79R15735 JTS-F


By:  Krusee                                                       H.B. No. 2702

Substitute the following for H.B. No. 2702:                                   

By:  Phillips                                                 C.S.H.B. No. 2702


A BILL TO BE ENTITLED
AN ACT
relating to the construction, acquisition, financing, maintenance, management, operation, ownership, and control of rail and highway transportation facilities in this state. BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: SECTION 1. Section 91.004, Transportation Code, is amended to read as follows: Sec. 91.004. GENERAL POWERS. (a) The department may: (1) plan and make policies for the location, construction, maintenance, and operation of a rail facility or system in this state; (2) acquire, finance, construct, maintain, and subject to Section 91.005, operate a passenger or freight rail facility, individually or as one or more systems; (3) for the purpose of acquiring or financing a rail facility or system, accept a grant or loan from a: (A) department or agency of the United States; (B) department, agency, or political subdivision of this state; or (C) public or private person; (4) contract with a public or private person to finance, construct, maintain, or operate a rail facility under this chapter; or (5) perform any act necessary to the full exercise of the department's powers under this chapter. (b) Except as provided by Subsection (c), money appropriated or allocated by the United States for the construction and maintenance in this state of rail facilities owned by any public or private entity shall be administered by the commission and may be spent only under the supervision of the department. (c) Subsection (b) does not apply to money appropriated or allocated for a fixed rail guideway system constructed by a transit authority described by Chapter 451, a transportation authority described by Chapter 452 or 460, or a transit department described by Chapter 453. SECTION 2. Section 91.051, Transportation Code, is amended to read as follows: Sec. 91.051. AWARDING OF CONTRACTS. Except for a contract entered into under Section 91.052, 91.054, or 91.102 [Unless otherwise provided by this subchapter], a contract made by the department for the financing, design, construction, maintenance, or operation of a rail facility must be let by a competitive bidding procedure in which the contract is awarded to the lowest responsible bidder that complies with the department's criteria. SECTION 3. Subchapter C, Chapter 91, Transportation Code, is amended by adding Section 91.054 to read as follows: Sec. 91.054. COMPREHENSIVE DEVELOPMENT AGREEMENTS. (a) To the extent and in the manner that the department may enter into a comprehensive development agreement under Chapter 361 with regard to a turnpike project, the department may enter into a comprehensive development agreement under this chapter that provides for the financing, design, acquisition, construction, maintenance, or operation of a rail facility or system. All provisions of Chapter 361 relating to comprehensive development agreements for turnpike projects apply to comprehensive development agreements for facilities under this chapter, including provisions relating to the confidentiality of information. Claims arising under a comprehensive development agreement are subject to Section 201.112. (b) The department may combine in a comprehensive development agreement under this chapter a rail facility or system and a turnpike project as defined by Section 361.001. SECTION 4. Section 91.074(c), Transportation Code, is amended to read as follows: (c) The department may contract with a person for the use of all or part of a rail facility or system or may lease or sell all or part of a rail facility or system, including all or any part of the right-of-way adjoining trackwork, for any purpose, including placing on the adjoining right-of-way a storage or transfer facility, warehouse, garage, parking facility, telecommunication line or facility, restaurant, or gas station. Any portion of a rail facility or system that is used or leased by a private person under this subsection for a commercial purpose is not exempt from ad valorem taxation and is subject to local zoning regulations and building standards. SECTION 5. Section 91.102, Transportation Code, is amended by adding Subsection (e) to read as follows: (e) Notwithstanding Section 11.11, Tax Code, a private entity that leases a rail facility or system and provides rail transportation services is exempt from taxation of or assessment on the portion of the facility or system used for those purposes. SECTION 6. Subchapter K, Chapter 201, Transportation Code, is amended by adding Section 201.907 to read as follows: Sec. 201.907. CONTRACT FOR ENFORCEMENT. The department or a public or private entity contracted to operate a toll project may contract with an agency of this state or a local governmental entity for the services of peace officers employed by the agency or entity to enforce laws related to: (1) the