1-1 By: Lewis of Orange (Senate Sponsor - Armbrister) H.B. No. 702
1-2 (In the Senate - Received from the House April 2, 2001;
1-3 April 3, 2001, read first time and referred to Committee on Natural
1-4 Resources; April 30, 2001, reported favorably by the following
1-5 vote: Yeas 4, Nays 0; April 30, 2001, sent to printer.)
1-6 A BILL TO BE ENTITLED
1-7 AN ACT
1-8 relating to the administration of drainage districts and the
1-9 issuance of bonds and other instruments of indebtedness by drainage
1-10 districts; increasing a criminal penalty.
1-11 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-12 SECTION 1. Section 56.015(a), Water Code, is amended to read
1-13 as follows:
1-14 (a) Any person filing a petition shall deposit with the
1-15 clerk of the commissioners court [$200 in] cash, in an amount to be
1-16 determined by the county election officer, which shall be held by
1-17 the clerk until the result of the election to create the district
1-18 and issue bonds is officially announced.
1-19 SECTION 2. Section 56.032(b), Water Code, is amended to read
1-20 as follows:
1-21 (b) To operate under Article XVI, Section 59, of the Texas
1-22 Constitution, the board must adopt a resolution proposing the
1-23 change and schedule [district shall present the petition and make
1-24 the deposit required by Sections 56.014 and 56.015 of this code.
1-25 The commissioners court, by order entered in its minutes, shall
1-26 give notice and hold] a hearing on the resolution. The hearing
1-27 must be held not earlier than the 30th day but not later than the
1-28 60th day after the date the resolution is adopted. The board shall
1-29 give notice of the time and place of the hearing on the resolution
1-30 by posting a copy of the resolution for at least the 20 days
1-31 preceding the date of the hearing in five public places in the
1-32 county. One of the copies shall be posted on the courthouse door
1-33 and the other copies shall be posted within the boundaries of the
1-34 district. Following the hearing, the board may adopt a resolution
1-35 authorizing [petition as required by Sections 56.017 and 56.018 of
1-36 this code and may by order authorize] the district to operate under
1-37 the provisions of Article XVI, Section 59, of the Texas
1-38 Constitution.
1-39 SECTION 3. Subchapter C, Chapter 56, Water Code, is amended
1-40 by adding Section 56.062 to read as follows:
1-41 Sec. 56.062. ELIGIBILITY REQUIREMENTS FOR DIRECTORS. To be
1-42 eligible to serve as a director, a person must satisfy the
1-43 requirements of Section 141.001(a), Election Code.
1-44 SECTION 4. Section 56.069(a), Water Code, is amended to read
1-45 as follows:
1-46 (a) The functions, powers, rights, and duties exercised by
1-47 or relating to the board of any district may be transferred to the
1-48 commissioners court of the county in which the district is wholly
1-49 located, but before the transfer is made, the commissioners court
1-50 and the board must pass resolutions authorizing the transfer. In
1-51 any district in which the board is elected, the transfer may not be
1-52 made unless the transfer is approved by a majority of the voters
1-53 voting on that issue at an election held in the district.
1-54 SECTION 5. Section 56.128, Water Code, is amended to read as
1-55 follows:
1-56 Sec. 56.128. INJURING DRAINAGE CANAL OR DITCH. Any person
1-57 who wilfully fills up, cuts, injures, destroys, or impairs the
1-58 usefulness of any canal, drain, ditch, watercourse, or other work
1-59 constructed, repaired, or improved by a district to drain and
1-60 protect from overflow of water, upon conviction is punishable by
1-61 confinement in the county jail for not more than two months or by a
1-62 fine of not more than $1,000 [$100].
1-63 SECTION 6. Sections 56.182(b) and (c), Water Code, are
1-64 amended to read as follows:
2-1 (b) The interest and sinking fund consists of that portion
2-2 of tax collections necessary for paying principal and interest on
2-3 bonded indebtedness, and this fund may be invested for the benefit
2-4 of the district as provided by law [in bonds and securities
2-5 approved by the attorney general].
