Amend CSHB 3335 by adding the following appropriately
numbered SECTION to the bill and renumbering subsequent SECTIONS of
the bill accordingly:
SECTION ___. (a) The legislature finds that:
(1) according to audits and evaluations of the Bexar
Metropolitan Water District performed by state agencies under H.B.
No. 1565, Acts of the 80th Legislature, Regular Session, 2007:
(A) certain officials of the district have
engaged in a pattern of unethical conduct and unprofessional
management practices;
(B) disagreements regarding jurisdiction within
the district and between the district and other entities and
distrust among key management personnel and members of the board
have hampered efforts by the district to improve services for
existing customers and to meet water supply needs of growing
populations within its service areas;
(C) there has been a history of noncompliance on
the part of the district; and
(D) the district has demonstrated weak
management, engaged in financial improprieties, and provided
unreliable service, which threatens to impair the quality of life
of its customers and diminish the prospects for economic growth
within the district;
(2) after 18 months of intense scrutiny by state
agencies and the Bexar Metropolitan Water District Oversight
Committee, which is composed of gubernatorial appointees,
legislators, and a local representative of Bexar County, it is
evident that further legislative action is necessary; and
(3) to ensure the reliability, sustainability,
quality, and affordability of water supply services to the
customers of the district, it is necessary to appoint a
conservator, who shall manage the district until the district has
achieved sufficient rehabilitation to serve its customers in a
professional, ethical, and reliable manner.
(b) Chapter 306, Acts of the 49th Legislature, Regular
Session, 1945, is amended by adding Sections 33B, 33C, 33D, 33E, and
33F to read as follows:
Sec. 33B. ELECTION ON DISSOLUTION AND CONSERVATORSHIP. An
election on the appointment of a conservator for the purpose of
dissolving the District shall be held on the uniform election date
in November 2009.
Sec. 33C. BALLOT. The ballot for the election shall be
printed to permit voting for or against the proposition: "The
appointment of a conservator for the Bexar Metropolitan Water
District for the purpose of dissolving the District."
Sec. 33D. APPOINTMENT OF CONSERVATOR; ADMINISTRATION OF
ASSETS. (a) If a majority of the votes in the election held under
Section 33B of this Act favor dissolution, a conservator shall be
appointed by the Texas Commission on Environmental Quality not
later than the 60th day after the date of the election.
(b) The Conservator shall administer the property, assets,
and debts until all funds have been disposed of and all District
debts have been paid or settled.
Sec. 33E. SALE OR TRANSFER OF ASSETS AND LIABILITIES.
(a) Notwithstanding any other provision of this Act, the District
may not be dissolved unless the Conservator provides for the sale or
transfer of the District's assets and liabilities to another person
or entity or until all of the District's outstanding indebtedness
or contractual obligations have otherwise been repaid or discharged
in a manner consistent with Subsection (d) of this section.
(b) The dissolution of the District and the sale or transfer
of the District's assets or liabilities may not contravene a trust
indenture or bond resolution relating to the outstanding bonds of
the District. The dissolution and sale or transfer does not
diminish or impair the rights of a holder of an outstanding bond,
warrant, commercial paper note, or other obligation of the
District.
(c) The sale or transfer of the District's assets and
liabilities must satisfy the debt, bond obligations, commercial
paper notes, or any other financial obligation of the District in a
manner that protects the interests of the residents of the
District, including the residents' collective property rights in
the District's assets. The District may not transfer or dispose of
the District's assets except for due compensation unless the
transfer is made to another governmental agency that serves the
District and the transferred assets are to be used for the benefit
of the residents of the District.
(d) The sale or transfer of the District's assets and
liabilities does not impair, affect the validity of, or modify the
terms of any contract to which the District is a party, and the
acquiring entity of a District asset, or any assignee-in-interest
to the asset, assumes the terms, benefits, and obligations of a
contract related to that asset, as if the entity or assignee were
the District.
Sec. 33F. REPORT; DISSOLUTION ORDER. (a) After the
District has paid all its debts and has disposed of all its assets
and funds as prescribed by this Act, the Conservator shall file a
written report with the Texas Commission on Environmental Quality
summarizing the Conservator's actions in dissolving the District.