regulation and control of vehicular traffic on a state highway; and (2) the payment of the proper toll on a toll project. SECTION 7. Section 202.112, Transportation Code, is amended by adding Subsection (d) to read as follows: (d) An option to acquire property purchased under this section or Section 227.041 may not expire later than the 10th anniversary of the date the option was purchased and may be renewed for subsequent periods that expire not later than the 10th anniversary of the date the option was renewed, by agreement of the commission and the grantor of the option or the grantor's heirs or assigns. SECTION 8. The heading to Section 203.004, Transportation Code, is amended to read as follows: Sec. 203.004. [CONTRACTS FOR MANAGEMENT OF PROPERTY USED FOR] MITIGATION OF ADVERSE ENVIRONMENTAL IMPACTS. SECTION 9. Section 203.004, Transportation Code, is amended by amending Subsection (a) and adding Subsection (a-1) to read as follows: (a) If authorized by an applicable regulatory authority, to mitigate an adverse environmental impact that is a direct result of a state highway improvement project, the [The] department may: (1) pay a fee to an appropriate public agency or private entity in lieu of acquiring or agreeing to manage property; (2) transfer real property to an entity designated by an agency of the United States without monetary consideration if the property is used or is proposed to be used for mitigation purposes; or (3) contract with any public or private entity for the management of property owned by the department and used for [the] mitigation purposes [of an adverse environmental impact directly resulting from the construction or maintenance of a state highway]. (a-1) Before the commission may acquire by purchase or condemnation real property to mitigate an adverse environmental impact that is a direct result of a state highway improvement project, the department shall, if authorized by an applicable regulatory authority, offer to purchase a conservation easement from the owner of the real property. If the landowner does not accept the offer to execute a conservation easement before the 61st day after the date the offer is made, the department may acquire the property by purchase or condemnation. SECTION 10. Section 203.0521, Transportation Code, is amended to read as follows: Sec. 203.0521. ACQUISITION OF REMAINDER. (a) If a proposed acquisition of a tract of real property under Section 203.052 would leave the owner of the property a remainder of the tract, the department may negotiate for and purchase the severed tract or either part of the severed tract if the department and the owner agree on terms for the purchase. The department [commission] shall offer to purchase a [the] remainder if the department [commission] determines that: (1) the remainder has little or no value or utility to the owner; or (2) the entire tract could be acquired for substantially the same compensation as the partial tract. (b) In acquiring a tract of real property under Subsection (a), the department shall pay: (1) the value of the property acquired; and (2) the damages to the remainder of the owner's property caused by the severance, including damages caused by the inaccessibility of one tract from the other [The department may acquire the remainder under this section only if the owner of the property consents to the acquisition of the remainder]. (c) Instead of a single fixed payment for real property purchased under Subsection (a) for a toll project, the department may agree to a payment to the owner in the form of: (1) an intangible legal right to receive a percentage of identified revenue attributable to the applicable segment of the toll project; or (2) a right to use, without charge, a segment or part of the toll project [The department is not required to make an offer on a remainder if an appraisal or environmental investigation indicates the presence of hazardous materials or substances]. (d) A right to receive revenue under Subsection (c)(1) is subject to any pledge of the revenue under the terms of a trust agreement securing bonds issued for the applicable segment of the toll project. (e) The department and its designated agents may enter the real property [a remainder] to conduct an appraisal, survey, or environmental investigation to determine whether the department will offer to acquire the real property [remainder]. SECTION 11. Section 227.021, Transportation Code, is amended by adding Subsection (f) to read as follows: (f) The department may not limit the public's direct access to or from the Trans-Texas Corridor with the intent to benefit the economic viability of an ancillary facility. SECTION 12. Section 227.023, Transportation Code, is amended by adding Subsections (d) and (e) to read as follows: (d) For the purposes of Section 11.11, Tax Code, a portion of a facility that is licensed or leased to a private entity, other than a facility described by Section 227.001(4)(E) that is used for commercial purposes, is used for a public purpose if the facility is operated