SRC-JLB S.B. 623 78(R)   BILL ANALYSIS


Senate Research Center   S.B. 623
By: Lindsay
Natural Resources
3/3/2003
As Filed


DIGEST AND PURPOSE 

Currently, special water districts, including municipal utility districts,
water control and improvement districts, and levee improvement districts,
are governed by Chapters 49, 51, 54, and 57 of the Water Code.  A district
may not contract with a municipality for longer than 40 years. 
As proposed, S.B. 623 removes the 40-year restriction; clarifies that
districts can issue both nonnegotiable and negotiable revenue notes;
clarifies that an election is not required to add a pledge of revenues to
tax bonds; eliminates certain loopholes through which districts avoid
Texas Commission on Environmental Quality review and approval of unlimited
tax bonds; authorizes districts to impose restrictions on the development
of the property as deemed reasonable by the board of directors; allows
public safety and security exemptions to the bid requirements for
districts; empowers districts to reuse and recycle water for irrigation
and other uses for conservation; and clarifies the use of the engineer's
report in the creation of the district and any bond authorization. 

RULEMAKING AUTHORITY

Rulemaking authority previously granted to water districts and water
supply corporations is modified in SECTION 8 (Section 49.235, Water Code)
of this bill. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Section 49.002, Water Code, by adding Subsection (c) to
provide that a water district (district) is not a municipality, local
jurisdiction, or political subdivision for purposes of Chapter 388 (Texas
Building Energy Performance Standards), Health and Safety Code. 

SECTION 2.  Amends Section 49.068, Water Code, as follows:
 
Sec. 49.068.  New heading:  CONTRACTS WITH GOVERNMENTAL ENTITIES.  (a)
Created from existing text. 

(b)  Authorizes a municipality to contract with a district and provides
that the term of the contract may be of unlimited duration, the provisions
of any other law or home-rule municipal charter notwithstanding 
 
SECTION 3.  Amends Section 49.103, Water Code, by adding Subsection (h) to
require the secretary of the board, or the secretary's designee, acting on
behalf of the board, if authorized in the proceedings calling a director
election, to, on receipt of the certification required by Section 2.052,
Election Code, post a notice on or before the commencement of early voting
at each polling place that would have been used in the election that the
election is not to be held.  Provides that if such notice is timely
posted, no notice of election need be posted or published, ballots and
election materials need not be prepared or printed, early and regular
voting are not held, and the board shall meet at the earliest practicable
time and declare each unopposed candidate elected to office. 

SECTION 4.  Amends Section 49.106(a), Water Code, to require the mandated
engineer's report to not be considered to be part of the proposition or
propositions to be voted on.  Requires the engineer's  report to not give
rise to nor be considered a part of a contract with the voters. 

SECTION 5.  Amends Section 49.153(a), Water Code, to authorize the board,
without the necessity of an election, to borrow money on nonnegotiable
notes of the district, in addition to the negotiable notes already
authorized, to be paid solely from the revenues derived from the ownership
of all or any designated part of the district's works, plants,
improvements, facilities, or equipment after deduction of the reasonable
cost of maintaining and operating the facilities. 

SECTION 6.  Amends Section 49.181(a), Water Code, to provide that this
section does not apply to refunding bonds, if the commission issued an
order approving the issuance of the bonds or notes that originally
financed the project, or bonds issued to and approved by the Farmers Home
Administration, the United States Department of Agriculture, or the Texas
Water Development Board. 

SECTION 7.  Amends Sections 49.226(a), (c), and (d), Water Code, as
follows: 
 
(a)  Authorizes, in connection with the sale of surplus land, the board,
in its discretion, to impose restrictions on the development and use of
the land. 

(c)  Requires the district, before a public sale of real property, rather
than either a public or private sale, to give notice of the intent to sell
by publishing notice once a week for two consecutive weeks in one or more
newspapers with general circulation in the district. 

(d)  Requires the proceeds of the sale of property originally acquired
with bond proceeds, if the district has outstanding bonds secured by a
pledge of tax revenues, to be applied to retire outstanding bonds of the
district or to be held and treated as surplus bond proceeds and expended
only as provided by the applicable rules of the commission relating to
surplus bond proceeds. 

