1-1 By: Crownover (Senate Sponsor - Nelson) H.B. No. 3804 1-2 (In the Senate - Received from the House May 11, 1999; 1-3 May 12, 1999, read first time and referred to Committee on Natural 1-4 Resources; May 14, 1999, reported favorably by the following vote: 1-5 Yeas 4, Nays 0; May 14, 1999, sent to printer.) 1-6 A BILL TO BE ENTITLED 1-7 AN ACT 1-8 relating to the Lake Cities Municipal Utility Authority; granting 1-9 the power of eminent domain; authorizing an ad valorem tax; and 1-10 granting the authority to issue bonds. 1-11 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-12 SECTION 1. VALIDATION OF CREATION; PRINCIPAL OFFICES. (a) 1-13 Under the authority of Section 59, Article XVI, Texas 1-14 Constitution, the creation of the conservation and reclamation 1-15 district known and to be known as Lake Cities Municipal Utility 1-16 Authority is validated and reconfirmed. The Lake Cities Municipal 1-17 Utility Authority is a governmental agency and a body politic and 1-18 corporate. 1-19 (b) The principal offices of the authority shall be located 1-20 in Denton County, Texas. 1-21 SECTION 2. DEFINITIONS. In this Act: 1-22 (1) "Board" means the board of directors of the Lake 1-23 Cities Municipal Utility Authority. 1-24 (2) "LCMUA" means the Lake Cities Municipal Utility 1-25 Authority. 1-26 SECTION 3. BOUNDARIES. (a) LCMUA consists of the territory 1-27 contained in the boundaries of the City of Lake Dallas and that 1-28 part of the City of Shady Shores specifically described in the 1-29 official records of LCMUA. 1-30 (b) The specific territorial boundaries of LCMUA are 1-31 definitively described in the official records of LCMUA. Changes 1-32 to that territory by addition or exclusion shall be reflected in 1-33 the official records of LCMUA. LCMUA must maintain at all times as 1-34 part of its official public records an adequate description of its 1-35 territory that constitutes its official boundaries. All LCMUA 1-36 territory as designated in the official records is subject to 1-37 assessment for the payment of ad valorem taxes. 1-38 SECTION 4. FINDING OF BENEFIT. All land and other property 1-39 included within the boundaries of LCMUA is being and will be 1-40 benefited by the works and projects that are to be accomplished by 1-41 LCMUA under powers conferred by Section 59, Article XVI, Texas 1-42 Constitution. LCMUA is created to serve a public use and benefit. 1-43 SECTION 5. GENERAL POWERS. LCMUA has all of the rights, 1-44 powers, privileges, authority, functions, and duties provided by 1-45 the general law of this state, including Chapters 49 and 51, Water 1-46 Code, applicable to water conservation and improvement districts 1-47 created under Section 59, Article XVI, Texas Constitution. LCMUA 1-48 has in addition the rights, powers, privileges, authority, 1-49 functions, and duties provided by Chapters 54 and 55, Water Code. 1-50 This Act prevails over any provision of general law that is in 1-51 conflict or inconsistent with this Act. 1-52 SECTION 6. BOARD OF DIRECTORS. (a) LCMUA is governed by 1-53 a board of five directors. 1-54 (b) Directors are elected at large by the qualified voters 1-55 residing within the boundaries of LCMUA. 1-56 (c) Directors serve four-year staggered terms. 1-57 (d) A director must: 1-58 (1) be at least 21 years old at the time of election 1-59 or appointment; 1-60 (2) have been a resident within the boundaries of 1-61 LCMUA for at least six months before election or appointment and 1-62 maintain that residence during the director's term; 1-63 (3) never have been convicted of a felony offense or 1-64 any offense of theft; and 2-1 (4) be capable of being bonded. 2-2 (e) A member of a governing body of a municipal corporation 2-3 or an employee of a municipal corporation may not serve as a 2-4 director. 2-5 (f) Each director must qualify to serve in the manner 2-6 provided by this Act, the Election Code, and Chapter 49, Water 2-7 Code. 2-8 (g) A director serves until the director's successor has 2-9 qualified. 2-10 (h) Each director shall subscribe the appropriate oath of 2-11 office and shall obtain the required minimum bond for the faithful 2-12 performance of the director's duties. The cost of the bond shall be 2-13 paid by LCMUA. 2-14 (i) A majority of the board constitutes a quorum. 2-15 (j) A vacancy on the board shall be filled for the unexpired 2-16 term by appointment by the remaining board members. 2-17 (k) A director does not receive any compensation for 2-18 services as a director. 2-19 SECTION 7. OFFICERS. (a) The board shall elect from its 2-20 number a president and vice president and any other officers the 2-21 board considers necessary or appropriate. 