SRC-VRA S.B. 905 78(R)BILL ANALYSIS


Senate Research CenterS.B. 905
By: Madla
Intergovernmental Relations
6/18/2003
Enrolled


DIGEST AND PURPOSE 

Current Texas law requires a municipality to reimburse an emergency
services district (ESD) in a county with a population of 125,000 or more
if the municipality annexes territory away from the district. The city is
to compensate the district an amount equal to the disannexed territory's
pro rata share of the district's indebtedness.  S.B. 905 provides the same
compensation of debt to ESDs in small counties as provided ESDs in large
counties.  Additionally, the bill includes loans and lease-purchase
agreements to the types of debt included in the indebtedness total,
requires the district to follow a specific formula to determine the
indebtedness, and allows for binding arbitration of disputes between the
city and district.  

RULEMAKING AUTHORITY

This bill does not expressly grant any additional rulemaking authority to
a state officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Section 775.022, Health and Safety Code, by amending
Subsections (b) and (c) and adding Subsections (e) and (f), as follows: 
 
(b)  Provides that the disannexation of territory under this section does
not diminish or impair the rights of the holders of any outstanding and
unpaid bonds, warrants, or other obligations of the district including
loans and lease-purchase agreements. 
 
(c) Makes a conforming change.  Deletes language in text relating to a
municipality annexing a portion of a district.  
 
(e)  Requires the amount of compensation under Subsection (c) to be
determined by multiplying the district's total indebtedness at the time of
the annexation by a fraction the numerator of which is the assessed value
of the property to be annexed based on the most recent certified county
property tax rolls at the time of annexation and the denominator of which
is the total assessed value of the property of the district based on the
most recent certified county property tax rolls at the time of annexation. 
 
(f)  Provides that for purposes of this section, total indebtedness
includes loans and leasepurchase agreements but does not include: 
 
(1) a loan or lease-purchase agreement the district enters into after the
district receives notice of the municipality's intent to annex district
territory; or 

(2)  any indebtedness attributed to any real or personal property that the
district requires a municipality to purchase under Subsection (d). 

SECTION 2.  Amends Subchapter B, Chapter 775, Health and Safety Code, by
adding Section 775.0221, as follows: 
  
Sec. 775.0221.  ARBITRATION REGARDING REMOVED TERRITORY.  (a) Requires the
municipality and the district to negotiate an agreement on the amount of
compensation required under Section 775.022.  Requires the municipality
and the district, if the municipality and the district cannot reach an
agreement, to resolve the dispute using binding arbitration. 
 
(b) Requires a request for binding arbitration to be in writing and
prohibits it from being made before the 60th day after the date the
municipality receives notice from the district regarding the amount of
compensation required under Section 775.022. 
 
(c)  Requires the municipality and the district to agree on the
arbitrator.  Requires the mayor of the municipality, if the parties cannot
agree on the appointment of an arbitrator before the 11th business day
after the date arbitration is requested, to immediately request a list of
seven neutral arbitrators from the American Arbitration Association or the
Federal Mediation and Conciliation Service or their successors in
function. Requires an arbitrator included in the list to be a resident of
this state and prohibits the arbitrator from being a resident of a county
in which any part of the municipality or any part of the district is
located.  Requires the municipality and the district to agree on the
appointment of an arbitrator included in the list.  Authorizes each party
or the party's designee, if the municipality and the district cannot agree
on the arbitrator before the 11th business day after the date the list is
provided to the parties, to alternately strike a name from the list.
Requires the remaining person on the list to be appointed as the
arbitrator.  Provides that in this subsection, "business day" means a day
other than a Saturday, Sunday, or state or national holiday. 
 
 (d)  Requires the arbitrator to perform certain tasks.  
 
 (e)  Authorizes the arbitrator to perform certain tasks.
  
(f) Requires the arbitrator, unless the parties to the dispute agree
otherwise, to complete the hearing within two consecutive days.  Requires
the arbitrator to permit each party one day to present evidence and other
information.  Authorizes the arbitrator, for good cause shown, to schedule
an additional hearing to be held not later than the seventh day after the
date of the first hearing.   Requires the arbitrator, unless otherwise
agreed to by the parties, to issue a decision in writing and deliver a
copy of the decision to the parties not later than the 14th day after the
date of the final hearing. 
 
