The Legislative Budget Board, in 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 Val Verde County Groundwater Conservation District (District) providing for the powers, duties, administration, operations and financing of the District. The bill authorizes the District with specific powers and duties and with those of Texas Water Code, Chapter 36, related to the general law for Groundwater Conservation Districts (GCDs).

1) Population- The Val Verde County population projections to be used in the 2006 Plateau Region (J) Water Plan show significant growth from a 2000 population of 44,856 to 51,312 in 2010.

2) Location & Size- The initial boundaries of the district are coextensive with the boundaries of Val Verde County.

3) Powers- Same as general law GCDs under Texas Water Code, Chapter 36; however, special district permitting powers and duties are provided related to permits for the transfer of groundwater; granting specific permits for in-district use to the City of Del Rio, nonprofit water suppliers, and cultivated agriculture users; providing exemptions from permitting for specific types of domestic, livestock, poultry, and existing agriculture wells; and providing exemptions for like-use replacement wells. The District is authorized to create a water conservation initiative under Tax Code, Section 11.32.

4) District Finances- Same as general law GCDs under Texas Water Code, Chapter 36, including issuance of bonds and notes; levying of maintenance tax; and, assessing of production fees, export fees, and administrative fees. District tax limitations are discussed under the Ability to Tax heading below.

Similar to general law GCDs, the District would be authorized to assess annual production fees on each well for which a permit is issued by the District. District production fees would be based on the size of the column pipe, the amount of water actually withdrawn from wells or the amount authorized to be withdrawn. The fees may not exceed $0.25 per acre-foot for water used for agricultural purposes and $0.0425 per 1,000 gallons of water used for any other purpose. Production fees may be increased at a cumulative rate not to exceed 3 percent per year. Under general law, annual production fees may not exceed $1 per acre-foot for water used for agricultural purposes or $10 per acre-foot for water used for any other purpose. Similar to general law GCDs, the District may assess an export fee for groundwater produced from a well for transport out of the district in addition to the production fee. Export fees may be assessed annually and used to pay the cost of district operations. The District may not assess a fee, except during a drought or other district emergency, on a well drilled by a nonprofit water supply corporation, water district, or other political subdivision if the well’s production is for use within the District.

5) Board of Directors- The District would be governed by a board of seven elected permanent directors serving staggered four-year terms. Unlike general law GCDs, directors would be elected according to the commissioners precinct method with one director elected from each county commissioners precinct and three directors elected at-large. Temporary directors are appointed and are responsible for scheduling and conducting the District's confirmation election. Within 45 days of the effective date of the Act, four temporary directors are to be appointed by the Commissioners Court of Val Verde County to represent commissioners precincts, one temporary director is to be appointed by the County Judge of Val Verde County to represent the District at-large, and two temporary directors are to be appointed by the Del Rio City Council to represent the District at-large. At least one temporary director must represent each of rural water supply, agriculture, industry, and municipal water supply interests. The temporary directors become the initial directors if the District is confirmed by the voters. After drawing lots to determine short- and long-terms, three initial directors would serve until the first permanent directors election in November of the first even-numbered year after the year in which the District is confirmed by election, and the other four initial directors would serve until the second permanent directors election in November of the second even-numbered year. The appropriate number of directors would then be elected in November of each subsequent second year. General law GCDs under Texas Water Code, Chapter 36, have 5 to 11 directors elected by the general precinct method. In some general law GCD creation cases, commissioners courts are provided 90 days to appoint temporary directors.

6) Eminent Domain- Unlike general law GCDs under Texas Water Code, Chapter 36, the District is not authorized to exercise the power of eminent domain.

7) Ability to Tax- Similar to general law GCDs under Texas Water Code, Chapter 36, the District is authorized to levy a maintenance tax and to levy a tax for the repayment of bonds or notes. Both types of taxes are subject to voter authorization. The District may not levy a tax that exceeds $0.025 per $100 assessed valuation during its first two years of operation, and may not levy a tax that exceeds $0.05 per $100 assessed valuation after the first two years. Under Texas Water Code, Chapter 36, the maintenance tax for general law GCDs may not exceed $0.50 per $100 assessed valuation and the tax rate for the repayment of bonds or notes is not limited.

8) Ability to Exclude Territory- As with general law for GCDs, there are no provisions to exclude territory.