2-22 (b) The president is the chief executive officer of LCMUA 2-23 and the presiding officer of all board meetings and proceedings and 2-24 has the same right to vote as any other board member. 2-25 (c) The vice president performs the duties and exercises the 2-26 powers of the president when the president is absent or fails or 2-27 declines to act but may not exercise the president's right to vote. 2-28 (d) The board shall also elect a secretary and a treasurer 2-29 from its members and may combine those offices. The treasurer 2-30 shall give bond in the amount required by the board or by 2-31 applicable state law, the premium to be paid by LCMUA. The 2-32 treasurer's bond shall be conditioned on the treasurer's faithfully 2-33 accounting for all money that comes into the treasurer's custody as 2-34 treasurer for LCMUA. 2-35 SECTION 8. EMPLOYMENT AUTHORITY; GENERAL MANAGER. (a) The 2-36 board as necessary and appropriate may employ professional persons 2-37 including engineers, attorneys, accountants, consultants, and other 2-38 employees. 2-39 (b) The board shall hire a general manager to conduct the 2-40 day-to-day management of LCMUA. 2-41 (c) The board may authorize the general manager to: 2-42 (1) hire and fire employees and independent 2-43 contractors; and 2-44 (2) sign checks and contracts on behalf of LCMUA and 2-45 otherwise conduct the day-to-day management and operations of LCMUA 2-46 without specific board approval of specific transactions. 2-47 (d) The general manager may not: 2-48 (1) employ a person, firm, or entity except at the 2-49 will of the board; or 2-50 (2) sign, without prior board approval, any contract 2-51 on behalf of LCMUA that exceeds the minimum amount of total overall 2-52 value for consideration set by law. 2-53 SECTION 9. SEAL. The board may adopt a seal for LCMUA. The 2-54 seal does not have to be affixed to any act, memorandum, or 2-55 resolution of the board unless the act requires the seal to be 2-56 affixed. 2-57 SECTION 10. ANNEXATION BY PETITION OF QUALIFIED VOTERS. 2-58 (a) Additional territory may be annexed to LCMUA as provided by 2-59 this section. A petition asking for annexation and signed by a 2-60 majority of the qualified voters of the territory proposed to be 2-61 annexed may be filed with the board. The petition must: 2-62 (1) legibly state the name, address, and residence of 2-63 each person signing; 2-64 (2) be signed under oath with the following affidavit: 2-65 "Each of the undersigned swears that she or he is a bona fide 2-66 resident qualified voter of the territory proposed to be annexed 2-67 and has not been offered or paid any consideration in money or any 2-68 thing of value to sign this petition."; 2-69 (3) describe the territory proposed to be annexed by 3-1 metes and bounds or other adequate legal description signed and 3-2 sealed by a qualified registered professional surveyor or engineer; 3-3 and 3-4 (4) be accompanied by a plat that enables the board to 3-5 identify the boundaries and specific territory proposed to be 3-6 annexed. 3-7 (b) The board shall adopt a resolution stating the 3-8 conditions of annexation and setting a time and place for a hearing 3-9 on the annexation if the board finds that: 3-10 (1) the petition is signed by the required number of 3-11 qualified persons and otherwise complies with this section; 3-12 (2) the annexation would be in the best interest of 3-13 the residents of the territory proposed to be annexed and the best 3-14 interest of LCMUA; and 3-15 (3) LCMUA will be able to supply services to the 3-16 territory proposed to be annexed. 3-17 (c) The resolution must: 3-18 (1) state the conditions under which the territory 3-19 proposed to be annexed may be annexed to LCMUA; and 3-20 (2) set a time and place for a hearing by the board on 3-21 the question of whether the territory proposed to be annexed will 3-22 be benefited by the improvements, works, services, and facilities 3-23 then owned or operated or contemplated to be owned or operated by 3-24 LCMUA or by the performance of other functions of LCMUA. 3-25 (d) Notice of the adoption of the resolution stating the 3-26 time and place of the hearing shall be published once in a 3-27 newspaper of general circulation in the territory sought to be 3-28 annexed not later than the 10th day before the date of the hearing. 3-29 The notice shall describe the territory proposed to be annexed in 3-30 the same manner as required by Subsection (a)(3) for the petition. 