H.B. No. 3031
 
 
 
 
AN ACT
  relating to the sale by the Brazos River Authority of certain
  residential and commercial leased lots and other real property in
  the immediate vicinity of Possum Kingdom Lake.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Chapter 8502, Special District Local Laws Code,
  is amended by adding Section 8502.020 to read as follows:
         Sec. 8502.020.  SALE OF AUTHORITY PROPERTY.  (a)  
  Definitions.  In this section:
               (1)  "Authority Land" means the FERC Project Area and
  all other real property owned by the Authority at the Lake as of the
  date before Closing, save and except for the Leased Tract.
               (2)  "Buffer Zone" means that twenty-five or fifty foot
  strip of land measured landward horizontally from the 1000' contour
  line that is included in the FERC Project Area as defined in the
  FERC License.
               (3)  "Close" or "Closing" means the date on which the
  Authority transfers its interest in the Leased Tract, in whole or in
  part, to a Purchaser.  There may be multiple closing dates if the
  Leased Tract is sold in portions.
               (4)  "Commercial Leased Land" means that portion of the
  Leased Tract that is located wholly outside the FERC Project Area
  and that is leased for commercial purposes as of the date the
  Restrictions are placed of record.
               (5)  "Consumer Price Index" means the consumer price
  index for Housing, Dallas-Fort Worth, TX area, Series Id:
  CUURA316SAH, CUUSA316SAH, Base Period: 1982-84 = 100, as published
  by the Bureau of Labor Statistics of the United States Department of
  Labor, or its equivalent substitute should this series be
  discontinued.
               (6)  "Contract" means the Authority entering into a
  purchase and sale agreement with a Purchaser for the transfer of the
  Authority's interest in the Leased Tract, in whole or in part.
               (7)  "Driveways" means those certain private gravel
  and/or paved driveways that connect a Road or other street or
  thoroughfare to an individual Leased Tract or any improvements
  thereon; Driveways also includes those shared or common Driveways
  that serve more than one Leaseholder or individual Leased Tract.
               (8)  "Environmental Laws" means the Comprehensive
  Environmental Response, Compensation and Liability Act of 1980, the
  Toxic Substances Control Act, the Clean Water Act, the Resource
  Conservation and Recovery Act and any other similar federal, state
  or local law, rule or regulation respecting the environment or
  Hazardous Materials, together with all rules and regulations
  promulgated thereunder and all present or future amendments
  thereto.
               (9)  "FERC License" means the order of the Federal
  Energy Regulatory Commission issuing a license to the Authority for
  project number 1490-003-Texas on September 8, 1989, as such license
  has been renewed, extended, or amended and may be further renewed,
  extended, or amended at any time and from time to time, and also
  including the Amendment to the original FERC License, which
  amendment was issued on May 15, 1980, to the extent incorporated or
  referenced in the FERC License.
               (10)  "FERC Project Area" means that portion of
  Authority property that is subject to the FERC License, as
  identified and defined in the FERC License, as may be amended at any
  time and from time to time, and which FERC Project Area may move or
  change over time due to natural forces.
               (11)  "Ground Lease" means each of those certain
  residential and/or commercial ground leases between the Authority
  and a Leaseholder, and the respective heirs, successors, and
  assigns.
               (12)  "Hazardous Materials" means underground storage
  tanks, petroleum and petroleum products, asbestos, PCB's,
  urea-formaldehyde and any hazardous or toxic substances,
  pollutants, contaminants, wastes, or materials as defined under any
  Environmental Laws.
               (13)  "Lake" means Possum Kingdom Lake located in
  Young, Palo Pinto, Stephens, and Jack Counties.  The boundary of the
  Lake is defined by the 1000' contour line, as that contour may
  meander and change over time with natural forces, including erosion
  and accretion.  The "1000' contour line" means the line running
  along the periphery of the Lake if the surface of the Lake is at an
  elevation of 1000 feet above mean sea level, as measured from the
  top of the spillway crest gates of the Morris Sheppard Dam, as such
  line may move and shift from time to time due to natural forces.
               (14)  "Leased Tract" or "Tract" means all or any
  portion of the Commercial Leased Land, the Residential Leased Land,
  and Undeveloped Strips, whether owned by the Authority, Purchaser,
  or Owner and whether or not subject to a lease or Ground Lease or
  owned in fee simple.
               (15)  "Leaseholder" means a person or entity that has a
  residential lease or a commercial lease with the Authority,
  including the Leaseholder's heirs, successors, and assigns.
               (16)  "Lienholder" means any mortgagee under a
  mortgage, or a trustee or beneficiary under a deed of trust,
  constituting a lien on any portion of the Leased Tract.
               (17)  "Owner" means the record holder of fee simple
  title to any portion of the Leased Tract sold pursuant to this
  section, including its heirs, personal representatives,
  successors, and assigns.  This term does not include a Purchaser who
  acquires the Leased Tract from the Authority in accordance with
  Subsection (b).
               (18)  "Property" means the Leased Tract and the
  Authority Land.
               (19)  "Purchaser" means any person or entity, including
  its successors in interest, heirs, or assigns, that acquires the
  Leased Tract (or any portion thereof) from the Authority in
  accordance with Subsection (b).  This term does not include those
  Leaseholders that acquire individual Leased Tracts from the
  Purchaser in accordance with Subsection (b).
               (20)  "Ranch" means that certain subdivision of record
  in Palo Pinto County, Texas, according to the map or plat of record
  in Volume 7, Page 71, Plat Records of Palo Pinto County, Texas, as
  it may be amended or modified from time to time, which subdivision
  includes a portion of the Leased Tract and a portion of the
  Authority Land.
               (21)  "Ranch Agreement" means that certain agreement by
  and among the Authority, The Ranch on Possum Kingdom, L.P., and Hill
  Country Harbor Village, L.P., effective as of August 1, 1997, and
  dated December 12, 1997.
               (22)  "Ranch Declarations" means that certain
  Declaration of Covenants, Conditions and Restrictions for The Ranch
  on Possum Kingdom Palo Pinto County, Texas, dated December 8, 1997,
  as recorded in Volume 944, Page 403, Official Public Records of Palo
  Pinto County, Texas.
               (23)  "Residential Leased Land" means that portion of
  the Leased Tract located outside the FERC Project Area that is
  leased for single-family residential purposes only as of the date
  the Restrictions are placed of record.  This term does not include
  land that is subject to a commercial lease, where such lessee is
  authorized to sublease for residential purposes.
               (24)  "Restrictions" means the easements, covenants,
  restrictions, liens, encumbrances, and requirements contained in
  the Declaration of Restrictive Covenants, Easements, and
  Conditions to be recorded by the Authority as set forth in
  Subsection (d).
               (25)  "Roads" means those paved or gravel streets,
  roads, and thoroughfares owned and maintained by the Authority that
  are located in Stephens, Jack, Young, or Palo Pinto County and that
  provide access, ingress, and egress to and from the Leased Tract,
  the Lake, and/or Authority Land; provided, however, that the
  definition of Roads, as used herein, does not include:
                     (A)  Driveways;
                     (B)  paved or gravel roads located wholly within
  Authority public use areas;
                     (C)  paved or gravel roads located within gated
  Authority operations areas; and
                     (D)  paved or gravel roads located wholly within
  an individual tract that is part of the Commercial Leased Land,
  which roads only serve that individual commercial Tract.
               (26)  "Shoreline Management Plan" means that certain
  Possum Kingdom Shoreline Management Plan and Customer Guide,
  adopted May 22, 2006, and amended July 31, 2006, and as may be
  revised and/or further amended by the Authority at any time and from
  time to time.
               (27)  "Undeveloped Strips" means small strips of
  unleased land located between individual lots within the Leased
  Tract and small parcels of land between the Leased Tract and Roads
  that the Authority determines in its sole discretion to include in
  any sale of all or any portion of the Leased Tract.
         (b)  Sale to Purchaser. Prior to January 1, 2011, the
  Authority may sell the Leased Tract in whole or in part, to a
  Purchaser in accordance with applicable law, this subsection, and
  Subsections (d), (e), (f), (g), (h), and (i).  Any sale of the
  Leased Tract to a Purchaser under this subsection shall be subject
  to the following:
               (1)  Each Leaseholder shall have the opportunity to buy
  such Leaseholder's individual Leased Tract from the Purchaser or to
  continue leasing the applicable Leased Tract from the Purchaser in
  accordance with the following purchase or lease options.  The
  Purchaser shall:
                     (A)  Permit the Leaseholder to purchase such
  Leaseholder's individual Leased Tract in cash or through lender
  financing for 90% of land only assessed value without any
  exemptions (as determined by the appraisal district) for the year
  2008, such option to be available at Closing as set forth in
  Subdivision (2) and for a period of at least one year from Closing.