(b) Not later than the 10th day after the date the Texas
Commission on Environmental Quality receives the report and
determines that the requirements of this Act as they relate to
dissolution have been fulfilled, the Commission shall enter an
order confirming the dissolution of the District and ordering the
termination of conservatorship established under Section 33E of
this Act, as applicable.
(c) Chapter 306, Acts of the 49th Legislature, Regular
Session, 1945, is amended by adding Sections 34, 34A, and 34B to
read as follows:
Sec. 34. CONSERVATOR. If a majority of the votes in the
election held under Section 33B of this Act do not favor
dissolution, not later than the 60th day after the date of this
election, the Texas Commission on Environmental Quality shall
appoint a conservator for the purpose of rehabilitating the
District. The individual appointed must have demonstrated a high
level of expertise in water utility management.
Sec. 34A. POWERS AND DUTIES OF CONSERVATOR. (a) If a
conservator is appointed under Section 34 or 34B of this Act, the
Board shall work cooperatively with the Conservator in
rehabilitating the Board in its ability to manage and operate the
District in a professional manner.
(b) The Conservator shall:
(1) collectively coordinate the daily management of
the District;
(2) work with the Board to ensure that the assets of
the District are protected and that the quality of service provided
to District customers is improved to the highest level reasonably
practicable under the circumstances;
(3) develop and work to implement a comprehensive
rehabilitation plan for the District; and
(4) report monthly to the Texas Commission on
Environmental Quality and to any committee with direct oversight
authority over the District regarding:
(A) the financial, managerial, technical, and
operational status of the District under the conservatorship;
(B) the actions the Conservator has taken to
ensure that the District complies with the plan developed under
Subdivision (3) of this Subsection; and
(C) the progress the Conservator has made towards
completion of the plan developed under Subdivision (3) of this
Subsection.
(c) The comprehensive rehabilitation plan must:
(1) identify strategies for restoring the District's
financial integrity and for developing a system of sound financial
management;
(2) describe a standard of ethics, professionalism,
and openness expected of each member of the Board and employees of
the District and a mechanism for enforcing compliance with District
policies, including procurement policies;
(3) address ways to enhance the District's operational
efficiency;
(4) as an integral part of rehabilitating the
District, devise a program for:
(A) educating the Board of Directors and key
management personnel on improving management practices, on
complying with Board policy and applicable laws and regulations,
and on implementing needed reforms for the District; and
(B) developing greater technical expertise on
the part of District employees;
(5) identify District assets that, if sold, would
likely improve the District's ability to serve its remaining
customers;
(6) ensure that any assets identified in Subdivision
(5) of this Subsection that are sold are sold at fair market value;
(7) ensure that any entity that acquires a District
asset is responsible for all transaction costs related to the
acquisition, including the cost of defending the State against
legal challenges to the disposition of the asset; and
(8) inventory and evaluate the discrete water systems
that the District comprises and determine:
(A) the District's basis in or the intrinsic
value of the infrastructure associated with each water system;
(B) the District's bonded debt and commercial
paper reasonably associated with or allocable to the infrastructure
of each water system;
(C) the adequacy of the source of the water
supply, such as wells, located in each water system's service area
to supply the current and projected demands generated in that
service area;
(D) the adequacy of the water storage facilities
located in each water system's service area to supply the current
and projected demands generated in that service area; and
(E) the adequacy of the distribution system
located in each water system's service area to supply the current
and projected demands generated in that service area.
(d) The term of the Conservator continues until the earlier
of:
(1) the end of a period of 18 months; or
(2) the Conservator reports that the District has been
sufficiently rehabilitated to provide reliable, cost-effective,
quality service to its customers, and the Texas Commission on
Environmental Quality, after performing a confirmation review,
concurs with the Conservator's report that the District has been
sufficiently rehabilitated to ensure that it can serve its
customers in a professional manner and that conservatorship is no
longer necessary.
(e) Funding for the conservatorship shall be provided by the
District and approved by the Commission.
(f) The Conservator may not take any action that:
(1) will impair the District's ability to collect
revenues, fees, or charges:
(A) for operating District systems; or
(B) necessary for the payment of any bonds,
commercial paper notes, or any other financial obligation; or
(2) would cause an event of default under any
provision of any indenture, contract, order, or other financial
instrument creating any such obligation.