3-31 Any interested person may appear at the hearing and offer evidence 3-32 for or against the proposed annexation. Witnesses may be sworn at 3-33 the option of the presiding officer of LCMUA. The hearing may 3-34 proceed in the order and under the rules the board prescribes. The 3-35 hearing may be recessed and reconvened from time to time at the 3-36 board's discretion. 3-37 (e) If at the conclusion of the hearing the board finds that 3-38 the territory proposed to be annexed will be benefited by the 3-39 present or contemplated improvements, services, works, or 3-40 facilities of LCMUA, the board by resolution shall make that 3-41 finding and shall call an election in the territory proposed to be 3-42 annexed. The resolution must state the date and place of the 3-43 election and the proposition to be voted on and shall appoint a 3-44 presiding judge or judges and clerks for the election who in turn 3-45 shall appoint the necessary assistant judges or clerks to assist in 3-46 holding the election. The election shall be conducted in 3-47 accordance with the Election Code. 3-48 (f) Notice of the election shall be given by publishing a 3-49 synopsis of the resolution calling for the election once in a 3-50 newspaper of general circulation within the territory sought to be 3-51 annexed not later than the 10th day before the date set for the 3-52 election. Only qualified voters who reside in the territory 3-53 proposed to be annexed may vote in the election. A voter may be 3-54 required to furnish proof of residency. Returns of the election 3-55 results shall be made to the board. The board shall canvass the 3-56 election returns and adopt an order declaring the results. If the 3-57 order shows that a majority of the votes cast favor annexation, the 3-58 board by resolution shall annex the territory into LCMUA. The 3-59 annexation may be contested only in the manner provided by the 3-60 Election Code for contesting an election. 3-61 (g) The board in calling an election on the proposition of 3-62 annexation of territory may call an election over the territory of 3-63 LCMUA to determine whether the LCMUA territory as enlarged by the 3-64 proposed annexation shall assume and be burdened by an ad valorem 3-65 tax necessary and appropriate to support outstanding general 3-66 obligation bonds, bonds voted but not yet sold, and bonds that may 3-67 be voted on in the future and whether an ad valorem tax shall be 3-68 levied upon all taxable property within the territory of LCMUA as 3-69 enlarged by the proposed annexation. The board may provide in the 4-1 election process within the territory proposed to be annexed a 4-2 proposition that the annexed territory shall be subject to a levy 4-3 and assessment for any bonded indebtedness of LCMUA supported by 4-4 the levy and collection of ad valorem taxes. The election shall be 4-5 called and held and notice given in the same manner provided by the 4-6 Election Code and Chapter 49, Water Code, for elections on the 4-7 issuance of bonds. 4-8 (h) Railroad right-of-way that is not situated within the 4-9 defined limits of an incorporated municipality will not be 4-10 benefited by LCMUA services, and therefore railroad right-of-way 4-11 may not be annexed to LCMUA unless the right-of-way is within the 4-12 limits of an incorporated municipality or other governmental body. 4-13 SECTION 11. DISANNEXATION. An election for disannexation 4-14 may be called by the board or by open petition. A disannexation 4-15 election shall be held in the same manner as provided by Sections 4-16 10(a)-(g) of this Act for an annexation election. A disannexation 4-17 may not reduce the tax base necessary to support outstanding bonds 4-18 by levy and assessment of ad valorem taxes. 4-19 SECTION 12. ANNEXATION AND DISANNEXATION BY LANDOWNER 4-20 PETITION. (a) Territory may be added to LCMUA on petition of all 4-21 owners of land in the territory proposed to be annexed. All owners 4-22 of the land proposed to be annexed may file with the board a 4-23 petition asking that the lands described be added to and become a 4-24 part of LCMUA's established territory. The petition must describe 4-25 by metes and bounds the land proposed to be annexed and be 4-26 accompanied by a plat by which LCMUA can ascertain the location, 4-27 description, and identity of the land. The petition must be signed 4-28 and executed in the same manner provided by law for conveyance of 4-29 real property. 