by the private entity to provide transportation or utility services. Property that is licensed or leased to a private entity under Section 227.082 for a commercial purpose is not exempt from ad valorem taxation and is subject to local zoning regulations and building standards. (e) If the department contracts with a private entity for the collection of a fee for the use of a facility or a combination of facilities that are part of the Trans-Texas Corridor, the private entity shall submit to the department for approval: (1) a plan outlining methods the entity will use to collect the fee, including: (A) any charge to be imposed as a penalty for late payment of the fee; (B) any charge to be imposed to recover the cost of collecting a delinquent fee; and (C) the methodology for increasing the amount of the fee; and (2) any proposed change in an approved plan for collecting the fee. SECTION 13. Section 227.028(a), Transportation Code, is amended to read as follows: (a) Subject to Section 203.004(a-1), the [The] department may acquire, maintain, hold, restore, enhance, develop, or redevelop property for the purpose of mitigating a past, present, or future adverse environmental effect arising from the construction or operation of any part of the Trans-Texas Corridor without regard to whether the need for mitigation is established for a particular project. SECTION 14. Section 227.029(b), Transportation Code, is amended to read as follows: (b) If the department finds it necessary to change the location of a portion of a facility, it shall reconstruct the facility at a [the] location that the department determines restores the utility of the facility [to be most favorable]. The reconstructed facility must be of substantially the same type and in as good condition as the original facility. The department shall determine and pay the cost of the reconstruction and any damage incurred in changing the location of a facility. SECTION 15. Subchapter C, Chapter 227, Transportation Code, is amended by adding Sections 227.032 and 227.033 to read as follows: Sec. 227.032. HIGHWAYS INTERSECTING TRANS-TEXAS CORRIDOR. (a) The department shall ensure that, at each intersection of a segment of a state highway that is designated as part of the Trans-Texas Corridor and a segment of a highway that is designated as an interstate highway, state highway, or United States highway, the Trans-Texas Corridor and the interstate highway, state highway, or United States highway are directly accessible to each other. (b) The department shall make every reasonable effort to connect a segment of a state highway that is designated as part of the Trans-Texas Corridor with significant farm-to-market and ranch-to-market roads and major county and city arterials included in the locally adopted long-range transportation plan as determined by the department, taking into consideration: (1) financial feasibility; (2) advice solicited from: (A) county commissioners courts; (B) governing bodies of municipalities; and (C) metropolitan planning organizations; (3) circuity of travel for landowners; (4) access for emergency vehicles; and (5) traffic volume. Sec. 227.033. GROUNDWATER. (a) After receipt of an offer to construct a facility for the transportation of groundwater from the county in which the groundwater is pumped or extracted, but not later than the 90th calendar day before entering into a lease agreement, license agreement, or franchise agreement for the use of any part of the Trans-Texas Corridor for that purpose, the department shall provide written notice of the offer to: (1) each groundwater conservation district, subsidence district, or other local water authority having territory in the county in which the groundwater is pumped or extracted; and (2) the commissioners court of the county in which the groundwater is pumped or extracted. (b) The department may not pump or extract, or allow the pumping or extracting, of groundwater from the right-of-way of the Trans-Texas Corridor unless the groundwater is needed for the construction, operation, or maintenance of a facility other than a public utility facility. If a well drilled and operated on the Trans-Texas Corridor is located inside the boundaries of a groundwater conservation district, the well is subject to the rules of the district. SECTION 16. Section 227.041, Transportation Code, is amended by amending Subsection (b) and adding Subsections (d) and (e) to read as follows: (b) An interest in real property or a property right is necessary or convenient for the construction or operation of a facility if it is located in or contiguous to an existing or planned segment of the Trans-Texas Corridor or is needed for mitigation of adverse environmental effects, and if its acquisition will further the primary purposes of the Trans-Texas Corridor. Primary purposes include: (1) providing right-of-way or a location for a facility; (2) providing land for mitigation of adverse environmental effects; (3) providing buffer zones for scenic or safety purposes; (4) allowing for