AN ACT
 1-1     relating to the reimbursement of landowners or developers prior to
 1-2     annexation of a water-related special district.
 1-3           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-4           SECTION 1.  Section 43.0715, Local Government Code, is
 1-5     amended to read as follows:
 1-6           Sec. 43.0715.  Annexation of Water-Related Special District:
 1-7     Reimbursement of Landowner or Developer; Continuation of District
 1-8     and Taxing Authority.  (a)  In this section:
 1-9                 (1)  "Special[, "special] district" means a political
1-10     subdivision one purpose of which is to supply fresh water for
1-11     domestic or commercial use or to furnish sanitary sewer services or
1-12     drainage.
1-13                 (2)  "Delinquent sum" means the sum a municipality has
1-14     failed to timely pay to a landowner or developer under Subsection
1-15     (b).
1-16           (b)  If a municipality with a population of less than 1.5
1-17     million annexes a special district for full or limited purposes and
1-18     the annexation precludes or impairs the ability of the district to
1-19     issue bonds, the municipality shall, prior to the effective date of
1-20     [simultaneously with] the annexation, pay in cash to the landowner
1-21     or developer of the district a sum equal to all actual costs and
1-22     expenses incurred by the landowner or developer in connection with
1-23     the district that the district has, in writing, agreed to pay and
1-24     that would otherwise have been eligible for reimbursement from bond
 2-1     proceeds under the rules and requirements of the Texas Natural
 2-2     Resource Conservation Commission as such rules and requirements
 2-3     exist on the date of annexation.  For an annexation that is subject
 2-4     to preclearance by a federal authority, a payment will be
 2-5     considered timely if the municipality:  (i) escrows the
 2-6     reimbursable amounts determined in accordance with Subsection (c)
 2-7     prior to the effective date of the annexation; and
 2-8     (ii) subsequently causes the escrowed funds and accrued interest to
 2-9     be disbursed to the developer within five business days after the
2-10     municipality receives notice of the preclearance.
2-11           (c)  At the time notice of the municipality's intent to annex
2-12     the land within the district is first published in accordance with
2-13     Section 43.052, the municipality shall proceed to initiate and
2-14     complete a report for each developer conducted in accordance with
2-15     the format approved by the Texas Natural Resource Conservation
2-16     Commission for audits.  In the event the municipality is unable to
2-17     complete the report prior to the effective date of the annexation
2-18     as a result of the developer's failure to provide information to
2-19     the municipality which cannot be obtained from other sources, the
2-20     municipality shall obtain from the district the estimated costs of
2-21     each project previously undertaken by a developer which are
2-22     eligible for reimbursement.  The amount of such costs, as estimated
2-23     by the district, shall be escrowed by the municipality for the
2-24     benefit of the persons entitled to receive payment in an insured
2-25     interest-bearing account with a financial institution authorized to
2-26     do business in the state.  To compensate the developer for the
 3-1     municipality's use of the infrastructure facilities pending the
 3-2     determination of the reimbursement amount or federal preclearance,
 3-3     all interest accrued on the escrowed funds shall be paid to the
 3-4     developer whether or not the annexation is valid.  Upon placement
 3-5     of the funds in the escrow account, the annexation may become
 3-6     effective.  In the event a municipality timely escrows all
 3-7     estimated reimbursable amounts as required by this subsection and
 3-8     all such amounts, determined to be owed, including interest, are
 3-9     subsequently disbursed to the developer within five days of final
3-10     determination in immediately available funds as required by this
3-11     section, no penalties or interest shall accrue during the pendency
3-12     of the escrow.  Either the municipality or developer may, by
3-13     written notice to the other party, require disputes regarding the
3-14     amount owed under this section to be subject to nonbinding
3-15     arbitration in accordance with the rules of the American
3-16     Arbitration Association.
3-17           (d)  A delinquent sum incurs a penalty of six percent of the
3-18     amount of the sum for the first calendar month it is delinquent
3-19     plus one percent for each additional month or portion of a month
3-20     the sum remains unpaid.  For an annexation occurring prior to the
3-21     effective date of the changes in law made by this Act in amending
3-22     Subsection (b), a delinquent sum begins incurring a penalty on the
3-23     first day of the eighth month following the month in which the
3-24     municipality enacted its annexation ordinance.  For an annexation
3-25     occurring after the effective date of this Act, a delinquent sum
3-26     begins incurring a penalty on the first day after the date the
 4-1     municipality enacts its annexation ordinance.
 4-2           SECTION 2.  The changes in law made by this Act in amending
 4-3     Subsection (a) and adding Subsection (d), Section 43.0715, Local
 4-4     Government Code, apply to any sum that is delinquent on the
 4-5     effective date of this Act.
 4-6           SECTION 3.  The importance of this legislation and the
 4-7     crowded condition of the calendars in both houses create an
 4-8     emergency and an imperative public necessity that the
 4-9     constitutional rule requiring bills to be read on three several
4-10     days in each house be suspended, and this rule is hereby suspended,
4-11     and that this Act take effect and be in force from and after its
4-12     passage, and it is so enacted.
         _______________________________     _______________________________
             President of the Senate              Speaker of the House
               I hereby certify that S.B. No. 262 passed the Senate on
         March 11, 1999, by the following vote:  Yeas 31, Nays 0; and that
         the Senate concurred in House amendments on May 21, 1999, by the
         following vote:  Yeas 30, Nays 0.
                                             _______________________________
                                                 Secretary of the Senate
               I hereby certify that S.B. No. 262 passed the House, with
         amendments, on May 19, 1999, by the following vote:  Yeas 139,
         Nays 5, one present not voting.
                                             _______________________________
                                                 Chief Clerk of the House
         Approved:
         _______________________________
                     Date
         _______________________________
                   Governor