HBA-NLM S.B. 89 76(R)BILL ANALYSIS Office of House Bill AnalysisS.B. 89 By: Madla Land & Resource Management 4/7/1999 Engrossed BACKGROUND AND PURPOSE Under current Texas law, municipalities have the exclusive right to annex within their extraterritorial jurisdictions. S.B. 89 revises the municipal annexation process, requiring cities to implement advance annexation planning procedures and providing for the timely provision of services to the annexed areas, among other revisions. 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 B, Chapter 42, Local Government Code, by adding Section 42.0225, as follows: Sec. 42.0225. EXTRATERRITORIAL JURISDICTION AROUND CERTAIN MUNICIPALLY OWNED PROPERTY. Provides that this section applies only to an area owned by a municipality that is annexed by the municipality, and not contiguous to other territory of the municipality. Provides that the annexation of the area expands the extraterritorial jurisdiction of the municipality only to include the area located within one mile of the boundaries of the annexed area, notwithstanding certain provisions under Section 42.021 (Extent of Extraterritorial Jurisdiction). Provides that the extraterritorial jurisdiction of the municipality does not expand following the annexation of territory located only in the municipality's extraterritorial jurisdiction otherwise provided by this section. SECTION 2. Amends Subchapter A, Chapter 43, Local Government Code, by adding Section 43.002, as follows: Sec. 43.002. CONTINUATION OF LAND USE. (a) Prohibits a municipality, after annexing an area, from prohibiting a person from continuing to use land in the area in the manner in which the land was being used on the date the annexation proceedings were instituted if the land use was legal at that time, or beginning to use land in the area in the manner that was planned for the land before the 90th day before the effective date of the annexation if: _one or more licenses, certificates, permits, approvals, or other forms of authorization by a governmental entity were required by law for the planned land use; and _a completed application for the initial authorization was filed with the governmental entity before the date the annexation proceedings were instituted. (b) Specifies that for purposes of this section, a completed application is filed if the application includes all documents and other information designated as required by the governmental entity in a written notice to the applicant. (c) Provides that this section does not prohibit a municipality from imposing a regulation relating to: _the location of sexually oriented businesses as that term is defined by Section 243.002; _a municipal ordinance, regulation, or other requirement affecting colonias as that term is defined by Section 2306.581 (Definition), Government Code; _preventing imminent destruction of property or injury to persons; _public nuisances; _the storage and use of hazardous substances; _the sale and use of fireworks; or _the discharge of firearms. SECTION 3. Amends the heading to Subchapter C, Chapter 43, Local Government Code, as follows: SUBCHAPTER C. New title: ANNEXATION PROCEDURE FOR AREAS ANNEXED UNDER MUNICIPAL ANNEXATION PLAN SECTION 4. Amends Sections 43.052 and 43.053, Local Government Code, as follows: Sec. 43.052. New title: MUNICIPAL ANNEXATION PLAN REQUIRED. (a) Authorizes a municipality to annex an area identified in the annexation plan only as provided by this section. (b) Requires a municipality to prepare an annexation plan that specifically identifies annexations that may occur beginning on the third anniversary of the date the annexation plan is adopted. Authorizes the municipality to amend the plan to specifically identify annexations that may occur beginning on the third anniversary of the date the plan is amended. (c) Prohibits another political subdivision, including a municipal utility district or other special district and excluding a county, independent school district, and emergency services district, in which the area is located from reducing the tax rate applicable to the area, voluntarily transferring an asset without consideration, or entering into a contract for services that extends beyond the three-year annexation plan period, at any time during which an area is included in a municipality's annexation plan. (d) Authorizes a municipality to amend its annexation plan at any time to remove an area proposed for annexation. Prohibits the municipality from amending the plan to again include the area in its annexation plan until the first anniversary of the date the municipality amended the plan to remove the area, if, before the end of the 18th month after the month an area is included in the three-year annexation cycle, a municipality amends its annexation plan to remove the area. Prohibits the municipality from amending the plan to again include the area in its annexation plan until the second anniversary of the date the municipality amended the plan to remove the area, if, during or after the 18 months after the month an area is included in the three-year annexation cycle, a municipality amends its annexation plan to remove the area. (e) Requires the municipality to give written notice to certain persons and entities as provided, before the 90th day after the date a municipality adopts or amends an annexation plan under this section. Deletes existing Subsections (a) and (b), and part of (c), relating to public