80R10603 T

By: Estes S.B. No. 1326

A BILL TO BE ENTITLED

AN ACT

relating to the sale by the Brazos River Authority of certain residential and commercial lots in the immediate vicinity of Possum Kingdom Lake to leaseholders of those lots.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Chapter 221, Water Code, is amended by adding Section 221.020 to read as follows:

Sec. 221.020. SALE OF LOTS SUBJECT TO RESIDENTIAL AND COMMERCIAL LEASES. (a) In this section:

(1) "FERC Order" means the order of the Federal Energy Regulatory Commission issuing a license to the authority for project number 1490-003-Texas.

(2) "1980 FERC Order" means that modifying order signed in 1980 by FERC that, among other things, removed the leasehold lots from the Project Lands.

(2) "Lake" means Possum Kingdom Lake.

(3) "Project Lands" means those lands identified and defined in the 1980 FERC Order and do not include the lease lots to be sold to the Residential Leaseholders and Commercial Leaseholders.

(4) "Buffer Zone" means that strip of land abutting the lake as identified and defined in the 1980 FERC Order.

(3) "Residential Leaseholder" means a person or entity who leases a lot in the immediate vicinity of the lake from the authority for residential purposes.

(4) "Commercial Leaseholder" means a person or entity who leases a lot in the immediate vicinity of the lake from the authority to produce income.

(b) A leaseholder may purchase the lot as provided by this section.

(c) The authority shall make available a form for an application of intent to purchase the lot within ninety days of the effective date of this section. Such application shall be a deemed a contract subject to the provisions set out herein. A leaseholder who desires to purchase a lot must submit a completed application to the authority. Until September 1, 2008, the authority may only accept applications from leaseholders leasing for residential purposes. Until February 1, 2008, the authority shall give preference in processing applications to applicants who receive an ad valorem tax exemption under Section 11.13, Tax Code, for a structure on the applicants' lots. After September 1, 2008, the authority may accept applications from leaseholders leasing for commercial purposes. The authority shall accept and process applications in the order in which they are received.

(d) Each lot sold under this section shall be sold for no less than fair market value of the interest being acquired. Within 30 days of receiving an application of the intent to purchase, the authority shall select a disinterested appraiser certified under Chapter 1103, Occupations Code, to determine the fair market value of the interest being acquired and such fair market value shall be as of January 1, 2007. Such appraiser shall complete the appraisal within 60 days of his selection and send the completed appraisal to the authority and the prospective purchaser within such 60 day period. If the prospective purchaser disputes the fair market value determined by such appraisal, the prospective purchaser may employ another disinterested appraiser who satisfies the requirements above to conduct a second appraisal which shall be completed and sent to the authority within 60 days of the date the prospective purchaser receives the authority's appraisal. If the authority rejects the value proffered by the second appraiser, within 30 days of the date the authority receives the prospective purchaser's appraisal, the two appraisers shall meet and attempt to reach an agreement on the fair market value of the interest being acquired. If the two appraisers fail to reach agreement within 10 days of the meeting, within 10 days of such impasse, the authority shall request that the state comptroller of public accounts appoint a disinterested third appraiser who satisfies the requirements of this subsection to reconcile the two previous appraisals. The determination of the value by the third appraiser may not be less than the lower value or more than the higher value of the two previous appraisals. The third appraiser's report must be completed within 30 days of the date the dispute is submitted to him and the fair market value determined by the third appraiser is final and binding on all parties. Each party shall pay for his, her or its respective appraisal, except that the cost of the third appraisal, if necessary, shall be borne equally by the purchaser and the authority. The appraisal shall not take into account the value of any improvements constructed on the lot or over the water that are the property of the prospective purchaser. The closing of the sale shall take place within 30 days of an agreed appraisal or determination of the value by the third appraiser.

(e) A prospective purchaser of a lot is responsible for:

(1) a survey of the lot dated not more than one year before the effective date of this section and prepared by a licensed state land surveyor or a registered professional land surveyor. However, a survey dated more than one year before the effective date of this section shall be deemed acceptable if accompanied by an affidavit signed by the leaseholder stating facts that indicate no improvements have been made to the property that would change the submitted survey, and that such survey would be acceptable to a title company for purposes of issuing any policy of title insurance;

(2) All reasonable, normal, customary and documented closing costs associated with the sale of the lot; and

(3) If applicable, reasonable and necessary costs incurred and documented by the authority for FERC approval of the sale of the lot to be purchased under this section.

(f) The lease in effect as of January 1,2007 or after shall remain in effect until such transaction is completed. A lease of the lot expires on the date the sale of the lot is complete.

(g) If an eligible leaseholder is unable or unwilling to purchase the lot, the leaseholder shall submit a purchase application form waiver and indicate on such form that they wish to continue leasing and affirm their understanding that the obligation of a prospective purchaser, transferee, heir or devisee to purchase the lot through conventional financing or otherwise, must be exercised upon transfer of the property to any party not subject to the lease existing on the date of the purchase application form waiver. Such waiver shall be memorialized in a written affirmation signed by all parties to the existing lease, or any subsequent lease, and appended as an amendment thereto. In the event an eligible leaseholder submits a waiver under this subsection, upon sale, the lease valuation date shall be January 1st of the year in which the property is sold or transferred and subsection (f) above shall have no applicability.

