AN ACT
 1-1     relating to municipal annexation; providing penalties.
 1-2           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-3           SECTION 1.  Subchapter B, Chapter 42, Local Government Code,
 1-4     is amended by adding Section 42.0225 to read as follows:
 1-5           Sec. 42.0225.  EXTRATERRITORIAL JURISDICTION AROUND CERTAIN
 1-6     MUNICIPALLY OWNED PROPERTY.  (a)  This section applies only to an
 1-7     area owned by a municipality that is:
 1-8                 (1)  annexed by the municipality; and
 1-9                 (2)  not contiguous to other territory of the
1-10     municipality.
1-11           (b)  Notwithstanding Section 42.021, the annexation of an
1-12     area described by Subsection (a) does not expand the
1-13     extraterritorial jurisdiction of the municipality.
1-14           SECTION 2.  Subchapter A, Chapter 43, Local Government Code,
1-15     is amended by adding Section 43.002 to read as follows:
1-16           Sec. 43.002.  CONTINUATION OF LAND USE.  (a)  A municipality
1-17     may not, after annexing an area, prohibit a person from:
1-18                 (1)  continuing to use land in the area in the manner
1-19     in which the land was being used on the date the annexation
1-20     proceedings were instituted if the land use was legal at that time;
1-21     or
1-22                 (2)  beginning to use land in the area in the manner
1-23     that was planned for the land before the 90th day before the
1-24     effective date of the annexation if:
 2-1                       (A)  one or more licenses, certificates, permits,
 2-2     approvals, or other forms of authorization by a governmental entity
 2-3     were required by law for the planned land use; and
 2-4                       (B)  a completed application for the initial
 2-5     authorization was filed with the governmental entity before the
 2-6     date the annexation proceedings were instituted.
 2-7           (b)  For purposes of this section, a completed application is
 2-8     filed if the application includes all documents and other
 2-9     information designated as required by the governmental entity in a
2-10     written notice to the applicant.
2-11           (c)  This section does not prohibit a municipality from
2-12     imposing:
2-13                 (1)  a regulation relating to the location of sexually
2-14     oriented businesses, as that term is defined by Section 243.002;
2-15                 (2)  a municipal ordinance, regulation, or other
2-16     requirement affecting colonias, as that term is defined by Section
2-17     2306.581, Government Code;
2-18                 (3)  a regulation relating to preventing imminent
2-19     destruction of property or injury to persons;
2-20                 (4)  a regulation relating to public nuisances;
2-21                 (5)  a regulation relating to flood control;
2-22                 (6)  a regulation relating to the storage and use of
2-23     hazardous substances;
2-24                 (7)  a regulation relating to the sale and use of
2-25     fireworks; or
2-26                 (8)  a regulation relating to the discharge of
 3-1     firearms.
 3-2           SECTION 3.  The heading to Subchapter C, Chapter 43, Local
 3-3     Government Code, is amended to read as follows:
 3-4            SUBCHAPTER C.  ANNEXATION PROCEDURE FOR AREAS ANNEXED
 3-5                       UNDER MUNICIPAL ANNEXATION PLAN
 3-6           SECTION 4.  Sections 43.052 and 43.053, Local Government
 3-7     Code, are amended to read as follows:
 3-8           Sec. 43.052.  MUNICIPAL ANNEXATION PLAN REQUIRED.  (a)  In
 3-9     this section, "special district" means a municipal utility
3-10     district, water control and improvement district, or other district
3-11     created under Section 52, Article III, or Section 59, Article XVI,
3-12     Texas Constitution.
3-13           (b)  A municipality may annex an area identified in the
3-14     annexation plan only as provided by this section.
3-15           (c)  A municipality shall prepare an annexation plan that
3-16     specifically identifies annexations that may occur beginning on the
3-17     third anniversary of the date the annexation plan is adopted.  The
3-18     municipality may amend the plan to specifically identify
3-19     annexations that may occur beginning on the third anniversary of
3-20     the date the plan is amended.
3-21           (d)  At any time during which an area is included in a
3-22     municipality's annexation plan, a municipal utility district or
3-23     other special district that will be abolished as a result of the
3-24     annexation, excluding an emergency services district, in which the
3-25     area is located may not without consent of the municipality:
3-26                 (1)  reduce the tax rate applicable to the area if the
 4-1     amount that would remain in the debt service fund after the
 4-2     reduction and after subtracting the amount due for debt service in
 4-3     the following year is less than 25 percent of the debt service
 4-4     requirements for the following year;
 4-5                 (2)  voluntarily transfer an asset without
 4-6     consideration; or
 4-7                 (3)  enter into a contract for services that extends
 4-8     beyond the three-year annexation plan period other than a contract
 4-9     with another political subdivision for the operation of water,
4-10     wastewater, and drainage facilities.
4-11           (e)  A municipality may amend its annexation plan at any time
4-12     to remove an area proposed for annexation.  If, before the end of
4-13     the 18th month after the month an area is included in the
4-14     three-year annexation cycle, a municipality amends its annexation
4-15     plan to remove the area, the municipality may not amend the plan to
4-16     again include the area in its annexation plan until the first
4-17     anniversary of the date the municipality amended the plan to remove
4-18     the area.  If, during or after the 18 months after the month an
4-19     area is included in the three-year annexation cycle, a municipality
4-20     amends its annexation plan to remove the area, the municipality may
4-21     not amend the plan to again include the area in its annexation plan
4-22     until the second anniversary of the date the municipality amended
4-23     the plan to remove the area.
4-24           (f)  Before the 90th day after the date a municipality adopts
4-25     or amends an annexation plan under this section, the municipality
4-26     shall give written notice to:
 5-1                 (1)  each property owner in the affected area, as
 5-2     indicated by the appraisal records furnished by the appraisal
 5-3     district for each county in which the affected area is located,
 5-4     that the area has been included in or removed from the
 5-5     municipality's annexation plan;
 5-6                 (2)  each public entity, as defined by Section 43.053,
 5-7     or private entity that provides services in the area proposed for
 5-8     annexation; and
 5-9                 (3)  [ANNEXATION HEARING REQUIREMENTS.  (a)  Before a
5-10     municipality may institute annexation proceedings, the governing
5-11     body of the municipality must conduct two public hearings at which
5-12     persons interested in the annexation are given the opportunity to
5-13     be heard.  The hearings must be conducted on or after the 40th day
5-14     but before the 20th day before the date of the institution of the
5-15     proceedings.]
5-16           [(b)  At least one of the hearings must be held in the area
5-17     proposed for annexation if more than 20 adult residents of the area
5-18     file a written protest of the annexation with the secretary of the
5-19     municipality within 10 days after the date of the publication of
5-20     the notice required by this section.  The protest must state the
5-21     name, address, and age of each protester who signs.]
5-22           [(c)  The municipality must publish notice of the hearings in
5-23     a newspaper of general circulation in the municipality and in the
5-24     area proposed for annexation.  The notice for each hearing must be
5-25     published at least once on or after the 20th day but before the
5-26     10th day before the date of the hearing.  The municipality must
 6-1     give additional notice by certified mail to] each railroad company
 6-2     that serves the municipality and is on the municipality's tax roll
 6-3     if the company's right-of-way is in the area proposed for
 6-4     annexation.
 6-5           (g)  If an area is not removed from the municipality's
 6-6     annexation plan, the annexation of the area under the plan must be
 6-7     completed before the 31st day after the third anniversary of the
 6-8     date the area was included in the annexation plan.  If the
 6-9     annexation is not completed within the period prescribed by this
6-10     subsection, the municipality may not annex the area proposed for
6-11     annexation before the fifth anniversary of the last day for
6-12     completing an annexation under this subsection.