possible future expansion of any facility; and (5) generating revenue, directly or indirectly, for use in constructing or operating the Trans-Texas Corridor from or for ancillary facilities that directly benefit users of the Trans-Texas Corridor. (d) The commission may not condemn property contiguous to an existing or planned segment of the Trans-Texas Corridor for an ancillary facility. (e) If the commission acquires property not immediately needed for department purposes, the department is encouraged to acquire an option to purchase the property under Subsection (a) or to lease back purchased land under Section 227.043 to continue the agricultural or recreational use of the property. SECTION 17. Subchapter D, Chapter 227, Transportation Code, is amended by adding Sections 227.047 and 227.048 to read as follows: Sec. 227.047. ACQUISITION OF REMAINDER. (a) If a proposed acquisition of a tract of real property under Section 227.041 would leave the owner of the property a remainder of the tract, the department may negotiate for and purchase the remainder or any part of the severed tract if the department and the owner agree on terms for the purchase. Except as provided by Subsection (d), the department shall offer to purchase a remainder if the department determines that: (1) the remainder has little or no value or utility to the owner; or (2) the entire tract could be acquired for substantially the same compensation as the partial tract. (b) In acquiring a tract of real property under Subsection (a), the department shall pay: (1) the value of the property acquired; and (2) the damages to the remainder of the owner's property caused by the severance, including damages caused by the loss of reasonable access between portions of a bisected tract. (c) The department and its designated agents may enter the real property to conduct an appraisal, survey, or environmental investigation to determine whether the department will offer to acquire the real property. (d) The department is not required under Subsection (a) to make an offer on a remainder if an appraisal or environmental investigation indicates the presence of hazardous materials or substances. Sec. 227.048. LOSS OF ACCESS. If a portion of a tract or parcel of real property is acquired under this subchapter, the department shall pay for loss of reasonable access to or from the remaining property in determining the damage to the property owner. SECTION 18. Section 227.082, Transportation Code, is amended by adding Subsection (f) to read as follows: (f) The department may lease property or grant a franchise or license under this section only if the agreement has been approved by the commissioners court of the county in which the property, facility, or other part of the Trans-Texas Corridor is located. This subsection does not apply to a lease of property or a grant of a franchise or license to a private entity for the purpose of operating a highway, turnpike, rail facility, or utility facility under a comprehensive development agreement. SECTION 19. Section 284.009, Transportation Code, as added by Chapters 953 and 1325, Acts of the 78th Legislature, Regular Session, 2003, is reenacted and amended to read as follows: Sec. 284.009. CONVERSION AND TRANSFER [CONVEYANCE] OF STATE HIGHWAY TO COUNTY [OR TOLL ROAD AUTHORITY]. (a) The commission may transfer [convey] a nontoll state highway or a segment of a nontoll state highway, including real property acquired to construct or operate the highway, to [(i)] a county [or a toll road authority in the county in which the state highway or segment is located, or (ii) a county or toll road authority in a county adjacent to the county in which the highway or segment is located if the county or toll road authority in the county in which the segment or highway is located approves the conveyance,] for the purpose of converting the highway to a toll facility to be operated and maintained [operation and maintenance] as a project under this chapter, if: (1) the commission determines that the proposed transfer [conveyance] will improve overall mobility in the region or is the most feasible and economic means of accomplishing necessary improvements to the highway; (2) any funds paid by the department for the construction, maintenance, and operation of the transferred [conveyed] highway are repaid to the department; and (3) the county [or toll road authority] agrees to assume all liability and responsibility for the maintenance and operation of the transferred [conveyed] highway on its transfer [conveyance]. (b) A county [or toll road authority] that receives a nontoll state highway or a segment of a nontoll state highway under Subsection (a) may own, operate, and maintain the highway as a pooled project under Section 284.065. [The commission may only make a conveyance under this section if the commission determines that the conveyance is the most feasible and economic means to accomplish necessary expansions, extensions, or improvements of the conveyed segment of the highway. Tolls may not be collected by an