By: Lucio S.B. No. 964
(In the Senate - Filed March 3, 2005; March 14, 2005, read
first time and referred to Committee on Natural Resources; March
16, 2005, rereferred to Committee on International Relations and
Trade; April 18, 2005, reported adversely, with favorable
Committee Substitute by the following vote: Yeas 5, Nays 1;
April 18, 2005, sent to printer.)
COMMITTEE SUBSTITUTE FOR S.B. No. 964 By: Lucio
A BILL TO BE ENTITLED
AN ACT
relating to the authorization, administration, and funding of the
program to provide financial assistance for the construction,
acquisition, or improvement of water supply and sewer services for
economically distressed areas.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subsection (a), Section 15.407, Water Code, is
amended to read as follows:
(a) In this section, "economically distressed area" and
"political subdivision" have the meanings assigned by Section
17.921 [16.341 of this code].
SECTION 2. Section 15.973, Water Code, is amended to read as
follows:
Sec. 15.973. WATER INFRASTRUCTURE FUND. (a) The water
infrastructure fund is a special fund in the state treasury to be
administered by the board under this subchapter and rules adopted
by the board under this subchapter. Money in the fund may be used to
pay for the implementation of water projects recommended through
the state and regional water planning processes under this
subchapter and Sections 16.051 and 16.053 and for other uses
authorized by this subchapter.
(b) The fund consists of:
(1) appropriations from the legislature;
(2) money from the retail water and sewer utility
service fee under Section 17.087;
(3) any other fees or sources of revenue that the
legislature may dedicate for deposit to the fund;
(4) [(3)] repayments of loans made from the fund;
(5) [(4)] interest earned on money credited to the
fund;
(6) [(5)] depository interest allocable to the fund;
(7) [(6)] money from gifts, grants, or donations to
the fund;
(8) [(7)] money from revenue bonds or other sources
designated by the board; and
(9) [(8)] proceeds from the sale of political
subdivision bonds or obligations held in the fund and not otherwise
pledged to the discharge, repayment, or redemption of revenue bonds
or other bonds, the proceeds of which were placed in the fund.
SECTION 3. Section 15.974, Water Code, is amended by adding
Subsection (d) to read as follows:
(d) Money deposited in the fund under Section 15.973(b)(2)
may be transferred by the board only to the following accounts or
funds:
(1) the economically distressed areas program account
of the Texas Water Development Fund II authorized by Section
49-d-8, Article III, Texas Constitution, and Subchapter L, Chapter
17 of this code, to be used for the purposes authorized by law;
(2) the water assistance fund authorized by Subchapter
B, to be used for the purposes authorized by Section 15.407; and
(3) the general revenue fund in amounts as directed by
legislative appropriation to be used for:
(A) the administrative costs of the board in
administering the economically distressed areas program under
Subchapter K, Chapter 17, including the provision of training under
Subchapter M, Chapter 17; and
(B) the administrative costs of the commission in
collecting the retail water and sewer utility service fee under
Section 17.087.
SECTION 4. Section 16.341, Water Code, is amended by
amending Subdivisions (1) and (2) and adding Subdivisions (1-a) and
(2-a) to read as follows:
(1) "Affected county" means a border or nonborder
county[:
[(A) that has a per capita income that averaged
25 percent below the state average for the most recent three
consecutive years for which statistics are available and an
unemployment rate that averaged 25 percent above the state average
for the most recent three consecutive years for which statistics
are available; or
[(B) that is adjacent to an international
border].
(1-a) "Border county" has the meaning assigned by
Section 17.921.
(2) "Economically distressed area" has the meaning
assigned by Section 17.921 [means an area in which:
[(A) water supply or sewer services are
inadequate to meet minimal needs of residential users as defined by
board rules;
[(B) financial resources are inadequate to
provide water supply or sewer services that will satisfy those
needs; and
[(C) an established residential subdivision was
located on June 1, 1989, as determined by the board].
(2-a) "Nonborder county" has the meaning assigned by
Section 17.921.
SECTION 5. Subsections (b) and (c), Section 16.343, Water
Code, are amended to read as follows:
(b) The model rules must:
(1) assure that adequate drinking water is available
to the residential areas in accordance with Chapter 341, Health and
Safety Code, and the Rules and Regulations for Public Water Systems
and the Drinking Water Standards Governing Water Quality and
Reporting Requirements for Public Water Supply Systems adopted by
the commission [Texas Board of Health] and other law and rules
applicable to drinking water; [and]
(2) for border counties, provide criteria applicable
to tracts that were divided into two or more parts to lay out a
subdivision and were not platted or recorded before September 1,
1989; and
(3) for nonborder counties, provide criteria
applicable to tracts that were divided into two or more parts to lay
out a subdivision and were not platted or recorded before
September 1, 2005.