SECTION 8.  Amends Section 49.234, Water Code, as added by Section 15,
Chapter 1423, Acts of the 77th Legislature, Regular Session, 2001, by
renumbering it as Section 49.235, Water Code, and amending it as follows: 
 
Sec.  49.235.  PROHIBITION OF CERTAIN PRIVATE ON-SITE FACILITIES.  (a)
Prohibits a district or corporation that has not received funding under
Subchapter K, Chapter 17, from requiring a property owner who installed an
on-site wastewater holding or treatment facility before the adoption of
such rule to connect to the district's or corporation's wastewater
collection system. 
 
(b)  Authorizes a district or water supply corporation that operates a
water supply and distribution system to serve land within its boundaries
by rule to prohibit the installation of private on-site water wells on
land within the district that is not served by the district's or
corporation's water system.  Prohibits a district or corporation that has
not received funding under Subchapter K, Chapter 17, from requiring a
property owner who installed an on-site water well before the adoption of
such rule to connect to the district's or corporation's water system. 
 
(c)  Redesignated from existing Subsection (b).  Makes conforming changes.

SECTION 9.  Amends Section 49.271, Water Code, by adding Subsection (e) to
authorize district contracts for construction work to provide for economic
incentives for early completion of the work or economic disincentives for
late completion of the work. 
 
SECTION 10.  Amends Section 49.273, Water Code, by adding Subsection (l)
to provide that the board is not required to advertise or seek competitive
bids for security and surveillance systems or components of or additions
to district facilities relating to security or surveillance, including
systems used  for the prevention of terrorist or criminal acts and
incidents and acts of war, if the board finds that advertising or seeking
competitive bids would compromise the safety and security of district
facilities or residents. 

SECTION 11.  Amends Section 49.303, Water Code, as follows:
 
Sec. 49.303.  EXCLUDING LAND FROM DISTRICT.  (a)  Prohibits a district
from excluding land or other property from the district as provided by
this subchapter if the district has issued bonds payable in whole or in
part from taxes and such bonds are outstanding. Authorizes a district to
exclude land or other property from the district as provided by this
subchapter if no district bonds payable in whole or in part from taxes are
outstanding. 
 
(b)  Authorizes the board, if no district bonds payable in whole or in
part from taxes are outstanding, to, on its own motion, call a hearing on
the question of the exclusion of land or other property from the district
as provided by this subchapter, provided the exclusions are practicable,
just, or desirable. 

(c)  Authorizes the board, if no district bonds payable in whole or in
part from taxes are outstanding, to hold, in its discretion, a hearing on
the exclusion of land or other property from the district as provided by
this subchapter if a landowner or property owner submits a signed petition
to the secretary of the board evidencing the consent of the owners of a
majority of the acreage proposed to be excluded and a majority of the
taxable property in the district, as reflected by the most recent
certified tax roll of the district. 

  (d) Makes a nonsubstantive change.

SECTION 12.  Amends Sections 49.351(a), (k), and (l), Water Code, as
follows: 
 
(a)  Authorizes a district providing potable water or sewer service to
household users to establish, operate, and maintain a fire department to
perform all fire-fighting services, rather than activities, within the
district as provided in this subchapter and to issue bonds or impose a
mandatory fee, with voter approval, for financing a plan approved in
accordance with this section, including the construction and purchase of
necessary buildings, facilities, land, and equipment and the provision of
an adequate water supply. 

 (k)  Makes a conforming change.

 (l)  Makes a conforming change.
 
SECTION 13.  Amends Section 49.455(d), Water Code, to require the
information form required by this section to be filed with the county
clerk within 48 hours after the district is officially created. 

SECTION 14.  Amends Section 51.121(b), Water Code, to authorize a water
control and improvement district organized under the provisions of Article
XVI, Section 59, of the Texas Constitution, to provide for certain
activities including the reuse and recycling of water. 

SECTION 15.  Amends Section 51.125, Water Code, as follows:
 
Sec. 51.125.  CONSTRUCTION OF IMPROVEMENTS.  Authorizes a district to
construct all works and improvements necessary for certain tasks,
including the reuse and recycling of water, for municipal uses, domestic
uses, power and commercial purposes, and all other beneficial uses or
controls. 