authority from a conveyed segment of highway except to finance the expansion, extension, operation, and maintenance of that highway segment.] (c) The commission shall, at the time of a transfer [conveyance], remove the highway or segment of highway from the state highway system. After a transfer [conveyance], the department has no liability, responsibility, or duty for the maintenance or operation of the highway or segment. (d) The commission may waive all or a portion of an amount due under Subsection (a)(2) if it finds that the transfer [conveyance] will result in substantial net benefits to the state, the department, and the traveling public that equal or exceed the amount of payment waived. (e) Before transferring [conveying] a nontoll state highway or a segment of a nontoll state highway under this section, the commission shall conduct a public hearing to receive comments from interested persons concerning the proposed transfer [conveyance]. Notice of the hearing shall be published in the Texas Register and in one or more newspapers of general circulation in any county in which the highway or segment is located. (f) A county [or toll road authority] may use toll revenue collected from a highway or segment of highway transferred under this section or from a highway or segment of highway described by Subsection (j) to fund a transportation project or an air quality project. (g) The commission shall adopt rules implementing this section, including criteria and guidelines for approval of a transfer [conveyance] of a highway or segment. (h) In this section: (1) "Air quality project" means a project or program of a county[, toll road authority,] or another governmental entity that the county or other governmental entity [toll road authority] determines will mitigate or prevent air pollution caused by the construction, maintenance, or use of public roads within the county. (2) "Transportation project" means the construction, improvement, maintenance, or operation of a transportation facility: (A) under the jurisdiction of a county, toll road authority, or another governmental entity; (B) located inside or outside the county or area served by the toll road authority; and (C) that the county or toll road authority determines will improve mobility within the county or area served by the toll road authority. (i) Funds received by the department under this section: (1) shall be deposited to the credit of the state highway fund; and (2) are exempt from the application of Section 403.095, Government Code. (j) The requirements of this section do not apply to a highway or segment: (1) that the commission by order designated as a toll project before the contract to construct the highway or segment was awarded, regardless of whether the highway or segment is operated without tolls for a period before toll collection operations begin; (2) that was designated as a toll project in a plan or program of a metropolitan planning organization on or before May 1, 2005; (3) that is reconstructed so that the number of nontolled lanes on the highway or segment is greater than or equal to the number in existence before the reconstruction; (4) to which an adjacent facility is constructed with a number of nontolled lanes that, when combined with the number of nontolled lanes on the converted highway or segment, is greater than or equal to the number in existence on the converted highway or segment before the conversion; or (5) that was open to traffic as a high-occupancy vehicle lane on May 1, 2005. [This section applies only to a nontoll state highway or a segment of a nontoll state highway that is conveyed for purposes of creating an outer loop or connecting to an outer loop located primarily in a county having a population of more than three million or an adjacent county.] SECTION 20. Subchapter A, Chapter 361, Transportation Code, is amended by adding Sections 361.005 and 361.006 to read as follows: Sec. 361.005. REVENUE OF TURNPIKE PROJECT. Except as provided by Subchapter E, toll revenue collected or received by the department under this chapter: (1) shall be deposited in the state highway fund; and (2) is exempt from the application of Section 403.095, Government Code. Sec. 361.006. USE OF CONTRACT PAYMENTS. Payments received by the department under a comprehensive development agreement may be used by the department to finance the construction, maintenance, or operation of a transportation project or air quality project in the region. SECTION 21. Section 361.137(c), Transportation Code, is amended to read as follows: (c) The department may not file a declaration of taking before the completion of: (1) all environmental documentation, including a final environmental impact statement or a record of decision, that is required by federal or state law; (2) all public hearings and meetings, including those held in connection with the environmental process and under Sections 201.604 and 203.021, that are required by federal or state law; [and] (3) all notifications required by Section 203.022; and (4) if the