(c) The model rules must:
(1) assure that adequate sewer facilities are
available to the residential areas through either septic tanks or
an organized sewage disposal system that is a publicly or privately
owned system for the collection, treatment, and disposal of sewage
operated in accordance with the terms and conditions of a valid
waste discharge permit issued by the commission or private sewage
facilities in accordance with Chapter 366, Health and Safety Code,
and the Construction Standards for On-Site Sewerage Facilities
adopted by the commission and other law and rules applicable to
sewage facilities; [and]
(2) for border counties, provide criteria applicable
to tracts that were divided into two or more parts to lay out a
subdivision and were not platted or recorded before September 1,
1989; and
(3) for nonborder counties, provide criteria
applicable to tracts that were divided into two or more parts to lay
out a subdivision and were not platted or recorded before September
1, 2005.
SECTION 6. Section 17.0112, Water Code, is amended to read
as follows:
Sec. 17.0112. AUTHORIZATION OF CERTAIN BONDS FOR FINANCIAL
ASSISTANCE. (a) The board may issue not more than $25 million in
bonds dedicated under Section 17.0111 of this code and may issue not
more than $50 million in bonds authorized under Section 49-d-10,
Article III, Texas Constitution, during a fiscal year to provide
financial assistance for water supply and sewer services as
provided under Subchapter K of this chapter.
(b) On request of the board, the bond review board by
resolution may waive during any state fiscal year the limits
[limit] provided by Subsection (a) [of this section] and authorize
the board to issue an additional amount of bonds if the bond review
board finds that the amount of bonds authorized for that state
fiscal year has been exhausted or there is not a sufficient amount
of bonds to meet needs of the program during the state fiscal year
and that the public health and safety require immediate
authorization of additional bonds. Before the bond review board
adopts such a resolution, it shall give notice and hold a hearing to
determine whether the limits should be waived and the authorization
given.
SECTION 7. Subchapter C, Chapter 17, Water Code, is amended
by adding Section 17.087 to read as follows:
Sec. 17.087. RETAIL WATER AND SEWER UTILITY SERVICE FEES.
(a) In this section, "retail public utility" and "retail water or
sewer utility service" have the meanings assigned by Section
13.002.
(b) Each retail public utility shall collect from each
household to which the utility provides retail water or sewer
utility service a fee in an amount determined by the commission.
The fee may not exceed two cents for each day water or sewer service
or both are provided.
(c) Not later than January 1 of each year, the board shall
report to the commission:
(1) the amount anticipated to be necessary to service,
for the next state fiscal year, the debt for the bonds issued or to
be issued under Section 49-d-10, Article III, Texas Constitution;
and
(2) the anticipated cost, for the next state fiscal
year, of facility engineering in economically distressed areas
under Section 15.407.
(d) Not later than March 1 of each year, the commission by
rule shall establish the fee at an amount that the commission
reasonably anticipates will generate an amount of money sufficient
to pay the amount:
(1) anticipated by the board under Subsection (c)(1)
to be necessary to service for the next state fiscal year the debt
for bonds issued or to be issued under Section 49-d-10, Article III,
Texas Constitution;
(2) anticipated by the board under Subsection (c)(2)
to be necessary for facility engineering in economically distressed
areas under Section 15.407 for the next state fiscal year;
(3) appropriated by the legislature for the
administrative costs of the board in administering the economically
distressed areas program under Subchapter K, including the cost of
providing training under Subchapter M; and
(4) appropriated by the legislature for the
administrative costs of the commission in collecting the fee.
(e) The fee may be listed on the household's bill as a
separate item and shall be collected in addition to other charges
for utility services.
(f) The commission by rule may establish:
(1) the due date for the fee;
(2) the procedures for collecting the fee; and
(3) a penalty for late payment of the fee.
(g) The executive director shall collect the fee from the
retail public utilities.
(h) Fees collected under this section shall be deposited to
the credit of the water infrastructure fund.