4-30 (b) The board shall hear and consider the petition and may 4-31 grant the petition and add the land to LCMUA's existing territory 4-32 if the board considers the addition of the land advantageous and 4-33 beneficial to LCMUA and if services can be provided to the annexed 4-34 territory without injury or detriment to the operation and function 4-35 of LCMUA's existing territory. The determination regarding 4-36 probable or possible injury or detrimental operation or function 4-37 shall be determined solely by the board. 4-38 (c) A petition adding land to LCMUA's territory that is 4-39 granted becomes a part of the official records of LCMUA. The 4-40 board shall require the petitioner to provide a sworn affidavit 4-41 identifying all owners and lienholders of land proposed to be 4-42 annexed and may refuse annexation unless all owners and lienholders 4-43 join in or consent to the petition. 4-44 (d) All landowners of a single tract or parcel may petition 4-45 for voluntary disannexation in the manner provided by this section 4-46 for annexation by landowner petition. The board may refuse to 4-47 grant the disannexation if the board determines that disannexation 4-48 would be detrimental to the interests of LCMUA. 4-49 SECTION 13. POWERS. (a) LCMUA may develop surface or 4-50 underground water storage and supply facilities and construct a 4-51 diversion works, pumps, pumping stations, pipelines, intermediate 4-52 and terminal storage reservoirs, water treatment plants, 4-53 distribution systems, and all other related facilities that will 4-54 facilitate or implement the duty of LCMUA to deliver and distribute 4-55 water within its territory and any other territory for which it 4-56 holds a certificate of convenience and necessity and to purchase, 4-57 improve, modify, or extend any existing water system or systems 4-58 within the certificated territory or outside the certificated 4-59 territory if reasonably necessary or appropriate for the support of 4-60 services within the certificated territory. LCMUA may construct 4-61 all facilities reasonably necessary or convenient to enable LCMUA 4-62 to deliver, treat, and distribute water. 4-63 (b) LCMUA may construct, maintain service, and operate a 4-64 complete wastewater system, including wastewater treatment plant 4-65 sites and collection systems. LCMUA may use public streets, 4-66 alleys, ways, and places for the laying of its water and wastewater 4-67 lines and facilities. 4-68 (c) LCMUA may make contracts for the purchase of water or 4-69 water supplies, purchase treated water, purchase wastewater 5-1 treatment facilities, and make contracts for the purchase or sale 5-2 of treated or untreated water or wastewater. 5-3 (d) LCMUA may apply as necessary for any permit, license, or 5-4 other authorization from the Texas Natural Resource Conservation 5-5 Commission or any other regulatory body in order to conduct any of 5-6 its operations. 5-7 (e) LCMUA may purchase all works, machinery, plants, and 5-8 other facilities and equipment and land, rights-of-way, and 5-9 easements necessary or appropriate for exercising its rights and 5-10 performing its duties under this Act. Subject to the terms of any 5-11 deed of trust or indenture executed by LCMUA, LCMUA may sell, 5-12 trade, or otherwise dispose of any real or personal property the 5-13 board considers unnecessary for LCMUA purposes. Any personal 5-14 property the board considers unnecessary for LCMUA purposes may be 5-15 sold in the manner specified by the board and applicable law. 5-16 SECTION 14. EMINENT DOMAIN. (a) LCMUA has full power of 5-17 eminent domain and may acquire by condemnation any interest in land 5-18 or other property including fee simple title or easements or 5-19 rights-of-way in and upon or under property within and beyond the 5-20 boundaries of LCMUA territory. The exercise of the power of 5-21 eminent domain granted by this Act is governed by Chapter 21, 5-22 Property Code, and any other applicable law. The board by 5-23 resolution shall determine the amount and character of an interest 5-24 in land or other property and easements to be acquired under this 5-25 section. 5-26 (b) If LCMUA, in exercising the power of eminent domain, 5-27 power of relocation, or any other power granted under this Act, 5-28 makes necessary the relocating, raising, rerouting, or changing the 5-29 grade of, or altering the construction of any highway, roadway, 5-30 electric transmission line, telephone or telegraph properties and 5-31 facilities, or pipelines, LCMUA must bear the actual cost of the 5-32 relocation, lowering, rerouting, or changing in grade or altering 5-33 of construction in providing a comparable replacement without 5-34 enhancement of the facilities, after deducting the net salvage 5-35 value derived from the old facility. 