property contains a business, farm, or ranch, a written notification to the property owner that the occupants: (A) will not be required to move before the 90th day after the date of the notice; and (B) will receive, not later than the 30th day before the date by which the property must be vacated, a written notice specifying the date by which the property must be vacated. SECTION 22. Section 361.179(f), Transportation Code, is amended to read as follows: (f) The revenue and disbursements for each turnpike project shall be kept separately. The revenue from one turnpike project may not be used to pay the cost of another project except as authorized by Sections [Section] 361.189 and 361.006. SECTION 23. Subchapter F, Chapter 361, Transportation Code, is amended by adding Section 361.237 to read as follows: Sec. 361.237. OPERATION OF TURNPIKE PROJECT. The department may enter into an agreement with one or more persons to provide, on terms approved by the department, personnel, equipment, systems, facilities, and services necessary to operate a turnpike project, including the operation of toll plazas and lanes and customer service centers and the collection of tolls. SECTION 24. The heading to Section 361.255, Transportation Code, is amended to read as follows: Sec. 361.255. ELECTRONIC TOLL COLLECTION [USE AND RETURN OF TRANSPONDERS]. SECTION 25. Section 361.255, Transportation Code, is amended by adding Subsections (c), (d), and (e) to read as follows: (c) The department may enter into an agreement with one or more persons to market and sell transponders for use on department toll roads. (d) The department may charge reasonable fees for administering electronic toll collection customer accounts. (e) A contract for the acquisition, construction, maintenance, or operation of a toll project must ensure the confidentiality of all electronic toll collection customer account information, including contact and payment information and trip data. SECTION 26. Section 361.302, Transportation Code, is amended by adding Subsection (f) to read as follows: (f) The department may combine in a comprehensive development agreement under this chapter a turnpike project and a rail facility as defined by Section 91.001. SECTION 27. Sections 361.3022(i) and (j), Transportation Code, are amended to read as follows: (i) The department may enter into negotiations [discussions] with the private entity whose proposal offers the apparent best value for the purpose of establishing the final terms of a comprehensive development agreement. [The discussions shall be limited to: [(1) incorporation of aspects of other proposals for the purpose of achieving the overall best value for the department; [(2) clarifications and minor adjustments in scheduling, cash flow, and similar items; and [(3) matters that have arisen since the submission of the proposal.] (j) If at any point in negotiations [discussions] under Subsection (i)[,] it appears to the department that the highest ranking proposal will not provide the department with the overall best value, the department may enter into negotiations [discussions] with the private entity submitting the next–highest ranking proposal. SECTION 28. Section 361.303, Transportation Code, is amended by adding Subsection (c) to read as follows: (c) For purposes of Section 11.11, Tax Code, a portion of a state highway that is licensed or leased to a private entity under a comprehensive development agreement is used for a public purpose if the highway is operated by the private entity to provide transportation services. Any portion of a highway asset or turnpike project that is used or leased by a private entity under Section 202.052 or 361.179 for a commercial purpose is not exempt from ad valorem taxation and is subject to local zoning regulations and building standards. SECTION 29. Section 361.305(a), Transportation Code, is amended to read as follows: (a) The department shall negotiate the terms of private participation in a turnpike project, including: (1) methods to determine the applicable cost, profit, and project distribution between the private equity investors and the department; (2) subject to Section 227.023(e), reasonable methods to determine and classify toll rates; (3) acceptable safety and policing standards; and (4) other applicable professional, consulting, construction, operation, and maintenance standards, expenses, and costs. SECTION 30. Section 362.0041, Transportation Code, is transferred to Chapter 361, Transportation Code, designated as Subchapter K, and amended to read as follows:
SUBCHAPTER K. CONVERSION OF NONTOLLED HIGHWAY
