SRC-ARR H.B. 3804 76(R)   BILL ANALYSIS


Senate Research Center   H.B. 3804
76R11235 MI-DBy: Crownover (Nelson)
Natural Resources
5/13/1999
Engrossed


DIGEST 

The Lake Cities Municipal Utilities Authority (LCMUA) provides the Lake
Dallas area with water and wastewater services. It was originally created
in the 58th legislative session in 1963. Due to changes in the law, some of
LCMUA's statutes are now in conflict with current law. C.S.H.B. 3804 is a
comprehensive consolidation, clarification, and update of LCMUA's prior
statutes and amendments. This bill updates LCMUA's territorial boundaries,
annexation, disannexation and eminent domain provisions as well as sections
regarding the issuance and payment of bonds and matters which relate to the
Texas Natural Resource Conservation Commission.  

PURPOSE

As proposed, H.B. 3804 provides for comprehensive consolidation,
clarification, and update of prior statutes and amendments of the Lake
Cities Municipal utility Authority . 

RULEMAKING AUTHORITY

This bill does not grant any additional rulemaking authority to a state
officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1. VALIDATION AND CREATION; PRINCIPAL OFFICES. Validates and
reconfirms the creation of the conservation and reclamation district known
as Lake Cities Municipal Utility Authority (LCMUA), which is a governmental
agency and a body politic and corporate, under the authority of Section 59,
Article XVI, Texas Constitution. Requires the principal offices of LCMUA to
be located in Denton County, Texas.  

SECTION 2. DEFINITIONS. Defines "board" and "LCMUA." 

SECTION 3. BOUNDARIES. Provide that LCMUA consists of the territory
contained in the boundaries of the City of Lake Dallas and that part of the
City of Shady Shores specifically described in the official records of
LCMUA. Requires the specific territorial boundary of LCMUA and any changes
to it to be definitively described in the official records of LCMUA.  

SECTION 4. FINDING OF BENEFIT. Provides finding of benefit.

SECTION 5. GENERAL POWERS. Sets forth the general powers of LCMUA.

SECTION 6. BOARD OF DIRECTORS. Provides that LCMUA is governed by a
five-person Board of Directors (board). Sets forth the method of electing
the board, the length of terms of the members, qualifications of members,
and establishes election procedures. Provides that no compensation shall be
paid to any board member.  

SECTION 7. OFFICERS. Requires the board to elect from its number a
president and vice president of LCMUA and such other officers as in the
judgment of the board are necessary or appropriate. Sets forth the duties
of the president, the vice president, the secretary, the treasurer.  

SECTION 8. EMPLOYMENT AUTHORITY; GENERAL MANAGER. Authorizes the board to
employ professional persons including engineers, attorneys, accountants,
consultants, and other  employees. Requires the board to hire a general
manager to conduct the day-to-day business of LCMUA. Authorizes the board
to authorize the general manager to perform certain acts. Sets forth
prohibited acts of the general manager.  

SECTION 9. SEAL. Authorizes the board to adopt a seal for LCMUA. 

SECTION 10. ANNEXATION BY PETITION OF QUALIFIED VOTERS. Authorizes
additional territory to be annexed to LCMUA under certain circumstances.
Sets forth the required contents of the petition. Requires the board to
adopt a resolution stating the conditions of annexation and setting a time
and place for a hearing on the annexation if the board makes certain
findings. Sets forth the contents of the resolution. Sets forth publication
requirements. Sets forth requirements for an election to annex the
property. Prohibits the annexation of railroad right-of-way unless the
right-of way is within the limits of an incorporated municipality or other
governmental body.  

SECTION 11. DISANNEXATION. Authorizes an election for disannexation.
Provides that a disannexation election shall be held in the same manner as
an annexation election. Prohibits a disannexation from reducing the tax
base necessary to support outstanding bonds by levy and assessment of ad
valorem taxes.  

SECTION 12. ANNEXATION AND DISANNEXATION BY LANDOWNER PETITION. Sets forth
the procedures for annexing and disannexing through landowner petitions.  