5-36 SECTION 15. CONSTRUCTION CONTRACT. A construction contract 5-37 must be procured in accordance with Subchapter I, Chapter 49, Water 5-38 Code. 5-39 SECTION 16. AUTHORITY TO ISSUE BONDS. (a) To carry out any 5-40 power or authority conferred by this Act, the board by resolution 5-41 may authorize the issuance of negotiable bonds payable from revenue 5-42 or ad valorem taxes or both revenue and taxes. Pending the 5-43 issuance of definitive bonds the board may authorize the delivery 5-44 of negotiable interim bonds or notes, certificates of obligation, 5-45 or other similar documents that are eligible for exchange or 5-46 substitution or retirement based upon the proceeds of the 5-47 definitive bonds. LCMUA may refinance any outstanding bonds. 5-48 (b) Bonds must be issued in accordance with Subchapter F, 5-49 Chapter 49, Water Code, and other applicable law. 5-50 (c) Bonds shall be issued in the name of Lake Cities 5-51 Municipal Utility Authority, signed by the president or vice 5-52 president, and attested by the secretary and shall bear the seal, 5-53 or a facsimile seal, of LCMUA. The facsimile signature of the 5-54 president or secretary or both may be printed or lithographed on 5-55 the bonds if authorized by the board, and the seal of LCMUA may be 5-56 impressed, printed, or lithographed on the bonds. 5-57 (d) Bonds shall mature at a time set by the board not to 5-58 exceed 40 years and may be sold at a price or under the terms the 5-59 board determines to be the most advantageous reasonably available. 5-60 Interest on the bonds, including the discount, if any, shall be 5-61 based upon market value at the time of sale and shall be 5-62 established at the discretion of the board at a rate not to exceed 5-63 the maximum rate permitted by law. Bonds may be made callable 5-64 before maturity at a time and price and under the circumstances 5-65 prescribed in the resolution authorizing the bonds and may be made 5-66 registrable or electronically registrable as to principal or as to 5-67 both principal and interest. 5-68 (e) Bonds may be issued in more than one series and at 5-69 different times as required to carry out the purposes and business 6-1 of LCMUA. 6-2 (f) The bonds may be secured by a pledge of all or part of 6-3 the net revenue of LCMUA or by the net revenue of any one or more 6-4 existing or future contracts or other revenue specified by board 6-5 resolution, the trust indenture, or other instrument securing the 6-6 bonds. A pledge of revenue may reserve the right under specified 6-7 conditions to issue additional bonds on a parity with or 6-8 subordinate to the bonds then being issued. "Net revenues" as used 6-9 in this section means the gross revenue of LCMUA less the amount 6-10 necessary to pay the cost of performing the contract and of 6-11 maintaining and operating LCMUA and its properties. 6-12 (g) After the election required by Section 19 of this Act, 6-13 LCMUA may issue bonds payable from ad valorem taxes to be levied on 6-14 all taxable property in LCMUA or secured by and payable from both 6-15 taxes and revenue. If the bonds issued are payable wholly or 6-16 partially from ad valorem taxes, the board shall levy a tax 6-17 sufficient to pay the bonds and the interest on the bonds as the 6-18 bonds and interest become due. The annual tax rate may be fixed 6-19 after considering the money received from other pledged revenue 6-20 that may be available for payment of principal and interest to the 6-21 extent and in the manner permitted by the resolution authorizing 6-22 the issuance of the bonds. 6-23 (h) If the bonds are payable wholly from revenue, the board 6-24 shall fix and revise as needed the rates for water sold and 6-25 services rendered by LCMUA at a rate sufficient to pay the expense 6-26 of operating and maintaining LCMUA facilities and to pay the bonds 6-27 as they mature and the interest as it accrues and to maintain the 6-28 reserve and other funds as required in the resolution authorizing 6-29 the bonds or in the trust indenture or other instruments securing 6-30 the bonds. If the bonds are payable partially from revenue and 6-31 partially from taxes, the board shall fix and revise as necessary 6-32 the rates for water sold and services rendered by LCMUA at a rate 6-33 sufficient to assure compliance with the resolution authorizing the 6-34 bonds and with any trust indenture or other instrument securing the 6-35 bonds. 