hearing requirements. (f) Provides that this section does not apply to an area proposed for annexation described by this subsection. Sec. 43.053. New title: INVENTORY OF SERVICES AND FACILITIES REQUIRED. (a) Defines "public entity" for the purposes of this section. (b) Requires a municipality to compile a comprehensive inventory of services and facilities provided by public and private entities, directly or by contract, in each area proposed for annexation, after adopting an annexation plan or amending an annexation plan to include additional areas under Section 43.052. Provides that inventory of services and facilities must include all services and facilities the municipality is required to provide or maintain following the annexation. (c) Requires the municipality to request, in the notice provided under Section 43.052(e), the information necessary to compile the inventory from each public or private entity that provides services or facilities in each area proposed for annexation. Requires the public or private entity to provide to the municipality the information held by the entity that is necessary to compile the inventory not later than the 90th day after the date the municipality requests the information. Sets forth the required content for the information provided under this subsection. Authorizes the municipality to impose an administrative penalty of $200 for each day the service provider is in violation of this subsection, if a service provider fails to provide the information required by this subsection within the 90-day period. Requires the municipality to prescribe procedures to provide for due process in the imposition of an administrative penalty under this subsection. (d) Requires the information in the inventory to be based on the services and facilities provided during the year preceding the date the municipality adopted the annexation plan or amended the annexation plan to include additional areas. (e) Provides that for utility facilities, roads, drainage structures, and other infrastructure provided or maintained by public or private entities, the inventory must include an engineer's report that describes the physical condition of all infrastructure elements in the area, and a summary of capital, operational, and maintenance expenditures for that infrastructure. (f) Provides that for police, fire, and emergency medical services provided by public or private entities, the inventory must include for each service the average dispatch and delivery time, a schedule of equipment, including vehicles, a staffing schedule that discloses the certification and training levels of personnel, and a summary of operating and capital expenditures. (g) Requires the municipality to complete the inventory and make the inventory available for public inspection on or before the 60th day after the municipality receives the required information from the service providers under Subsection (c). Deletes existing Subsections (a) and (b), relating to the period for completion of the annexation of an area. SECTION 5. Amends Subchapter C, Chapter 43, Local Government Code, by adding Section 43.0545, as follows: Sec. 43.0545. ANNEXATION OF CERTAIN ADJACENT AREAS. Prohibits a municipality from annexing an area that is located in the extraterritorial jurisdiction of the municipality only because the area is contiguous to municipal territory that is less than 1,000 feet in width at its narrowest point. Prohibits a municipality from annexing an area that is located in the extraterritorial jurisdiction of the municipality only because the area is contiguous to a specified municipal territory. Provides that the provisions of this section do not apply to an area: _completely surrounded by incorporated territory of one or more municipalities; _for which the owners of the area have requested annexation by the municipality; _that is owned by the municipality; or _that is the subject of an industrial district contract under Section 42.044. Specifies that certain provisions of this section do not apply if the minimum width of the narrow territory otherwise described by this section, following subsequent annexation, is no longer less than 1,000 feet in width at its narrowest point. Specifies that for purposes of this section, roads, highways, rivers, lakes, or other bodies of water are not included in computing the 1,000 foot distance unless the area annexed includes land in addition to a road, highway, river, lake, or other body of water. SECTION 6. Amends Section 43.056, Local Government Code, as follows: Sec. 43.056. PROVISION OF SERVICES TO ANNEXED AREA. (a) Requires the governing body of the municipality proposing the annexation to direct its planning department or other appropriate municipal department to prepare a service plan that provides for the extension of full municipal services to the area to be annexed, before the first day of the 10th month after the month in which the inventory is prepared as provided by Section 43.053, rather the before the publication of the notice of the first hearing. (b) Provides that the service plan must include a program under which the municipality will provide full municipal services in the annexed area no later than 2-1/2 years, rather than 4-1/2 years, after the effective date of the annexation, in accordance with Subsection (e), unless certain services cannot reasonably be provided within that period and the municipality proposes a schedule for