2-6 (c) Each fund shall be held for the purpose for which it was
2-7 created, and if money is improperly paid from either fund, the
2-8 board [commissioners court] may [have the county treasurer]
2-9 transfer money in the two funds to restore the fund which was
2-10 improperly used.
2-11 SECTION 7. Sections 56.202 and 56.203, Water Code, are
2-12 amended to read as follows:
2-13 Sec. 56.202. ISSUANCE OF BONDS. When maps, profiles, and
2-14 estimates are filed, the board [commissioners court] shall issue an
2-15 order directing the issuance of bonds sufficient to pay for
2-16 proposed improvements together with necessary, actual, and
2-17 incidental expenses. The bonds may not be issued in an amount
2-18 greater than the amount specified in the order and notice of
2-19 election, and in districts operating under Article III, Section 52,
2-20 of the Texas Constitution, the bonds may not be issued in an amount
2-21 greater than one-fourth of the assessed valuation of the real
2-22 property of the district.
2-23 Sec. 56.203. RECORD BOOK FOR BONDS. (a) Before any bonds
2-24 are issued, the board [commissioners court] shall provide a
2-25 well-bound book in which the board [county clerk] shall keep a
2-26 record of:
2-27 (1) all bonds which have been issued;
2-28 (2) the numbers of the bonds;
2-29 (3) the amount of the bonds;
2-30 (4) the rate of interest on the bonds;
2-31 (5) the date of issuance of the bonds;
2-32 (6) the date on which the bonds are due;
2-33 (7) the place where the bonds are payable;
2-34 (8) the amount received for the bonds;
2-35 (9) the annual rate of assessment to pay interest on
2-36 and provide a sinking fund for the bonds; and
2-37 (10) the payment of each bond.
2-38 (b) The board [county clerk] shall keep the book open at all
2-39 times for public inspection by district taxpayers and bondholders.
2-40 [(c) The county clerk is entitled to receive for recording
2-41 district bonds and other instruments the same fees allowed by law
2-42 for recording other similar records.]
2-43 SECTION 8. Sections 56.204(a), (b), and (c), Water Code, are
2-44 amended to read as follows:
2-45 (a) Bonds shall be issued in the name of the district,
2-46 signed by the board president [county judge], and attested by the
2-47 board secretary [county clerk], and each bond shall have the seal
2-48 of the district [commissioners court] affixed to it.
2-49 (b) The bonds shall be issued in denominations [of not less
2-50 than $100 nor more than $1,000] and shall bear interest as
2-51 authorized by the board [which is payable annually or
2-52 semiannually].
2-53 (c) The terms of the bonds shall include the time, places,
2-54 manner, and conditions of payment and the rate of interest
2-55 determined and ordered by the board [commissioners court].
2-56 SECTION 9. Section 56.205(a), Water Code, is amended to read
2-57 as follows:
2-58 (a) After the [Before any] bonds are sold [offered for
2-59 sale], the district shall submit to the attorney general:
2-60 (1) [a copy of] the actual bonds;
2-61 (2) a certified copy of the board's [commissioners
2-62 court] order levying a tax to pay interest and create a sinking
2-63 fund;
2-64 (3) a statement of the district's total bonded
2-65 indebtedness including the value of the bonds proposed to be issued
2-66 and the value of taxable property in the district as shown by the
2-67 last official assessment of the appraisal district in which the
2-68 district participates [county]; and
2-69 (4) other information the attorney general requires.
3-1 SECTION 10. Sections 56.207, 56.209, and 56.210, Water Code,
3-2 are amended to read as follows:
3-3 Sec. 56.207. BONDS: SALE. (a) The board [When the bonds are
3-4 registered, the county judge, under the direction of the
3-5 commissioners court,] shall advertise and sell the bonds on the
3-6 best terms and for the best price possible.
3-7 (b) The board [county judge] shall deposit [pay to the
3-8 county treasurer] all money from the sale of the bonds as it is
3-9 received into [, and the county treasurer shall place the money in]
3-10 the construction and maintenance fund [to the credit] of the
3-11 district.