6-13           (h)  This section does not apply to an area proposed for
6-14     annexation if:
6-15                 (1)  the area contains fewer than 100 separate tracts
6-16     of land on which one or more residential dwellings are located on
6-17     each tract;
6-18                 (2)  the area will be annexed by petition of more than
6-19     50 percent of the real property owners in the area proposed for
6-20     annexation or by vote or petition of the qualified voters or real
6-21     property owners as provided by Subchapter B;
6-22                 (3)  the area is or was the subject of:
6-23                       (A)  an industrial district contract under
6-24     Section 42.044; or
6-25                       (B)  a strategic partnership agreement under
6-26     Section 43.0751;
 7-1                 (4)  the area is located in a colonia, as that term is
 7-2     defined by Section 2306.581, Government Code;
 7-3                 (5)  the area is annexed under Section 43.026, 43.027,
 7-4     43.029, or 43.031;
 7-5                 (6)  the area is located completely within the
 7-6     boundaries of a closed military installation; or
 7-7                 (7)  the municipality determines that the annexation of
 7-8     the area is necessary to protect the area proposed for annexation
 7-9     or the municipality from:
7-10                       (A)  imminent destruction of property or injury
7-11     to persons; or
7-12                       (B)  a condition or use that constitutes a public
7-13     or private nuisance as defined by background principles of nuisance
7-14     and property law of this state.
7-15           (i)  A municipality may not circumvent the requirements of
7-16     this section by proposing to separately annex two or more areas
7-17     described by Subsection (h)(1) if no reason exists under generally
7-18     accepted municipal planning principles and practices for separately
7-19     annexing the areas.  If a municipality proposes to separately annex
7-20     areas in violation of this section, a person residing or owning
7-21     land in the area may petition the municipality to include the area
7-22     in the municipality's annexation plan.  If the municipality fails
7-23     to take action on the petition, the petitioner may request
7-24     arbitration of the dispute.  The petitioner must request the
7-25     appointment of an arbitrator in writing to the municipality.
7-26     Sections 43.0564(b), (c), and (e) apply to the appointment of an
 8-1     arbitrator and the conduct of an arbitration proceeding under this
 8-2     subsection.  Except as provided by this subsection, the
 8-3     municipality shall pay the cost of arbitration.  If the arbitrator
 8-4     finds that the petitioner's request for arbitration was groundless
 8-5     or requested in bad faith or for the purposes of harassment, the
 8-6     arbitrator shall require the petitioner to pay the costs of
 8-7     arbitration.
 8-8           (j)  If a municipality has an Internet website, the
 8-9     municipality shall:
8-10                 (1)  post and maintain the posting of its annexation
8-11     plan on its Internet website;
8-12                 (2)  post and maintain the posting on its Internet
8-13     website of any amendments to include an area in its annexation plan
8-14     until the date the area is annexed; and
8-15                 (3)  post and maintain the posting on its Internet
8-16     website of any amendments to remove an area from its annexation
8-17     plan until the date the municipality may again include the area in
8-18     its annexation plan.
8-19           Sec. 43.053.  INVENTORY OF SERVICES AND FACILITIES REQUIRED.
8-20     (a)  In this section, "public entity" includes a municipality,
8-21     county, fire protection service provider, including a volunteer
8-22     fire department, emergency medical services provider, including a
8-23     volunteer emergency medical services provider, or a special
8-24     district, as that term is defined by Section 43.052.
8-25           (b)  After adopting an annexation plan or amending an
8-26     annexation plan to include additional areas under Section 43.052, a
 9-1     municipality shall compile a comprehensive inventory of services
 9-2     and facilities provided by public and private entities, directly or
 9-3     by contract, in each area proposed for annexation.  The inventory
 9-4     of services and facilities must include all services and facilities
 9-5     the municipality is required to provide or maintain following the
 9-6     annexation.
 9-7           (c)  The municipality shall request, in the notice provided
 9-8     under Section 43.052(f), the information necessary to compile the
 9-9     inventory from each public or private entity that provides services
9-10     or facilities in each area proposed for annexation.  The public or
9-11     private entity shall provide to the municipality the information
9-12     held by the entity that is necessary to compile the inventory not
9-13     later than the 90th day after the date the municipality requests
9-14     the information unless the entity and the municipality agree to
9-15     extend the period for providing the information.  The information
9-16     provided under this subsection must include the type of service
9-17     provided, the method of service delivery, and all information
9-18     prescribed by Subsections (e) and (f).  If a service provider fails
9-19     to provide the required information within the 90-day period, the
9-20     municipality is not required to include the information in an
9-21     inventory prepared under this section.
9-22           (d)  The information required in the inventory shall be based
9-23     on the services and facilities provided during the year preceding
9-24     the date the municipality adopted the annexation plan or amended
9-25     the annexation plan to include additional areas.
9-26           (e)  For utility facilities, roads, drainage structures, and
 10-1    other infrastructure provided or maintained by public or private
 10-2    entities, the inventory must include:
 10-3                (1)  an engineer's report that describes the physical
 10-4    condition of all infrastructure elements in the area; and
 10-5                (2)  a summary of capital, operational, and maintenance
 10-6    expenditures for that infrastructure.
 10-7          (f)  For police, fire, and emergency medical services
 10-8    provided by public or private entities, the inventory must include
 10-9    for each service:
10-10                (1)  the average dispatch and delivery time;
10-11                (2)  a schedule of equipment, including vehicles;
10-12                (3)  a staffing schedule that discloses the
10-13    certification and training levels of personnel; and
10-14                (4)  a summary of operating and capital expenditures.
10-15          (g)  The municipality shall complete the inventory and make
10-16    the inventory available for public inspection on or before the 60th
10-17    day after the date the municipality receives the required
10-18    information from the service providers under Subsection (c).
10-19          (h)  The municipality may monitor the services provided in an
10-20    area proposed for annexation and verify the inventory information
10-21    provided by the service provider.  [PERIOD FOR COMPLETION OF
10-22    ANNEXATION; EFFECTIVE DATE.  (a)  The annexation of an area must be
10-23    completed within 90 days after the date the governing body
10-24    institutes the annexation proceedings or those proceedings are
10-25    void.  Any period during which the municipality is restrained or
10-26    enjoined by a court of competent jurisdiction from annexing the
 11-1    area is not included in computing the 90-day period.]
 11-2          [(b)  Notwithstanding any provision of a municipal charter to
 11-3    the contrary, the governing body of a municipality with a
 11-4    population of 1.5 million or more may provide that an annexation
 11-5    take effect on any date within 90 days after the date of the
 11-6    adoption of the ordinance providing for the annexation.]
 11-7          SECTION 5.  Subsection (a), Section 43.054, Local Government
 11-8    Code, is amended to read as follows:
 11-9          (a)  A municipality with a population of less than 1.6
11-10    million may not annex a publicly or privately owned area, including
11-11    a strip of area following the course of a road, highway, river,
11-12    stream, or creek, unless the width of the area at its narrowest
11-13    point is at least 1,000 feet.
11-14          SECTION 6.  Subchapter C, Chapter 43, Local Government Code,
11-15    is amended by adding Sections 43.0545 and 43.0546 to read as
11-16    follows:
11-17          Sec. 43.0545.  ANNEXATION OF CERTAIN ADJACENT AREAS.  (a)  A
11-18    municipality may not annex an area that is located in the
11-19    extraterritorial jurisdiction of the municipality only because the
11-20    area is contiguous to municipal territory that is less than 1,000
11-21    feet in width at its narrowest point.
11-22          (b)  A municipality may not annex an area that is located in
11-23    the extraterritorial jurisdiction of the municipality only because
11-24    the area is contiguous to municipal territory that:
11-25                (1)  was annexed before September 1, 1999; and
11-26                (2)  was in the extraterritorial jurisdiction of the
 12-1    municipality at the time of annexation only because the territory
 12-2    was contiguous to municipal territory that was less than 1,000 feet
 12-3    in width at its narrowest point.
 12-4          (c)  Subsections (a) and (b) do not apply to an area:
 12-5                (1)  completely surrounded by incorporated territory of
 12-6    one or more municipalities;
 12-7                (2)  for which the owners of the area have requested
 12-8    annexation by the municipality;
 12-9                (3)  that is owned by the municipality; or
12-10                (4)  that is the subject of an industrial district
12-11    contract under Section 42.044.
12-12          (d)  Subsection (b) does not apply if the minimum width of
12-13    the narrow territory described by Subsection (b)(2), following
12-14    subsequent annexation, is no longer less than 1,000 feet in width
12-15    at its narrowest point.
12-16          (e)  For purposes of this section, roads, highways, rivers,
12-17    lakes, or other bodies of water are not included in computing the
12-18    1,000-foot distance unless the area being annexed includes land in
12-19    addition to a road, highway, river, lake, or other body of water.
