By Keel H.B. No. 3165 Line and page numbers may not match official copy. Bill not drafted by TLC or Senate E&E. A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to annexations and water conservation and reclamation 1-3 districts, including municipal utility districts. 1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-5 SECTION 1. Subchapter D, Chapter 43, Local Government Code, 1-6 is amended by adding Section 43.0716 to read as follows: 1-7 Sec. 43.0716. INVALID ANNEXATIONS AND RESUMPTION OF SPECIAL 1-8 DISTRICT FUNCTIONS. (a) In the event a municipality's annexation 1-9 of certain land is subsequently determined to be invalid and (1) 1-10 such land was contained within a water or sewer district, as that 1-11 term is defined in Section 43.071 of this Subchapter as of the date 1-12 of the annexation; and (2) such district was purported to have been 1-13 dissolved pursuant to said invalid annexation, the district shall 1-14 resume its functions as before the annexation and purported 1-15 dissolution. The resumption of functions by the district shall 1-16 commence on the thirtieth day after a final non-appealable decision 1-17 of a Texas court of competent jurisdiction is rendered that (1) the 1-18 annexation is invalid; or (2) that a statute which serves to 1-19 prohibit annexation under conditions which exist for such annexed 1-20 land is determined to be constitutional. 1-21 (b) The municipality which had annexed the land contained 2-1 within the district shall at its expense within thirty days of such 2-2 non-appealable decision or on the effective date of this act, if 2-3 such decision has already been rendered, complete the following: 2-4 (1) Transfer all of the district's assets, including 2-5 revenues from taxes levied by the district back to the possession 2-6 of the district. 2-7 (2) Notify in writing all financial institutions with 2-8 whom assets of the district had been held at the time of the 2-9 purported dissolution, all owners of the district's bonds, and all 2-10 water and sewer customers of the district of the resumption of the 2-11 district's functions and duties. 2-12 (3) Provide to the board of directors of the district 2-13 a written accounting of all assets of the district held by the 2-14 municipality and of all assets or obligations disposed of by the 2-15 municipality, including the amounts of proceeds from the sale of 2-16 any district assets. At the discretion of the board of directors 2-17 of the district, an independent appraisal of the reasonableness of 2-18 the sales price of any such asset together with interest thereon at 2-19 the rate of six percent (6%) per annum from the date the 2-20 municipality received the sales proceeds may be required and shall 2-21 be paid for by the municipality. A municipality shall pay to the 2-22 district the amount of money equal to the difference between the 2-23 value established by the independent appraisal and the sales price 2-24 received by the municipality, if the sales price is less than the 2-25 value established by the independent appraisal, together with 3-1 interest thereon at the rate of six percent (6%) per annum from the 3-2 date the municipality received the sales proceeds. 3-3 (4) Pay to the owners of taxable property in the 3-4 district from whom the municipality collected ad valorem taxes, the 3-5 amount of such taxes collected together with interest at a rate of 3-6 six percent (6%) per annum. 3-7 (5) Provide to the board of directors of the district 3-8 a written accounting of all revenues received and expenses incurred 3-9 from the municipality's operation of the district's water and 3-10 sanitary sewer systems and pay to the district the amount of any 3-11 excess of such revenues over such expenses. 3-12 (c) The elected or duly appointed directors who were serving 3-13 as directors at the time of the purported dissolution of the 3-14 district shall resume their positions as directors and be 3-15 authorized to assume their powers and duties under state law. 3-16 Their oaths of office and bonds shall be reinstated. In the event 3-17 a director is no longer qualified to serve pursuant to the 3-18 requirements of state law, the vacancy shall be filled by 3-19 appointment of the board. If the number of directors is reduced to 3-20 fewer than a majority, the vacancies shall be filled by the 3-21 appointment by the commission of the Texas Natural Resource 3-22 Conservation Commission within twenty days of the receipt of a 3-23 written request by any remaining director of the board or by any 3-24 landowner within the district. A director appointed to fill a 3-25 vacancy shall serve until the next regular election date for the 4-1 district. 4-2 (d) All contracts and other outstanding obligations, 4-3 including bonded indebtedness, which existed at the time of the 4-4 purported dissolution shall be of full force and effect, except for 4-5 any conditions imposed by the municipality pursuant to Section 4-6 54.016, Water Code, which conditions are hereby annulled and at no 4-7 further force or effect. Any obligations incurred by the 4-8 municipality for the direct benefit of the land or water or sewer 4-9 customers of the district after the purported annexation may be 4-10 assumed by the district at the sole discretion of its board of 4-11 directors. Those obligations not assumed by the district shall 4-12 remain the obligations of the municipality. The municipality shall 4-13 not seek reimbursement from the district for monies spent or assets 4-14 of the municipality consumed by the municipality for the benefit of 4-15 the district, landowners or the district's water or sewer customers 4-16 during the period of the invalid annexation. 4-17 (e) All water and/or sewer customers located within the 4-18 boundaries of the district or its preexisting out-of-district 4-19 service area, if any, and connected to the water and/or sewer 4-20 facilities of the district prior to or after the municipality's 4-21 annexation and purported dissolution of the district shall be 4-22 customers of the district. The municipality shall not be 4-23 authorized to discontinue service to customers until the district 4-24 is able to resume its operations of the water and/or sewer system. 4-25 (f) All voted authority of the district, including taxing 5-1 authority and authority to issue bonded indebtedness secured by 5-2 taxes and/or revenues shall be in effect as if the annexation and 5-3 purported dissolution had not occurred. 5-4 SECTION 2. The importance of this legislation and the 5-5 crowded condition of the calendars in both houses create an 5-6 emergency and an imperative public necessity that the 5-7 constitutional rule requiring bills to be read on three several 5-8 days in each house be suspended, and this rule is hereby suspended, 5-9 and that this Act take effect and be in force from and after its 5-10 passage, and it is so enacted.