 (g)  Requires the municipality and the district to share the cost of
arbitration. 

SECTION 3.  Amends Section 776.052, Health and Safety Code, by amending
Subsection (c) and adding Subsections (d)-(g), as follows: 
 
 (c) Makes a nonsubstantive change.
 
(d)  Requires the municipality,  if a municipality removes territory from
a district under Subsection (a) or (c), to compensate the district in an
amount equal to the removed territory's pro rata share of the district's
bonded and other indebtedness as computed according to the formula in
Subsection (e).  Requires the district to apply compensation received from
a municipality under this subsection exclusively to the payment of the
removed territory's pro rata share of the district's bonded and other
indebtedness. 
 
(e)  Requires the amount of compensation under Subsection (d) to be
determined by multiplying the district's total indebtedness at the time
the territory is removed by a fraction the numerator of which is the
assessed value of the property to be removed based on the most recent
certified county property tax rolls at the time of removal and the
denominator of which is the total  assessed value of the property of the
district based on the most recent certified county property tax rolls at
the time of removal. 
 
(f)  Requires a municipality, on the district's request, to purchase from
the district at fair market value any real or personal property used to
provide emergency services in territory disannexed under this section.
Provides that if any part of the indebtedness for which the district
receives compensation under Subsection (d) was for the purchase of the
real or personal property that the municipality purchases under this
subsection, the fair market value of that property for the purpose of this
subsection is reduced by a percentage equal to the disannexed territory's
pro rata share under Subsection (d). 
 
 (g) Provides that for purposes of this section, total indebtedness
includes loans and lease- 
purchase agreements but does not include;

(1) a loan or lease-purchase agreement the district enters into after the
district receives notice of the municipality's intent to annex district
territory; or 

(2)  any indebtedness attributed to any real or personal property that the
district requires a municipality to purchase under Subsection (f). 

SECTION 4.  Amends Subchapter D, Chapter 776, Health and Safety Code, by
adding Section 776.0521, as follows: 
 
Sec. 776.0521.  ARBITRATION REGARDING REMOVED TERRITORY.  (a) Requires the
municipality and the district to negotiate an agreement on the amount of
compensation required under Section 776.052.  Requires the municipality
and the district, if the municipality and the district cannot reach an
agreement, to resolve the dispute using binding arbitration. 
 
(b) Requires a request for binding arbitration to be in writing and
prohibits it from being made before the 60th day after the date the
municipality receives notice from the district regarding the amount of
compensation required under Section 776.052. 
 
(c)  Requires the municipality and the district to agree on the
arbitrator.  Requires the mayor of the municipality, if the parties cannot
agree on the appointment of an arbitrator before the 11th business day
after the date arbitration is requested, to immediately request a list of
seven neutral arbitrators from the American Arbitration Association or the
Federal Mediation and Conciliation Service or their successors in
function. Requires an arbitrator included in the list to be a resident of
this state and prohibits the arbitrator from being a resident of a county
in which any part of the municipality or any part of the district is
located.  Requires the municipality and the district to agree on the
appointment of an arbitrator included in the list.  Authorizes each party
or the party's designee, if the municipality and the district cannot agree
on the arbitrator before the 11th business day after the date the list is
provided to the parties, to alternately strike a name from the list.
Requires the remaining person on the list to be appointed as the
arbitrator.  Provides that in this subsection, "business day" means a day
other than a Saturday, Sunday, or state or national holiday. 
 
 (d)  Requires the arbitrator to perform certain taks.
  
 (e)  Authorizes the arbitrator to perform certain tasks.
 
(f)  Requires the arbitrator, unless the parties to the dispute agree
otherwise, to complete the hearing within two consecutive days.  Requires
the arbitrator to permit each party one day to present evidence and other
information.  Authorizes the arbitrator, for good cause shown, to schedule
an additional hearing to be held not later  than the seventh day after the
date of the first hearing.  Requires the arbitrator, unless otherwise
agreed to by the parties, to issue a decision in writing and deliver a
copy of the decision to the parties not later than the 14th day after the
date of the final hearing. 
 
 (g)  Requires the municipality and the district to share the cost of
arbitration. 

SECTION 5.Effective date: September 1, 2003
  Makes application of this Act prospective.