12-20          Sec. 43.0546.  ANNEXATION OF CERTAIN ADJACENT AREAS BY
12-21    POPULOUS MUNICIPALITIES.  (a)  In this section, "municipal area"
12-22    means the area within the corporate boundaries of a municipality
12-23    other than:
12-24                (1)  an area annexed before September 1, 1999, that is
12-25    less than 1,000 feet wide at any point;
12-26                (2)  an area within the corporate boundaries of the
 13-1    municipality that was annexed by the municipality before September
 13-2    1, 1999, and at the time of the annexation the area was contiguous
 13-3    to municipal territory that was less than 1,000 feet wide at any
 13-4    point;
 13-5                (3)  an area annexed after December 1, 1995, and before
 13-6    September 1, 1999;
 13-7                (4)  municipally owned property; or
 13-8                (5)  an area contiguous to municipally owned property
 13-9    if the municipally owned property was annexed in an annexation that
13-10    included an area that was less than 1,000 feet wide at its
13-11    narrowest point.
13-12          (b)  This section applies only to a municipality with a
13-13    population of 1.6 million or more.
13-14          (c)  A municipality to which this section applies may not
13-15    annex an area that is less than 1,500 feet wide at any point.  At
13-16    least 1,500 feet of the perimeter of the area annexed by a
13-17    municipality must be coterminous with the boundary of the municipal
13-18    area of the municipality.
13-19          (d)  This section does not apply to territory:
13-20                (1)  that is completely surrounded by municipal area;
13-21                (2)  for which the owners of the area have requested
13-22    annexation by the municipality;
13-23                (3)  within a district whose elected board of directors
13-24    has by a majority vote requested annexation;
13-25                (4)  owned by the municipality; or
13-26                (5)  that contains fewer than 50 inhabitants.
 14-1          SECTION 7.  Section 43.056, Local Government Code, is amended
 14-2    to read as follows:
 14-3          Sec. 43.056.  PROVISION OF SERVICES TO ANNEXED AREA.
 14-4    (a)  Before the first day of the 10th month after the month in
 14-5    which the inventory is prepared as provided by Section 43.053,
 14-6    [publication of the  notice of the first hearing required under
 14-7    Section 43.052, the governing body of] the municipality proposing
 14-8    the annexation shall complete [direct its planning department or
 14-9    other appropriate municipal department to prepare] a service plan
14-10    that provides for the extension of full municipal services to the
14-11    area to be annexed.  The municipality shall provide the services by
14-12    any of the methods by which it extends the services to any other
14-13    area of the municipality.
14-14          (b)  The service plan must include a program under which the
14-15    municipality will provide full municipal services in the annexed
14-16    area no later than 2-1/2 [4-1/2] years after the effective date of
14-17    the annexation, in accordance with Subsection (e), unless certain
14-18    services cannot reasonably be provided within that period and the
14-19    municipality proposes a schedule for providing those services
14-20    [(d)].  If the municipality proposes a schedule to extend the
14-21    period for providing certain services, the schedule must provide
14-22    for the provision of full municipal services no later than 4-1/2
14-23    years after the effective date of the annexation.  If the area was
14-24    annexed after December 1, 1998, and before September 1, 1999, the
14-25    municipality shall provide sewer services in the annexed area as
14-26    provided by this subsection, except that, no later than five years
 15-1    after the effective date of the annexation, the municipality may
 15-2    not provide sewer services in the annexed area by means of a
 15-3    package wastewater treatment plant.  However, under the program if
 15-4    the municipality provides any of the following services within the
 15-5    corporate boundaries of the municipality before annexation, the
 15-6    municipality must provide those [the following] services in the
 15-7    area proposed for annexation on [within 60 days after] the
 15-8    effective date of the annexation of the area:
 15-9                (1)  police protection;
15-10                (2)  fire protection;
15-11                (3)  emergency medical services;
15-12                (4)  solid waste collection, except as provided by
15-13    Subsection (o);
15-14                (5)  operation and [(4)]  maintenance of water and
15-15    wastewater facilities in the annexed area that are not within the
15-16    service area of another water or wastewater utility;
15-17                (6)  operation and [(5)]  maintenance of roads and
15-18    streets, including road and street lighting;
15-19                (7)  operation and [(6)]  maintenance of parks,
15-20    playgrounds, and swimming pools; and
15-21                (8)  operation and [(7)]  maintenance of any other
15-22    publicly owned facility, building, or service.
15-23          [(b-1)  The service plan of a municipality with a population
15-24    of 1.5 million or more must include a program under which the
15-25    municipality will provide full municipal services in the annexed
15-26    area no later than 4-1/2 years after the effective date of the
 16-1    annexation, in accordance with Subsection (d).  However, under the
 16-2    program the municipality must:]
 16-3                [(1)  provide the following services in the area on and
 16-4    after the effective date of the annexation of the area:]
 16-5                      [(A)  police protection; and]
 16-6                      [(B)  solid waste collection;]
 16-7                [(2)  provide the following services in the area within
 16-8    30 days after the effective date of the annexation of the area, if
 16-9    the services are provided through a contract between the
16-10    municipality and a service provider:]
16-11                      [(A)  emergency medical service; and]
16-12                      [(B)  fire protection; and]
16-13                [(3)  provide the following services in the area within
16-14    60 days after the effective date of the annexation of the area:]
16-15                      [(A)  maintenance of water and wastewater
16-16    facilities in the annexed area that are not within the service area
16-17    of another water or wastewater utility;]
16-18                      [(B)  maintenance of roads and streets, including
16-19    road and street lighting;]
16-20                      [(C)  maintenance of parks, playgrounds, and
16-21    swimming pools;]
16-22                      [(D)  maintenance of any other publicly owned
16-23    facility, building, or service; and]
16-24                      [(E)  emergency medical service and fire
16-25    protection, if the services are provided by municipal personnel and
16-26    equipment.]
 17-1          (c)  For purposes of this section, "full municipal services"
 17-2    means services [funded in whole or in part by municipal taxation
 17-3    and] provided by the annexing municipality within its full-purpose
 17-4    boundaries, including water and wastewater services and excluding
 17-5    gas or electrical service.
 17-6          (d)  A municipality with a population of 1.5 million or more
 17-7    may provide all or part of the municipal services required under
 17-8    the service plan by contracting with service providers.  If the
 17-9    municipality owns a water and wastewater utility, the municipality
17-10    shall, subject to this section, extend water and wastewater service
17-11    to any annexed area not within the service area of another water or
17-12    wastewater utility.  If the municipality annexes territory included
17-13    within the boundaries of a municipal utility district or a water
17-14    control and improvement district, the municipality shall comply
17-15    with applicable state law relating to annexation of territory
17-16    within a municipal utility district or a water control and
17-17    improvement district.  The service plan shall summarize the service
17-18    extension policies of the municipal water and wastewater utility.
17-19          (e) [(d)]  The service plan must also include a program under
17-20    which the municipality will initiate after the effective date of
17-21    the annexation the acquisition or construction of capital
17-22    improvements necessary for providing municipal services adequate to
17-23    serve the area.  The construction shall [begin within two years
17-24    after the effective date of the annexation of the area and shall]
17-25    be substantially completed within the period provided in the
17-26    service plan.  The service plan may be amended to extend the period
 18-1    for construction if the construction is proceeding with all
 18-2    deliberate speed [4-1/2 years after that date].  The acquisition or
 18-3    construction of the facilities shall be accomplished by purchase,
 18-4    lease, or other contract or by the municipality succeeding to the
 18-5    powers, duties, assets, and obligations of a conservation and
 18-6    reclamation district as authorized or required by law.  The
 18-7    construction of the facilities shall be accomplished in a
 18-8    continuous process and shall be completed as soon as reasonably
 18-9    possible, consistent with generally accepted local engineering and
18-10    architectural standards and practices.  However, the municipality
18-11    does not violate this subsection if the construction process is
18-12    interrupted for any reason by circumstances beyond the direct
18-13    control of the municipality.  The requirement that construction of
18-14    capital improvements must be substantially completed within the
18-15    period provided in the service plan [4-1/2 years] does not apply to
18-16    a development project or proposed development project within an
18-17    annexed area if the annexation of the area was initiated by
18-18    petition or request of the owners of land in the annexed area and
18-19    the municipality and the landowners have subsequently agreed in
18-20    writing that the development project within that area, because of
18-21    its size or projected manner of development by the developer, is
18-22    not reasonably expected to be completed within that period.