SECTION 16.  Amends Section 54.012, Water Code, as follows:
  
Sec. 54.012.  PURPOSES OF A DISTRICT.  Requires a district to be created
for a variety of purposes, including the reuse and recycling of water. 

SECTION 17.  Amends Section 54.201(b), Water Code, to provide that a
district is authorized to take certain actions necessary to accomplish the
purposes of the district as authorized by the constitution, this code, or
any other law, including water conservation. 
 
SECTION 18.  Amends Chapter 54D, Water Code, by adding Section 54.2052, to
read as follows: 
 
Sec. 54.2052.  PLUMBING CODE.  Authorizes a district, notwithstanding any
law to the contrary, although it is not required to, to adopt and enforce
one or more plumbing codes meeting the standards and requirements of the
rules and laws of this state and to amend any provisions of such codes, if
adopted, to conform to local concerns that do not substantially vary from
rules or laws of this state. 

SECTION 19.  Amends Section 54.234, Water Code, as follows:
 
Sec. 54.234.  ACQUIRING ROAD UTILITY DISTRICT POWERS.  Authorizes any
district which has the power to levy taxes to petition the commission to
acquire the powers granted to road utility districts operating pursuant to
Chapter 441, Transportation Code, under the authority of Article III,
Section 52, Texas Constitution.  Requires the commission, as soon as
practicable after a petition has been filed with the commission, to issue
an order either approving or denying the petition. 

SECTION 20.  Amends Section 54.503, Water Code, as follows:
 
Sec. 54.503.  MANNER OF REPAYMENT OF BONDS.  Authorizes the board to
provide for the payment of principal of and interest and redemption price
on the bonds by pledging all or part of any funds or revenues available to
the district. 

SECTION 21.  Amends Section 54.505, Water Code, as follows:
 
Sec. 54.505.  ELECTION ON TAX BONDS.  Authorizes bonds payable solely from
revenues to be issued by resolution or order of the board without an
election.  Provides that an election is not required to pledge revenues to
the payment of bonds. 

SECTION 22.  Amends Section 54.739, Water Code, as follows:

Sec. 54.739.  New heading: SUBSTITUTING LAND OF EQUAL VALUE.  Authorizes
land within the district boundaries subject to taxation that does not need
or utilize the services of the district, after the district is organized
and acquires facilities with which to function for the purposes for which
it was organized and votes, issues, and sells bonds for such purposes, to
be excluded and other land not within the boundaries of the district to be
included within the boundaries of the district, without impairment of the
security for payment of such bonds or invalidation of any prior bond
election, as provided by this section and Sections 54.740 through 54.747. 

SECTION 23.  Amends Section 54.744, Water Code, as follows:
 
Sec. 54.744.  IMPAIRMENT OF SECURITY.  Requires the lands proposed for
inclusion, for purposes of the board's consideration of the applications,
to be deemed to be sufficient to avoid an impairment of the security for
payment of obligations of the district if 
either the estimated costs of providing district facilities and services
to such included lands is equal to or less than the estimated costs of
providing district facilities and services to the  excluded lands, or any
increased estimated costs of providing such facilities and services to the
included land, as determined by the district's engineer, can be amortized
at prevailing bond interest rates and maturity schedules and the
prevailing debt service tax rate of the district at such time, as
determined by the district's professional financial advisor, when applied
to the increase in taxable value of the included land over the taxable
value of the excluded land. 


SECTION 24.  Amends Section 57.015(b), Water Code, to require the notice
to be posted at the courthouse door and at a place, rather than four
different places, inside the proposed district.  Makes a conforming
change. 

SECTION 25.  Amends Section 57.092(a), Water Code, to authorize the
district to enter into all necessary and proper contracts and employ all
persons and means necessary to fully accomplish the purposes of the
district, including the reclamation of all land within the district. 

SECTION 26.  Amends Section 57.104, Water Code, as follows:
 
Sec. 57.104.  New heading:  CONSTRUCTION OF IMPROVEMENTS.  Authorizes,
rather than requires, the district to construct all improvements necessary
or convenient to accomplish the purposes of the district. 