SECTION 8. Section 17.921, Water Code, is amended by
amending Subdivision (1) and adding Subdivisions (6), (7), and (8)
to read as follows:
(1) "Economically distressed area" means an area in:
(A) a border county in which:
(i) [(A)] water supply or sewer services
are inadequate to meet minimal needs of residential users as
defined by board rules;
(ii) [(B)] financial resources are
inadequate to provide water supply or sewer services that will
satisfy those needs; and
(iii) [(C)] an established residential
subdivision was located on June 1, 1989, as determined by the board;
or
(B) a nonborder county in which:
(i) water supply or sewer services are
inadequate to meet minimal needs of residential users as defined by
board rules;
(ii) financial resources are inadequate to
provide water supply or sewer services that will satisfy those
needs; and
(iii) an established residential
subdivision was located on June 1, 2005, as determined by the board.
(6) "Border county" means a county that is located
adjacent to an international border or a county any part of which is
within 62 miles of an international border.
(7) "Nonborder county" means a county that is not a
border county.
(8) "Economically distressed areas account" means the
economically distressed areas account in the Texas Water
Development Fund or the economically distressed areas program
account in the Texas Water Development Fund II.
SECTION 9. Section 17.922, Water Code, is amended to read as
follows:
Sec. 17.922. FINANCIAL ASSISTANCE. (a) The economically
distressed areas account may be used by the board to provide
financial assistance to political subdivisions for the
construction, acquisition, or improvement of water supply and sewer
services, including providing funds from the account for the
state's participation in federal programs that provide assistance
to political subdivisions. The board may provide assistance to
political subdivisions in:
(1) border counties in an amount not to exceed the sum
of:
(A) the proceeds of the sale of bonds authorized
by Section 49-d-8, Article III, Texas Constitution, and the
interest earned on those proceeds;
(B) $250 million of the proceeds of the sale of
bonds authorized by Section 49-d-10, Article III, Texas
Constitution, and the interest earned on those proceeds; and
(C) any other funds deposited in the account; and
(2) nonborder counties in an amount not to exceed the
sum of:
(A) $250 million of the proceeds of the sale of
bonds authorized by Section 49-d-10, Article III, Texas
Constitution, and the interest earned on those proceeds; and
(B) any other funds deposited in the account
after September 1, 2005.
(b) To the extent practicable, the board shall use the funds
in the economically distressed areas account in conjunction with
the other financial assistance available through the board to
encourage the use of cost-effective water supply and wastewater
systems, including regional systems, to maximize the long-term
economic development of counties eligible for financial assistance
under the economically distressed areas program. Any savings
derived from the construction of a regional system that includes or
serves an economically distressed area project shall be factored
into the board's determination of financial assistance for the
economically distressed area in a manner that assures the
economically distressed area receives appropriate benefits from
the savings. In no event shall financial assistance provided from
the economically distressed areas account be used to provide water
supply or wastewater service to any area that is not [defined as] an
economically distressed area [pursuant to Section 17.921(1)(A) of
this code].
SECTION 10. Subsections (b), (c), and (d), Section 17.927,
Water Code, are amended to read as follows:
(b) The application and plan must include:
(1) the name of the political subdivision and its
principal officers [comply with board requirements];
(2) a citation of the law under which the political
subdivision was created and operates [describe in detail the method
for delivering water supply and sewer services and the persons to
whom the services will be provided];
(3) a project plan, prepared and certified by an
engineer registered to practice in this state, that must:
(A) describe the proposed planning, design, and
construction activities necessary to provide water supply and sewer
services that meet minimum state standards; and
(B) identify the households to which the water
supply and sewer services will be provided [describe the method for
complying with minimum state standards for water supply and sewer
services adopted by the board under Section 16.342 of this code];
(4) [include] a budget that estimates the total cost
of providing water supply and sewer services to the economically
distressed area and a proposed schedule and method for repayment of
financial assistance consistent with board rules and guidelines;
(5) a description of the [describe] existing water
supply and sewer facilities located in the [economically
distressed] area to be served by the proposed project, including a
statement [and include with the description:
[(A) the county map required by Section 366.036,
Health and Safety Code; or
[(B) a document] prepared and certified by an
engineer registered to practice in this state that the facilities
do not meet minimum state standards [describing the plan for
providing water supply and sewer services to the economically
distressed area];
(6) documentation [provide proof] that the
appropriate political subdivision has adopted the model rules
developed under Section 16.343 [of this code];
(7) [include] information identifying the median
household income for the area to be served by the proposed project
[on the ability of potential customers to pay for the services
provided by the project including composite data prepared by the
applicant pursuant to board rules and guidelines from surveys of
those potential customers covering income, family size, personal
expenses, employment status, and other information required by
board rule]; and
(8) the total amount of assistance requested from the
economically distressed areas account [include an estimate of the
per household cost of providing the services contemplated by the
project with supporting data;
[(9) describe the procedures to be used to collect
money from residents who use the proposed water supply and sewer
services including procedures for collection of delinquent
accounts;
[(10) include a requirement that a contractor who
agrees to acquire, construct, extend, or provide water supply and
sewer services executes a performance bond in the amount of 100
percent of the contract price;
[(11) contain an agreement to comply with applicable
procurement procedures in contract awards for water supply and
sewer services;
[(12) if located in the service area of a retail public
utility or public utility that has a certificate of public
convenience and necessity under Chapter 13 of this code, include a
document in the form of an affidavit signed by the chief executive
officer of the utility, which shall cooperate with the political
subdivision, stating that the utility does not object to the
construction and operation of the services and facilities in its
service area;
[(13) include a map of the economically distressed
area together with supporting information relating to dwellings in
the area;
[(14) describe in detail the methods for incorporating
water conservation into the provision of water and sewer services
to the economically distressed area;
[(15) include, on request of the board, a written
determination by the commission on the managerial, financial, and
technical capabilities of the applicant to operate the system for
which assistance is being requested; and
[(16) include any other information required by the
board].
