-9     advertisement shall state the location at which these documents may

3-10     be reviewed.

3-11           (d)  For [construction] contracts for $25,000 or more, the

3-12     board shall advertise the letting of the contract, including the

3-13     general conditions, time, and place of opening of sealed bids.  The

3-14     notice shall be published in one or more newspapers circulated in

3-15     each county in which part of the district is located.  If one

3-16     newspaper meets both of these requirements, publication in such

3-17     newspaper is sufficient.  If there are more than four counties in

3-18     the district, notice may be published in any newspaper with general

3-19     circulation in the district.  The notice shall be published once a

3-20     week for three consecutive weeks before the date that the bids are

3-21     opened, and the first publication shall be not later than the 21st

3-22     day before the date of the opening of the sealed bids.

3-23           (e)  For [construction] contracts for $15,000 or more but

3-24     less than $25,000, the board shall solicit written competitive bids

3-25     on uniform written specifications from at least three bidders.

3-26           (f)  For [construction] contracts of less than $15,000, the

3-27     board is not required to advertise or seek competitive bids.

3-28           (g)  The board may not subdivide work to avoid the

3-29     advertising requirements specified in this section. Repair of

3-30     district facilities by the utility service operator is not subject

3-31     to competitive bidding unless the costs of a single repair exceed

3-32     the advertising requirements specified in this section.

3-33           (l)  The provisions of this subchapter do not apply to

3-34     equipment, materials, or machinery purchased at an auction open to

3-35     the public.

3-36           SECTION 12.  Section 49.301, Water Code, is amended by

3-37     amending Subsection (b) and adding Subsection (g) to read as

3-38     follows:

3-39           (b)  If the district has bonds, notes, or other obligations

3-40     outstanding or bonds payable in whole or in part from taxes that

3-41     have been voted but are unissued, the board shall [may] require the

3-42     petitioner or petitioners to assume their share of the outstanding

3-43     bonds, notes, or other obligations and the voted but unissued tax

3-44     bonds of the district and authorize the board to levy a tax on

3-45     their property in each year while any of the bonds, notes, or other

3-46     obligations payable in whole or in part from taxation are

3-47     outstanding to pay their share of the indebtedness.

3-48           (g)  The order adding the proposed territory to the district

3-49     need not include all of the land described in the petition if at

3-50     the hearing a modification or change is found necessary or

3-51     desirable by the board.

3-52           SECTION 13.  Subsection (f), Section 49.302, Water Code, is

3-53     amended to read as follows:

3-54           (f)  A copy of the order annexing land to the district,

3-55     [signed by a majority of the members of the board and] attested by

3-56     the secretary of the board, shall be filed and recorded in the deed

3-57     records of the county or counties in which the district is located

3-58     if the land is finally annexed to the district.

3-59           SECTION 14.  Subsection (b), Section 49.455, Water Code, is

3-60     amended to read as follows:

3-61           (b)  The information form filed by a district under this

3-62     section shall include:

3-63                 (1)  the name of the district;

3-64                 (2)  the complete and accurate legal description of the

3-65     boundaries of the district;

3-66                 (3)  the most recent rate of district taxes on property

3-67     located in the district;

3-68                 (4)  the total amount of bonds that have been approved

3-69     by the voters and which may be issued by the district (excluding

 4-1     refunding bonds and any bonds or portion of bonds payable solely

 4-2     from revenues received or expected to be received pursuant to a

 4-3     contract with a governmental entity);

 4-4                 (5)  the aggregate initial principal amount of all

 4-5     bonds of the district payable in whole or in part from taxes

 4-6     (excluding refunding bonds and any bonds or portion of bonds

 4-7     payable solely from revenues received or expected to be received

 4-8     pursuant to a contract with a governmental entity) that have been

 4-9     previously issued [and remain outstanding];

4-10                 (6)  whether a standby fee is imposed by the district

4-11     and, if so, the amount of the standby fee;

4-12                 (7)  the date on which the election to confirm the

4-13     creation of the district was held if such was required;

4-14                 (8)  a statement of the functions performed or to be

4-15     performed by the district; and

4-16                 (9)  the particular form of Notice to Purchasers

4-17     required by Section 49.452 to be furnished by a seller to a

4-18     purchaser of real property in that district completed by the

4-19     district with all information required to be furnished by the

4-20     district.

4-21           If a district has not yet levied taxes, a statement to such

4-22     effect together with the district's most recent projected rate of

4-23     debt service tax shall be substituted for Subdivisions (3) and (4).