SECTION 27.  Amends Section 57.108, Water Code, as follows:

Sec. 57.108.  CONDITIONS OF CONTRACT.  Deletes existing Subsection (a).
Deletes the designation of Subsection (b) as a subsection and amends the
text by deleting the requirement that as funds become available, the
district comply with Section 57.104 (Duty to Construct Approved
Improvements). 

SECTION 28.  Amends Section 57.116, Water Code, as follows:

Sec. 57.116.  New heading:  ENGINEER'S CONSTRUCTION REPORT.  (a)  Requires
the engineer, as work progresses on the district's improvements, to make a
report to the board showing in detail whether or not the contract is being
fulfilled. 
 
  (b)  Makes a nonsubstantive change.

SECTION 29.  Amends Section 57.117(b), Water Code, to require the
executive director, if the director finds that the work has not been done
in strict accordance with the contract, to officially certify this fact,
and in the certificate state where the contractor has failed to comply
with the contract, rather than the approved plan of reclamation. 

SECTION 30.  Amends Section 57.118, Water Code, to make conforming changes.

SECTION 31.  Amends the heading of Chapter 57E, Water Code, to read as
follows: 

SUBCHAPTER E.  ENGINEER'S REPORT

SECTION 32.  Amends Section 57.154, Water Code, to delete the requirement
that a duplicate of the engineer's report shall be filed with and approved
by the commission. 

SECTION 33.  Amends Sections 57.177(a) and (c), Water Code, to make
conforming changes. 

SECTION 34.  Amends Section 57.208(b), Water Code, to require the bonds to
be known as "Levee Improvement Bonds," but deletes the requirement that
the bonds state on their face the purpose for which they are issued. 
 
SECTION 35.  Amends Section 57.216, Water Code, to make conforming changes.

SECTION 36.  Amends Section 57.260(a), Water Code, to make a conforming
change. 

SECTION 37.  Amends Section 57.261, Water Code, to make a nonsubstantive
change. 
 
SECTION 38.  Amends Sections 57.265(c) and (d), Water Code, to make
conforming changes. 

SECTION 39.  Amends Section 57.266(a), Water Code, to make a conforming
change. 

SECTION 40.  Amends Sections 57.267(b), (c), and (d), Water Code, as
follows: 
 
 (b)  Makes a conforming change.
 
(c)  Requires the engineer's report to be filed in the district's office,
rather than with the county clerk. 
 
 (d)  Makes conforming changes.

SECTION 41.  Amends Sections 57.269(a) and (b), Water Code, to make
conforming changes. 

SECTION 42.  Amends Sections 57.270(e), (j), and (k), Water Code, to make
conforming changes. 

SECTION 43.  Amends Section 57.273(b), Water Code, to require the board,
if the engineer's report is changed or modified, or if extensive repairs
or modifications, rather than additions, to the engineer's report are
desired, to file a petition with the commissioners court describing the
changes, modifications, repairs, or additions. 

SECTION 44.  Amends Section 57.274(b), Water Code, to make conforming
changes. 
 
SECTION 45.  Amends Section 57.275(d), Water Code, to make conforming
changes. 

SECTION 46.  Amends Section 67.010(d), Water Code, to require the
corporation, if a corporation issues bonds secured by a contract entered
into under this section, to be considered to be acting for or on behalf of
the political subdivision for the purposes of Section 1201.002(1)(B),
Government Code. Provides that a political subdivision is authorized to
approve by ordinance, resolution, or order the articles of incorporation
and the bylaws of a corporation that is created for the purpose of
constructing facilities under a contract under Section 402.014, Local
Government Code. 
 
SECTION 47.  Repealer:  Sections 49.218(d), (e), (f), and (g), Water Code,
as added by Section 1, Chapter 71, Acts of the 77th Legislature, Regular
Session, 2001;  Sections 54.508, 57.094, and 57.156, Water Code; and
Chapter 441C, Transportation Code. 
 
SECTION 48.  Effective date:  upon passage or September 1, 2003.