6-36 (i) From the proceeds of the sale of the bonds, LCMUA may 6-37 set aside amounts to make payments into the interest and sinking 6-38 fund and the reserve fund, and revisions may be made in the 6-39 resolution authorizing the bonds or any trust indenture or other 6-40 instruments securing the bonds. Proceeds from the sale of the 6-41 bonds may be used to pay all expenses necessarily incurred in 6-42 accomplishing the purpose for which LCMUA was created, including 6-43 expenses of issuing and selling the bonds. Proceeds from the sale 6-44 of the bonds may be invested as specified by the resolution 6-45 authorizing the bonds or the trust indenture or other instrument 6-46 securing the bonds. 6-47 (j) Funds accumulated from the payment of bonds and from 6-48 revenue may be invested as specified in the resolution authorizing 6-49 the bonds or in the indenture. 6-50 (k) If a default occurs or is threatened in the payment of 6-51 principal or of interest on bonds payable wholly or partially from 6-52 revenue, a court in Denton County, Texas, may, on petition of the 6-53 holders of outstanding bonds, appoint a receiver with authority to 6-54 collect and receive all income of LCMUA except taxes, to employ and 6-55 discharge agents and employees of LCMUA, to take charge of funds on 6-56 hand, except funds received from taxes unless commingled, and to 6-57 manage the proprietary affairs of LCMUA without the consent of or 6-58 hindrance by the board, individual board members, or other 6-59 employees of LCMUA. The receiver may also be authorized to sell or 6-60 make contracts for the sale of water or renew such contracts with 6-61 the approval of the court that appointed the receiver. The court 6-62 may vest the receiver with other powers and duties the court may 6-63 find necessary to protect the bondholders. The resolution 6-64 authorizing the issuance of the bonds or the trust indenture or 6-65 other instrument securing them may limit or qualify rights of the 6-66 holders of less than all of the outstanding bonds payable from the 6-67 same source to institute or prosecute any litigation affecting 6-68 LCMUA's property or income. 6-69 (l) Any provision in this Act to the contrary 7-1 notwithstanding, before issuing any construction bonds, LCMUA shall 7-2 submit plans, specifications, and other necessary information and 7-3 documents to the appropriate authorities and shall obtain the 7-4 necessary permits or other authorizations from the appropriate 7-5 regulatory bodies, including the Texas Natural Resource 7-6 Conservation Commission. 7-7 SECTION 17. REFUNDING BONDS. (a) LCMUA may issue refunding 7-8 bonds to refund any outstanding bonds authorized by this Act or 7-9 other authority and any interest on those bonds. Refunding bonds 7-10 may be issued to refund more than one series of outstanding bonds, 7-11 may combine the revenue pledged to the outstanding bonds for the 7-12 security of the refunding bonds, and may be secured by other or 7-13 additional revenue and mortgage liens. The requirements of this 7-14 Act with reference to the issuance by LCMUA of other bonds, their 7-15 security, and the remedies of the bondholders apply also to 7-16 refunding bonds. 7-17 (b) Refunding bonds shall be registered by the comptroller 7-18 on surrender and cancellation of the bonds to be refunded. The 7-19 resolution authorizing the bond issue may provide that the bonds 7-20 instead shall be sold and the proceeds deposited in a bank, in 7-21 which case the refunding bonds may be issued in an amount 7-22 sufficient to pay the principal of and the interest on the original 7-23 bonds to their option date or maturity date, and the comptroller 7-24 shall register the bonds without concurrent surrender and 7-25 cancellation of the original bonds. 7-26 SECTION 18. ADDITIONAL SECURITY. (a) Any bonds, including 7-27 refunding bonds, authorized by law and not payable wholly from ad 7-28 valorem taxes, may be additionally secured by a trust indenture 7-29 under which the trustee may be a bank with trust powers situated 7-30 either within or outside this state. The bonds, at the board's 7-31 discretion, may be additionally secured by a deed of trust or a 7-32 mortgage lien on physical properties of LCMUA and all franchises, 7-33 easements, water rights and appropriation permits, leases and 7-34 contracts, and all rights pertinent to those properties, vesting in 7-35 the trustee power to sell the properties to pay the debt, to 7-36 operate the properties and all other powers and authority to 7-37 further secure the bonds. 