18-23          (f) [(e)]  A service plan may not:
18-24                (1)  require the creation of another political
18-25    subdivision;
18-26                (2)  require a landowner in the area to fund the
 19-1    capital improvements necessary to provide municipal services in a
 19-2    manner inconsistent with Chapter 395 unless otherwise agreed to by
 19-3    the landowner; or
 19-4                (3)  provide [fewer] services [or lower levels of
 19-5    services] in the area in a manner that would have the effect of
 19-6    reducing by more than a negligible amount the level of fire and
 19-7    police protection and emergency medical services provided within
 19-8    the corporate boundaries of the municipality before annexation[:]
 19-9                      [(A)  than were in existence in the area
19-10    immediately preceding the date of the annexation; or]
19-11                      [(B)  than are otherwise available in other parts
19-12    of the municipality with land uses and population densities similar
19-13    to those reasonably contemplated or projected in the area].
19-14          (g)  If the annexed area had a lower level of services,
19-15    infrastructure, and infrastructure maintenance than the level of
19-16    services, infrastructure, and infrastructure maintenance provided
19-17    within the corporate  boundaries of the  municipality before
19-18    annexation, a service plan must provide the annexed area with a
19-19    level of services, infrastructure, and infrastructure maintenance
19-20    that is comparable to the level of services, infrastructure, and
19-21    infrastructure maintenance available in other parts of the
19-22    municipality with topography, land use, and population density
19-23    similar to those reasonably contemplated or projected in the area.
19-24    If the annexed area had a level of services, infrastructure, and
19-25    infrastructure maintenance equal to the level of services,
19-26    infrastructure, and infrastructure maintenance provided within the
 20-1    corporate boundaries of the  municipality before annexation, a
 20-2    service plan must maintain that same level of services,
 20-3    infrastructure, and infrastructure maintenance.  Except as provided
 20-4    by this subsection, if the annexed area had a level of services
 20-5    superior to the level of services provided within the corporate
 20-6    boundaries of the municipality before annexation, a service plan
 20-7    must provide the annexed area with a level of services that is
 20-8    comparable to the level of services available in other parts of the
 20-9    municipality with topography, land use, and population density
20-10    similar to those reasonably contemplated or projected in the area.
20-11    If the annexed area had a level of services for operating and
20-12    maintaining the infrastructure of the area, including the
20-13    facilities described by Subsections (b)(5)-(8), superior to the
20-14    level of services provided within the corporate boundaries of the
20-15    municipality before annexation, a service plan must provide for the
20-16    operation and maintenance of the infrastructure of the annexed area
20-17    at a level of services that is equal or superior to that level of
20-18    services.
20-19          (h)  A municipality with a population of 1.6 million or more
20-20    may not impose a fee in the annexed area, over and above ad valorem
20-21    taxes and fees imposed within the corporate boundaries of the
20-22    municipality before annexation, to maintain the level of services
20-23    that existed in the area before annexation.  This subsection does
20-24    not prohibit the municipality from imposing a fee for a service in
20-25    the area annexed if the same fee is imposed within the corporate
20-26    boundaries of the municipality before annexation.
 21-1          (i) [(f)]  If only a part of the area to be annexed is
 21-2    actually annexed, the governing body shall direct the department to
 21-3    prepare a revised service plan for that part.
 21-4          (j) [(g)]  The proposed service plan must be made available
 21-5    for public inspection and explained to the inhabitants of the area
 21-6    at the public hearings held under Section 43.0561 [43.052].  The
 21-7    plan may be amended through negotiation at the hearings, but the
 21-8    provision of any service may not be deleted.  On completion of the
 21-9    public hearings, the service plan shall be attached to the
21-10    ordinance annexing the area and approved as part of the ordinance.
21-11          (k) [(h)]  On approval by the governing body, the service
21-12    plan is a contractual obligation that is not subject to amendment
21-13    or repeal except that if the governing body determines at the
21-14    public hearings required by this subsection that changed conditions
21-15    or subsequent occurrences make the service plan unworkable or
21-16    obsolete, the governing body may amend the service plan to conform
21-17    to the changed conditions or subsequent occurrences.  An amended
21-18    service plan must provide for services that are comparable to or
21-19    better than those established in the service plan before amendment.
21-20    Before any amendment is adopted, the governing body must provide an
21-21    opportunity for interested persons to be heard at public hearings
21-22    called and held in the manner provided by Section 43.0561 [43.052].
21-23          (l) [(i)]  A service plan is valid for 10 years.  Renewal of
21-24    the service plan is at the discretion of the municipality.   A
21-25    person residing or owning land in an annexed area in a municipality
21-26    with a population of 1.6 million or more may enforce a service plan
 22-1    by petitioning the municipality for a change in policy or
 22-2    procedures to ensure compliance with the service plan.  If the
 22-3    municipality fails to take action with regard to the petition, the
 22-4    petitioner may request arbitration of the dispute under Section
 22-5    43.0565.  A person residing or owning land in an annexed area in a
 22-6    municipality with a population of less than 1.6 million may enforce
 22-7    a service plan by applying for a writ of mandamus not later than
 22-8    the second anniversary of the date the person knew or should have
 22-9    known that the municipality was not complying with the service
22-10    plan.  If a writ of mandamus is applied for, the municipality has
22-11    the burden of proving that the services have been provided in
22-12    accordance with the service plan in question.  If a court issues a
22-13    [the] writ under this subsection, the court:
22-14                (1)  [municipality shall pay the person's costs and
22-15    reasonable attorney's fees in bringing the action.  A writ issued
22-16    under this subsection] must provide the municipality the option of
22-17    disannexing the area within a reasonable period specified by the
22-18    court;
22-19                (2)  may require the municipality to comply with the
22-20    service plan in question before a reasonable date specified by the
22-21    court if the municipality does not disannex the area within the
22-22    period prescribed by the court under Subdivision (1);
22-23                (3)  may require the municipality to refund to the
22-24    landowners of the annexed area money collected by the municipality
22-25    from those landowners for services to the area that were not
22-26    provided;
 23-1                (4)  may assess a civil penalty against the
 23-2    municipality, to be paid to the state in an amount as justice may
 23-3    require, for the period in which the municipality is not in
 23-4    compliance with the service plan;
 23-5                (5)  may require the parties to participate in
 23-6    mediation; and
 23-7                (6)  may require the municipality to pay the person's
 23-8    costs and reasonable attorney's fees in bringing the action for the
 23-9    writ [30 days].
23-10          (m) [(j)  A municipality that annexes an area shall provide
23-11    the area or cause the area to be provided with services in
23-12    accordance with the service plan for the area.]
23-13          [(k)]  This section does not require that a uniform level of
23-14    full municipal services be provided to each area of the
23-15    municipality if different characteristics of topography, land use,
23-16    and population density constitute [are considered] a sufficient
23-17    basis for providing different levels of service.  Any disputes
23-18    regarding the level of services provided under this subsection are
23-19    resolved in the same manner provided by Subsection (l).  Nothing in
23-20    this subsection modifies the requirement under Subsection (g) for a
23-21    service plan to provide a level of services in an annexed area that
23-22    is equal or superior to the level of services provided within the
23-23    corporate boundaries of the municipality before annexation.  To the
23-24    extent of any conflict between this subsection and Subsection (g),
23-25    Subsection (g) prevails.
23-26          (n)  Before the second anniversary of the date an area is
 24-1    included within the corporate boundaries of a municipality by
 24-2    annexation, the municipality may not:
 24-3                (1)  prohibit the collection of solid waste in the area
 24-4    by a privately owned solid waste management service provider; or
 24-5                (2)  impose a fee for solid waste management services
 24-6    on a person who continues to use the services of a privately owned
 24-7    solid waste management service provider.
 24-8          (o)  A municipality is not required to provide solid waste
 24-9    collection services under Subsection (b) to a person who continues
24-10    to use the services of a privately owned solid waste management
24-11    service provider as provided by Subsection (n).
