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.