7-38 (b) The trust indenture, regardless of the existence of the 7-39 deed of trust or mortgage lien on the properties, may contain any 7-40 provisions prescribed by the board for the security of the bonds 7-41 and the preservation of the trust estate, may provide for amendment 7-42 or modification and the issuance of bonds to replace lost or 7-43 mutilated bonds, may condition the right to spend LCMUA money or 7-44 sell LCMUA property on approval of a registered professional 7-45 engineer selected as provided in the trust indenture, and may 7-46 provide for the investment of LCMUA funds. 7-47 (c) A purchaser under a sale under the deed of trust lien, 7-48 where one is given, is the absolute owner of the properties, 7-49 facilities, and rights purchased and has the right to maintain, 7-50 operate, and exercise the properties, facilities, and rights. 7-51 SECTION 19. ELECTION REQUIRED FOR TAX-SUPPORTED BONDS. 7-52 (a) Bonds payable wholly or partially from ad valorem taxes may 7-53 not be issued unless authorized by a majority of the qualified 7-54 voters residing in LCMUA's territory voting in an election called 7-55 for that purpose. Refunding bonds and bonds not payable wholly or 7-56 partially from ad valorem taxes may be issued without an election. 7-57 (b) The board may call an election under this section 7-58 without a petition. The resolution calling the election shall 7-59 specify the time and places of holding the election, the purpose 7-60 for which the bonds are to be issued, the maximum amount of the 7-61 bonds, the form of the ballot, and the presiding judge for each 7-62 voting place. Bonds for water purposes and sewer purposes may, in 7-63 the discretion of the board, be submitted in a single proposition. 7-64 The presiding judge serving at each voting place may appoint one 7-65 assistant judge and two clerks to assist in holding the election. 7-66 Notice of the election shall be given by publishing a substantial 7-67 copy of the resolution calling for the election in a newspaper with 7-68 general circulation in LCMUA on the same day of each of two 7-69 consecutive weeks. The first publication shall be not later than 8-1 the 14th day before the date set for the election. 8-2 (c) The returns of the election shall be made to and 8-3 canvassed by the board. 8-4 (d) The Election Code and other applicable law relating to 8-5 bond elections apply to an election under this section except as 8-6 otherwise provided by this section. 8-7 SECTION 20. DEPOSITORY. The board shall designate one or 8-8 more banks to serve as depository for the funds of LCMUA. All 8-9 LCMUA funds shall be deposited in the depository bank or banks 8-10 except that funds pledged to pay bonds may be deposited with the 8-11 trustee bank named in the trust agreement or other escrow and 8-12 except that funds shall be remitted to the bank or banks of payment 8-13 for the payment of principal of and interest on bonds. To the 8-14 extent that funds in the depository bank and the trustee bank are 8-15 not insured by the Federal Deposit Insurance Corporation, the funds 8-16 shall be secured in the manner provided by law for the security of 8-17 municipal funds. A bank selected by the board is not required to 8-18 go through any bid process or process regarding invitation of the 8-19 banks to become designated depositories. 8-20 SECTION 21. ABOLITION OF LCMUA. (a) LCMUA may be abolished 8-21 by a majority of the qualified voters residing within the territory 8-22 of LCMUA voting at an election held for the purpose. 8-23 (b) The county judge of Denton County, Texas, shall call an 8-24 election if a petition to abolish LCMUA is presented to the county 8-25 judge, duly signed by a majority of the qualified voters residing 8-26 within the territory of LCMUA. Notice of the election shall be 8-27 published and posted in accordance with the Election Code. The 8-28 county judge shall appoint a presiding judge and as many clerks as 8-29 necessary to assist the election judge in holding the election. 8-30 The ballots shall contain the propositions: "For abolishment of 8-31 Lake Cities Municipal Utility Authority" and "Against abolishment 8-32 of Lake Cities Municipal Utility Authority." Only qualified voters 8-33 who reside within the territory of LCMUA may vote at the election. 