(c) Before the board approves the application or provides
any funds under an application, it shall require an applicant to
adopt a program of water conservation for the more effective use of
water that meets the criteria established under Section 17.125 [If
an applicant is a district or nonprofit water supply corporation,
the applicant must include with the application proof that the
appropriate county and municipalities have given their consent].
(d) Before considering an application, the board may
require the applicant to:
(1) provide documentation to the executive
administrator sufficient to allow review of the applicant's
managerial, financial, and technical capabilities to operate the
system for which assistance is being requested;
(2) provide a written determination by the commission
on the applicant's managerial, financial, and technical
capabilities to operate the system for which assistance is being
requested;
(3) request that the comptroller perform a financial
management review of the applicant and, if the review is performed,
provide the board with the results of the review; or
(4) provide any other information required by the
board or the executive administrator [In an application to the
board for financial assistance for a water supply project or for
sewer services, the applicant shall include:
[(1) the name of the political subdivision and its
principal officers;
[(2) a citation of the law under which the political
subdivision operates and was created;
[(3) a description of the water supply project or the
sewer services for which the financial assistance will be used;
[(4) the estimated total cost of the water supply
project or sewer services construction;
[(5) the amount of state financial assistance
requested;
[(6) the plan for repaying the financial assistance
provided for the water supply project or sewer services; and
[(7) any other information the board requires].
SECTION 11. Section 17.929, Water Code, is amended to read
as follows:
Sec. 17.929. CONSIDERATIONS IN PASSING ON APPLICATION.
(a) In passing on an application for financial assistance, the
board shall consider:
(1) the need of the economically distressed area to be
served by the water supply and sewer services in relation to the
need of other political subdivisions requiring financial
assistance under this subchapter and the relative costs and
benefits of all applications;
(2) the availability to the area to be served by the
project of revenue or financial assistance from alternative sources
for the payment of the cost of the proposed project [efforts by the
residents of the economically distressed area to provide necessary
water supply and sewer services];
(3) [the proposed use of labor from inside the
political subdivision to perform contracts for providing water
supply and sewer services;
[(4) the relationship of the proposed water supply and
sewer services to minimum state standards for water supply and
sewer services adopted under Section 16.343 of this code;
[(5)] the financing of the proposed water supply and
sewer project including consideration of:
(A) the budget and repayment schedule submitted
under Section 17.927(b)(4) [of this code];
(B) other items included in the application
relating to financing; and
(C) other financial information and data
available to the board;
(4) [(6) whether the applicant has proposed methods
for incorporating water conservation into the provision of water
and sewer services to the economically distressed area;
[(7)] whether the county and other appropriate
political subdivisions have [has] adopted model rules pursuant to
Section 16.343 [of this code] and the manner of enforcement of model
rules;
[(8) the feasibility of creating a conservation and
reclamation district under Article XVI, Section 59, of the Texas
Constitution, to provide the services and finance the water supply
and sewer services covered by the application with district bonds
issued and sold through the regular bond market;
[(9) the percentage of the total project cost that the
financial assistance will comprise;] and
(5) [(10)] the feasibility of achieving cost savings
by providing a regional facility for water supply or wastewater
service and the feasibility of financing the facility by using
funds from the economically distressed areas account or any other
financial assistance.