providing those services. Provides that the schedule must provide for the provision of full municipal services no later than 4-1/2 years after the effective date of the annexation, if the municipality proposes a schedule to extend the period for providing certain services. Provides that on, rather than within 60 days after, the effective date of the annexation of the area under the program the municipality must provide certain services in the area, including emergency medical services, and the operation and maintenance of water and wastewater facilities in the annexed area that are not within the service area of another water or wastewater utility, roads, streets, parks, playgrounds, swimming pools, and any other publicly owned facility, building, or service. Deletes existing text relating to the service plan of a certain municipality and the required services in the annexed area. (c) Makes no change. (d) Created from existing text. (e) Redesignated from existing Subsection (d). Provides that the service plan must also include a program under which the municipality will initiate after the effective date of the annexation the acquisition or construction of capital improvements necessary for providing municipal services adequate to serve the area. Requires the construction to be substantially completed within the period provided in the service plan, rather than begin within two years after the effective date of the annexation and be completed within 4-1/2 years of that date. Authorizes the service plan to be amended to extend the period for construction if the construction is proceeding with all deliberate speed. Provides that the requirement that construction of capital improvements must be substantially completed within the time period provided in the service plan, rather than 4-1/2 years, in the manner provided by this subsection. (f) Redesignated from existing Subsection (e). Prohibits a service plan from providing services in the area in a manner that would have the effect of reducing the level of fire and police protection and emergency medical services provided within the corporate boundaries of the municipality before annexation. Makes nonsubstantive changes. (g) Provides that a service plan must provide the annexed area with a level of services that is comparable to the level of services available in other parts of the municipality with land uses and population densities similar to those reasonably contemplated or projected in the area, if the annexed area had a lower level of services than the level of services provided within the corporate boundaries of the municipality before annexation. Provides that a service plan must maintain that same level of services, if the annexed area had a level of services equal to the level of services provided within the corporate boundaries of the municipality before annexation. Specifies that a service plan must provide the annexed area with a level of services that is comparable to the level of services available in other parts of the municipality with land use and population densities similar to those reasonably contemplated or projected in the area, except as provided by this subsection, if the annexed area had a level of services superior to the level of services provided within the corporate boundaries of the municipality before annexation. Specifies that a service plan must provide for the operation and maintenance of the infrastructure of the annexed area at a level of services that is equal or superior to that level of services, if the annexed area had a level of services for operating and maintaining the infrastructure of the area. Makes nonsubstantive changes. (h)-(j) Redesignated from existing Subsections (f)-(h). Makes conforming changes. (k) Redesignated from existing Subsection (i). Authorizes a person residing or owning land in an annexed area to enforce a service plan by applying for a writ of mandamus not later than the second anniversary of the date the person knew or should have known that the municipality was not complying with the service plan. Establishes that the municipality has the burden of proving that the services have been provided in accordance with the service plan in question, if a writ of mandamus is applied for (l) Authorizes the court to take certain actions if a court issues a writ under Subsection (k). (m) Redesignated from existing Subsection (k). Provides that this section does not require that a uniform level of full municipal services be provided to each area of the municipality if the governing body of the municipality determines that different characteristics of topography, land use, and population density are considered a sufficient basis for providing different levels of service. Specifies that nothing in this subsection modifies the requirement under Subsection (g) for a service plan to provide a level of services in an annexed area that is equal or superior to the level of services provided within the corporate boundaries of the municipality before annexation. Provides that Subsection (g) prevails to the extent of any conflict between this subsection and Subsection (g). Deletes existing Subsection (j). SECTION 7. Amends Subchapter C, Chapter 43, Local Government Code, by redesignating Section 43.0561 as Section 43.0566 and by adding Sections 43.0561, 43.0562, 43.0563, and 43.0564, as follows: Sec. 43.0561. ANNEXATION HEARING REQUIREMENTS. (a) Provides that the governing body of the