4-24           SECTION 15.  Subsection (b), Section 51.411, Water Code, is

4-25     amended to read as follows:

4-26           (b)  In the order, the board shall estimate the total amount

4-27     of money needed to cover:

4-28                 (1)  the cost of organization of the district;

4-29                 (2)  incidental expenses;

4-30                 (3)  the cost of investigation and making plans;

4-31                 (4)  the engineer's work and other incidental expenses;

4-32                 (5)  the cost of retirement of preliminary bonds;

4-33                 (6)  the cost of issuing and selling bonds;

4-34                 (7)  the estimated discount on the bonds;

4-35                 (8)  the cost of operation of the district for the

4-36     period of construction of the plant and improvements stated in the

4-37     engineer's report;

4-38                 (9)  an amount to pay interest on the bonds during the

4-39     period stated in the engineer's report, which shall be not more

4-40     than three years from the time the bonds are sold;

4-41                 (10)  any additional cost or expense made necessary by

4-42     any change or modification made in the proposed work by the

4-43     district; and

4-44                 (11)  the payment of interest on or the creation of a

4-45     reasonable reserve to pay interest on bonds and notes of the

4-46     district for a period of time not to exceed three years from the

4-47     date of the bonds and notes of the district [the items listed in

4-48     Section 51.409 of this code].

4-49           SECTION 16.  Section 54.102, Water Code, is amended to read

4-50     as follows:

4-51           Sec. 54.102.  QUALIFICATIONS FOR DIRECTORS.  To be qualified

4-52     to serve as a director, a person shall be at least 18 [21] years

4-53     old, a resident citizen of the State of Texas, and either own land

4-54     subject to taxation in the district or be a qualified voter within

4-55     the district.

4-56           SECTION 17.  Subsection (b), Section 54.802, Water Code, is

4-57     amended to read as follows:

4-58           (b)  The board shall adopt a proposed plan for improvements

4-59     in the defined area or to serve the designated property in the

4-60     manner provided by Section 49.106 [Sections 54.506-54.507] of this

4-61     code.

4-62           SECTION 18.  Subsection (a), Section 54.806, Water Code, is

4-63     amended to read as follows:

4-64           (a)  Before the adopted plans may become effective, they must

4-65     be approved by the voters in the defined area or within the

4-66     boundaries of the designated property.  The election shall be

4-67     conducted as provided by Section 49.106 of this code [this chapter]

4-68     for an election to authorize the issuance of bonds.

4-69           SECTION 19.  Subsection (b), Section 59.072, Water Code, is

 5-1     amended to read as follows:

 5-2           (b)  Except as specifically provided by this chapter, Chapter

 5-3     49 and Sections 54.018, 54.019(a), (b), (c), and (d), 54.020,

 5-4     54.021, 54.023, 54.024, 54.201, 54.205, 54.207, 54.208, 54.502

 5-5     through 54.505, 54.507(b) and (c), 54.510 through 54.512, 54.514,

 5-6     [54.515,] 54.518, 54.520, 54.521, 54.601 through 54.604, and 54.735

 5-7     through 54.737 apply under this chapter.

 5-8           SECTION 20.  Subsection (e), Section 42.042, Local Government

 5-9     Code, is amended to read as follows:

5-10           (e)  If the consent to initiate proceedings to create the

5-11     political subdivision is obtained, the consent will be valid until

5-12     withdrawn by the governing body [proceedings must be initiated

5-13     within six months after the date of the consent and must be finally

5-14     completed within 18 months after the date of the consent.  Failure

5-15     to comply with either time requirement terminates the consent].

5-16           SECTION 21.  Subchapter B, Chapter 41, Election Code, is

5-17     amended by adding Section 41.033 to read as follows:

5-18           Sec. 41.033.  EARLY CLOSING OF POLLS FOR ELECTIONS INVOLVING

5-19     FEWER THAN 50 QUALIFIED VOTERS.  In an election involving fewer

5-20     than 50 qualified voters, notwithstanding any other provision of

5-21     law, the presiding judge present at the polling place may determine

5-22     to close the polls at any time that the number of ballots cast

5-23     equals the number of qualified voters eligible to vote in the

5-24     election.

5-25           SECTION 22.  Subsection (b), Section 6.003, Civil Practice

5-26     and Remedies Code, is amended to read as follows:

5-27           (b)  The following are exempt from the appeal bond

5-28     requirements:

5-29                 (1)  a water improvement district, a water control and

5-30     improvement district, a conservation and reclamation district, [or]

5-31     a water control and preservation district organized under state

5-32     law, or any entity organized under Section 52, Article III, or

5-33     Section 59, Article XVI, Texas Constitution;

5-34                 (2)  a levee improvement district organized under state

5-35     law; and

5-36                 (3)  a drainage district organized under state law.

5-37           SECTION 23.  Subsection (a), Section 16.061, Civil Practice

5-38     and Remedies Code, is amended to read as follows:

5-39           (a)  A right of action of this state or any political

5-40     subdivision thereof, including but not limited to a county, an

5-41     incorporated city or town, a navigation district, a municipal

5-42     utility district, a conservation and reclamation district, a port

5-43     authority, an entity acting under Chapter 341, Acts of the 57th

5-44     Legislature, Regular Session, 1961 (Article 1187f, Vernon's Texas

5-45     Civil Statutes), [or] a school district, or any entity organized

5-46     under Section 52, Article III, or Section 59, Article XVI, Texas

5-47     Constitution, is not barred by any of the following

5-48     sections:  16.001-16.004, 16.006, 16.007, 16.021-16.028,

5-49     16.030-16.032, 16.035-16.037, 16.051, 16.062, 16.063,

5-50     16.065-16.067, 16.070, 16.071, 31.006, or 71.021.