9) Overlapping Services- There are no other GCDs in Val Verde County. The primary functions of GCDs are conservation and management of groundwater resources through data collection, rules and well permitting within their boundaries. These functions do not conflict with the services provided by the other water utilities or districts in the same area. The District's boundaries include the service areas of other water utilities and districts with Certificates of Convenience and Necessity (CCN). The other known water supply or sewer-service corporations, investor-owned utilities, or local water district or authorities in the District are: Val Verde County Water Control and Improvement District - Comstock (Reg. No. P0475); Del Rio Utilities Commission (CCN Nos. 11046 & 20420); Devils Shores Services, Inc. (CCN No. 12076); Devils Shores Water Supply Corporation (Reg. No. A1568); Lake Amistad Properties, Inc. (CCN No. 11090); Lake Ridge Estates (CCN No. 11113); Lake Ridge Water System (Reg. No. A1586); Langtry Water Supply Corporation (CCN No. 12500); Paynes Village Water Supply (Reg. No. 99212); Rough Canyon Marina, Inc. (CCN No. 12804); San Pedro Canyon Water Company (CCN No. 11089); and San Pedro Village (CCN No. 11088).

10) Adequacy of Boundary Description- The District’s boundaries would be the same as the county boundaries of Val Verde County and form a closure. The District is located in Groundwater Management Area 7 designated by the Texas Water Development Board predominantly for the Edwards-Trinity (Plateau) aquifer. Val Verde County is not located within a Priority Groundwater Management Area designated by the TCEQ.

11) Comments on Powers /Duties Different from Similar Types of Districts- Unlike general law GCDs where directors are entitled to receive $150 per day of service up to a maximum of $9,000 per year, the directors of the District are not entitled to receive compensation for service. After the seventh year of operation, the District is required to maintain financial reserves of not less than six months and not more than two years of operating capital. If the financial reserves exceed this amount, the District must reduce taxes or perform a recharge project. Under Texas Water Code, Chapter 36, general law GCDs are not subject to this financial reserves limitation. Unlike general law GCDs, the temporary directors may attempt subsequent confirmation elections after a one-year time period should the voters initially oppose creation of the District.

Unlike general law GCDs, the District may not purchase, sell, transport or distribute surface water or groundwater for any purpose. Differing from the requirements of general law, the District is subject to more stringent requirements for cooperation with other groundwater districts within the same designated groundwater management area. These requirements include coordinating data collection, monitoring, and investigations; sharing data; and notification of detections of pollution.

Unlike general law GCDs, many specific regulatory goals, permitting provisions, groundwater production allowances, and permitting and fee exemptions have been provided or required in the bill. In general law GCDs, these types of goals and decisions are made at the discretion of a district’s board of directors. Unlike general law GCDs, the bill requires the Texas Water Development Board (TWDB) to conduct a groundwater study in the District within six months of the date the District is confirmed by the voters, and then conduct subsequent studies at least once every ten years or as considered necessary by the District board of directors to implement permitting. Further, the bill requires a local groundwater study within ten years to determine the City of Del Rio groundwater allocation. The bill also provides for a moratorium on transfer permits until the TWDB study is completed and the District has adopted rules.

The bill provides the Act would take effect immediately if passed by a two-thirds majority in each house. If passed otherwise, the Act would take effect September 1, 2005. The District would be dissolved on September 1, 2010, if it is not confirmed by the voters by this date, and the Act would likewise expire on September 1, 2010. The bill does not provide for Special District Local Laws Code, Chapter 8804 to expire should the District be dissolved.

12) TCEQ’s Supervision- Same as for general law GCDs, including bond review authority. The TCEQ’s supervision authority as it is related to the District’s development and implementation of a groundwater district management plan would be the same as for general law GCDs. As with general law GCDs, the District would not have to comply with TCEQ financial auditing requirements.

13) State Water Plan Objectives-Water Use: Within Val Verde County, 92 percent of the total water use was groundwater in the year 2000.  Ninety-four percent of the groundwater use was for municipal purposes. The proposed district would be partially located over the Edwards-Trinity Plateau. The county’s total water use to be included in the 2007 State Water Plan is projected to grow from a year 2000 total of 19,388 acre feet of use to 20,793 acre feet of use in 2010. TWDB staff finds that creation of the proposed district is not in conflict with the State Water Plan objectives of promoting the efficient use of local groundwater resources and the implementation of practices and programs to effectively manage local groundwater resources.

The Legislative Budget Board in 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 Victoria County Groundwater Conservation District (District) providing for the powers, duties, administration, operations and financing of the District. The bill authorizes the District with the powers and duties of Texas Water Code, Chapter 36, related to the general law for Groundwater Conservation Districts (GCDs).

1) Population- The Victoria County population projections to be used in the 2007 State Water Plan show significant growth from a 2000 population of 84,088 to 93,073 in 2010.

2) Location & Size- The District’s boundaries would be coextensive with the boundaries of Victoria County.

3) Powers- Same as general law GCDs under Texas Water Code, Chapter 36, with some taxing and regulatory limitations as noted below.