24-12          SECTION 8.  Subchapter C, Chapter 43, Local Government Code,
24-13    is amended by renumbering Section 43.0561 as Section 43.0566 and
24-14    Section 43.0565 as Section 43.0567 and adding Sections 43.0561,
24-15    43.0562, 43.0563, 43.0564, and 43.0565 to read as follows:
24-16          Sec. 43.0561.  ANNEXATION HEARING REQUIREMENTS.  (a)  Before
24-17    a municipality may institute annexation proceedings, the governing
24-18    body of the municipality must conduct two public hearings at which
24-19    persons interested in the annexation are given the opportunity to
24-20    be heard.  The hearings must be conducted not later than the 90th
24-21    day after the date the inventory is available for inspection.
24-22          (b)  At least one of the hearings must be held in the area
24-23    proposed for annexation if a suitable site is reasonably available
24-24    and more than 20 adults who are permanent residents of the area
24-25    file a written protest of the annexation with the secretary of the
24-26    municipality within 10 days after the date of the publication of
 25-1    the notice required by this section.  The protest must state the
 25-2    name, address, and age of each protester who signs.  If a suitable
 25-3    site is not reasonably available in the area proposed for
 25-4    annexation, the hearing may be held outside the area proposed for
 25-5    annexation if the hearing is held in the nearest suitable public
 25-6    facility.
 25-7          (c)  The municipality must post notice of the hearings on the
 25-8    municipality's Internet website if the  municipality has an
 25-9    Internet website and publish notice of the hearings in a newspaper
25-10    of general circulation in the municipality and in the area proposed
25-11    for annexation.  The notice for each hearing must be published at
25-12    least once on or after the 20th day but before the 10th day before
25-13    the date of the hearing.  The notice for each hearing must be
25-14    posted on the municipality's Internet website on or after the 20th
25-15    day but before the 10th day before the date of the hearing and must
25-16    remain posted until the date of the hearing.  The municipality must
25-17    give additional notice by certified mail to:
25-18                (1)  each public entity, as defined by Section 43.053,
25-19    and utility service provider that provides services in the area
25-20    proposed for annexation; and
25-21                (2)  each railroad company that serves the municipality
25-22    and is on the municipality's tax roll if the company's right-of-way
25-23    is in the area proposed for annexation.
25-24          Sec. 43.0562.  NEGOTIATIONS REQUIRED.  (a)  After holding the
25-25    hearings as provided by Section 43.0561:
25-26                (1)  if a municipality has a population of less than
 26-1    1.6 million, the municipality and the property owners of the area
 26-2    proposed for annexation shall negotiate for the provision of
 26-3    services to the area after annexation or for the provision of
 26-4    services to the area in lieu of annexation under Section 43.0563;
 26-5    or
 26-6                (2)  if a municipality proposes to annex a special
 26-7    district, as that term is defined by Section 43.052, the
 26-8    municipality and the governing body of the district shall negotiate
 26-9    for the provision of services to the area after annexation or for
26-10    the provision of services to the area in lieu of annexation under
26-11    Section 43.0751.
26-12          (b)  For purposes of negotiations under Subsection (a)(1),
26-13    the commissioners court of the county in which the area proposed
26-14    for annexation is located shall select five representatives to
26-15    negotiate with the municipality for the provision of services to
26-16    the area after annexation.  If the area proposed for annexation is
26-17    located in more than one county, the commissioners court of the
26-18    county in which the greatest number of residents reside shall
26-19    select three representatives to negotiate with the municipality,
26-20    and the commissioners courts of the remaining counties jointly
26-21    shall select two representatives to negotiate with the
26-22    municipality.
26-23          (c)  For purposes of negotiations under Subsection (a)(2), if
26-24    more than one special district is located in the area proposed for
26-25    annexation, the governing boards of the districts may jointly
26-26    select five representatives to negotiate with the municipality on
 27-1    behalf of all the affected districts.
 27-2          Sec. 43.0563.  CONTRACTS FOR PROVISION OF SERVICES IN LIEU OF
 27-3    ANNEXATION.  (a)  The governing body of a municipality with a
 27-4    population of less than 1.6 million may negotiate and enter into a
 27-5    written agreement with representatives designated under Section
 27-6    43.0562(b) for the provision of services and the funding of the
 27-7    services in the area.  The agreement may also include an agreement
 27-8    related to permissible land uses and compliance with municipal
 27-9    ordinances.
27-10          (b)  An agreement under this section is in lieu of annexation
27-11    by the municipality of the area.
27-12          (c)  In negotiating an agreement under this section, the
27-13    parties may agree to:
27-14                (1)  any term allowed under Section 42.044 or 43.0751,
27-15    regardless of whether the municipality or the area proposed for
27-16    annexation would have been able to agree to the term under Section
27-17    42.044 or 43.0751; and
27-18                (2)  any other term to which both parties agree to
27-19    satisfactorily resolve any dispute between the parties, including
27-20    the creation of any type of special district otherwise allowed by
27-21    state law.
27-22          Sec. 43.0564.  ARBITRATION REGARDING NEGOTIATIONS FOR
27-23    SERVICES.  (a)  If the municipality and the representatives of the
27-24    area proposed for annexation cannot reach an agreement for  the
27-25    provision of services under Section 43.0562 or if the municipality
27-26    and the property owner representatives cannot reach an agreement
 28-1    for the provision of services in lieu of annexation under Section
 28-2    43.0563, either party by majority decision of the party's
 28-3    representatives may request the appointment of an arbitrator to
 28-4    resolve the service plan issues in dispute.  The request must be
 28-5    made in writing to the other party before the 60th day after the
 28-6    date the service plan is completed under Section 43.056.  The
 28-7    municipality may not annex the area under another section of this
 28-8    chapter during the pendency of the arbitration proceeding or an
 28-9    appeal from the arbitrator's decision.
28-10          (b)  The parties to the dispute may agree on the appointment
28-11    of an arbitrator.  If the parties cannot agree on the appointment
28-12    of an arbitrator before the 11th business day after the date
28-13    arbitration is requested, the mayor of the municipality shall
28-14    immediately request a list of seven neutral arbitrators from the
28-15    American Arbitration Association or the Federal Mediation and
28-16    Conciliation Service or their successors in function.  An
28-17    arbitrator included in the list must be a resident of this state
28-18    and may not be a resident of a county in which any part of the
28-19    municipality or any part of the district proposed for annexation is
28-20    located.  The parties to the dispute may agree on the appointment
28-21    of an arbitrator included in the list.  If the parties cannot agree
28-22    on the appointment of an arbitrator before the 11th business day
28-23    after the date the list is provided to the parties, each party or
28-24    the party's designee may alternately strike a name from the list.
28-25    The remaining person on the list shall be appointed as the
28-26    arbitrator.  In this subsection, "business day" means a day other
 29-1    than a Saturday, Sunday, or state or national holiday.
 29-2          (c)  The arbitrator shall:
 29-3                (1)  set a hearing to be held not later than the 10th
 29-4    day after the date the arbitrator is appointed; and
 29-5                (2)  notify the parties to the arbitration in writing
 29-6    of the time and place of the hearing not later than the eighth day
 29-7    before the date of the hearing.
 29-8          (d)  The authority of the arbitrator is limited to issuing a
 29-9    decision relating only to the service plan issues in dispute.
29-10          (e)  The arbitrator may:
29-11                (1)  receive in evidence any documentary evidence or
29-12    other information the arbitrator considers relevant;
29-13                (2)  administer oaths; and
29-14                (3)  issue subpoenas to require:
29-15                      (A)  the attendance and testimony of witnesses;
29-16    and
29-17                      (B)  the production of books, records, and other
29-18    evidence relevant to an issue presented to the arbitrator for
29-19    determination.
29-20          (f)  Unless the parties to the dispute agree otherwise, the
29-21    arbitrator shall complete the hearing within two consecutive days.
29-22    The arbitrator shall permit each party one day to present evidence
29-23    and other information.  The arbitrator, for good cause shown, may
29-24    schedule an additional hearing to be held not later than the
29-25    seventh day after the date of the first hearing.  Unless otherwise
29-26    agreed to by the parties, the arbitrator must issue a decision in
 30-1    writing and deliver a copy of the decision to the parties not later
 30-2    than the 14th day after the date of the final hearing.