(g) The appointment of the Conservator is not conditioned on
or a result of an insolvency or bankruptcy proceeding or an
inability of the District to pay its debts.
(h) The Conservator may not be a receiver, trustee,
custodian, or liquidator of the District's system or other
property.
Sec. 34B. APPOINTMENT OF NEW CONSERVATOR. (a) If the
Texas Commission on Environmental Quality determines that, after a
reasonable period, the Conservator has not made satisfactory
progress in developing and working to implement the comprehensive
rehabilitation plan, the Commission shall appoint a new
Conservator.
(b) The Texas Commission on Environmental Quality shall
adopt rules providing for filling a vacancy in the position of
Conservator.
(d) Effective June 1, 2011, Chapter 306, Acts of the 49th
Legislature, Regular Session, 1945, is amended by adding Section
34C to read as follows:
Sec. 34C. SUBSEQUENT CONSERVATOR. (a) The Texas
Commission on Environmental Quality shall appoint a subsequent
Conservator for the District if the Commission determines that
after the termination of an earlier conservatorship under Section
34A of this Act, the District has:
(1) obstructed the Commission's authority to supervise
the District;
(2) violated a final order of the Commission;
(3) caused a potential health hazard by failing to
provide appropriate water or wastewater treatment to District
customers;
(4) caused a potential health hazard, extended
outages, or repeated service interruptions by failing to adequately
maintain District facilities;
(5) displayed a pattern of hostility towards the
Commission or repeatedly failed to respond to the Commission or to
District customers;
(6) engaged in a pattern of:
(A) noncompliance with laws or regulations; or
(B) unethical conduct and unprofessional
management practices;
(7) abandoned the operation of its facilities;
(8) had a majority of its Board of Directors resign;
(9) engaged in financial improprieties; or
(10) provided unreliable service that impairs the
quality of life of its customers or diminishes the prospects for
economic growth within the District.
(b) An individual appointed Conservator under this Section
must have demonstrated a high level of expertise in water utility
management and shall have all the powers and duties assigned to a
Conservator under Section 34A of this Act.
(e) Section 33A, Chapter 306, Acts of the 49th Legislature,
Regular Session, 1945, is amended by amending Subsection (c) and
adding Subsection (g) to read as follows:
(c) The oversight committee is comprised of five [5] members
appointed as follows [to represent the following members]:
(1) a [the] Senator who represents a Senate district
that includes territory within the District, [sponsor of this Act,
or, in the event this Senator cannot serve, a Senator] appointed by
the Lieutenant Governor;
(2) a Representative who represents a [the] House
district that includes territory within the District, [author of
this Act, or, in the event this Representative cannot serve, a
Representative] appointed by the Speaker of the Texas House of
Representatives;
(3) one member of the Senate Committee on Natural
Resources [with special expertise in the operation of public water
utilities] appointed by the Lieutenant Governor;
(4) one member of the House Committee on Natural
Resources appointed by the Speaker of the Texas House of
Representatives; and
(5) one member appointed by the Governor to represent
the public[; and
[(5) a member of the Bexar County Commissioners Court
who represents a precinct in which customers of the District
reside].
(g) On or before December 31, 2010, the oversight committee
shall provide a report under Subsection (e) of this Section to the
82nd Legislature. The committee is abolished and this Section
expires on January 1, 2011.
(f) The legal notice of the intention to introduce this
section, setting forth the general substance of this section, has
been published as provided by law, and the notice and a copy of this
section have been furnished to all persons, agencies, officials, or
entities to which they are required to be furnished under Section
59, Article XVI, Texas Constitution, and Chapter 313, Government
Code.
(g) The governor, one of the required recipients, has
submitted the notice and section to the Texas Commission on
Environmental Quality.
(h) The Texas Commission on Environmental Quality has filed
its recommendations relating to this section with the governor, the
lieutenant governor, and the speaker of the house of
representatives within the required time.
(i) All requirements of the constitution and laws of this
state and the rules and procedures of the legislature with respect
to the notice, introduction, and passage of this section are
fulfilled and accomplished.
URESTI