                     (B)  Permit the Leaseholder to purchase for the
  percent of assessed value only as set forth in Paragraph (A) such
  Leaseholder's individual Leased Tract via seller financing, with a
  down payment of ten percent (10%) and an interest rate of six
  percent (6%), with a 30-year amortization, such option to be
  available at Closing as set forth in Subdivision (2) and for a
  period of at least one year from Closing.  The leaseholder shall not
  be charged any origination fees or points by purchaser as a part of
  the closing costs involved in the seller financing option.
                     (C)  Offer a new 99-year lease at a rental rate of
  6% of the land only assessed value without any exemptions (as
  determined by the appraisal district) for the year 2008, with
  annual Consumer Price Index increases or decreases, such option to
  be available for a period of at least one year from Closing.  The
  99-year lease will include an option to purchase the applicable
  Leased Tract at the land only assessed value without any exemptions
  (as determined by the appraisal district) at the time of purchase
  (but not less than the 2008 land only assessed value without any
  exemptions).
                     (D)  Offer a new 20-year lease with a rental rate
  as determined by the current Authority lease rate methodology or
  other lease rate structure as set forth in the Ground Lease as
  applicable (and including increases and adjustments to such rates)
  with annual Consumer Price Index increases or decreases, to
  Leaseholders who are over the age of 65 and who receive an ad
  valorem tax exemption under Section 11.13, Tax Code, for a
  structure on the Leaseholder's individual Leased Tract, such option
  to be available for a period of at least one year from the date of
  Closing.  The Leaseholder must have received the ad valorem tax
  exemption for a structure on the Leaseholder's individual Leased
  Tract by January 1, 2009.  The 20-year lease will include an option
  to purchase the applicable Leased Tract at the land only assessed
  value without any exemptions (as determined by the appraisal
  district) at the time of purchase (but not less than the 2008 land
  only assessed value without any exemptions).
                     (E)  Ratify the existing Ground Lease of any
  Leaseholder who does not timely exercise one of the foregoing
  options, such ratification to include:
                           (i)  adoption of the current Authority lease
  rate methodology or other lease rate structure as set forth in the
  Ground Lease, as applicable (and including increases and
  adjustments to such rates) for a period of 8 years from Closing;
                           (ii)  an option permitting the Leaseholder
  to purchase such Leaseholder's individual Leased Tract for the land
  only assessed value without any exemptions (as determined by the
  appraisal district) at the time of purchase, or for the year 2008,
  whichever is greater, for a period of 8 years from Closing; and
                           (iii)  an agreement to extend Ground Leases
  as necessary to allow for this full 8-year purchase option period.
  Nothing in this subsection shall preclude the Purchaser from
  offering additional purchase or lease options to the Leaseholders,
  provided any additional options are made available to all
  Leaseholders on an equal basis.
               (2)  A Leaseholder who desires to buy such
  Leaseholder's individual Leased Tract from the Purchaser pursuant
  to the option set forth in either Subdivision (1)(A) or (B)
  concurrently with the Purchaser's Closing must exercise the desired
  option as follows:
                     (A)  notify the Authority and Purchaser in writing
  within 90 days after the effective date of the Contract between the
  Authority and Purchaser of Leaseholder's intent to purchase the
  applicable Leased Tract;
                     (B)  Leaseholder and Purchaser will enter into a
  purchase and sale agreement in substantially the form as agreed to
  between the Authority and Purchaser, which form will be attached to
  the Contract, and which individual purchase and sale agreements
  will be ratified by Purchaser at the Closing; the purchase and sale
  agreement shall contain, at a minimum, the following terms and
  conditions:
                           (i)  the purchase price for the individual
  Leased Tract in accordance with the applicable purchase option;
                           (ii)  earnest money in the amount of $1,000
  to be delivered to the title company agreed to by Leaseholder and
  Purchaser and approved by the Authority along with the executed
  purchase and sale agreement;
                           (iii)  the Leaseholder's obligation to
  provide a survey as set forth in this subsection and a title
  commitment from the agreed upon title company;
                           (iv)  a 60-day period commencing on the date
  of the purchase and sale agreement for the Leaseholder to obtain
  financing (if exercising its option pursuant to Subdivision (1)(A)
  above);
                           (v)  the Leaseholder must notify Purchaser
  of any objections to any items on the title commitment and/or survey
  within fifteen (15) days after receipt of same, but in no event less
  than 45 days prior to the anticipated date of Closing, provided
  however that neither the Purchaser nor the Authority shall have any
  obligation to cure any such items or to incur any expenses in curing
  any items, except that Purchaser and/or the Authority, as
  applicable, shall use good faith efforts to address and/or remove
  those requirements or exceptions shown on Schedule C of the title
  commitment that are applicable to or created by the Purchaser
  and/or Authority, as applicable, and, notwithstanding the
  foregoing, neither the Purchaser nor the Authority shall have any
  obligation to cure any exceptions on the attached Schedule C
  regarding legal right of access to or from the applicable Leased
  Tract;
                           (vi)  Leaseholder is purchasing the
  applicable individual Leased Tract in its "as-is" condition and
  Purchaser shall have no obligation to make any improvements or
  modifications thereto, nor will Purchaser make any representations
  or warranties as to the condition or use of the applicable Leased
  Tract;
                           (vii)  Purchaser shall not be responsible
  for any broker fees or commissions due to any broker or agent
  engaged or claiming to have been engaged by Leaseholder for the
  purchase and sale of the applicable Leased Tract;
                           (viii)  Purchaser shall be responsible for
  costs related to the release of any existing liens placed on the
  applicable portion of the Leased Tract by Purchaser, including
  prepayment penalties and recording fees, release of Purchaser's
  loan liability to the extent applicable to the individual Leased
  Tract, tax statements or certificates, preparation of the deed, and
  one-half of any escrow fee;
                           (ix)  Leaseholder shall be responsible for
  any costs associated with a loan or financing for the applicable
  portion of the Leased Tract, including, without limitation, loan
  origination, discount, buy-down, and commitment fees, appraisal
  fees, loan application fees, credit reports, preparation of loan
  documents, loan-related inspection fees, and interest on the notes
  from the date of disbursement to date of first monthly payment; the
  cost of the survey; recording fees; copies of easements and
  restrictions; mortgagee title policy with endorsements required by
  lender, if any; one-half of any escrow fee; any prepaid items,
  including without limitation, insurance premiums and reserves and
  taxes; underwriting fee; and any title policy (including
  endorsements) obtained by Leaseholder;
                           (x)  Taxes will be prorated as of the date of
  Closing; if taxes are not paid as of the date of Closing, then
  Leaseholder shall be responsible for the payment of taxes; and
                           (xi)  the agreement between Leaseholder and
  Purchaser shall be contingent on Closing occurring within the
  timeframes set forth in this subsection.
                     (C)  Leaseholder shall deliver to Authority and
  Purchaser no less than forty-five days prior to Closing, at the
  Leaseholder's expense, an accurate survey of the individual Leased
  Tract (including any Undeveloped Strips being included in such
  Leased Tract), which survey is acceptable to the Authority and
  Purchaser.  To be acceptable to the Authority and Purchaser, the
  survey must:
                           (i)  be acceptable to the title company
  selected by the Purchaser and Leaseholder and approved by the
  Authority for purposes of issuing any policy of title insurance on
  the applicable portion of the Leased Tract;
                           (ii)  be prepared by a licensed state land
  surveyor or a registered professional land surveyor acceptable to
  the Authority;
                           (iii)  include the boundary of the
  Leaseholder's Leased Tract and any Undeveloped Strips being
  conveyed, which boundaries must be consistent with the master
  survey prepared on behalf of the Authority in conjunction with the
  sale of the Leased Tract to the Purchaser;
                           (iv)  include all improvements on the Leased
  Tract and indicate any encroachments across the applicable boundary
  lines or into the FERC Project Area or Buffer Zone; Leaseholder must
  provide evidence that any such encroachments across boundary lines
  or into the FERC Project Area or Buffer Zone have been cured by the
  Leaseholder (either by removal of such encroachment or by written
  agreement between the affected parties permitting such
  encroachment to continue) prior to the survey being deemed
  acceptable; and
                           (v)  be reviewed and approved by the
  Authority and Purchaser; the Authority, Purchaser, and their
  representatives or agents may perform an inspection of the
  applicable Leased Tract to verify the accuracy of the Survey and any
  encroachments thereon;
                     (D)  On or before Closing, the purchase and sale
  agreement between the Leaseholder and Purchaser and any earnest
  money that may be required pursuant to such agreement shall be
  timely delivered to a title company or escrow agent acceptable to
  the Authority and agreed to by Leaseholder and Purchaser in such
  agreement;
                     (E)  On or before Closing, Purchaser and
  Leaseholder shall complete all documentation necessary to
  effectuate transfer of the applicable Leased Tract from the
  Purchaser to the Leaseholder and deliver such completed and
  executed documents to the applicable escrow agent; and
                     (F)  Promptly after Closing, the deed and any
  other applicable documents effectuating transfer of such Leased
  Tract to the Leaseholder shall be recorded in the county records
  where the Leased Tract is located promptly after such escrow agent
  receives written notice from the Authority or title company or
  escrow agent facilitating the Closing of the Leased Tract from the
  Authority to Purchaser that such Closing has been completed and the
  necessary documents have been recorded pursuant to such Closing. In
  no event shall the deed or any other documents transferring the
  applicable portion of the Leased Tract to the Leaseholder be
  recorded prior to Closing.