 30-3          (g)  Either party may appeal any provision of an arbitrator's
 30-4    decision that exceeds the authority granted under Subsection (d) to
 30-5    a district court in a county in which the area proposed for
 30-6    annexation is located.
 30-7          (h)  If the municipality does not agree with the terms of the
 30-8    arbitrator's decision, the municipality may not annex the area
 30-9    proposed  for annexation before the fifth anniversary of the date
30-10    of the arbitrator's decision.
30-11          (i)  Except as provided by this subsection, the municipality
30-12    shall pay the cost of arbitration.  If the arbitrator finds that
30-13    the request for arbitration submitted by the representatives of the
30-14    area proposed for annexation was groundless or requested in bad
30-15    faith or for the purposes of harassment, the arbitrator may require
30-16    the area proposed for annexation to pay all or part of the cost of
30-17    arbitration.
30-18          Sec. 43.0565.  ARBITRATION REGARDING ENFORCEMENT OF SERVICE
30-19    PLAN.  (a)  A person who requests arbitration as provided by
30-20    Section 43.056(l) must request the appointment of an arbitrator in
30-21    writing to the municipality.
30-22          (b)  Sections 43.0564(b), (c), and (e) apply to appointment
30-23    of an arbitrator and the conduct of an arbitration proceeding under
30-24    this section.
30-25          (c)  In an arbitration proceeding under this section, the
30-26    municipality has the burden of proving that the municipality is in
 31-1    compliance with the service plan requirements.
 31-2          (d)  If the arbitrator finds that the municipality has not
 31-3    complied with the service plan requirements:
 31-4                (1)  the municipality may disannex the area before the
 31-5    31st day after the date the municipality receives a copy of the
 31-6    arbitrator's decision; and
 31-7                (2)  the arbitrator may:
 31-8                      (A)  require the municipality to comply with the
 31-9    service plan in question before a reasonable date specified by the
31-10    arbitrator if the municipality does not disannex the area;
31-11                      (B)  require the municipality to refund to the
31-12    landowners of the annexed area money collected by the municipality
31-13    from those landowners for services to the area that were not
31-14    provided; and
31-15                      (C)  require the municipality to pay the costs of
31-16    arbitration, including the reasonable attorney's fees and
31-17    arbitration costs of the person requesting arbitration.
31-18          (e)  If the arbitrator finds that the municipality has
31-19    complied with the service plan requirements, the arbitrator may
31-20    require the person requesting arbitration to pay all or part of the
31-21    cost of arbitration, including the reasonable attorney's fees of
31-22    the municipality.
31-23          Sec. 43.0566 [43.0561].  RELEASE OF EXTRATERRITORIAL
31-24    JURISDICTION BY GENERAL LAW MUNICIPALITY OVER CERTAIN TRACTS OF
31-25    LAND.  (a)  This section applies only to a tract of property that
31-26    is:
 32-1                (1)  40 or more acres in size;
 32-2                (2)  located entirely in a county with a population of
 32-3    more than 260,000; and
 32-4                (3)  located in the extraterritorial jurisdiction of a
 32-5    general law municipality with a population of more than 1,000 but
 32-6    less than 2,500 that provides water but not sewer services.
 32-7          (b)  The owner of a tract of land to which this section
 32-8    applies that is adjacent to the corporate limits of another
 32-9    municipality may petition the governing body of that other
32-10    municipality for annexation.  On receipt of a petition, the
32-11    municipality may annex the area if the municipality agrees to a
32-12    service plan that provides both water and sewer services to the
32-13    tract not later than 3-1/2 years after the date of the annexation.
32-14    On annexation, the area is released from the extraterritorial
32-15    jurisdiction of the municipality described by Subsection (a)(3) and
32-16    becomes a part of the municipality agreeing to provide water and
32-17    sewer services.
32-18          (c)  This section expires March 31, 1996, unless there is
32-19    litigation pending at that time involving the validity of the
32-20    annexation of a tract of land to which this section applies.  If
32-21    litigation is pending, this section remains in effect until a court
32-22    enters a final judgment in the case.
32-23          Sec. 43.0567 [43.0565].  PROVISION OF WATER OR SEWER SERVICE
32-24    IN POPULOUS MUNICIPALITY.  (a)  The requirements of  this section
32-25    are in addition to those prescribed by Section 43.056.
32-26          (b)  A municipality with a population of more than 1.6 [1.5]
 33-1    million that includes within its boundaries annexed areas without
 33-2    water service, sewer service, or both:
 33-3                (1)  shall develop a service plan that:
 33-4                      (A)  must identify developed tracts in annexed
 33-5    areas of the municipality that do not have water service, sewer
 33-6    service, or both and must provide a procedure for providing water
 33-7    service, sewer service, or both to those developed tracts;
 33-8                      (B)  must establish a timetable for providing
 33-9    service based on a priority system that considers potential health
33-10    hazards, population density, the number of existing buildings, the
33-11    reasonable cost of providing service, and the desires of the
33-12    residents;
33-13                      (C)  must include a capital improvements plan
33-14    committing the necessary financing;
33-15                      (D)  may relieve the municipality from an
33-16    obligation to provide water service, sewer service, or both in an
33-17    area described in the service plan if a majority of the households
33-18    in the area sign a petition stating they do not want to receive the
33-19    services; and
33-20                      (E)  may require property owners to connect to
33-21    service lines constructed to serve their area;
33-22                (2)  shall provide water service, sewer service, or
33-23    both to at least 75 percent of the residential buildings in annexed
33-24    areas of the municipality that did not have water service, sewer
33-25    service, or both on September 1, 1991;
33-26                (3)  shall provide water service to each area annexed
 34-1    before January 1, 1993, if the area or subdivision as described in
 34-2    the service plan contains at least 25 residences without water
 34-3    service, unless a majority of the households in the area state in a
 34-4    petition that they do not want municipal water service; and
 34-5                (4)  is subject to the penalty prescribed by Section
 34-6    5.235(n)(6), Water Code, for the failure to provide services.
 34-7          SECTION 9.  Chapter 43, Local Government Code, is amended by
 34-8    adding Subchapter C-1 to read as follows:
 34-9       SUBCHAPTER C-1.  ANNEXATION PROCEDURE FOR AREAS EXEMPTED FROM
34-10                         MUNICIPAL ANNEXATION PLAN
34-11          Sec. 43.061.  APPLICABILITY.  This subchapter applies to an
34-12    area proposed for annexation that is not required to be included in
34-13    a municipal annexation plan under Section 43.052.
34-14          Sec. 43.062.  PROCEDURES APPLICABLE.  (a)  Sections 43.051,
34-15    43.054, 43.0545, 43.055, 43.0565, 43.0567, and 43.057 apply to the
34-16    annexation of an area to which this subchapter applies.
34-17          (b)  This subsection applies only to an area described by
34-18    Section 43.052(h)(1).  Before the 30th day before the date of the
34-19    first hearing required under Section 43.063, a municipality shall
34-20    give written notice of its intent to annex the area to:
34-21                (1)  each property owner in an area proposed for
34-22    annexation, as indicated by the appraisal records furnished by the
34-23    appraisal district for each county in which the area is located;
34-24                (2)  each public entity, as defined by Section 43.053,
34-25    or private entity that provides services in the area proposed for
34-26    annexation; and
 35-1                (3)  each railroad company that serves the municipality
 35-2    and is on the municipality's tax roll if the company's right-of-way
 35-3    is in the area proposed for annexation.
 35-4          Sec. 43.063.  ANNEXATION HEARING REQUIREMENTS.  (a)  Before a
 35-5    municipality may institute annexation proceedings, the governing
 35-6    body of the municipality must conduct two public hearings at which
 35-7    persons interested in the annexation are given the opportunity to
 35-8    be heard.  The hearings must be conducted on or after the 40th day
 35-9    but before the 20th day before the date of the institution of the
35-10    proceedings.
35-11          (b)  At least one of the hearings must be held in the area
35-12    proposed for annexation if a suitable site is reasonably available
35-13    and more than 10 percent of the adults who are permanent residents
35-14    of the area file a written protest of the annexation with the
35-15    secretary of the municipality within 10 days after the date of the
35-16    publication of the notice required by this section.  The protest
35-17    must state the name, address, and age of each protester who signs.