3-12 [(c) The county judge is entitled to receive one-half of one
3-13 percent of the amount received from the sale of bonds sold by him
3-14 as payment for his services.]
3-15 Sec. 56.209. USE OF UNSOLD BONDS FOR MAINTENANCE PURPOSES.
3-16 If any bonds remain unsold which are not required to complete
3-17 improvements, the board [commissioners court] may enter its consent
3-18 on the public record to sell the bonds and place the proceeds in
3-19 the construction and maintenance fund for use in accomplishing the
3-20 purposes stated in Section 56.242 of this code.
3-21 Sec. 56.210. REFUNDING BONDS. (a) A [With the consent of
3-22 the bondholders, a] district may refund outstanding bonds by
3-23 issuing new [coupon] bonds as provided by Chapter 1207, Government
3-24 Code [in their place].
3-25 (b) [Interest is shown by coupons attached to the bonds.
3-26 The commissioners court may pay the interest on the bonds annually
3-27 or semiannually.]
3-28 [(c) The commissioners court may pay the refunding bonds
3-29 serially, or in any other manner they choose, but in districts
3-30 which are not operating under Article XVI, Section 59, of the Texas
3-31 Constitution, it shall pay the bonds not later than 40 years from
3-32 the date the bonds are issued.]
3-33 [(d)] The district shall issue the bonds in denominations to
3-34 be determined by the board [of $100 or a multiple of $100,] and
3-35 shall levy a tax sufficient to meet the payment of principal and
3-36 interest of the refunding bonds before the bonds are delivered.
3-37 [(e) The commissioners court shall issue refunding bonds in
3-38 the manner provided for other district bonds, and shall deduct any
3-39 sum on hand to the credit of any sinking fund account in
3-40 ascertaining the amount of refunding bonds to be issued. This sum
3-41 shall be applied to the payment of the outstanding bonds.]
3-42 [(f) The commissioners court shall not issue refunding bonds
3-43 until they are approved by the attorney general and registered by
3-44 the comptroller. The comptroller shall not register the refunding
3-45 bonds until the old bonds being replaced are presented to him for
3-46 cancellation. After the comptroller registers the new bonds, he
3-47 shall cancel the old bonds and interest coupons and deliver the new
3-48 bonds to the proper bondholders. The district may present the old
3-49 bonds for cancellation in installments, and the comptroller may
3-50 register and deliver a like amount of the new bonds.]
3-51 [(g) In a district operating under Article XVI, Section 59,
3-52 of the Texas Constitution, if the holders of outstanding bonds do
3-53 not consent to the exchange of their bonds for refunding bonds, the
3-54 refunding bonds may be sold and the proceeds applied to the
3-55 purchase of the outstanding bonds when they become payable under an
3-56 option of prepayment contained in the bonds or when the bondholders
3-57 will accept payment.]
3-58 SECTION 11. Sections 56.211(b) and (c), Water Code, are
3-59 amended to read as follows:
3-60 (b) The board [commissioners court] shall call the election
3-61 and the secretary [clerk] of the board [court] shall give notice of
3-62 the time and places for holding the election.
3-63 (c) The notice shall be signed by the secretary [clerk] and
3-64 shall
3-65 (1) state the purpose of the election;
3-66 (2) state the proposition to be voted on;
3-67 (3) define the election precincts;
3-68 (4) prescribe the polling places in the district; and
3-69 (5) list the names of the election officers.
4-1 SECTION 12. Sections 56.212(a), (b), and (c), Water Code, are
4-2 amended to read as follows:
4-3 (a) If the board [commissioners court] declares the result
4-4 of the election under Section 56.211 of this code to favor the
4-5 issuance of refunding bonds and the levy of a tax to pay for the
4-6 bonds, refunding bonds with the seal of the district [commissioners
4-7 court] affixed to them may be issued in the name of the district.