               (3)  Closing shall occur no later than December 31,
  2010.  The Authority shall post on its website no later than thirty
  days after entering into a Contract for sale with Purchaser the
  effective date of such Contract and the anticipated date of
  Closing, which date shall be at least six (6) months from the
  effective date of the Contract. Any changes to the anticipated date
  of Closing shall also be posted on the Authority's website.  These
  dates shall be used to establish the time periods provided in
  Subdivision (2).
         (c)  Sale to Leaseholders.  This subsection shall only apply
  to, and be effective for, those portions of the Leased Tract (if
  any) for which Closing has not occurred on or before December 31,
  2010, pursuant to Subsection (b), in which case the effective date
  of this subsection shall be January 1, 2011.  Upon the effective
  date of this subsection, the Authority shall suspend any applicable
  sale efforts under Subsection (b) for a period of two years
  beginning on the effective date of this subsection and initiate a
  tract by tract sale of the Leased Tract to the then-current
  Leaseholders as follows:
               (1)  For a period of two years beginning on the
  effective date of this subsection and in accordance with the
  procedures set forth in this subsection, and subject to Subsections
  (d), (e), (f), (g), (h), and (i), the Authority shall provide
  Leaseholders the opportunity to purchase their individual Leased
  Tracts directly from the Authority. Leaseholders shall have until
  the expiration of such two-year period to submit a completed
  application of intent to purchase their individual Leased Tracts as
  provided by Subdivision (4).
               (2)  The Authority shall determine if, and how, any
  Undeveloped Strips will be divided between adjacent Leaseholders
  and incorporated into any individual Leased Tract; provided,
  however, Leaseholders shall not be required to accept any such
  Undeveloped Strips.
               (3)  On or before the effective date of this
  subsection, the Authority shall make available to the Leaseholders
  a form for an application of intent to purchase the Leaseholder's
  individual Leased Tract. Such application shall be deemed a
  contract subject to the provisions set out herein.  The application
  of intent shall provide the Leaseholder a 30-day feasibility period
  beginning on the date such application is submitted in which the
  Leaseholder can determine the feasibility of purchasing the
  applicable individual Leased Tract, including the ability of such
  Leaseholder to obtain financing for such purchase.
               (4)  A Leaseholder who desires to purchase such
  Leaseholder's individual Leased Tract must submit a completed
  application to the Authority on or before December 31, 2012.  An
  application will be deemed "complete" upon the following:
                     (A)  Leaseholder delivers to the Authority an
  executed application of intent to purchase with all required
  information included in the application;
                     (B)  Leaseholder delivers an earnest money
  deposit, in good funds acceptable to the title company or escrow
  agent selected by the Authority, in the amount of $1,000 to such
  title company or escrow agent, which earnest money shall be
  nonrefundable after the expiration of the feasibility period except
  in the event closing does not occur due to the fault of the
  Authority;
                     (C)  any and all rent and other fees or amounts due
  to the Authority pursuant to such Leaseholder's Ground Lease have
  been paid and there are no amounts then outstanding which are past
  due;
                     (D)  Leaseholder has delivered to the Authority a
  survey that is acceptable to the Authority of the applicable Leased
  Tract (and any Undeveloped Strips being included in such Leased
  Tract). To be acceptable to the Authority, the survey must:
                           (i)  be acceptable to the title company
  selected by the Authority for purposes of issuing any policy of
  title insurance on the applicable portion of the Leased Tract;
                           (ii)  be prepared by a licensed state land
  surveyor or a registered professional land surveyor acceptable to
  the Authority;
                           (iii)  include the boundary of the
  Leaseholder's Leased Tract and any Undeveloped Strips being
  conveyed, which boundaries must be consistent with the master
  survey of the Leased Tract prepared on behalf of the Authority;
                           (iv)  include all improvements on the Leased
  Tract and indicate any encroachments across the applicable boundary
  lines or into the FERC Project Area or Buffer Zone; Leaseholder must
  provide evidence that any such encroachments across boundary lines
  or into the FERC Project Area or Buffer Zone have been cured by the
  Leaseholder (either by removal of such encroachment or by written
  agreement between the affected parties permitting such
  encroachment to continue) prior to the survey being deemed
  acceptable; and
                           (v)  be reviewed and approved by the
  Authority; the Authority or its representatives or agents may
  perform an inspection of the Leased Tract to verify the accuracy of
  the Survey and any encroachments thereon.
                     (E)  Leaseholder has delivered to the Authority a
  title commitment and, if requested by the Authority, any exception
  documents referenced therein, prepared by the applicable title
  company or escrow agent selected by the Authority; and
                     (F)  Leaseholder has delivered to the Authority
  written evidence from Leaseholder's lender or financial
  institution that Leaseholder has the financing or funds available,
  as applicable, to complete the purchase of Leaseholder's Leased
  Tract.
               (5)  Completed applications that are timely delivered
  will be accepted and processed by the Authority in the order in
  which they are received; except that the Authority shall give
  preference in processing applications to Leaseholders who receive
  an ad valorem tax exemption under Section 11.13, Tax Code, for a
  structure on the Leaseholder's Leased Tract.
               (6)  A Leased Tract sold under this subsection shall be
  sold for 90% of the land only assessed value without any exemptions,
  as determined by the appraisal district, for the year in which the
  Leaseholder's application of intent to purchase is submitted to the
  Authority, or for the year 2008, whichever is greater.
               (7)  The Leaseholder purchasing such Leaseholder's
  Leased Tract is responsible for:
                     (A)  timely paying all rent and other fees or
  amounts due to the Authority pursuant to such Leaseholder's Ground
  Lease through the date of closing on the Leaseholder's portion of
  the Leased Tract;
                     (B)  obtaining and delivering to the Authority a
  survey of the applicable Leased Tract in accordance with
  Subdivision (4)(D) and curing any encroachments shown thereon, all
  at Leaseholder's expense;
                     (C)  obtaining and delivering to the Authority, at
  such Leaseholder's expense, a title commitment in accordance with
  Subdivision (4)(E); the Authority may, but shall have no obligation
  to, cure any objections that Leaseholder may have to the
  exceptions, covenants, easements, reservations or any other items
  reflected on the title commitment; provided, however, that the
  Authority shall use good faith efforts to address and/or remove
  those requirements or exceptions shown on Schedule C of the title
  commitment that are applicable to or created by the Authority, and,
  notwithstanding the foregoing, the Authority shall have no
  obligation to cure any exceptions on the attached Schedule C
  regarding legal right of access to or from the applicable Leased
  Tract;
                     (D)  delivering to the applicable title company or
  escrow agent on or before closing on the Leaseholder's Leased
  Tract, in good funds, the purchase price and all reasonable,
  normal, customary, and documented costs associated with the
  transfer of the individual Leased Tract to the Leaseholder
  including, without limitation, all escrow fees, recording fees,
  taxes on the land after the date of such closing, document
  preparation fees, the cost of any Title Policy (including any
  endorsements thereon) obtained by Leaseholder, and any costs
  associated with removing any liens on the applicable Leased Tract;
  and
                     (E)  timely delivering to the escrow agent any
  notices, statements, affidavits, or other documents required by the
  application, escrow agent, or at law to effectuate the transfer of
  the applicable Leased Tract to the Leaseholder.