(b) At the time an application for financial assistance is
considered, the board also must find that the area to be served by a
proposed project has a median household income that is not greater
than 75 percent of the median state household income [an average per
capita income that is at least 25 percent below the state average]
for the most recent year [three consecutive years] for which
statistics are available.
SECTION 12. Subsection (b), Section 17.930, Water Code, is
amended to read as follows:
(b) After making the considerations provided by Section
17.929 [of this code], the board by resolution shall:
(1) approve the plan and application as submitted;
(2) approve the plan and application subject to the
requirements identified by the board or commission for the
applicant to obtain the managerial, financial, and technical
capabilities to operate the system and any other requirements,
including training under Subchapter M, the board considers
appropriate;
(3) deny the application and identify the requirements
or remedial steps the applicant must complete before the applicant
may be reconsidered for financial assistance;
(4) if the board finds that the applicant will be
unable to obtain the managerial, financial, or technical
capabilities to build and operate a system, deny the application
and issue a determination that a service provider other than the
applicant is necessary or appropriate to undertake the proposed
project; or
(5) deny the application.
SECTION 13. Subsections (a) and (c), Section 17.933, Water
Code, are amended to read as follows:
(a) The board may use money in the economically distressed
areas account to provide financial assistance to a political
subdivision [to be repaid] in the form of a loan, including a loan
with zero interest, grant, or other type of financial assistance to
be determined[, manner, and time provided] by the board [rules and
in the agreement between the board and the political subdivision]
taking into consideration the information provided by Section
17.927(b)(7) [of this code].
(c) The total amount of financial assistance provided by the
board to political subdivisions under this subchapter from
state-issued bonds for which repayment is not required may not
exceed at any time 90 percent of the total principal amount of
issued and unissued bonds authorized under Article III, Sections
[Section] 49-d-7 and 49-d-10, of the Texas Constitution, for
purposes of this subchapter plus outstanding interest on those
bonds.
SECTION 14. Subsection (c), Section 17.936, Water Code, is
amended to read as follows:
(c) This section applies only to property located in:
(1) the unincorporated area of a border or nonborder
[an affected] county[, as defined by Section 16.341]; and
(2) an economically distressed area[, as defined by
Section 16.341].
SECTION 15. Section 17.952, Water Code, is amended to read
as follows:
Sec. 17.952. ISSUANCE OF WATER FINANCIAL ASSISTANCE BONDS.
The board by resolution may provide for the issuance of water
financial assistance bonds, which shall be general obligation bonds
of the state, in an aggregate principal amount not to exceed the
principal amount authorized to be issued by Section 49-d-8 or
49-d-10, Article III, Texas Constitution.
SECTION 16. Subsection (a), Section 17.993, Water Code, is
amended to read as follows:
(a) The commission or the board may evaluate whether an
operating entity needs training if the operating entity:
(1) requests financial assistance or an amendment to
the project plan or budget [additional funding];
(2) requests more time to meet its obligations under a
repayment schedule;
(3) does not provide required documentation; or
(4) has a history of compliance problems, as
determined by the commission.
SECTION 17. Section 232.071, Local Government Code, is
amended to read as follows:
Sec. 232.071. APPLICABILITY. This subchapter applies only
to the subdivision of land located:
(1) outside the corporate limits of a municipality;
and
(2) in a county:
(A) in which is located a political subdivision
that is eligible for and has applied for financial assistance under
Section 15.407, Water Code, or Subchapter K, Chapter 17, Water
Code; and
(B) to which Subchapter B does not apply.
SECTION 18. Subsection (i), Section 15.407, Subsection (f),
Section 16.343, Sections 17.923 through 17.926, and Subsection (g),
Section 17.933, Water Code, are repealed.
SECTION 19. The changes in law made by this Act apply only
to an application for financial assistance pending or filed on or
after the effective date of this Act.
SECTION 20. (a) The Texas Commission on Environmental
Quality shall adopt rules to implement Section 17.087, Water Code,
as added by this Act, not later than March 1, 2006.
(b) The fee required by Section 17.087, Water Code, as added
by this Act, applies to retail water or sewer utility service
provided on or after April 1, 2006.
SECTION 21. This Act takes effect on the date on which the
constitutional amendment proposed by the 79th Legislature, Regular
Session, 2005, providing for the issuance of additional general
obligation bonds by the Texas Water Development Board in an amount
not to exceed $500 million to provide assistance to economically
distressed areas, takes effect. If that amendment is not approved
by the voters, this Act has no effect.
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