HBA-NIK S.B. 262 76(R) BILL ANALYSIS Office of House Bill AnalysisS.B. 262 By: Brown Land & Resource Management 4/8/1999 Engrossed BACKGROUND AND PURPOSE Currently, when a municipality with a population of less than 1.5 million annexes a water district, including a municipal utility district (MUD), the municipality must pay any amounts owed to developers who paid for installing water and wastewater systems in the district. Upon annexation, the city becomes the owner of the utility system; therefore, the city must make reimbursement payments to developers simultaneously with the annexation. S.B. 262 requires the annexing municipality to pay utility reimbursements to the developers prior to the annexation of a district. This bill also imposes penalties and interest on reimbursement payments that are delinquent on the effective date of this bill. 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 Section 43.0715, Local Government Code, as follows: Sec.43.0715. ANNEXATION OF WATER-RELATED SPECIAL DISTRICT: REIMBURSEMENT OF LANDOWNER OR DEVELOPER; CONTINUATION OF DISTRICT AND TAXING AUTHORITY (a) Defines "delinquent sum." Makes a nonsubstantive change. (b) Requires the municipality, prior to the effective date of, rather than simultaneously with, the annexation, to pay in cash to the landowner or developer of the district a sum equal to all actual costs and expenses incurred by the landowner or developer in connection with the district that adhere to specified provisions. Provides that for an annexation that is subject to preclearance by a federal authority a payment will be considered timely if the municipality adheres to specified provisions. (c) Requires the municipality to proceed to initiate and complete a report for each developer conducted in accordance with the format approved by the Texas Natural Resource Conservation Commission for audits at the specified time. _Requires the municipality to obtain from the districts the estimated costs of each project previously undertaken by a developer which are eligible for reimbursement under specified circumstances. _Requires the amount of such costs, as estimated by the district, to be escrowed by the municipality for the benefit of the persons entitled to receive payment in an insured interest-bearing account with a financial institution authorized to do business in the state. _Requires all interest accrued on the escrowed funds to be paid to the developer whether or not the annexation is valid to compensate the developer for the municipality's use of the infrastructure facilities pending the determination of the reimbursement amount or federal preclearance. _Authorizes the annexation to become effective upon placement of the funds in the escrow account. _Prohibits penalties or interest from accruing during the pendency of the escrow under specified circumstances. (d) Provides the certain provisions whereby a delinquent sum incurs a specified penalty. SECTION 2. Makes application of this Act prospective with respect to any sum that is delinquent on the effective date of this Act. SECTION 3. Emergency clause. Effective date: upon passage.