               (8)  For those completed applications of intent to
  purchase timely delivered to the Authority under this subsection,
  the purchase must be completed no later than June 30, 2013. For any
  individual Leased Tracts for which closing has not occurred by such
  date, the application shall be deemed terminated.  The Authority
  shall not accept any applications of intent to purchase after
  December 31, 2012; and any applications of intent to purchase that
  are delivered to the Authority prior to such date but that are not
  "complete" as of such date in accordance with Subdivision (4) shall
  be rejected by the Authority. Leaseholders submitting an
  application of intent to purchase their individual Leased Tracts
  are responsible for ensuring that such application is deemed
  "complete" on or before December 31, 2012.
               (9)  Any Ground Lease that would otherwise expire shall
  be automatically extended as necessary for one year terms to permit
  such Leaseholder the full two-year period to deliver such
  application of intent to purchase such Leaseholder's individual
  Leased Tract and to complete such transaction no later than June 30,
  2013.
               (10)  The Owner of a Tract sold under this subsection
  shall pay the Authority any reasonable fees set by the Authority for
  any services the Owner accepts from the Authority. However, the
  Owner of a Tract is under no obligation to accept services from the
  Authority.
               (11)  Any Tract subject to the Ranch Agreement shall
  only be subject to sale under this subsection if the Authority is
  released from its obligations under the Ranch Agreement relating to
  such Tract.
               (12)  The following laws do not apply to sale of an
  individual Leased Tract under this subsection:
                     (A)  Chapter 272, Local Government Code;
                     (B)  Section 49.226, Water Code; and
                     (C)  Section 8502.013 of this code.
               (13)  A provision that applies to the Leaseholder of a
  Leased Tract under this section applies to any subsequent Owner of
  the Leased Tract.
               (14)  At closing on the individual Leased Tract, the
  Leaseholder shall pay any indebtedness secured by a lien on the
  Leaseholder's leasehold estate (including the Buffer Zone, whether
  or not included as part of the Leased Tract pursuant to Subsection
  (e)) or deliver the express written consent of the Lienholder on the
  leasehold estate in the Leased Tract permitting the Leaseholder to
  grant a purchase money lien on the fee simple estate in the Leased
  Tract.
               (15)  At the closing of the applicable Leased Tract,
  the Authority will deliver a special warranty deed.
               (16)  For any portion of the Leased Tract that has not
  been sold pursuant to this subsection on or before June 30, 2013,
  the Board shall sell any such remaining portion of the Leased Tract
  pursuant to terms and conditions determined by such Board.
         (d)  Restrictions on Leased Tract.  The Leased Tract (or any
  portion thereof) sold in accordance with Subsection (b) or (c)
  shall be subject to the following Restrictions, which shall be
  included, in substance, in a Declaration of Restrictive Covenants,
  Easements, and Conditions to be prepared by the Authority
  substantively in accordance with the following and recorded by the
  Authority, as declarant, in the applicable county records prior to
  any sale pursuant to Subsection (b) or (c):
               (1)  Subject to Subdivision (10), no Owner, Purchaser,
  or Leaseholder may forbid, restrict, or take any action which
  effectively forbids or restricts the public from using the FERC
  Project Area and the adjacent areas of the Lake in accordance with
  the terms of the FERC License.
               (2)  Each Owner, Purchaser, and Leaseholder shall agree
  to not block, restrict, or otherwise prohibit access over, through,
  or across any Road and further agrees that such Roads or portion
  thereof shall remain open for use by the Authority, other Owners or
  Purchasers, lessees of any portion of the Property (including
  Leaseholders) and the general public. Except for (i) those portions
  of the Property that are accessible by water only as of the
  effective date of the Restrictions, and/or (ii) restrictions of
  access existing as of the effective date of the Restrictions (e.g.,
  access to and from public roads that requires traversing real
  property not owned by the Authority, Owners, or Purchasers
  hereunder), and/or (iii) the covenants and restrictions of the
  Ranch Declarations (to the extent applicable to the Roads) or other
  restrictive covenants existing prior to the date the Restrictions
  are recorded of record, no Owner, Purchaser, or Leaseholder shall
  be permitted to block, restrict, or otherwise prohibit access on,
  over, or across the Roads.
               (3)  The Driveways are not part of the Roads and shall
  be maintained by the Owner, Purchaser, or Leaseholder of the
  applicable Driveways. No Owner, Purchaser, or Leaseholder shall
  obstruct, prevent, or otherwise restrict access on, over or across
  any portion of a common Driveway by any such other Owner, Purchaser,
  or Leaseholder, or their guests or invitees, whose portion of the
  Property is served by such common Driveway. Owners, Purchasers,
  and/or Leaseholders whose portion of the Property is served by a
  common Driveway shall at all times have a nonexclusive right of
  ingress and egress over and across such common Driveway to access
  their portion of the Property.
               (4)  All grants and dedications of easements,
  rights-of-way, restrictions, and related rights affecting the
  Leased Tract, made prior to the Leased Tract becoming subject to the
  Restrictions that are of record, or visible or apparent, shall be
  incorporated into such Restrictions by reference and made a part of
  the Restrictions for all purposes as if fully set forth therein and
  shall be construed as being adopted in each and every contract,
  deed, or conveyance executed or to be executed by or on behalf of
  the Authority conveying any part of the Leased Tract.  The foregoing
  adoption of such easements includes, without limitation, any and
  all written easements or agreements, whether or not recorded,
  between the Authority and any other party for the installation,
  maintenance, repair, or replacement of utility lines located on,
  above, over, under, or beneath the Property.
               (5)  The Authority shall reserve for itself and its
  successors, assigns, and designees the nonexclusive right and
  easement, but not the obligation, to enter upon the Property, the
  Lake and other bodies of water, if any, located within the Property
  (a) to install, keep, maintain, and replace pumps in order to obtain
  water for the irrigation of any portion of the Authority Land, (b)
  to construct, maintain, replace, and repair any wall, dam, or other
  structure retaining water therein, (c) to access, construct,
  maintain, replace, and repair any measurement stations, monuments,
  or other similar improvements, (d) to remove trash and other
  debris, and (e) to fulfill the Authority's obligations as a river
  authority and any obligations set forth in the FERC License, state
  water rights, or other governmental regulations.  The Authority and
  its designees shall have an access easement through, over, and
  across any portion of the Leased Tract to the extent reasonably
  necessary to exercise the rights and responsibilities under this
  subdivision; provided, however, that (i) the Authority shall
  provide written notice at least 48 hours in advance of such entry to
  the Purchaser or Owner of such portion of the Leased Tract (except
  in the event of an emergency, in which case advance notice shall not
  be required, but the Authority shall provide such written notice as
  soon as practicable thereafter); (ii) the Authority shall promptly
  repair any damage to the portion of the Leased Tract caused by the
  Authority's entrance onto such Owner's or Purchaser's portion of the
  Leased Tract; and (iii) the Authority shall use reasonable efforts
  to avoid interfering with the Owner's or Purchaser's use of the
  portion of the Leased Tract.
               (6)  The Authority shall reserve for itself and its
  successors, assigns, and designees a perpetual right, power,
  privilege, and easement to occasionally overflow, flood, and
  submerge that portion of the Property located at or below the
  elevation contour of 1015' above mean sea level in connection with
  the Authority's operation and maintenance of the Lake.  The
  Authority shall have no liability to any Owner, Purchaser,
  Leaseholder, or any other person for any damages, claims, costs,
  injuries, or liabilities to any person or the Property or any
  improvements thereon that are caused by or arise from any act or
  omission by the Authority in connection with the foregoing right
  and easement.
               (7)  Additional land may be included in the Property or
  Leased Tract at any time by the Authority, as long as the Authority
  owns any portion of the Property, by recording an amendment to these
  Restrictions in each of the counties in which the Property is
  located. Upon such additions, the Restrictions shall apply to the
  added land and the rights, privileges, duties, and liabilities of
  the Owners or Purchasers subject to the Restrictions shall be the
  same with respect to the added land as with respect to the Property
  originally covered by the Restrictions. As additional lands are
  added hereto, the Authority shall, with respect to said land,
  record amendments that may incorporate the Restrictions therein by
  reference and that may supplement or modify the Restrictions with
  such additional covenants, restrictions, and conditions that may be
  appropriate for those added lands.
