S.B. No. 905
AN ACT
relating to reimbursement for land removed from emergency service
districts and dispute resolution relating to the amount of
reimbursement.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 775.022, Health and Safety Code, is
amended by amending Subsections (b) and (c) and adding Subsections
(e) and (f) to read as follows:
(b) 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) If a municipality annexes a portion of a district, the
municipality shall compensate the district in an amount equal to
the annexed territory's pro rata share of the district's bonded and
other indebtedness as computed according to the formula in
Subsection (e) [based on the unpaid principal balances and the
actual property values at the time the territory is annexed]. The
district shall apply compensation received from a municipality
under this subsection exclusively to the payment of the annexed
territory's pro rata share of the district's bonded and other
indebtedness.
(e) The amount of compensation under Subsection (c) shall 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) 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 (d).
SECTION 2. Subchapter B, Chapter 775, Health and Safety
Code, is amended by adding Section 775.0221 to read as follows:
Sec. 775.0221. ARBITRATION REGARDING REMOVED TERRITORY.
(a) The municipality and the district shall negotiate an agreement
on the amount of compensation required under Section 775.022. If
the municipality and the district cannot reach an agreement, the
municipality and the district shall resolve the dispute using
binding arbitration.
(b) A request for binding arbitration must be in writing and
may not be 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) The municipality and the district must agree on the
arbitrator. If the parties cannot agree on the appointment of an
arbitrator before the 11th business day after the date arbitration
is requested, the mayor of the municipality shall 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. An arbitrator included in
the list must be a resident of this state and may not be a resident
of a county in which any part of the municipality or any part of the
district is located. The municipality and the district must agree
on the appointment of an arbitrator included in the list. 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, each party or the party's designee may alternately strike
a name from the list. The remaining person on the list shall be
appointed as the arbitrator. In this subsection, "business day"
means a day other than a Saturday, Sunday, or state or national
holiday.
(d) The arbitrator shall:
(1) set a hearing to be held not later than the 10th
day after the date the arbitrator is appointed; and
(2) notify the parties to the arbitration in writing
of the time and place of the hearing not later than the eighth day
before the date of the hearing.
(e) The arbitrator may:
(1) receive in evidence any documentary evidence or
other information the arbitrator considers relevant;
(2) administer oaths; and
(3) issue subpoenas to require:
(A) the attendance and testimony of witnesses;
and
(B) the production of books, records, and other
evidence relevant to an issue presented to the arbitrator for
determination.
(f) Unless the parties to the dispute agree otherwise, the
arbitrator shall complete the hearing within two consecutive days.
The arbitrator shall permit each party one day to present evidence
and other information. The arbitrator, for good cause shown, may
schedule an additional hearing to be held not later than the seventh
day after the date of the first hearing. Unless otherwise agreed to
by the parties, the arbitrator must 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) The municipality and the district shall share the cost
of arbitration.
SECTION 3. Section 776.052, Health and Safety Code, is
amended by amending Subsection (c) and adding Subsections (d)
through (g) to read as follows:
(c) If a municipality that is not in the district annexes
territory that is included in a district, the governing body of the
municipality shall notify the secretary of the board in writing
that the annexed territory is removed [excluded] from the
district's territory.
(d) If a municipality removes territory from a district
under Subsection (a) or (c), the municipality shall 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). The district shall
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) The amount of compensation under Subsection (d) shall 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) On the district's request, a municipality shall
purchase from the district at fair market value any real or personal
property used to provide emergency services in territory disannexed
under this section. 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) 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 about the
municipality's intent to remove 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. Subchapter D, Chapter 776, Health and Safety
Code, is amended by adding Section 776.0521 to read as follows:
Sec. 776.0521. ARBITRATION REGARDING REMOVED TERRITORY.
(a) The municipality and the district shall negotiate an agreement
on the amount of compensation required under Section 776.052. If
the municipality and the district cannot reach an agreement, the
municipality and the district shall resolve the dispute using
binding arbitration.
(b) A request for binding arbitration must be in writing and
may not be 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) The municipality and the district must agree on the
arbitrator. If the parties cannot agree on the appointment of an
arbitrator before the 11th business day after the date arbitration
is requested, the mayor of the municipality shall 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. An arbitrator included in
the list must be a resident of this state and may not be a resident
of a county in which any part of the municipality or any part of the
district is located. The municipality and the district must agree
on the appointment of an arbitrator included in the list. 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, each party or the party's designee may alternately strike
a name from the list. The remaining person on the list shall be
appointed as the arbitrator. In this subsection, "business day"
means a day other than a Saturday, Sunday, or state or national
holiday.
(d) The arbitrator shall:
(1) set a hearing to be held not later than the 10th
day after the date the arbitrator is appointed; and
(2) notify the parties to the arbitration in writing
of the time and place of the hearing not later than the eighth day
before the date of the hearing.
(e) The arbitrator may:
(1) receive in evidence any documentary evidence or
other information the arbitrator considers relevant;
(2) administer oaths; and
(3) issue subpoenas to require:
(A) the attendance and testimony of witnesses;
and
(B) the production of books, records, and other
evidence relevant to an issue presented to the arbitrator for
determination.
(f) Unless the parties to the dispute agree otherwise, the
arbitrator shall complete the hearing within two consecutive days.
The arbitrator shall permit each party one day to present evidence
and other information. The arbitrator, for good cause shown, may
schedule an additional hearing to be held not later than the seventh
day after the date of the first hearing. Unless otherwise agreed to
by the parties, the arbitrator must 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) The municipality and the district shall share the cost
of arbitration.
SECTION 5. This Act takes effect September 1, 2003, and
applies only to removal of territory of an emergency services
district on or after that date.
______________________________ ______________________________
President of the Senate Speaker of the House
I hereby certify that S.B. No. 905 passed the Senate on
May 6, 2003, by the following vote: Yeas 31, Nays 0.
______________________________
Secretary of the Senate
I hereby certify that S.B. No. 905 passed the House on
May 28, 2003, by a non-record vote.
______________________________
Chief Clerk of the House
Approved:
______________________________
Date
______________________________
Governor