Sec. 361.401 [362.0041]. COMMISSION DETERMINATION [CONVERSION OF PROJECTS]. The [(a) Except as provided in Subsections (d) and (g), the] commission may by order convert a nontolled state highway or a segment of a nontolled state highway [the free state highway system] to a turnpike project [toll facility] if the commission: (1) [it] determines that the conversion will improve overall mobility in the region or is the most feasible and economic means to accomplish necessary expansion, improvements, or extensions to that segment of the state highway system; and (2) obtains county and voter approval as required by Section 361.406. Sec. 361.402. APPLICABILITY OF SUBCHAPTER. The requirements of this subchapter do not apply to a highway or segment: (1) that the commission by order designated as a toll project before the contract to construct the highway or segment was awarded, regardless of whether the highway or segment is operated without tolls for a period before toll collection operations begin; (2) that was designated as a toll project in a plan or program of a metropolitan planning organization on or before May 1, 2005; (3) that is reconstructed so that the number of nontolled lanes on the highway or segment is greater than or equal to the number in existence before the reconstruction; (4) to which an adjacent facility is constructed with a number of nontolled lanes that, when combined with the number of nontolled lanes on the converted highway or segment, is greater than or equal to the number in existence on the converted highway or segment before the conversion; or (5) that was open to traffic as a high-occupancy vehicle lane on May 1, 2005. Sec. 361.403. PUBLIC HEARING. [(b)] Prior to converting a state highway or a segment of a [the] state highway [system] under this subchapter [section], the commission shall conduct a public hearing for the purpose of receiving comments from interested persons concerning the proposed conversion [transfer]. Notice of the hearing shall be published in the Texas Register, one or more newspapers of general circulation, and a newspaper, if any, published in the county or counties in which the involved highway is located. Sec. 361.404. RULES. [(c)] The commission shall adopt rules implementing this subchapter [section], including criteria and guidelines for the approval of a conversion of a highway. Sec. 361.405. QUEEN ISABELLA CAUSEWAY. [(d)] The commission may not convert the Queen Isabella Causeway in Cameron County to a turnpike project [toll facility]. Sec. 361.406. COUNTY AND VOTER APPROVAL. [(e) Subchapter G, Chapter 361, applies to a highway converted to a toll facility under this section. [(f) Toll revenue collected under this section: [(1) shall be deposited in the state highway fund; [(2) may be used by the department to finance the improvement, extension, expansion, or operation of the converted segment of highway and may not be collected except for those purposes; and [(3) is exempt from the application of Section 403.095, Government Code. [(g)] The commission may only convert a state highway or a segment of a [the] state highway [system] under this subchapter [section] if the conversion is approved by: (1) the commissioners court of each county within which the highway or segment is located; and (2) the qualified voters who vote in an election under Section 361.407 and who reside in the limits of: (A) a county if any part of the highway or segment to be converted is located in an unincorporated area of the county; or (B) a municipality in which the highway or segment to be converted is wholly located. Sec. 361.407. ELECTION TO APPROVE CONVERSION. (a) If notified by the department of the proposed conversion of a highway or segment under this subchapter, the governing body of a county or municipality shall order an election for the approval of the conversion. (b) A governing body that orders an election shall publish notice of the election in a newspaper of general circulation published in the county or municipality at least once each week for three consecutive weeks, with the first publication occurring at least 21 days before the date of the election. (c) The proposition submitted in the election must distinctly describe the highway or segment proposed to be converted and the limits of that highway or segment. (d) At an election ordered under this section, the ballot shall be printed to permit voting for or against the proposition: "The conversion of (highway) from (beginning location) to (ending location) to a toll project." (e) A proposed conversion is approved only if it is approved by a majority of the votes cast. (f) A notice of the election and a certified copy of the order canvassing the election results shall be sent to the commission. (g) The election shall be held on the first uniform election date under Section 41.001, Election Code, on which the county or municipality is holding another election that occurs on or after the 62nd day after the date the election is ordered. SECTION 31. Section 366.035, Transportation Code, is amended by amending Subsection (a) and adding Subsections (h) and (i) to read as follows: (a) Except as provided under Subsections [Subsection] (g) and (h), if the commission determines that the most feasible and economic means to accomplish necessary expansion, improvements, or extensions to the state highway system is the conversion to a turnpike project of a nontolled segment of the [free] state highway system, any segment located in