4-8 The bonds shall be signed by the board president and [county
4-9 judge,] attested [by the county clerk,] and registered by the board
4-10 secretary [county treasurer].
4-11 (b) The bonds together with the record relating to them
4-12 shall be submitted to the attorney general for his approval, as
4-13 required by Section 49.184.
4-14 (c) When the attorney general approves the bonds, they shall
4-15 be delivered to the comptroller who shall register them and deliver
4-16 them in exchange for or on release of the obligations being
4-17 refunded at the time, in the manner, and in the amounts prescribed
4-18 in the order of the board [commissioners court]. If the
4-19 obligations being refunded are evidenced by outstanding securities,
4-20 the comptroller shall cancel the outstanding securities
4-21 concurrently with the registration and delivery of the bonds.
4-22 SECTION 13. Section 56.241, Water Code, is amended to read as
4-23 follows:
4-24 Sec. 56.241. LEVY OF TAXES TO PAY FOR BONDS. After bonds are
4-25 authorized at an election, the board [commissioners court] shall
4-26 have taxes annually assessed and collected on all property in the
4-27 district sufficient to pay interest and principal on the bonds.
4-28 Taxes collected under this section shall be placed in the interest
4-29 and sinking fund.
4-30 SECTION 14. Section 56.242, Water Code, is amended by
4-31 amending Subsection (a) and by adding Subsections (c) and (d) to
4-32 read as follows:
4-33 (a) The board [At the same time that taxes are levied to pay
4-34 bonded indebtedness, the commissioners court] shall have a tax
4-35 assessed and collected on district property sufficient to maintain,
4-36 repair, and preserve district improvements and to pay legal debts,
4-37 demands, and obligations of the district, but in districts
4-38 operating under Article III, Section 52, of the Texas
4-39 Constitution, the tax may not be in an amount greater than one-half
4-40 of one percent of the total assessed valuation of the district for
4-41 that year.
4-42 (c) The board may issue negotiable notes payable from the
4-43 maintenance tax authorized by Subsection (a) to meet the financial
4-44 obligations of the district, as described by Subsection (a). The
4-45 notes shall be payable over a period not to exceed five years from
4-46 the date of issuance. Notes issued under this subsection are not
4-47 required to be approved by the Texas Natural Resource Conservation
4-48 Commission. A district may not have outstanding, at any one time,
4-49 notes in excess of $3 million under this subsection.
4-50 (d) The board may issue negotiable notes to pay any lawful
4-51 expenditure of the district, other than principal and interest on
4-52 debt, including all costs to improve or repair any existing
4-53 drainage canal, ditch, watercourse, or other work constructed,
4-54 repaired, or improved by the district. The notes may be payable
4-55 from and secured by a lien on and pledge of any available funds of
4-56 the district, including the proceeds of a maintenance tax. Notes
4-57 issued under this subsection shall be payable over a period not to
4-58 exceed 20 years from the date of issuance and if issued for a term
4-59 longer than one year must be treated as "debt" as defined by
4-60 Section 26.012, Tax Code. The maximum debt service on all notes
4-61 issued under this subsection may not exceed in any fiscal year of a
4-62 district an amount that could be paid from the proceeds of
4-63 one-fourth of the maximum tax the district is authorized by law to
4-64 levy on the date any notes are issued.
4-65 SECTION 15. Sections 56.249, 56.251, 56.292, and 56.293,
4-66 Water Code, are amended to read as follows:
4-67 Sec. 56.249. AUTHORIZING TAXATION ON THE BENEFIT BASIS FOR
4-68 EXISTING DISTRICT. (a) A district [operating under Article XVI,
4-69 Section 59, of the Texas Constitution,] may levy taxes on the
5-1 benefit basis as provided in this section.
5-2 (b) Any person may present to the board [commissioners
5-3 court] a petition, signed by 75 of the resident freehold taxpayers
5-4 of the district whose land would be affected or by one-third of the
5-5 freehold resident taxpayers of the district whose land would be
5-6 affected if there are less than 75 in the district, requesting that
5-7 taxes of the district be levied on the benefit basis and showing
5-8 that the levy of taxes on the benefit basis will be fair and
5-9 equitable to all landowners in the district.
