HBA-EVB H.B. 3165 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 3165 By: Keel Land & Resource Management 4/8/1999 Introduced BACKGROUND AND PURPOSE Upon the annexation of land within a water or sewer district by a municipality, such a district is dissolved with respect to the annexed land. Current law makes no provision for the resumption of a water or sewer district's original functions if such an annexation is determined by the courts to be invalid. The purpose of H.B. 3165 is to provide that such districts resume their functions as before the annexation and purported dissolution to avoid disruption of services for area residents. This bill also contains conditions, reporting requirements, and time frames concerning the provision of services to residents of the affected area. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Subchapter D, Chapter 43, Local Government Code, by adding Section 43.0716 as follows: Sec. 43.0716. INVALID ANNEXATIONS AND RESUMPTION OF SPECIAL DISTRICT FUNCTIONS. (a) Requires the district to resume its functions as before the annexation and purported dissolution in the event a municipality's annexation of certain land is subsequently determined to be invalid and such land was contained within a water or sewer district, as that term is defined in Section 43.071 of this Subchapter as of the date of the annexation; and such district was purported to have been dissolved under that invalid annexation. Requires the district to commence the resumption of functions on the 30th day after a final non-appealable decision of a Texas court of competent jurisdiction is rendered that the annexation is invalid; or that a statute which serves to prohibit annexation under conditions which exist for such annexed land is determined to be constitutional. (b) Requires the municipality which had annexed the land contained within the district to do the following, at its expense within thirty days of such non-appealable decision or on the effective date of this Act, if such decision has already been rendered: (1) transfer all of the district's assets, including revenues from taxes levied by the district back to the possession of the district. (2) notify in writing all financial institutions with whom assets of the district had been held at the time of the purported dissolution, all owners of the district's bonds, and all water and sewer customers of the district of the resumption of the district's functions and duties. (3) provide to the board of directors of the district a written accounting of all assets of the district held by the municipality and of all assets or obligations disposed of by the municipality, including the amounts of proceeds from the sale of any district assets. At the discretion of the board of directors of the district, an independent appraisal of the reasonableness of the sales price of any such asset together with interest thereon at the rate of six percent (6%) per annum from the date the municipality received the sales proceeds may be required and shall be paid for by the municipality. A municipality shall pay to the district the amount of money equal to the difference between the value established by the independent appraisal and the sales price received by the municipality, if the sales price is less than the value established by the independent appraisal, together with interest thereon at the rate of six percent (6%) per annum from the date the municipality received the sales proceeds. (4) pay to the owners of taxable property in the district from whom the municipality collected ad valorem taxes, the amount of such taxes collected together with interest at a rate of six percent (6%) per annum. (5) provide to the board of directors of the district a written accounting of all revenues received and expenses incurred from the municipality's operation of the district's water and sanitary sewer systems and pay to the district the amount of any excess of such revenues over such expenses. (c) Requires the elected or duly appointed directors who were serving as directors at the time of the purported dissolution of the district to resume their positions as directors and authorizes them to assume their powers and duties under state law. Requires their oaths of office and bonds to be reinstated. Requires that the vacancy be filled by appointment of the board in the event a director is no longer qualified to serve under the requirements of state law. Requires that the vacancies be filled by the appointment by the commission of the Texas Natural Resource Conservation Commission within twenty days of the receipt of a written request by any remaining director of the board or by any landowner within the district, if the number of directors is reduced to fewer than a majority. Requires a director appointed to fill a vacancy to serve until the next regular election date for the district. (d) Requires all contracts and other outstanding obligations, including bonded indebtedness, which existed at the time of the purported dissolution to be of full force and effect, except for any conditions imposed by the municipality under Section 54.016 (Consent of City), Water Code, which conditions are provided to be hereby annulled and at no further force or effect. Authorizes the district, at the sole discretion of its board of directors, to assume any obligations incurred by the municipality for the direct benefit of the land or water or sewer customers of the district after the purported annexation. Requires those obligations not assumed by the district to remain the obligations of the municipality. Prohibits the municipality from seeking reimbursement from the district for monies spent or assets of the municipality consumed by the municipality for the benefit of the district, landowners or the district's water or sewer customers during the period of the invalid annexation. (e) Requires all water and sewer customers located within the boundaries of the district or its preexisting out-of-district service area, if any, and connected to the water or sewer facilities of the district prior to or after the municipality's annexation and purported dissolution of the district, to be customers of the district. Prohibits the municipality from being authorized to discontinue service to customers until the district is able to resume its operations of the water or sewer system. (f) Requires all voted authority of the district, including taxing authority and authority to issue bonded indebtedness secured by taxes or revenues, to be in effect as if the annexation and purported dissolution had not occurred. SECTION 2. Emergency clause. Effective date: upon passage.