municipality must conduct two public hearings at which persons interested in the annexation are given the opportunity to be heard, before a municipality may institute annexation proceedings. Provides that the hearings must be conducted not later than the 90th day after the date the inventory is available for inspection. (b) Provides that at least one of the hearings must be held in the area proposed for annexation if a suitable site is reasonably available and more than 20 adults who are permanent residents of the area file a written protest of the annexation with the secretary of the municipality within 10 days after the date of the publication of the notice required by this section. Specifies that the protest must state the name, address, and age of each protester who signs. Authorizes the hearing to be held outside the area proposed for annexation if the hearing is held in the nearest suitable public facility, if a suitable site is not reasonably available in the area proposed for annexation, (c) Provides that the municipality must publish notice of the hearings in a newspaper of general circulation in the municipality and in the area proposed for annexation and specifies that the notice for each hearing must be published at least once on or after the 20th day but before the 10th day before the date of the hearing. Provides that the municipality must give additional notice by certified mail to each railroad company that serves the municipality and is on the municipality's tax roll if the company's right-of-way is in the area proposed for annexation. Sec. 43.0562. NEGOTIATIONS REQUIRED. (a) Requires the municipality and the property owners of the area proposed for annexation to negotiate for the provision of services to the area after annexation or for the provision of services to the area in lieu of annexation under Section 43.0563, after holding the hearings as provided by Section 43.0561. (b) Requires the commissioners court of the county in which the area proposed for annexation is located to select five representatives to negotiate with the municipality for the provision of services to the area after annexation, except as provided by Subsection (c). Requires the commissioners court of the county in which the greatest number of residents reside to select three representatives to negotiate with the municipality, and the commissioners courts of the remaining counties jointly to select two representatives to negotiate with the municipality, if the area proposed for annexation is located in more than one county. (c) Requires the governing body of the district to negotiate with the municipality for provision of services to the area after annexation, if a municipality proposes to annex a municipal utility district. Authorizes the governing boards of the districts to jointly select five representatives to negotiate with the municipality on behalf of all the affected districts, if more than one municipal utility district is located in the area proposed for annexation. Sec. 43.0563. CONTRACTS FOR PROVISION OF SERVICES IN LIEU OF ANNEXATION. Authorizes the governing body of a municipality to negotiate and enter into a written agreement with representatives designated under Section 43.0562 for the provision of services and the funding of the services in the area. Authorizes the agreement to also include an agreement related to permissible land uses and compliance with municipal ordinances. Provides that an agreement under this section is in lieu of annexation by the municipality of the area. Sets forth the terms the parties are authorized to agree to in negotiating an agreement under this section. Sec. 43.0564. ARBITRATION REQUIRED. (a) Authorizes either party, by majority decision of the party's representatives, to request the appointment of an arbitrator to resolve the service plan issues in dispute, if the municipality and the representatives of the area proposed for annexation cannot reach an agreement for the provision of services under Section 43.0562, 43.0563, or 43.0751 (Strategic Partnerships for Continuation of Certain Districts). Provides that the request must be made in writing to the other party before the 60th day after the date the service plan is completed under Section 43.056. Prohibits the municipality from annexing the area under another section of this chapter during the pendency of the arbitration proceeding or an appeal from the arbitrator's decision. (b) Authorizes the parties to the dispute to agree on the appointment of an arbitrator. Requires the chief administrative district judge in a county with jurisdiction over either party to appoint a qualified person who is not a resident or property owner of the municipality or the area proposed for annexation to serve as arbitrator, if the parties cannot agree on the appointment of an arbitrator before the 31st day after the date arbitration is requested. (c) Requires the arbitrator to set a hearing to be held not later than the 10th day after the date the arbitrator is appointed, and to notify the parties to the arbitration in writing of the time and place of the hearing not later than the eighth day before the date of the hearing. (d) Provides that the authority of the arbitrator is limited to issuing a decision relating only to the service plan issues in dispute. (e) Authorizes the arbitrator to receive in evidence any documentary evidence or other information the arbitrator considers relevant, administer