               (8)  The Restrictions may not be modified in any
  respect whatsoever or terminated, in whole or in part, except with
  the consent of (i) the Owners or Purchasers of at least sixty
  percent (60%) of the individual lots that comprise the Residential
  Leased Land and Commercial Leased Land, and (ii) the Owners or
  Purchasers of at least sixty percent (60%) of the land area of the
  Authority Land, and (iii) the Authority, for so long as the
  Authority has any interest in the Property, whether as an Owner or
  holder of the FERC License or otherwise. Notwithstanding the
  foregoing, the Authority, without the joinder of any other party,
  shall have the absolute right to make minor changes or amendments to
  the Restrictions to correct or clarify errors, omissions, mistakes,
  or ambiguities contained therein. No amendment shall be effective
  until such amendment has been recorded in the Official Public
  Records of each of the counties in which the Property is located.
               (9)  No improvements (except as specifically set forth
  in Subdivision (11)) shall be constructed or located on the Leased
  Tract within twenty-five feet (25') landward measured horizontally
  from the 1000' contour line of the Lake, a meander line that changes
  over time due to natural forces, such as erosion and accretion;
  provided, however, this restriction shall not include improvements
  inside this setback that are existing at the time the Restrictions
  are filed that (i) have been approved in writing by the Authority,
  and (ii) if such improvements are located within the FERC Project
  Area, have been approved by the Federal Energy Regulatory
  Commission (and to the extent not already approved by the Federal
  Energy Regulatory Commission, the Authority intends to file an
  application to obtain permission for the existing encroachments
  into the FERC Project Area to remain in place). In addition, no
  improvements on the Leased Tract (or any portion thereof) shall be
  constructed or located within five feet (5') of any other boundary
  line (i.e., the side and back boundary lines), other than fences;
  provided, however, this restriction shall not include improvements
  located within this 5' setback that are existing at the time the
  Restrictions are filed and that have been approved in writing by the
  Authority.
               (10)  No Owner, Purchaser, or Leaseholder shall have
  any rights to construct any improvements or fencing that block or
  restrict access to the FERC Project Area, except with the written
  consent of the Authority, to be granted or withheld in its sole
  discretion, and except in compliance with the FERC License. This
  limitation does not apply to fences located within the Leased Tract
  and outside the FERC Project Area.
               (11)  Erosion control improvements (such as retaining
  walls, rip rap, etc.) and landscape planting may not be constructed
  or located within the FERC Project Area or at or below the 1000'
  contour line without the prior written approval of the Authority.
  Such improvements shall be subject to the terms and conditions set
  forth in the Restrictions, in the FERC License, in any other Federal
  Energy Regulatory Commission rules and regulations, and in the
  Authority's regulations, including without limitation, the
  Shoreline Management Plan.
               (12)  No Owner, Purchaser, or Leaseholder shall have
  the right to place, or permit to be placed, any advertisements,
  private notices, signs, or billboards on the Leased Tract except
  that temporary signage customarily found on residential property
  may be placed on the Residential Leased Land at the reasonable
  discretion of the Owner, Purchaser, and/or Leaseholder of that
  portion of the Residential Leased Land.
               (13)  No activities shall be conducted on the Leased
  Tract and no improvements constructed on the Leased Tract that are
  or might be unsafe or hazardous to any person or property.
               (14)  No Owner, Purchaser, Leaseholder, or occupant of
  any portion of the Leased Tract shall use or permit the use,
  handling, generation, storage, release, disposal, or
  transportation of Hazardous Materials on, about, or under the
  Leased Tract except for such quantities that are routinely utilized
  in connection with residential use (for all portions of the Leased
  Tract except the Commercial Leased Land) or for commercial uses
  that are in compliance with the Restrictions (for the Commercial
  Leased Land), and that are stored, used, and disposed of in
  compliance with all Environmental Laws. Each Owner, Purchaser, and
  Leaseholder shall indemnify, defend, protect, and save the
  Authority, its successors and assigns, trustees, directors,
  employees, and officers and each other Owner, Purchaser, and
  Leaseholder, harmless from and against, and shall reimburse such
  indemnified parties for, all liabilities, obligations, losses,
  claims, damages, fines, penalties, costs, charges, judgments, and
  expenses, including, without limitation, reasonable attorneys'
  fees and expenses that may be imposed upon or incurred or paid by or
  asserted against such indemnified parties by reason of or in
  connection with such Owner's, Purchaser's, or Leaseholder's failure
  to comply with this subdivision.
               (15)  No Owner or Purchaser shall conduct, or permit to
  be conducted, any activity on the Leased Tract that is improper,
  immoral, noxious, annoying, creates a nuisance, or is otherwise
  objectionable to other Owners or Purchasers or incompatible with
  the recreational use of the Lake and the FERC Project Area.
               (16)  The Residential Leased Land (and any Undeveloped
  Strips that are conveyed to an Owner or Purchaser as part of the
  Residential Leased Land pursuant to Subsection (b) or (c)) shall be
  improved and used solely for single-family residential use,
  inclusive of a garage, fencing, and other such related improvements
  as are necessary or customarily incident to normal residential use
  and enjoyment and for no other use. No portion of the Residential
  Leased Land (and any Undeveloped Strips that are conveyed to an
  Owner or Purchaser as part of the Residential Leased Land pursuant
  to Subsection (b) or (c)) shall be used for manufacturing,
  industrial, business, commercial, institutional, or other
  nonresidential purpose, save and except as set forth in Subdivision
  (17). Notwithstanding the foregoing, Owners, Purchasers, and/or
  Leaseholders shall be permitted to conduct a "garage sale" on their
  respective portion of the Residential Leased Land (and any
  Undeveloped Strips that are conveyed to an Owner or Purchaser as
  part of the Residential Leased Land pursuant to either Subsection
  (b) or (c)) not more than one time per calendar year.
               (17)  No professional, business, or commercial
  activity to which the general public is invited shall be conducted
  on the Residential Leased Land (and any Undeveloped Strips that are
  conveyed to an Owner or Purchaser as part of the Residential Leased
  Land pursuant to Subsection (b) or (c)); except an Owner,
  Purchaser, Leaseholder, or occupant of a residence may conduct
  business activities within a residence so long as: (a) the
  existence or operation of the business activity is not apparent or
  detectable by sight, sound, or smell from outside the residence;
  (b) the business activity conforms to all zoning requirements; (c)
  the business activity does not involve door-to-door solicitation of
  residents, lessees, Leaseholders, Owners, or Purchasers within the
  Property; (d) the business does not generate a level of vehicular or
  pedestrian traffic or a number of vehicles parked within the
  Property that is noticeably greater than that which is typical of
  residences in which no business activity is being conducted; and
  (e) the business activity is consistent with the residential
  character of the Residential Leased Land and does not constitute a
  nuisance, or a hazardous or offensive use, or threaten the security
  or safety of other residents, lessees, Owners, Purchasers, or
  Leaseholders of the Property.  The terms "business" and "trade", as
  used in this provision, shall be construed to have their ordinary,
  generally accepted meanings and shall include, without limitation,
  any occupation, work, or activity undertaken on an ongoing basis
  that involves the provision of goods or services to persons other
  than the provider's family and for which the provider receives a
  fee, compensation, or other form of consideration, regardless of
  whether: (x) such activity is engaged in full or part-time; (y) such
  activity is intended to or does generate a profit; or (z) a license
  is required. Leasing of a residence shall not be considered a
  business or trade within the meaning of this subsection. This
  subdivision shall not apply to any activity conducted by the
  Authority.
               (18)  Except as may be otherwise provided in the
  Restrictions, Commercial Leased Land (and any Undeveloped Strips
  that are conveyed to an Owner or Purchaser as part of the Commercial
  Leased Land pursuant to Subsection (b) or (c)) may be improved and
  used for any lawful commercial purpose, including without
  limitation, nonprofit organizations or governmental or
  quasi-governmental agencies.
               (19)  No portion of the Leased Tract may be used for the
  commercial testing or development of wind power, or to produce,
  lease, store, and/or transmit electrical power generated thereby
  for commercial or resale purposes.
               (20)  Each Owner or Purchaser shall keep, or cause to be
  kept, all improvements located on its respective portion of the
  Leased Tract maintained in good condition and repair, clean and
  free of rubbish and other hazards, and otherwise in full accordance
  with the Restrictions and all governmental rules, regulations,
  codes, and zoning requirements. Such maintenance shall include, but
  not be limited to, the following: regular and timely removal of all
  litter, garbage, trash, and waste; regular lawn mowing; tree,
  shrub, and plant pruning and trimming; watering of landscaped
  areas; weed control; pest control; maintaining exterior lighting
  and mechanical facilities in good working order; keeping walks and
  driveways clean and in good repair; and the repairing and
  repainting of the exterior improvements visible to neighboring
  properties and/or public view.