4) District Finances- Same as general law GCDs under Texas Water Code, Chapter 36, with the taxing limitation noted below. District finances under Chapter 36 include issuance of bonds and notes; levying of taxes for maintenance and operation expenses and for the repayment of bonds and notes; and, assessment of production fees, export fees, and administrative fees.

5) Board of Directors- The District would be governed by a board of five elected permanent directors serving staggered four-year terms. Unlike general law GCDs, directors would be elected according to the commissioners precinct method with one director elected from each county commissioners precinct and one director elected at-large. Temporary directors are to be appointed by the commissioner’s court within ten days of the effective date of the Act. The temporary directors are responsible for scheduling and conducting the District's confirmation election within 120 days of the effective date of the Act. The temporary directors become the initial directors if the District is confirmed by the voters. Two initial directors would serve until the first permanent directors election in November of the first even-numbered year after the year in which the District is confirmed by election, and the other three initial directors would serve until the second permanent directors election in November of the second even-numbered year. The appropriate number of directors would then be elected in November of each subsequent second year. General law GCDs under Texas Water Code, Chapter 36, have 5 to 11 directors elected by the general precinct method. In some general law GCD creation cases, commissioners’ courts are provided 90 days to appoint temporary directors.

6) Eminent Domain- Unlike general law GCDs under Texas Water Code, Chapter 36, the District is prohibited from exercising the power of eminent domain.

7) Ability to Tax- Similar to general law GCDs under Texas Water Code, Chapter 36, the District is authorized to levy a maintenance tax and to levy a tax for the repayment of bonds or notes. Both types of taxes are subject to voter authorization. The District may not levy a tax that exceeds $0.02 per $100 assessed valuation of property. Under Texas Water Code, Chapter 36, the maintenance tax for general law GCDs may not exceed $0.50 per $100 assessed valuation and the tax rate for the repayment of bonds or notes is not limited.

8) Ability To Exclude Property- As with general law for GCDs, there are no provisions to exclude property.

9) Overlapping Services- There is one GCD in Victoria County. The bill provides for the repeal of Chapter 1332, Acts of the 77th Legislature, Regular Session, 2001, (HB2643), governing the existing Crossroads Groundwater Conservation District in Victoria County. However, the bill does not provide for the repeal of Chapter 966, Article 3, Part 2, Acts of the 77th Legislature, Regular Session, 2001, (SB2, Article 3, Part 2), which also governs the existing Crossroads Groundwater Conservation District. The primary functions of GCDs are conservation and management of groundwater resources through data collection, rules and well permitting within their boundaries. These functions do not conflict with the services provided by the other water utilities or districts in the same area. The District's boundaries include the service areas of other water utilities and districts with Certificates of Convenience and Necessity (CCN). The other

known water supply or sewer-service corporations, investor-owned utilities, or local water districts or authorities in the District are the Guadalupe-Blanco River Authority, the Quail Creek MUD (Reg. No. P0425), the Victoria County Drainage Districts 2 and 3, the Victoria County Navigation District, the Victoria County WCIDs 1 (Reg. No. P0478) and 2 (P0479), the Aquasource Utility Inc. (CCN Nos. 11157 & 20453), the City of Victoria (CCN Nos. 10722 & 20297, the H 2 O Systems Plus (CCN No. 11548), the North Victoria Utilities Inc. (CCN No. 11817), and Victoria County (Reg. No. P0022).

10) Adequacy of Boundary Description- The District’s boundaries would be the same as the county boundaries of Victoria County and form a closure. The District is located in Groundwater Management Area 15 designated by the Texas Water Development Board for the central part of the Gulf Coast aquifer. Victoria County is not located within a Priority Groundwater Management Area designated by the TCEQ.

11) Comments on Powers /Duties Different from Similar Types of Districts- Unlike general law GCDs under Texas Water Code, Chapter 36, the temporary directors can hold subsequent elections after a one-year time period, if creation of the District is defeated by the voters. If the District is not confirmed by the fifth anniversary of the effective date of the Act, the Act will expire. General law GCDs under Chapter 36 are not authorized to have subsequent creation elections. The Act, if passed, would take effect on September 1, 2005.

12) TCEQ’s Supervision- Same as for general law GCDs, including bond review authority. The TCEQ’s supervision authority as it is related to the District’s development and implementation of a groundwater management plan would be the same as for general law GCDs. As with general law GCDs, the District would not have to comply with TCEQ financial auditing requirements.

13) State Water Plan Objectives- Water Use: Within Victoria County, 98 percent of the total water use was groundwater in the year 2000. Fifty-six percent of the groundwater use was for municipal purposes. The proposed district would be partially located over the Gulf Coast Aquifer. The county’s total water use to be included in the 2007 State Water Plan is projected to grow relatively little, from a year 2000 total of 48,794 acre feet of use to 50,992 acre feet of use in 2050.