oaths, and issue certain subpoenas. (f) Requires the arbitrator to complete the hearing within one day. Authorizes the arbitrator, for good cause shown, to schedule an additional hearing to be held not later than the seventh day after the date of the first hearing. Provides that unless otherwise agreed to by the parties, the arbitrator must issue a decision in writing and deliver a copy of the decision to the parties not later than the 14th day after the date of the final hearing. (g) Authorizes either party to appeal any provision of an arbitrator's decision that exceeds the authority granted under Subsection (d) to a district court in a county in which the area proposed for annexation is located. (h) Prohibits the municipality from annexing the area proposed for annexation before the fifth anniversary of the date of the arbitrator's decision, if the municipality does not agree with the terms of the arbitrator's decision. (i) Requires the municipality to pay the cost of arbitration. Section 43.0566 is redesignated from Section 43.0561. SECTION 8. Amends Chapter 43, Local Government Code, by adding Subchapter C-1, as follows: SUBCHAPTER C-1. ANNEXATION PROCEDURE FOR AREAS EXEMPTED FROM MUNICIPAL ANNEXATION PLAN Sec. 43.061. APPLICABILITY. Applies this subchapter to an area proposed for annexation that is not required to be included in a municipal annexation plan under Section 43.052. Sec. 43.062. PROCEDURES APPLICABLE. Applies Sections 43.051 (Authority to Annex Limited to Extraterritorial Jurisdiction), 43.054 (Width Requirements), 43.0545, 43.055 (Maximum Amount of Annexation Each Year), 43.0565, and 43.057 (Annexation That Surrounds Area: Findings Required) to the annexation of an area to which this subchapter applies. Sec. 43.063. ANNEXATION HEARING REQUIREMENTS. (a) Provides that the governing body of the municipality must conduct two public hearings at which persons interested in the annexation are given the opportunity to be heard, before a municipality may institute annexation proceedings. Provides that the hearings must be conducted on or after the 40th day but before the 20th day before the date of the institution of the proceedings. (b) Specifies that at least one of the hearings must be held in the area proposed for annexation if a suitable site is reasonably available and more than 10 percent of the adults who are permanent residents of the area file a written protest of the annexation with the secretary of the municipality within 10 days after the date of the publication of the notice required by this section. Specifies that the protest must state the name, address, and age of each protester who signs. (c) Provides that the municipality must publish notice of the hearings in the manner specified by this subsection. Sec. 43.064. PERIOD FOR COMPLETION OF ANNEXATION; EFFECTIVE DATE. Provides that the annexation of an area must be completed within 90 days after the date the governing body institutes the annexation proceedings or those proceedings are void. Provides that any period during which the municipality is restrained or enjoined by a court of competent jurisdiction from annexing the area is not included in computing the 90-day period. Authorizes the governing body of a municipality with a population of 1.5 million or more to provide that an annexation take effect on any date within 90 days after the date of the adoption of the ordinance providing for the annexation, notwithstanding any provision of a municipal charter to the contrary. Sec. 43.065. PROVISION OF SERVICES TO ANNEXED AREA. Requires the governing body of the municipality proposing the annexation to direct its planning department or other appropriate municipal department to prepare a service plan that provides for the extension of full municipal services to the area to be annexed, before the publication of the notice of the first hearing required under Section 43.063. Requires the municipality to provide the services by any of the methods by which it extends the services to any other area of the municipality. Provides that Sections 43.056(b)-(m) apply to the annexation of an area to which this subchapter applies. SECTION 9. Amends Section 43.0751, Local Government Code, by amending Subsection (b) and by adding Subsection (o), as follows: (b) Authorizes, rather than requires, the governing bodies of a municipality and a district to negotiate and enter into a written strategic partnership agreement for the district by mutual consent. Requires the governing body of a municipality, on written request from a district included in the municipality's annexation plan under Section 43.052, to negotiate and enter into a written strategic partnership agreement with the district. Deletes existing text relating to the requirement for the bodies of a municipality and the district to evidence intentions to negotiate. (o) Authorizes the municipality and the district to seek binding arbitration of the issues relating to the agreement in dispute under Section 43.0564, if a municipality required to negotiate with a district under this section and the requesting district fail to agree on the terms of a strategic partnership agreement. SECTION 10. Amends Subsection (a), Section 43.121, Local Government Code, to delete the provision relating to municipal authorization under a home-rule charter. SECTION 11. Amends Subsection (c), Section 43.141, Local Government Code, to prohibit a disannexed area from being annexed