               (21)  In the event of any damage to or destruction of
  any building or improvement on any portion of the Leased Tract from
  any cause whatsoever, the Owner, Purchaser, or Leaseholder upon
  whose portion of the Leased Tract the casualty occurred shall, at
  such Owner's, Purchaser's, or Leaseholder's sole option, either (i)
  repair, restore, or rebuild and complete the same with reasonable
  diligence, (ii) clear the affected area of all hazardous or
  dangerous debris and structures and lawfully dispose of same within
  one year from the date of casualty, or (iii) effectuate any
  combination of clauses (i) and (ii) of this subdivision as such
  Owner, Purchaser, or Leaseholder may deem reasonably appropriate.  
  Notwithstanding the foregoing, in the event the Owner, Purchaser,
  or Leaseholder elects to rebuild buildings or improvements that
  were located within the FERC Project Area or within twenty-five
  feet (25') landward measured horizontally from the 1000' contour
  line that were approved in accordance with Subdivision (9), such
  buildings or improvements shall be rebuilt in accordance with
  Subdivision (24).
               (22)  The Texas Commission on Environmental Quality has
  adopted rules governing on-site sewage facilities (also called
  septic systems).  The Authority is the commission's authorized
  agent for the septic system licensing program, including the
  enforcement of the commission's septic system rules and regulations
  for the Property.  The Authority, as the agent for the commission,
  shall have the authority to access the Property for the purpose of
  issuing such licenses, inspecting such septic systems, and
  enforcing any and all rules and regulations related thereto.  Each
  Owner, Purchaser, and Leaseholder agrees to comply with all
  sanitary regulations and the licensing process adopted by the
  commission and enforced by the Authority, as its agent, from time to
  time.
               (23)  The Owner or Purchaser shall be responsible, at
  such Owner's or Purchaser's expense, for providing for the
  collection, removal, and disposal of all solid waste on the Leased
  Tract; or the Owner or Purchaser of any portion of the Leased Tract
  shall be responsible for ensuring that the Leaseholders provide for
  such collection, removal, and disposal of all solid waste on the
  applicable portion of the Leased Tract. In the event the Ranch fails
  to provide for the collection, removal, and disposal of all solid
  waste related to the Ranch, the Owner or Purchaser shall be
  responsible for providing for the same.
               (24)  (i) An Owner, Purchaser, or Leaseholder, subject
  to approval by the Federal Energy Regulatory Commission, may
  repair, alter, or rebuild improvements located within the FERC
  Project Area, which improvements were previously approved in
  accordance with Subdivision (9); provided, however, such repairs,
  alterations, and/or rebuilding shall not extend beyond the
  footprint of the existing or previously existing improvement.
                     (ii)  An Owner, Purchaser, or Leaseholder may
  repair, alter, or rebuild improvements located outside the FERC
  Project Area but within 25' landward measured horizontally from the
  1000' contour line, and/or improvements located within the 5'
  boundary setback, which improvements were previously approved in
  accordance with Subdivision (9). Such repairs, alterations, or
  rebuilding may extend such improvements outside the previously
  existing footprint towards the side boundaries and back boundary of
  the applicable Leased Tract, but such improvements may not be
  extended towards the shoreline or encroach closer to the 1000'
  contour line of the Lake than the existing or previously existing
  improvements.
               (25)  The Authority shall reserve its rights, title,
  and interest in all oil, gas, and other minerals in and under any
  and all Property, including the Leased Tract.
               (26)  No land within the FERC Project Area shall be
  improved, used, or occupied, except in such manner as shall have
  been approved by the Authority and, to the extent required, by the
  Federal Energy Regulatory Commission. No docks, piers, on-water
  facilities, retaining walls, or any other structures or facilities
  shall be built, installed, or maintained in, on, or over the waters
  of the Lake or within the FERC Project Area except as authorized by
  the Authority. All such structures or facilities shall be subject
  to all rules and regulations applicable to the Lake and the FERC
  Project Area, as the same may be adopted or amended from time to
  time. Owner, Purchaser, and/or the Leaseholder shall be responsible
  for any fees or annual charges assessed by the Authority and/or the
  Federal Energy Regulatory Commission for such permit or
  improvements and shall be responsible for ensuring that any such
  improvements are consistent with the FERC License, Shoreline
  Management Plan, and all other rules and regulations applicable to
  the FERC Project Area. Owner or Purchaser shall not, at any time,
  permit any liens to encumber the FERC Project Area.
               (27)  No use of the Lake or other bodies of water within
  the Property, if any, shall be made except in accordance with the
  FERC License, the Shoreline Management Plan, the Authority's
  regulations, and any other rules and regulations that may be
  promulgated by the Federal Energy Regulatory Commission and/or the
  Authority at any time and as amended from time to time. Any such use
  shall be subject to the Authority's and the Federal Energy
  Regulatory Commission's superior use rights.  The Authority shall
  not be responsible for any loss, damage, or injury to any person or
  property arising out of the authorized or unauthorized use of the
  Lake or other bodies of water within or adjacent to the Property.
               (28)  The Authority may use and regulate the Lake or
  other bodies of water within the Property for the irrigation of the
  Authority Land, or for any other purpose deemed appropriate by the
  Authority, subject to the rights and authority of the Federal
  Energy Regulatory Commission or other governmental entity having
  jurisdiction of such areas, and subject to the water rights granted
  (or which may be granted) to the Authority by the State of Texas.  
  The Authority's rights under this subdivision shall be superior to
  any rights of any Owner, Purchaser, or Leaseholder.  This
  subdivision shall not be construed to limit or restrict the rights
  and authority of the Federal Energy Regulatory Commission or other
  governmental entity having jurisdiction of the Property.
               (29)  Owners or Purchasers must obtain written
  permission from the Authority in accordance with the Authority's
  regulations to use or divert water from the Lake on any portion of
  the Leased Tract for domestic or commercial purposes.
               (30)  No Owner, Purchaser, or Leaseholder shall be
  permitted to divert or alter the natural drainage of the terrain or
  clear vegetation on any portion of the Property in such a manner
  that would cause unnatural erosion or silting of the Lake.
               (31)  Owners, Purchasers, and Leaseholders shall take
  all reasonable precautions to ensure that all use of and activities
  on the Leased Tract and the FERC Project Area, including without
  limitation, the construction, operation, and maintenance of any
  improvements on the Leased Tract, and/or FERC Project Area occur in
  a manner that is in compliance with the FERC License and that will
  protect the scenic, recreational, and environmental values of the
  Lake.  The Authority, as a licensee of the Federal Energy Regulatory
  Commission, has specific approval authority on any proposed
  construction that impacts the FERC Project Area or lakebed, and
  Owner, Purchaser, and Leaseholder shall comply with the approval
  process as may be established by the Authority and/or the Federal
  Energy Regulatory Commission from time to time.
               (32)  Structures in place within the FERC Project Area
  shall be subject to the FERC License, as the same may be amended
  and/or renewed from time to time. Any structures erected in the FERC
  Project Area after May 15, 1980 (the date of the amendment to the
  previous FERC License) may be required to be removed at the expense
  of the owner of the improvement, unless such improvements are
  approved in writing by the Authority in accordance with the FERC
  License.  In no event shall this subdivision grant any
  authorization for a violation of any rules or regulations of the
  Authority, the FERC License, or any state, federal, or local law.
               (33)  The Owner, Purchaser, and Leaseholder of any
  portion of the Leased Tract shall comply with all of the following
  rules and regulations:
                     (A)  the Shoreline Management Plan and any
  amendments or revisions to that document to the extent such
  Shoreline Management Plan applies to the Owner's, Purchaser's,
  and/or Leaseholder's portion of the Leased Tract;
                     (B)  the applicable rules, regulations, and order
  of the Federal Energy Regulatory Commission including, without
  limitation the FERC License;
                     (C)  the Authority's "Regulations for Governance
  for Brazos River Authority Lakes and Associated Lands," as
  published on the Authority's Internet website; and
                     (D)  other rules and regulations adopted by the
  Authority regarding conduct on and use of the Lake or the Property.
               (34)  By Texas statute, the Authority is empowered to
  adopt and has adopted certain regulations governing conduct on and
  use of the Property within the FERC Project Area and Lake.  Owners,
  Purchasers, Leaseholders, and persons using the Leased Tract with
  such Owners' or Purchasers' consent shall abide by all such rules
  and regulations adopted from time to time by the Authority and any
  future revisions and amendments thereto.