5-51           SECTION 24.  Subdivision (8), Section 26.012, Tax Code, is

5-52     amended to read as follows:

5-53                 (8)  "Debt service" means the total amount expended or

5-54     to be expended by a taxing unit from property tax revenues to pay

5-55     principal of and interest on debts, [or] other payments required by

5-56     contract to secure the debts, or payments required on debts

5-57     anticipated to be incurred in the following calendar year.

5-58           SECTION 25.  Subsection (e), Section 26.04, Tax Code, is

5-59     amended to read as follows:

5-60           (e)  By August 7 or as soon thereafter as practicable, the

5-61     designated officer or employee shall submit the rates to the

5-62     governing body.  He shall deliver by mail to each property owner in

5-63     the unit or publish in a newspaper in the form prescribed by the

5-64     comptroller:

5-65                 (1)  the effective tax rate, the rollback tax rate, and

5-66     an explanation of how they were calculated;

5-67                 (2)  the estimated amount of interest and sinking fund

5-68     balances and the estimated amount of maintenance and operation or

5-69     general fund balances remaining at the end of the current fiscal

 6-1     year that are not encumbered with or by corresponding existing debt

 6-2     obligation, except that for a school district, estimated funds

 6-3     necessary for the operation of the district prior to the receipt of

 6-4     the first state education aid payment in the succeeding school year

 6-5     shall be subtracted from the estimated fund balances;

 6-6                 (3)  a schedule of the unit's debt obligations showing:

 6-7                       (A)  the amount of principal and interest that

 6-8     will be paid to service the unit's debts in the next year from

 6-9     property tax revenue, including payments of lawfully incurred

6-10     contractual obligations providing security for the payment of the

6-11     principal of and interest on bonds, payments required on debts

6-12     anticipated to be incurred in the following calendar year, and

6-13     other evidences of indebtedness issued on behalf of the unit by

6-14     another political subdivision;

6-15                       (B)  the amount by which taxes imposed for debt

6-16     are to be increased because of the unit's anticipated collection

6-17     rate; and

6-18                       (C)  the total of the amounts listed in

6-19     Paragraphs (A)-(B), less any amount collected in excess of the

6-20     previous year's anticipated collections certified as provided in

6-21     Subsection (b) of this section; and

6-22                 (4)  the amount of additional sales and use tax revenue

6-23     anticipated in calculations under Section 26.041 of this code;[.]

6-24                 (5)  in the year that a taxing unit calculates an

6-25     adjustment under Section 26.04(k) or (l) of this code, the unit

6-26     shall publish a schedule that includes the following elements:

6-27                       (A)  the name of the unit discontinuing the

6-28     department, function, or activity;

6-29                       (B)  the amount of property tax revenue spent by

6-30     the unit listed under Paragraph (A) of this subsection to operate

6-31     the discontinued department, function, or activity in the 12 months

6-32     preceding the month in which the calculations required by this

6-33     chapter are made; and

6-34                       (C)  the name of the unit that operates a

6-35     distinct department, function, or activity in all or a majority of

6-36     the territory of a taxing unit that has discontinued operating the

6-37     distinct department, function, or activity; and

6-38                 (6)  in the year following the year in which a taxing

6-39     unit raised its rollback rate as required by Section 26.04(l) of

6-40     this code, the taxing unit shall publish a schedule that includes

6-41     the following elements:

6-42                       (A)  the amount of property tax revenue spent by

6-43     the unit to operate the department, function, or activity for which

6-44     the taxing unit raised the rollback rate as required by Section

6-45     26.04(l) of this code for the 12 months preceding the month in

6-46     which the calculations required by this chapter are made; and

6-47                       (B)  the amount published by the unit in the

6-48     preceding tax year under Section 26.04(e)(5)(B) of this code.

6-49           SECTION 26.  Subsection (d), Section 191.0525, Natural

6-50     Resources Code, is amended to read as follows:

6-51           (d)  A project for a county, [or] municipality, or other

6-52     political subdivision requires advance project review only if the

6-53     project affects a cumulative area larger than five acres or

6-54     disturbs a cumulative area of more than 5,000 cubic yards,

6-55     whichever measure is triggered first, or if the project is inside a

6-56     designated historic district or recorded archeological site.

6-57           SECTION 27.  Sections 51.409, 53.071, 54.511, and 54.515,

6-58     Water Code, are repealed.

6-59           SECTION 28.  The importance of this legislation and the

6-60     crowded condition of the calendars in both houses create an

6-61     emergency and an imperative public necessity that the

6-62     constitutional rule requiring bills to be read on three several

6-63     days in each house be suspended, and this rule is hereby suspended,

6-64     and that this Act take effect and be in force from and after its

6-65     passage, and it is so enacted.

6-66                                  * * * * *