5-10 (c) At the same meeting at which the petition is presented,
5-11 the board [commissioners court] shall schedule a hearing on the
5-12 petition for either a regular meeting or a special meeting called
5-13 for that purpose to be held during the period beginning on the 30th
5-14 day and ending with the 60th day after the day the petition is
5-15 presented.
5-16 (d) The board [commissioners court] shall [order the clerk
5-17 to] give notice of the time and place of the hearing by posting a
5-18 copy of the petition and the order of the board [commissioners
5-19 court] at five public places in the county during the 20-day period
5-20 immediately preceding the day of the hearing. The board [clerk]
5-21 shall post one of the copies at the courthouse door and the other
5-22 four copies at four places within the boundaries of the district[,
5-23 and the district shall pay the clerk $1 for each notice he posts
5-24 and five cents a mile for each mile traveled in posting the
5-25 notices].
5-26 (e) At the hearing, any person whose land would be affected
5-27 may appear before the board [commissioners court] and may support
5-28 or oppose the levy of taxes on a benefit basis and may offer
5-29 testimony to show whether or not the levy of taxes on the benefit
5-30 basis will be fair and equitable to landowners in the district. The
5-31 board [commissioners court] has exclusive jurisdiction to hear and
5-32 determine this issue and matters relating to it and has exclusive
5-33 jurisdiction in all subsequent proceedings. The board
5-34 [commissioners court] may adjourn the hearing from day to day, and
5-35 judgments of the board [commissioners court] are final.
5-36 (f) If the board [commissioners court] finds that levying
5-37 taxes on the benefit basis will not be fair and equitable to
5-38 landowners in the district, an order shall be entered dismissing
5-39 the petition, and the district shall continue to levy taxes on an
5-40 ad valorem basis, but if the board [commissioners court] finds that
5-41 levying taxes on the benefit basis will be fair and equitable to
5-42 landowners in the district, the board [commissioners court] shall
5-43 order an election to be held in the district.
5-44 (g) An election to approve the levy of taxes on the benefit
5-45 basis must be held on the earliest legal date that occurs on or
5-46 after the 30th day after the date the board orders the election
5-47 [during the period beginning on the 30th day and ending with the
5-48 60th day after the date of the election order]. Notice of the
5-49 election shall be given in the same manner as notice is given for
5-50 the hearing on the petition. The board [commissioners court] shall
5-51 name polling places within the district and shall appoint judges
5-52 and other necessary election officers. The ballots shall be
5-53 printed to provide for voting for or against the following
5-54 proposition: "The levy of taxes in the district on the benefit
5-55 basis."
5-56 (h) At least two-thirds of those persons voting in the
5-57 election must vote in favor of the proposition for it to carry.
5-58 (i) If the proposition carries at the election, the order of
5-59 the board [commissioners court] canvassing the election shall
5-60 provide that taxes of the district are to be levied on the benefit
5-61 basis, but if the proposition fails to carry at the election, the
5-62 order of the board [commissioners court] canvassing the election
5-63 shall provide that taxes of the district are to continue to be
5-64 levied on an ad valorem basis.
5-65 Sec. 56.251. DETERMINING ACREAGE IN THE DISTRICT. (a) In
5-66 districts levying taxes on the benefit basis, the board
5-67 [commissioners court] shall appoint three freehold taxpaying voters
5-68 in the district [county] as a committee [board] to determine the
5-69 number of acres of land owned by each landowner in the district. A
6-1 [The] person appointed by the board [commissioners court] shall
6-2 qualify by taking an oath to fairly and impartially hold hearings
6-3 and determine acreage.
6-4 (b) The committee [board] to determine acreage shall give
6-5 notice of the time and place of the hearing on the acreage before
6-6 the 10-day period immediately preceding the day of the hearing.