(h) A lot sold under this section is subject to all existing restrictions, including any applicable easements, placed on the lot by the Federal Energy Regulatory Commission under the FERC order, if any , but does not include the terms of the existing leases unless otherwise mentioned herein.

(i) A residential lot sold under this section may be used only for a single-family residential structure and related facilities and only for normal residential, noncommercial, recreational use and enjoyment.

(j) If applicable, a commercial leaseholder that purchases a lot and sublets said lot for residential use shall comply with Section 94.204, Property Code.

(k) The sale of a lot under this section does not include any shoreline buffer zone that abuts the lot and is part of the project area covered by the FERC order. Subject to approval by the Federal Energy Regulatory Commission, the authority shall grant a person or entity who purchases a lot an exclusive easement for use of the buffer zone that abuts the lot. The authority shall retain ownership of the buffer zone and exercise control over the buffer zone consistent with the FERC order. The easement granted to a purchaser shall be limited to uses permitted under the terms of the FERC order and the authority's shoreline management plan. and shall be consistent with the use allowed since the implementation of the Buffer Zone.

(l) The owner of a lot sold under this section shall pay the authority any reasonable fees set by the authority for any services the authority provides and the owner desires. However, the owner of a lot is under no obligation to accept or pay for services from the authority that are provided by another public or private entity.

(m) If an existing road on land owned by the authority connects a county road to a lot sold under this section, the authority may not deny a person access to that road. The authority does not have a duty to maintain any road.

(n) A purchaser of a lot under this section shall comply with:

(1) the authority's "Shoreline Management Plan and Customer Guide," and any amendments to that document to the extent such plan applies to the Buffer Zone and any other land retained by the authority;

(2) the applicable rules, regulations, and orders of the Federal Energy Regulatory Commission;

(3) the authority's "Regulations for Governance for Brazos River authority Lakes and Associated Lands," as published on the authority's Internet website; and

(4) other rules and regulations adopted by the authority regarding conduct on and use of the lake or land owned by the authority.

(o) To maintain the quality of the lake's water and of the environment in the lake's vicinity, a person who purchases a lot under this section agrees to:

(1) obtain the written consent of the authority before altering the natural drainage of the terrain within the project area and buffer zone;

(2) comply with any local, state, or federal laws related to water quality or the environment, including laws governing toxic wastes and hazardous substances; and

(3) pay the cost of obtaining any Federal Energy Regulatory Commission approvals required for future improvements that are the property of the purchaser and in the project area covered by the FERC order; and

(4) connect to and use, at the lot owner's expense, any wastewater treatment system that becomes available to lot owners and lessees, not later than 24 months after the system becomes available.

(p) A leaseholder who purchases a lot under this section may not remove or disturb, or cause or permit to be removed or disturbed, any historical, archaeological, architectural, or other cultural artifact, relic, remains, or object of antiquity. If such an item is discovered on the lot, the lot owner shall immediately notify the authority and protect the site and the item from further disturbance until the authority gives written clearance to proceed.

(q) A leaseholder who purchases a lot under this section agrees that the water level in the lake varies and that the authority is not responsible for keeping the lake full.

(r) The authority reserves the right to modify Morris Sheppard (Possum Kingdom) Dam so that the water surface elevation of the lake is raised from 1,000 feet above mean sea level to 1,015 feet above mean sea level. The authority is not responsible or liable for any personal injury or damage to a lot or improvements on the lot caused by the resultant increase in the water level or caused by natural flooding.

(s) The authority reserves the right of ingress and egress for a person authorized by the authority, including an authority agent or employee, over and across a lot purchased under this section for all reasonable purposes of the authority, including the construction of any roads, drainage facilities, and power, water, gas, and other utility mains and lines that the authority considers necessary. The authority agrees to repair, or compensate the lot owner for any taking of property or damage it causes under this subsection.

(t) The authority reserves its interest in all oil, gas, and other minerals in and under the real property sold under this section.

(u) The authority may use proceeds from the sale of a lot under this section for any authority purpose.

(v) If a declaration of intent to purchase by a leaseholder is made under this section, the purchase must be completed by January 1, 2015.

(w) If the owner of a lot sold under this section does not comply with this section, the authority may seek any available legal remedy.

(x) The following laws do not apply to sale of a lot under this section:

(1) Chapters 232 and 272, Local Government Code;

(2) Section 49.226, Water Code; and

(3) Section 221.013, Water Code.

(y) In the event of a dispute arising under this section between the authority and a person who purchases a lot under this section, the prevailing party shall recover court costs and any reasonable attorney's fees and the authority expressly waives any claim to governmental immunity if such a dispute arises.

(z) A provision that applies to the purchaser of a lot under this section applies to any subsequent owner of the lot. SECTION 2. If the provisions of this section conflict with any other provisions of this code, then the provisions of this section shall prevail, notwithstanding all such conflicting provisions. SECTION 3. This Act takes effect immediately if it receives a vote of two-thirds of all 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, 2007.