35-18          (c)  The municipality must post notice of the hearings on the
35-19    municipality's Internet website if the municipality has an Internet
35-20    website and publish notice of the hearings in a newspaper of
35-21    general circulation in the municipality and in the area proposed
35-22    for annexation.  The notice for each hearing must be published at
35-23    least once on or after the 20th day but before the 10th day before
35-24    the date of the hearing.  The notice for each hearing must be
35-25    posted on the municipality's Internet website on or after the 20th
35-26    day but before the 10th day before the date of the hearing and must
 36-1    remain posted until the date of the hearing.  The municipality must
 36-2    give additional notice by certified mail to each railroad company
 36-3    that serves the municipality and is on the municipality's tax roll
 36-4    if the company's right-of-way is in the area proposed for
 36-5    annexation.
 36-6          Sec. 43.064.  PERIOD FOR COMPLETION OF ANNEXATION; EFFECTIVE
 36-7    DATE.  (a)  The annexation of an area must be completed within 90
 36-8    days after the date the governing body institutes the annexation
 36-9    proceedings or those proceedings are void.  Any period during which
36-10    the municipality is restrained or enjoined by a court from annexing
36-11    the area is not included in computing the 90-day period.
36-12          (b)  Notwithstanding any provision of a municipal charter to
36-13    the contrary, the governing body of a municipality with a
36-14    population of 1.6 million or more may provide that an annexation
36-15    take effect on any date within 90 days after the date of the
36-16    adoption of the ordinance providing for the annexation.
36-17          Sec. 43.065.  PROVISION OF SERVICES TO ANNEXED AREA.
36-18    (a)  Before the publication of the notice of the first hearing
36-19    required under Section 43.063, the governing body of the
36-20    municipality proposing the annexation shall direct its planning
36-21    department or other appropriate municipal department to prepare a
36-22    service plan that provides for the extension of full municipal
36-23    services to the area to be annexed.  The municipality shall provide
36-24    the services by any of the methods by which it extends the services
36-25    to any other area of the municipality.
36-26          (b)  Sections 43.056(b)-(o) apply to the annexation of an
 37-1    area to which this subchapter applies.
 37-2          SECTION 10.  Subchapter D, Chapter 43, Local Government Code,
 37-3    is amended by adding Section 43.0712 to read as follows:
 37-4          Sec. 43.0712.  INVALIDATION OF ANNEXATION OF SPECIAL
 37-5    DISTRICT; REIMBURSEMENT OF DEVELOPER.  (a)  If a municipality
 37-6    enacts an ordinance to annex a special district and assumes control
 37-7    and operation of utilities within the district, and the annexation
 37-8    is invalidated by a final judgment of a court after all appeals
 37-9    have been exhausted, the municipality is deemed, by enactment of
37-10    its annexation ordinance, to have acquired title to utilities owned
37-11    by a developer within the special district and is obligated to pay
37-12    the developer all amounts related to the utilities as provided in
37-13    Section 43.0715.
37-14          (b)  Upon resumption of the functions of the special
37-15    district:
37-16                (1)  the municipality shall succeed to the contractual
37-17    rights of the developer to be reimbursed by the special district
37-18    for the utilities the municipality acquires from the developer; and
37-19                (2)  the special district shall resume the use of the
37-20    utilities acquired and paid for by the municipality and shall
37-21    thereafter acquire the utilities from the municipality and
37-22    reimburse the municipality for amounts the municipality paid the
37-23    developer.  The payment to the municipality shall be governed by
37-24    the requirements of the Texas Natural Resource Conservation
37-25    Commission.
37-26          SECTION 11.  Section 43.0751, Local Government Code, is
 38-1    amended by amending Subsections (b) and (k) and adding Subsections
 38-2    (o) and (p) to read as follows:
 38-3          (b)  The governing bodies of a municipality and a district
 38-4    may [shall] negotiate and [may] enter into a written strategic
 38-5    partnership agreement for the district by mutual consent.  The
 38-6    governing body of a municipality, on written request from a
 38-7    district included in the municipality's annexation plan under
 38-8    Section 43.052, shall negotiate and enter into a written strategic
 38-9    partnership agreement with the district.  A district included in a
38-10    municipality's annexation plan under Section 43.052:
38-11                (1)  may not submit its written request before the date
38-12    of the second hearing required under Section 43.0561; and
38-13                (2)  must submit its written request before the 61st
38-14    day after the date of the second hearing required under Section
38-15    43.0561 [bodies of the municipality and the district shall evidence
38-16    their intention to negotiate such an agreement by resolution, each
38-17    of which resolutions shall specify an expiration date if the other
38-18    governing body fails to adopt a resolution under this section on or
38-19    before the specified date.  The governing body of a municipality
38-20    that has evidenced its intention by unexpired resolution to enter
38-21    into negotiations with a district for an agreement under this
38-22    section may not initiate proceedings to annex the district under
38-23    any other section of this code prior to the expiration of two years
38-24    after the adoption date of the resolution unless the municipality
38-25    has previously instituted annexation proceedings in granting
38-26    consent to the creation of the district prior to January 1, 1995].
 39-1          (k)  A municipality that has annexed all or part of a
 39-2    district for limited purposes under this section may impose a
 39-3    retail sales tax within the boundaries of the part of the district
 39-4    that is annexed for limited purposes.
 39-5          (o)  If a municipality required to negotiate with a district
 39-6    under this section and the requesting  district fail to agree on
 39-7    the terms of a strategic partnership agreement, either party may
 39-8    seek binding arbitration of the issues relating to the agreement in
 39-9    dispute under Section 43.0752.
39-10          (p)  An agreement under this section:
39-11                (1)  may not require the district to provide revenue to
39-12    the municipality solely for the purpose of obtaining an agreement
39-13    with the municipality to forgo annexation of the district; and
39-14                (2)  must provide benefits to each party, including
39-15    revenue, services, and regulatory benefits, that must be reasonable
39-16    and equitable with regard to the benefits provided by the other
39-17    party.
39-18          SECTION 12.  Subchapter D, Chapter 43, Local Government Code,
39-19    is amended by adding Section 43.0752 to read as follows:
39-20          Sec. 43.0752.  ARBITRATION OF STRATEGIC PARTNERSHIP
39-21    AGREEMENT.  (a)  If the municipality and the district cannot reach
39-22    an agreement on the terms of a strategic partnership agreement
39-23    under Section 43.0751, either party may request the appointment of
39-24    an arbitrator to resolve the issues in dispute.  The request must
39-25    be made in writing to the other party before the 60th day after the
39-26    date the district submits its written request for negotiations
 40-1    under Section 43.0751(b).  The municipality may not annex the
 40-2    district under another section of this chapter during the pendency
 40-3    of the arbitration proceeding or an appeal from the arbitrator's
 40-4    decision.
 40-5          (b)  Sections 43.0564(b), (c), (e), (f), (g), and (h) apply
 40-6    to appointment of an arbitrator and the conduct of an arbitration
 40-7    proceeding under this section.
 40-8          (c)  The authority of the arbitrator is limited to
 40-9    determining whether the offer of a party complies with Section
40-10    43.0751(p).
40-11          (d)  If the arbitrator finds that an offer complies with
40-12    Section 43.0751(p), the arbitrator may issue a decision that
40-13    incorporates the offer as part of the strategic partnership
40-14    agreement.
40-15          (e)  The municipality and the district shall equally pay the
40-16    costs of arbitration.
40-17          SECTION 13.  Subsection (a), Section 43.121, Local Government
40-18    Code, is amended to read as follows:
40-19          (a)  The governing body of a home-rule municipality with more
40-20    than 225,000 inhabitants[, if authorized under its home-rule
40-21    charter,] by ordinance may annex an area for the limited purposes
40-22    of applying its  planning, zoning, health, and safety ordinances in
40-23    the area.
40-24          SECTION 14.  Subsection (c), Section 43.141, Local Government
40-25    Code, is amended to read as follows:
40-26          (c)  If the area is disannexed under this section, it may not
 41-1    be annexed again within 10 [five] years after the date of the
 41-2    disannexation.  [If it is reannexed within seven years after the
 41-3    date of the disannexation, a service plan for the area must be
 41-4    implemented not later than one year after the date of the
 41-5    reannexation.]