again within 10, rather than five, years. Deletes existing text relating to a service plan for an area that has been reannexed within seven years of disannexation. SECTION 12. Amends Subchapter G, Chapter 43, Local Government Code, by adding Section 43.148, as follows: Sec. 43.148. REFUND OF TAXES AND FEES. Requires the municipality disannexing an area, if the area is disannexed, to refund to the landowners of the area the amount of money collected by the municipality in property taxes and fees from those landowners during the period that the area was a part of the municipality less the amount of money that the municipality spent for the direct benefit of the area during that period. Requires a municipality to proportionately refund the amount under Subsection (a) to the landowners according to a method to be developed by the municipality that identifies each landowner's approximate pro rata payment of the taxes and fees being refunded. SECTION 13. Amends Subchapter Z, Chapter 43, Local Government Code, by adding Section 43.905, as follows: Sec. 43.905. EFFECT OF ANNEXATION ON OPERATION OF SCHOOL DISTRICT. Requires a municipality that proposes to annex an area to provide written notice of the proposed annexation to each public school district in the manner provided. Sets forth the required content for a notice to a public school district. Prohibits the municipality from proceeding with the annexation unless the municipality provides the required notice. Requires certain municipalities to grant a variance from the municipality's building code for that facility if the facility does not comply with the code and to notify the governing board of the school district in writing of certain board actions. SECTION 14. Amends Subchapter A, Chapter 5, Property Code, by adding Section 5.011, as follows: Sec. 5.011. SELLER'S DISCLOSURE REGARDING POTENTIAL ANNEXATION. Requires a person who sells an interest in real property in this state to give to the purchaser of the property a written notice regarding possible annexation and sets forth the content of such notice. Requires the seller to deliver the notice to the purchaser before the date the executory contract binds the purchaser to purchase the property. Authorizes the notice to be given separately, as part of the contract during negotiations, or as part of any other notice the seller delivers to the purchaser. Provides that this section does not apply to certain transfers described by this subsection. Provides that the seller has no duty to provide additional information regarding the possible annexation of the property by a municipality, if the notice is delivered as provided by this section. Authorizes the purchaser to terminate the contract for any reason within the earlier of seven days after the date the purchaser receives the notice, or the date the transfer occurs, if an executory contract is entered into without the seller providing the notice required by this section. SECTION 15. (a) Provides that this Act takes effect September 1, 1999, except that Section 14 of this Act takes effect January 1, 2000. (b) Requires each municipality to adopt an annexation plan as required by Section 43.052, Local Government Code, as amended by this Act, on or before December 31, 1999, that becomes effective December 31, 1999. (c) Provides that the changes in law made by Sections 2 through 7 and 9 through 12 of this Act apply only to an annexation included in a municipality's annexation plan prepared under Section 43.052, Local Government Code, as amended by this Act, except as provided by Subsection (d) of this section. Authorizes a municipality, except as provided by Subsection (d) of this section, to continue to annex any area during the period beginning December 31, 1999, and ending December 31, 2002, under Chapter 43, Local Government Code, as it existed immediately before September 1, 1999, if the area is not included in the annexation plan, and the former law is continued in effect for that purpose. (d) Makes application of Sections 43.002, 43.0545, 43.056(b), (e), (f), (g), (k), (l), and (m), 43.121(a), 43.141(c), 43.148, and 43.905, Local Government Code, as added or amended by this Act, prospective. (e) Makes application of Sections 43.002, 43.0545, 43.056(b), (e), (f), (g), (k), (l), and (m), 43.121(a), 43.141(c), 43.148, and 43.905, Local Government Code, as added or amended by this Act, prospective. (f) Provides that the change in law made by Section 1 of this Act applies only to: _an annexation plan prepared under Section 43.052, Local Government Code, as amended by this Act; and _an annexation of an area that is not included inthe municipality's annexation plan during the period beginning December 31, 1999, and ending December 31, 2002, if the first hearing notice required by Section 43.052, Local Government Code, as it existed immediately before September 1, 1999, is published on or after that date. (g) Provides that the change in law made by Section 14 of this Act applies only to a transfer of property that occurs on or after January 1, 2000. Provides that a transfer of property occurs, for purposes of this section, if the executory contract binding the purchaser to purchase the property is executed before that date. Provides that property transferred before January 1, 2000, is covered by the law in effect when the property was transferred, and the former law is continued in effect for that purpose. SECTION 16. Emergency clause.