               (35)  Owners, Purchasers, and Leaseholders of that
  portion of the Leased Tract that is part of the Ranch shall comply
  with the terms and conditions of the Ranch Agreement and the
  covenants and restrictions set forth in the Ranch Declarations, to
  the extent applicable to such portion of the Leased Tract. As to
  that portion of the Property that is part of the Ranch, the Ranch
  Declarations shall control in the event of any conflict between the
  covenants, restrictions, and conditions set forth in the Ranch
  Declarations and the Restrictions.
               (36)  In order to maintain the quality of the Lake's
  water, the stability of the shoreline, and of the environment in the
  Lake's vicinity, each Owner, Purchaser, and Leaseholder of all or
  any portion of the Leased Tract agrees to:
                     (A)  comply with any local, state, or federal laws
  related to water quality or the environment, including laws
  governing toxic wastes and hazardous substances;
                     (B)  if the Owner's or Purchaser's private on-site
  sewerage facility is not licensed by the Texas Commission on
  Environmental Quality (or any successor to such Commission) then
  the Owner, Purchaser, or Leaseholder shall connect to and use, at
  the Owner's, Purchaser's, or Leaseholder's expense, as applicable,
  any wastewater treatment system or service that becomes available
  to the Owner's or Purchaser's portion of the Leased Tract, not later
  than twelve (12) months after the system or service becomes
  available to such portion of the Leased Tract and thereafter
  discontinue use of any private on-site sewerage facility; and if,
  at any time after a wastewater treatment system or service becomes
  available to the Owner's or Purchaser's portion of the Leased Tract,
  the Owner's or Purchaser's private on-site sewerage facility
  (whether licensed or not) requires either replacement or an
  alteration or change in the on-site sewerage facility resulting in
  (i) an increase in the volume of permitted flow, (ii) a change in
  the nature of permitted influent, (iii) a change from the planning
  materials approved by the permitting authority, (iv) a change in
  construction, and/or (v) an increase, lengthening, or expansion of
  the treatment or disposal system, then such Owner or Purchaser
  shall promptly connect to and use, at the Owner's, Purchaser's, or
  Leaseholder's expense, as applicable, such wastewater treatment
  system or service and thereafter discontinue use of any private
  on-site sewerage facility. Notwithstanding the foregoing, in the
  event a property owners association or municipality requires the
  Owners or Purchasers of the portion of the Leased Tract that is
  included in such association or municipality to connect to a
  wastewater system or service, then such association or municipality
  rules shall control;
                     (C)  obtain written consent of the Authority prior
  to diverting or pumping water from the Lake or any body of water
  within or adjacent to the Property, constructing or erecting any
  embankment or retaining wall, or commencing any dredging activity;
  and
                     (D)  pay to the Authority any reasonable fee
  related thereto (e.g., water usage, recreational user, dredging, or
  retaining wall fees) as may be adopted from time to time by the
  Authority.
               (37)  Each Owner or Purchaser of all or any portion of
  the Leased Tract agrees and acknowledges that the water level in the
  Lake varies and that the Authority is not responsible for
  maintaining the Lake at any certain level or above or below any
  certain level.
               (38)  The Authority is not responsible or liable for
  any personal injury or damage to any Owner, Purchaser, Leaseholder,
  the Leased Tract, the Property, or any improvements caused by any
  increase or decrease in the water level (even if such increase or
  decrease is due to modifications of the Morris Sheppard (Possum
  Kingdom) Dam or other actions or omissions of the Authority) or
  caused by natural flooding.
               (39)  The Authority shall reserve the right of ingress
  and egress for the Authority and any person authorized by the
  Authority, including an agent of the Authority or employees, over
  and across the Leased Tract and any and all on-water facilities
  whether located within the Leased Tract or FERC Project Area for all
  reasonable purposes of the Authority, including, without
  limitation, the construction, maintenance, repair, and/or
  replacements of any roads, drainage facilities, and power, water,
  wastewater, and other utility mains and lines that the Authority
  considers necessary or beneficial and for public safety, health,
  and welfare purposes; provided however, that:
                     (A)  the Authority shall provide written notice at
  least 48 hours in advance of such entry to the Purchaser or Owner of
  such portion of the Leased Tract (except in the event of an
  emergency, in which case advance notice shall not be required, but
  the Authority shall provide such written notice as soon as
  practicable thereafter), which notice shall state with reasonable
  specificity the purpose for such entry;
                     (B)  the Authority shall promptly repair any
  damage to the portion of the Leased Tract caused by the Authority's
  entrance onto such Owner's or Purchaser's portion of the Leased
  Tract; and
                     (C)  the Authority shall use reasonable efforts to
  avoid interfering with the Owner's or Purchaser's use of the portion
  of the Leased Tract.
               (40)  Each Owner, Purchaser, and Leaseholder shall
  comply strictly with the Restrictions, as the same may be amended
  from time to time. Failure to comply with the Restrictions shall
  constitute a violation of the Restrictions, and shall give rise to a
  cause of action to recover sums due for damages or injunctive relief
  or both, maintainable by the Authority or other Owners or
  Purchaser; provided however, no Owner, Purchaser, Leaseholder, or
  other person shall have any right of action against the Authority
  arising under the Restrictions.
               (41)  The Authority shall make no warranty or
  representation as to the present or future validity or
  enforceability of any such restrictive covenants, terms, or
  provisions. Any Owner, Purchaser, or Leaseholder acquiring or
  leasing, as applicable, any portion of the Property in reliance on
  one or more of the Restrictions shall assume all risks of the
  validity and enforceability thereof and, by acquiring such portion
  of the Property, agrees to hold the Authority harmless therefrom.
               (42)  If the Owner, Purchaser, or Leaseholder of any
  portion of the Leased Tracts or on-water facilities related thereto
  (including retaining walls) shall fail to comply with the
  requirements of the Restrictions, then the Authority shall have the
  right, but not the obligation, following thirty (30) days prior
  written notice to such defaulting owner to enter such defaulting
  owner's portion of the Leased Tract (but only if such failure to
  comply results in a public health, safety, or welfare concern)
  and/or such defaulting owner's on-water facility and cure such
  breach, the cost of which shall be reimbursed by such defaulting
  owner to the Authority upon demand. Any such unpaid amounts,
  together with interest thereon (at the rate of six percent (6%) per
  annum) and the costs of collection (if any), shall be charged as a
  continuing lien against such defaulting owner's portion of the
  Leased Tract, which lien shall be subordinate to the lien of any
  third-party deed of trust previously recorded against such
  defaulting owner's portion of the Leased Tract.
               (43)  A person shall be deemed to be in default of the
  Restrictions only upon the expiration of thirty (30) days (ten (10)
  days in the event of failure to pay money) from receipt of written
  notice from the Authority or other Owner or Purchaser specifying
  the particulars in which such person has failed to perform the
  obligations of the Restrictions unless such person, prior to the
  expiration of said thirty (30) days (ten (10) days in the event of
  failure to pay money), has rectified the particulars specified in
  said notice of default. However, such person shall not be deemed to
  be in default if such failure (except a failure to pay money) cannot
  be rectified within said thirty (30) day period and such person
  commences the cure of such default within such thirty (30) day
  period and thereafter is continuously using good faith and its best
  efforts to rectify the particulars specified in the notice of
  default.
               (44)  The Authority shall have the right, but not the
  obligation, to enforce all of the provisions of the Restrictions.
  Any Owner or Purchaser shall have the right to enforce all of the
  provisions of the Restrictions against any other Owner, Purchaser,
  or Leaseholder, but not against the Authority. Such right of
  enforcement shall include the right to sue for both damages for, and
  injunctive relief against, the breach of any such provision.
  Furthermore, the Authority shall have the right, when appropriate
  in its sole judgment and discretion, to claim or impose a lien upon
  any portion of the Leased Tract, or improvement constructed
  thereon, in order to enforce any right or effect compliance with the
  Restrictions.
               (45)  The failure of a person (including the Authority
  or any Owner or Purchaser) to insist upon strict performance of any
  of the Restrictions shall not be deemed a waiver of any rights or
  remedies that said person may have, and shall not be deemed a waiver
  of any subsequent breach or default in the performance of any of the
  Restrictions by the same or any other person.
               (46)  The Authority shall not be liable to any Owner,
  Purchaser, or Leaseholder, or to any other person for any loss,
  damage, or injury arising out of or in any way connected with the
  performance or nonperformance of the Authority's rights,
  obligations, or privileges under the Restrictions. Without
  limiting the foregoing, the Authority shall not be liable to any
  Owner, Purchaser, or Leaseholder due to the construction of any
  improvements within the Property.
               (47)  Each of the Restrictions on the Leased Tract
  shall be a burden on each portion of the Leased Tract, shall be
  appurtenant to and for the benefit of the other Property, other
  portions of the Leased Tract, and each part thereof, and shall run
  with the land.