 41-6          SECTION 15.  Subchapter G, Chapter 43, Local Government Code,
 41-7    is amended by adding Section 43.148 to read as follows:
 41-8          Sec. 43.148.  REFUND OF TAXES AND FEES.  (a)  If an area is
 41-9    disannexed, the municipality disannexing the area shall refund to
41-10    the landowners of the area the amount of money collected by the
41-11    municipality in property taxes and fees from those landowners
41-12    during the period that the area was a part of the municipality less
41-13    the amount of money that the municipality spent for the direct
41-14    benefit of the area during that period.
41-15          (b)  A municipality shall proportionately refund the amount
41-16    under Subsection (a) to the landowners according to a method to be
41-17    developed by the municipality that identifies each landowner's
41-18    approximate pro rata payment of the taxes and fees being refunded.
41-19          (c)  A municipality required to refund money under this
41-20    section shall refund the money to current landowners in the area
41-21    not later than the 180th day after the date the area is disannexed.
41-22    Money that is not refunded within the period prescribed by this
41-23    subsection accrues interest at the rate of:
41-24                (1)  six percent each year after the 180th day and
41-25    until the 210th day after the date the area is disannexed; and
41-26                (2)  one percent each month after the 210th day after
 42-1    the date the area is disannexed.
 42-2          SECTION 16.  Subchapter Z, Chapter 43, Local Government Code,
 42-3    is amended by adding Sections 43.905 and 43.906 to read as follows:
 42-4          Sec. 43.905.  EFFECT OF ANNEXATION ON OPERATION OF SCHOOL
 42-5    DISTRICT.  (a)  A municipality that proposes to annex an area shall
 42-6    provide written notice of the proposed annexation to each public
 42-7    school district located in the area proposed for annexation within
 42-8    the period prescribed for publishing the notice of the first
 42-9    hearing under Section 43.0561 or 43.063, as applicable.
42-10          (b)  A notice to a public school district shall contain a
42-11    description of:
42-12                (1)  the area within the district proposed for
42-13    annexation;
42-14                (2)  any financial impact on the district resulting
42-15    from the annexation, including any changes in utility costs; and
42-16                (3)  any proposal the municipality has to abate,
42-17    reduce, or limit any financial impact on the district.
42-18          (c)  The municipality may not proceed with the annexation
42-19    unless the municipality provides the required notice.
42-20          (d)  A municipality that has annexed any portion of an area
42-21    after December 1, 1996, and before September 1, 1999, in which a
42-22    school district has a facility shall grant a variance from the
42-23    municipality's building code for that facility if the facility does
42-24    not comply with the code.
42-25          (e)  A municipality that, as a result of the annexation,
42-26    provides utility services to a school district facility may charge
 43-1    the district for utility services at:
 43-2                (1)  the same rate that the district was paying before
 43-3    the annexation; or
 43-4                (2)  a lower municipal rate.
 43-5          (f)  A rate set under Subsection (e) is effective until the
 43-6    first day of the school district's fiscal year that begins after
 43-7    the 90th day after the effective date of the annexation.
 43-8          Sec. 43.906.  VOTING RIGHTS AFTER ANNEXATION.  (a)  In
 43-9    connection with an annexation or proposed annexation, a
43-10    municipality shall apply for preclearance under Section 5, Voting
43-11    Rights Act of 1965 (42 U.S.C. Section 1973c), of any voting change
43-12    resulting from the annexation or proposed annexation from the
43-13    United States Department of Justice not later than the 90th day
43-14    before the effective date of the annexation or the earliest date
43-15    permitted under federal law.
43-16          (b)  Notwithstanding Section 276.006, Election Code, a
43-17    municipality that annexes an area may not prevent a qualified voter
43-18    residing in the area from voting in a regularly scheduled municipal
43-19    election for any reason if the municipality has obtained
43-20    preclearance of the voting change from the United States Department
43-21    of Justice.
43-22          SECTION 17.  (a)  This Act takes effect September 1, 1999.
43-23          (b)  Each municipality shall adopt an annexation plan as
43-24    required by Section 43.052, Local Government Code, as amended by
43-25    this Act, on or before December 31, 1999, that becomes effective
43-26    December 31, 1999.
 44-1          (c)  Except as provided by Subsections (d) and (g) of this
 44-2    section, the changes in law made by Sections 2 through 8 and 10
 44-3    through 15 of this Act apply only to an annexation included in a
 44-4    municipality's annexation plan prepared under Section 43.052, Local
 44-5    Government Code, as amended by this Act.  Except as provided by
 44-6    Subsection (d) of this section, a municipality may continue to
 44-7    annex any area during the period beginning December 31, 1999, and
 44-8    ending December 31, 2002, under Chapter 43, Local Government Code,
 44-9    as it existed immediately before September 1, 1999, if the area is
44-10    not included in the annexation plan, and the former law is
44-11    continued in effect for that purpose.
44-12          (d)  The changes in law made by this Act in Sections 43.002,
44-13    43.054, 43.0545, 43.0546, 43.056(b), (c), (e), (f), (g), (l), (m),
44-14    (n), and (o), 43.0565, 43.0712, 43.0751, 43.121(a), 43.141(c),
44-15    43.148, 43.905, and 43.906, Local Government Code, as added or
44-16    amended by this Act, apply to the annexation of an area that is not
44-17    included in the municipality's annexation plan during the period
44-18    beginning December 31, 1999, and ending December 31, 2002, if the
44-19    first public hearing required as part of the annexation procedure
44-20    is conducted on or after September 1, 1999.
44-21          (e)  The changes in law made by this Act in Sections 43.002,
44-22    43.054, 43.0545, 43.0546, 43.056(b), (c), (e), (f), (g), (l), (m),
44-23    (n), and (o), 43.0565, 43.0712, 43.121(a), 43.141(c), 43.148,
44-24    43.905, and 43.906, Local Government Code, as added or amended by
44-25    this Act, apply to the annexation of an area that is not required
44-26    to be included in a municipal annexation plan under Section 43.052,
 45-1    Local Government Code, as amended by this Act, if the first hearing
 45-2    notice required by Section 43.063, Local Government Code, as added
 45-3    by this Act, is published on or after September 1, 1999.
 45-4          (f)  The change in law made by Section 1 of this Act applies
 45-5    only to:
 45-6                (1)  an annexation included in a municipality's
 45-7    annexation plan prepared under Section 43.052, Local Government
 45-8    Code, as amended by this Act; and
 45-9                (2)  an annexation of an area that is not included in
45-10    the municipality's annexation plan during the period beginning
45-11    December 31, 1999, and ending December 31, 2002, if the first
45-12    hearing notice required by Section 43.052, Local Government Code,
45-13    as it existed immediately before September 1, 1999, is published on
45-14    or after that date.
45-15          (g)  The change in law made by Section 43.0712, Local
45-16    Government Code, as added by this Act, applies to an annexation
45-17    that occurs before, on, or after the effective date of this Act.
45-18          SECTION 18.  The importance of this legislation and the
45-19    crowded condition of the calendars in both houses create an
45-20    emergency and an imperative public necessity that the
45-21    constitutional rule requiring bills to be read on three several
45-22    days in each house be suspended, and this rule is hereby suspended.
                                                                 S.B. No. 89
         ________________________________   ________________________________
             President of the Senate              Speaker of the House
               I hereby certify that S.B. No. 89 passed the Senate on
         March 25, 1999, by a viva-voce vote; May 27, 1999, Senate refused
         to concur in House amendments and requested appointment of
         Conference Committee; May 28, 1999, House granted request of the
         Senate; May 30, 1999, Senate adopted Conference Committee Report by
         a viva-voce vote.
                                             _______________________________
                                                 Secretary of the Senate
               I hereby certify that S.B. No. 89 passed the House, with
         amendments, on May 25, 1999, by a non-record vote; May 28, 1999,
         House granted request of the Senate for appointment of Conference
         Committee; May 30, 1999, House adopted Conference Committee Report
         by a non-record vote.
                                             _______________________________
                                                 Chief Clerk of the House
         Approved:
         ________________________________
                      Date
         ________________________________
                    Governor