6-7 (c) At the hearing each landowner may testify about the
6-8 amount of land owned by him in the district. The committee [board]
6-9 has final jurisdiction to determine the exact acreage of each
6-10 landowner in the district.
6-11 (d) After the committee [board] makes its determination, the
6-12 land in the district shall be annually placed on the tax rolls
6-13 according to the acreage determined without rendition of taxes.
6-14 Sec. 56.292. PETITION. At a regular meeting of the board
6-15 [commissioners court], any resident freehold taxpayer of the
6-16 district [person] may present a petition signed by at least five
6-17 percent of the qualified voters [50 of the resident freehold
6-18 taxpayers] of the district, or if there are fewer [less] than 100
6-19 resident freehold taxpayers in the district, then by one-third of
6-20 the resident freehold taxpayers [them] requesting the dissolution
6-21 of the district, and on verification of the petition signatures,
6-22 the board [commissioners court] shall order an election to be held
6-23 in the district at the earliest legal time to determine whether or
6-24 not the district should be dissolved.
6-25 Sec. 56.293. DEPOSIT. (a) Any person filing a petition
6-26 shall deposit with the board an amount sufficient to pay the cost
6-27 of conducting an election within the district [county clerk $200 in
6-28 cash] which shall be held by the board [county clerk] until the
6-29 result of the election to dissolve the district is officially
6-30 announced and entered in the record of the district [commissioners
6-31 court].
6-32 (b) If the result of the election favors dissolving the
6-33 district, the board [county clerk] shall return the deposit to the
6-34 petitioners or their agent or attorney, and the cost and expenses
6-35 of holding the election shall be paid by [charged to] the district
6-36 [and collected as other debts in this subchapter], but if the
6-37 result of the election is against dissolving the district, the
6-38 board [county clerk] shall pay the cost and expenses of the
6-39 election from the deposit [with vouchers signed by the county
6-40 judge] and return the balance of the deposit to the petitioners or
6-41 their agent or attorney.
6-42 SECTION 16. Section 56.295(b), Water Code, is amended to read
6-43 as follows:
6-44 (b) If the proposition carries, the board [commissioners
6-45 court] shall declare the result and enter it in its minutes
6-46 substantially as follows:
6-47 "__________ and __________ others having petitioned for the
6-48 dissolution of ______________ County Drainage District No. ______;
6-49 an election having been held in the district on ______________; and
6-50 a two-thirds majority of the votes cast in the election having
6-51 favored dissolution of the district; now, therefore, the board of
6-52 directors [commissioners court] declares that ______________
6-53 Drainage District No. ______ is dissolved."
6-54 SECTION 17. Section 56.311, Water Code, is amended by adding
6-55 Subsection (d) to read as follows:
6-56 (d) Before entering an order discharging the trustee and
6-57 the surety on the trustee's bond and closing the trust estate, the
6-58 commissioners court shall order all transactions of the trustee
6-59 audited by an independent certified public accountant. A copy of
6-60 the audit shall be filed with the commissioners court and the Texas
6-61 Natural Resource Conservation Commission, and a copy shall be
6-62 provided to the trustee.
6-63 SECTION 18. Sections 56.137, 56.206, and 56.208, Water Code,
6-64 are repealed.
6-65 SECTION 19. (a) Section 56.128, Water Code, as amended by
6-66 this Act, applies only to an offense committed on or after the
6-67 effective date of this Act. For purposes of this section, an
6-68 offense is committed before the effective date of this Act if any
6-69 element of the offense occurs before that date.
7-1 (b) An offense committed before the effective date of this
7-2 Act is covered by the law in effect when the offense was committed,
7-3 and the former law is continued in effect for that purpose.
7-4 SECTION 20. The changes in law made by this Act apply only
7-5 to bonds issued on or after the effective date of this Act. A bond
7-6 issued before the effective date of this Act is governed by the law
7-7 as it existed immediately before the effective date of this Act,
7-8 and that law is continued in effect for that purpose.
7-9 SECTION 21. This Act takes effect September 1, 2001.
7-10 * * * * *