The Legislative Budget Board inn cooperation with the Water Development Board (TWDB) and Texas Commission on Environmental Quality (TCEQ), has determined the following:

Subject to a confirmation election the bill would create the Pearland Municipal Management District No. 1 in Harris County with the powers and duties of a Municipal Management District (MMD) governed by Local Government Code Chapter 375.

1) Population- Due to the very specific metes and bounds descriptions of the seven different tracts, staff is not able to estimate a population within the proposed district, however this portion of the city in Harris County currently contains very little residential population.  The City of Pearland population projection, as a whole, for use in the 2006 State Water Plan shows a dramatic increase from 37,640 in 2000 to 66,049 in 2010.

2) Location & Size- The proposed district would be located in the portion of the City of Pearland located in Harris County and along State Highway 288.

3) Powers- The District has the rights, powers, privileges, authority, and functions of a general law MMD The District also has the power given to a corporation under the Development Corporation Act of 1979 (Section 4B, Article 5190.6, VTCS), the power to create a nonprofit corporation under Transportation Code Chapter 431 and the power to grant an abatement for a tax or assessment owed to the District under Tax Code Chapter 312.

4) District Finances- Similar to general law MMDs, including the authority to levy benefit assessments, ad valorem taxes, and issue bonds. In addition, the District would have the ability to impose a sales tax. A petition signed by the owners of a majority of the assessed value or surface area in the District, is required prior to financing projects.

5) Board of Directors- The initial board consists of five persons, three directors will serve two-year terms, and two directors will serve four-year terms. Subsequent directors will serve staggered four-year terms. The mayor and governing body of the City of Pearland shall appoint subsequent Directors.

6) Eminent Domain- Like general law MMDs, the District may not exercise the power of eminent domain.

7) Ability to Tax- The District may impose assessments, impact fees, ad valorem debt service and operation and maintenance taxes according to Local Government Code Chapter 375. The District may not impose an impact fee or assessment on the property, equipment, or facilities of an electric utility, power generation company, gas utility, or telecommunications provider. With voter approval, the District may impose a sales-and-use tax rate of 0.5% on the receipts from the sale of taxable items.

8) Ability to Exclude Property- Same as a general law municipal management district under Local Government Code Chapter 395.

9) Overlapping Services- An adequate boundary description and location map was not provided for the proposed District. Therefore, an overlap check could not be performed.

10) Adequacy of Boundary Description- The metes and bounds description provided includes 7 tracts of land to be included in the District. Tracts 2 through 6 formed acceptable closures. Tract 1 did not close and tract 7 did not include adequate information for a boundary closure check.

11) Comments on Powers /Duties Different from Similar Types of Districts- Subject to limitations on amount and voter authorization, the District may impose sales taxes. Also, the District may authorize the creation of a nonprofit corporation to assist and act on behalf of the District in implementing a project or providing a service. The District is eligible to be included in a tax increment reinvestment zone (Chapter 311, Tax Code), a tax abatement reinvestment zone (Chapter 312, Tax Code) or an enterprise zone (Chapter 2203, Government Code) created by the City of Pearland. The District may also establish programs to stimulate business and commercial activity with the powers of a municipality under Chapter 380, Local Government Code.

12) TCEQ’s Supervision- The District is exempt from TCEQ auditing and bond review authority unless the bonds are issued specifically for water, wastewater, or drainage facilities.

13) State Water Plan Objectives-Water Use: The main intent of the district would be to promote “employment, commerce, transportation, housing, tourism, etc”.  The creation of this district does not relieve Harris County or the City of Pearland from providing services that they are currently providing, including water and wastewater service.  For this reason, I believe that the creation of this district would have no impact on the State Water Plan objectives.