SECTION 13. POWERS. Sets forth the powers and authority of LCMUA to develop
surface or underground water storage and supply facilities and to construct
or cause to be constructed a diversion works, pumps, pumping stations,
pipelines, intermediate and terminal storage reservoirs, water treatment
plants, distribution systems, and all other related facilities which will
facilitate or implement the duty of LCMUA to deliver and distribute water
within its territory and any other territory for which it holds a
certificate of convenience and necessity and to purchase, improve, modify,
or extend any existing water system or systems within the certificated
territory or outside the certificated territory if reasonably necessary or
appropriate for the support of services within the certificated territory.
Authorizes LCMUA to construct, maintain service, and operate a complete
wastewater system. Authorizes LCMUA to use public streets, alleys, ways,
and places for the laying of its water and wastewater lines and
facilities.Authorizes LCMUA to make contracts for the purchase of water or
water supplies, purchase treated water, purchase wastewater treatment
facilities and to make contracts for the purchase or sale of treated or
untreated water or waste water. Provides that LCMUA is also empowered and
has authority to obtain any and all permits, licenses, consents, and
permissions as may be appropriate from the Texas Natural Resource
Conservation Commission or any other appropriate regulatory body in order
to conduct any of its operations. Provides that LCMUA is further authorized
to purchase and sell all works, machinery, plants, and other facilities and
equipment and land, rights-of-way, and easements necessary or appropriate
for the purpose of exercising its rights and performing its duties under
this Act.  

SECTION 14. EMINENT DOMAIN. Establishes that LCMUA has full power of
eminent domain.  

SECTION 15. CONSTRUCTION CONTRACT. Requires any construction contract to be
procured in accordance with Subchapter I (Construction, Equipment,
Materials, and Machinery Contracts), Chapter 49, Water Code.  

SECTION 16. AUTHORITY TO ISSUE BONDS. Sets forth the manner and procedures
in which LCMUA is authorized to issue general obligation and revenue bonds.

SECTION 17. REFUNDING BONDS. Sets forth the manner in which LCMUA is
authorized to issue refunding bonds for the purpose of refunding any
outstanding bonds authorized by this Act or other authority and any
interest thereon.  

SECTION 18. ADDITIONAL SECURITY. Authorizes any bonds (including refunding
bonds) authorized by law, not payable wholly from ad valorem taxes, to be
additionally secured by a trust indenture under which the trustee may be a
bank, having trust powers, situated either within or out side the State of
Texas. Sets forth additional powers of the board with respect to such bonds
and the  rights of a purchaser under a sale under a deed of trust lien.  

SECTION 19. ELECTION REQUIRED FOR TAX-SUPPORTED BONDS. Prohibits bonds
payable wholly or partially from ad valorem taxes (except refunding bonds)
from being issued unless authorized by an election at which only the
qualified voters residing in the LCMUA's voting territory are allowed to
vote and unless a majority of the votes cast is in favor of the issuance of
the bonds. Authorizes bonds not payable wholly or partially from ad valorem
taxes to be issued without an election. Sets forth the procedures for an
election.  

SECTION 20. DEPOSITORY. Requires the board to designate one or more banks
to serve as depository for the funds of LCMUA. Requires all funds of LCMUA
to be deposited in such depository bank or banks except that funds pledged
to pay bonds may be deposited with the trustee bank named in the trust
agreement or other escrow, and except that funds shall be remitted to the
bank or banks of payment for the payment of principal of and interest on
bonds. Provides that if funds in the depository bank and the trustee bank
are not insured by the Federal Deposit Insurance Corporation they are
required to be secured in the manner provided by law for the security of
municipal funds. Provides that banks selected by the board need not go
through any bid process or process regarding invitation of the banks to
become designated depositories.  

SECTION 21. ABOLITION OF LCMUA. Authorizes LCMUA to be abolished by a
majority vote of the qualified voters residing within the voting territory
of LCMUA at an election held for the purpose. Establishes the procedure for
such elections.  

SECTION 22. PUBLIC PURPOSE. States that the accomplishment of the purposes
stated in this Act are for the benefit of the people of this state and for
the improvement of their properties and industries, and LCMUA, in carrying
out the purposes of this Act, will be performing an essential public
function under the constitution. Prohibits LCMUA from being required to pay
any tax or assessment on any project, operations, equipment, personal or
real property or any part thereof, and the bonds issued hereunder and their
transfer and the income therefrom, including the profits made on the sale
thereof, shall at all times be free from taxation within this state.  

SECTION 23. TAX ASSESSOR-COLLECTOR. Authorizes the Denton County tax
assessor and collector to be used as a tax assessor and collector and
Denton Central Appraisal District to be designated as a board of
equalization and cause taxes to be assessed, valuations to be equalized,
and tax rolls to be prepared. Provides for procedures in the event that
Denton County and Denton Central Appraisal District do not cooperate.  

SECTION 24. STATUTORY INTERPRETATION. Prohibits this Act from being
interpreted as amending or repealing the statutes regarding the priorities
of the use of water or any legislation governing water control.  

SECTION 25. Provides that all notice and formal bill introductions have
been followed in the passage of this Act.  

SECTION 26. TRANSITION: ELECTION OF DIRECTORS. Sets forth the method of
determining which directors serve four-year terms initially and provides
that the director who is serving on the effective date of this Act will
remain director until a successor is elected at the directors election in
2000.  

SECTION 27. Emergency clause. 
                        Effective date: upon passage.