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                                  * * * * *