8-34 (c) If a majority of the votes cast at the election favor 8-35 abolishing LCMUA, LCMUA is abolished. If, at the time of 8-36 abolition, LCMUA has outstanding bonds or other indebtedness 8-37 maturing beyond the year in which abolition occurs, the 8-38 Commissioners Court of Denton County, Texas, shall levy and cause 8-39 to be collected in the same manner that county taxes are assessed 8-40 and collected sufficient taxes on all taxable property within the 8-41 former territory of LCMUA to pay the principal of and interest on 8-42 those bonds and other indebtedness when due. 8-43 SECTION 22. PUBLIC PURPOSE. The accomplishment of the 8-44 purposes stated in this Act is for the benefit of the people of 8-45 this state and for the improvement of their properties and 8-46 industries, and LCMUA, in carrying out the purposes of this Act, 8-47 will be performing an essential public function under the 8-48 constitution. LCMUA is not required to pay any tax or assessment 8-49 on any project, operations, equipment, or personal or real property 8-50 or any part thereof, and the bonds issued hereunder and their 8-51 transfer and the income therefrom, including the profits made on 8-52 the sale thereof, shall at all times be free from taxation within 8-53 this state. 8-54 SECTION 23. TAX ASSESSOR-COLLECTOR. The Denton County tax 8-55 assessor-collector may be used as a tax assessor and collector and 8-56 Denton Central Appraisal District may be designated as a board of 8-57 equalization and cause taxes to be assessed, valuations to be 8-58 equalized, and tax rolls to be prepared. Absent cooperation with 8-59 Denton County and Denton Central Appraisal District, the board, 8-60 before the sale and delivery of LCMUA bonds payable wholly or 8-61 partially from ad valorem taxes, shall appoint a tax assessor and 8-62 collector and board of equalization and cause taxes to be assessed, 8-63 evaluations to be equalized, and tax rolls to be prepared. 8-64 SECTION 24. STATUTORY INTERPRETATION. Nothing in this Act 8-65 shall be interpreted as amending or repealing the statutes 8-66 regarding the priorities of the use of water or any statute 8-67 governing water control. 8-68 SECTION 25. FINDINGS RELATED TO PROCEDURAL REQUIREMENTS. 8-69 (a) The proper and legal notice of the intention to introduce this 9-1 Act, setting forth the general substance of this Act, has been 9-2 published as provided by law, and the notice and a copy of this Act 9-3 have been furnished to all persons, agencies, officials, or 9-4 entities to which they are required to be furnished by the 9-5 constitution and other laws of this state, including the governor, 9-6 who has submitted the notice and Act to the Texas Natural Resource 9-7 Conservation Commission. 9-8 (b) The Texas Natural Resource Conservation Commission has 9-9 filed its recommendations relating to this Act with the governor, 9-10 lieutenant governor, and speaker of the house of representatives 9-11 within the required time. 9-12 (c) All requirements of the constitution and laws of this 9-13 state and the rules and procedures of the legislature with respect 9-14 to the notice, introduction, and passage of this Act are fulfilled 9-15 and accomplished. 9-16 SECTION 26. TRANSITION: ELECTION OF DIRECTORS. (a) A 9-17 director who is serving on the effective date of this Act serves 9-18 until the director's successor is elected at the directors election 9-19 in 2000. 9-20 (b) The three directors who receive the largest number of 9-21 votes at the election in 2000 serve four-year terms beginning in 9-22 2000. The remaining two directors serve two-year terms beginning 9-23 in 2000. 9-24 (c) If there is a tie vote between candidates for positions 9-25 three, four, or five, the tie shall be settled between the tying 9-26 directors by agreement of those directors. In the absence of an 9-27 agreement, the tying directors shall settle the tie by drawing a 9-28 high card from a new sealed packaged deck of 52 playing cards. The 9-29 general manager of LCMUA shall shuffle the deck three times, name 9-30 the candidate for whom the drawing is made, and draw from the deck 9-31 with high card prevailing without reference to suit and with the 9-32 ace being high card. If drawing results in a tie, the manager 9-33 shall continue to draw after a reshuffle until there is no tie. 9-34 The high card wins the four-year term. 9-35 (d) In 2002, two directors shall be elected to serve 9-36 four-year terms. 9-37 (e) In 2004, three directors shall be elected to serve 9-38 four-year terms. 9-39 (f) The appropriate number of directors shall be elected for 9-40 four-year terms in each subsequent even-numbered year in accordance 9-41 with the Election Code and Chapter 49, Water Code. 9-42 SECTION 27. EMERGENCY. The importance of this legislation 9-43 and the crowded condition of the calendars in both houses create an 9-44 emergency and an imperative public necessity that the 9-45 constitutional rule requiring bills to be read on three several 9-46 days in each house be suspended, and this rule is hereby suspended, 9-47 and that this Act take effect and be in force from and after its 9-48 passage, and it is so enacted. 9-49 * * * * *