S.B. 905 78 )    BILL ANALYSIS


S.B. 905
By: Madla
County Affairs
Committee Report (Unamended)



BACKGROUND 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.  Engrossed Senate Bill 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

It is the committee's opinion that this bill does not expressly grant any
additional rulemaking authority to a state officer, department, agency, or
institution. 

ANALYSIS

SECTION 1.  Amends Section 775.022, Health and Safety Code, by amending
Subsections (b) and  ) 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. 
 
 ) 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  ) 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. 
 
 )  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  ) and adding Subsections (d)-(g), as follows: 
 
  ) Makes a nonsubstantive change.
 
(d)  Requires the municipality,  if a municipality removes territory from
a district under Subsection (a) or  ), 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. 
 
 )  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 5.This Act takes effect immediately if it receives a vote of
two-thirds of all members 
elected to each house, as provided by Section 39, Article III, Texas
Constitution.  If this Act does not receive the vote necessary for
immediate effect, this Act takes effect September 1, 2003.