a county of an authority or a county in which an authority operates a turnpike project or in any county adjacent to those counties may, on approval of the governor and the affected authority, be transferred by order of the commission to that authority. An authority that receives the segment of highway may own, operate, and maintain the segment as a turnpike project or system or a part of a turnpike project or system under this chapter. (h) The commission may transfer a segment of the state highway system to an authority under this section only if the transfer is approved by the commissioners court of each county in which the segment of highway to be transferred is located. (i) The requirements of this section do not apply to a segment of the state highway system: (1) that the commission by order designated as a toll project before the contract to construct the highway or segment was awarded, regardless of whether the project is operated without tolls for a period before toll collection operations begin; (2) that was designated as a toll project in a plan or program of a metropolitan planning organization on or before May 1, 2005; (3) that is reconstructed so that the number of nontolled lanes on the segment of highway is greater than or equal to the number in existence before the reconstruction; (4) to which an adjacent facility is constructed with a number of nontolled lanes that, when combined with the number of nontolled lanes on the converted segment of highway, is greater than or equal to the number in existence on the converted highway or segment before the conversion; or (5) that was open to traffic as a high-occupancy vehicle lane on May 1, 2005. SECTION 32. The heading to Section 370.035, Transportation Code, is amended to read as follows: Sec. 370.035. [CONVERSION AND] TRANSFER OF STATE HIGHWAY SYSTEM TURNPIKE PROJECTS. SECTION 33. Section 370.035, Transportation Code, is amended by amending Subsection (a) and adding Subsection (i) to read as follows: (a) The commission by order may transfer [convert] a nontolled segment of the [free] state highway system [to a turnpike project and transfer that segment] to an authority for the purpose of converting the segment to a turnpike project, or may transfer an existing toll [turnpike] project that is part of the state highway system, whether previously tolled or not, to an authority if: (1) the commission determines that the proposed transfer is an integral part of the region's overall plan to improve mobility in the region; (2) the commission determines that the public has a reasonable alternative route on nontoll roads; (3) the authority agrees to assume all liability and responsibility for the maintenance and operation of the turnpike project on its transfer; [and] (4) the transfer is approved by the governor; and (5) in the case of a nontolled segment of the state highway system, the transfer is approved by the commissioners court of each county in which the segment of highway to be transferred is located. (i) The requirements of this section do not apply to a nontolled segment of the state highway system: (1) that the commission by order designated as a toll project before the contract to construct the segment of highway was awarded, regardless of whether the segment is operated without tolls for a period before toll collection operations begin; (2) that was designated as a toll project in a plan or program of a metropolitan planning organization on or before May 1, 2005; (3) that is reconstructed so that the number of nontolled lanes on the segment of highway is greater than or equal to the number in existence before the reconstruction; (4) to which an adjacent facility is constructed with a number of nontolled lanes that, when combined with the number of nontolled lanes on the converted segment of highway, is greater than or equal to the number in existence on the converted segment of highway before the conversion; or (5) that was open to traffic as a high-occupancy vehicle lane on May 1, 2005. SECTION 34. Section 11.11, Tax Code, is amended by adding Subsection (j) to read as follows: (j) For purposes of this section, any portion of a facility owned by the Texas Department of Transportation that is part of the Trans-Texas Corridor, is a rail facility or system, or is a highway in the state highway system, and that is licensed or leased to a private entity by that department under Chapter 91, 227, or 361, Transportation Code, is public property used for a public purpose if the rail facility or system, highway, or facility is operated by the private entity to provide transportation or utility services. Any part of a facility, rail facility or system, or state highway that is licensed or leased to a private entity for a commercial purpose is not exempt from taxation. SECTION 35. Sections 91.071(b), 227.062(c)-(g), 361.180, and 370.163(b), Transportation Code, are repealed. SECTION 36. This Act takes effect immediately if it receives a vote of two-thirds of all the 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, 2005.