               (48)  The Restrictions shall inure to the benefit of
  and be binding upon the Owners or Purchasers, their heirs,
  successors, assigns, and personal representatives, and upon any
  person acquiring all or any portion of the Leased Tract, or any
  interest therein, whether by operation of law or otherwise.
  Notwithstanding the foregoing, if any Owner or Purchaser sells or
  transfers all or any portion of such Owner's or Purchaser's interest
  in all or any portion of the Leased Tract, such Owner or Purchaser
  shall, upon the sale and conveyance of title, be released and
  discharged from all of its obligations as Owner or Purchaser in
  connection with the property sold by it arising under the
  Restrictions after the sale and conveyance of title but shall
  remain liable for all obligations arising under the Restrictions
  prior to the sale and conveyance of title.  The new Owner or
  Purchaser of all or any such portion of the Leased Tract,
  (including, without limitation, any Owner (or Lienholder) who
  acquires its interest by foreclosure, trustee's sale or otherwise)
  shall be liable for all obligations arising under the Restrictions
  with respect to such portion of the Leased Tract on and/or after the
  date of sale and conveyance of title.  The Authority may assign, in
  whole or in part, any of its privileges, exemptions, rights, and
  obligations (if any) under the Restrictions to any other person and
  may permit the participation, in whole or in part, by any other
  person in any of its privileges, exemptions, rights, and
  obligations (if any) hereunder.
               (49)  Except as provided in this subsection, the term
  of the Restrictions shall be for a period of fifty (50) years from
  the date such Restrictions are executed by the Authority.  
  Notwithstanding the foregoing, upon the expiration of such period,
  the term of the Restrictions shall automatically renew for
  successive periods of five (5) years each unless, at least ninety
  (90) days prior to the date of expiration of any period then in
  effect, (i) the Owners or Purchasers of at least sixty percent (60%)
  of the individual lots that comprise the Residential Leased Land
  and the Commercial Leased Land, (ii) the Owners or Purchasers of at
  least sixty percent (60%) of the land area of the Authority Land,
  and (iii) the Authority, for so long as the Authority has any
  interest in the Property, whether as an Owner or holder of the FERC
  License or otherwise, duly execute, acknowledge and record in the
  office of the recorder of the counties in which the Property is
  located a written termination notice, in which event, the
  Restrictions shall automatically expire at the end of the period
  then in effect.
         (e)  Buffer Zone. Notwithstanding any provision in this
  subsection to the contrary, a sale under Subsection (b) or (c) shall
  be subject to the following:
               (1)  If at the time Closing occurs under Subsection (b)
  or if at the time a Leaseholder completes the purchase of the
  applicable Leased Tract from the Authority pursuant to Subsection
  (c), as applicable, the Buffer Zone, or any portion thereof, has
  been removed from the FERC Project Area, the Leased Tract being
  conveyed shall include that portion of the Buffer Zone so removed;
  provided, however, the Purchaser and/or Owner, as applicable, shall
  grant the Authority access to the FERC Project Area and Lake to
  allow the Authority to fulfill its obligations as a River Authority
  and any obligations set forth in the FERC License, state water
  rights, or other governmental regulations.
               (2)  If at the time Closing occurs under Subsection
  (b), or if at the time a Leaseholder closes on the purchase of the
  applicable Leased Tract from the Authority pursuant to Subsection
  (c), as applicable, the Buffer Zone, or any portion thereof, has not
  been removed from the FERC Project Area and a portion of the Leased
  Tract is located within the Buffer Zone, the Authority shall
  provide such Purchaser and/or Owner, as applicable, a residual
  interest in that portion of the Buffer Zone adjacent to the Leased
  Tract and covered by the applicable residential Ground Lease, such
  residual interest to automatically vest upon satisfaction of either
  of the following conditions:
                     (A)  the Federal Energy Regulatory Commission
  approves an amendment to the FERC License removing the Buffer Zone
  from the boundaries prescribed by the FERC License such that the
  Buffer Zone is no longer subject to regulation by the Federal Energy
  Regulatory Commission; or
                     (B)  the FERC License expires (and is not renewed
  or extended) or is otherwise terminated and thus the Buffer Zone is
  no longer subject to regulation by the Federal Energy Regulatory
  Commission.
               (3)  Notwithstanding the foregoing, if such residual
  interest has not vested on or before August 31, 2040, then such
  residual interest shall be terminated and of no further force and
  effect.  Upon satisfaction of either of the foregoing conditions
  prior to August 31, 2040, this conveyance shall be automatically
  effective without necessity of further documentation.  From and
  after the date such conveyance becomes effective, the Buffer Zone
  shall be considered to be a part of the Leased Tract conveyed under
  Subsection (b) or (c) and the Purchaser or then current Owner of the
  applicable Leased Tract shall be the beneficiary of the residual
  interest created herein, but only as to the portion of the Buffer
  Zone located adjacent to the Purchaser's or Owner's property and all
  right, title, and interest in such adjacent portion of the Buffer
  Zone as measured by extending the boundary lines on both sides of
  the applicable portion of the Leased Tract in a straight line across
  the Buffer Zone to the then current 1000' contour line of the Lake,
  or, if such portion cannot reasonably be measured as set forth
  above, then as otherwise determined by the Authority. Such residual
  interest shall immediately vest in the Purchaser or then-current
  Owner of such adjacent Leased Tract without the necessity of any
  additional written conveyance.
               (4)  In the event a sale under Subsection (b) or (c)
  does not include the Buffer Zone or any portion thereof, or only
  includes a residual interest in the Buffer Zone or any portion
  thereof, then such Buffer Zone shall remain subject to the terms and
  conditions of the residential Ground Lease in effect between the
  Leaseholder and the Authority at the time Closing occurs under
  Subsection (b) or at the time the Leaseholder purchases the
  applicable Leased Tract under Subsection (c); provided, however, no
  rent shall be due the Authority under such Ground Lease for the
  Buffer Zone.  At such time as the applicable Ground Lease expires or
  is otherwise terminated, the Authority may, subject to approval of
  the Federal Energy Regulatory Commission, grant the Purchaser or
  the then-current Owner of the adjacent tract (as determined
  pursuant to the method set forth in Subdivision (2)(B)), an
  easement for use of such portion of the Buffer Zone, which easement
  shall be subject to the FERC License.  The Authority shall retain
  ownership of such portion of the Buffer Zone and exercise control
  over such portion of the Buffer Zone consistent with the FERC
  License and this subsection.  The easement granted to such Owner
  shall be limited to uses permitted under the terms of the FERC
  License and the Authority's Shoreline Management Plan, and any
  other Authority rules and regulations as may be adopted from time to
  time.
         (f)  Purchase Price.  For purposes of determining the
  purchase price and/or lease rate pursuant to the options set forth
  in Subsection (b)(1) or the purchase price in Subsection (c), in the
  event the appraisal district does not provide an assessed value for
  the applicable portion of the Leased Tract for the applicable year,
  then the land only assessed value without any exemptions for the
  applicable portion of the Leased Tract shall be calculated based on
  the assessed value per square foot of comparable lots with similar
  physical characteristics in the applicable county or adjoining
  counties, as determined by the Authority.
         (g)  Roads.  Authority or Purchaser, whichever is
  applicable, shall transfer its interest in the Roads to the
  applicable county in which the Roads, or any portion thereof, are
  situated as follows:
               (1)  All Roads located in Stephens County
  (approximately three miles of Roads) shall be transferred to
  Stephens County on or before December 31, 2011.
               (2)  All Roads located in Palo Pinto County
  (approximately forty-six miles of Roads) shall be transferred to
  Palo Pinto County in twenty percent increments of the total mileage
  per year for five consecutive years.  The first twenty percent
  increment shall be transferred on or before December 31, 2011, and
  each remaining twenty percent increment shall be transferred on or
  before December 31 of each subsequent year, but not before January 1
  of such year unless approved by an order or resolution of the Palo
  Pinto County Commissioners Court, with the final twenty percent
  increment being transferred on or before December 31, 2015, but not
  before January 1, 2015, unless approved by an order or resolution of
  the Palo Pinto County Commissioners Court.
               (3)  Authority or Purchaser, whichever is applicable,
  in consultation with the Palo Pinto County Commissioner or
  Commissioners who have jurisdiction over the Leased Tract, shall
  determine which Roads or portions thereof shall be transferred each
  year.
               (4)  The transfer of any portion of the Roads located
  within the FERC Project Area shall be in accordance with the FERC
  License and may be in the form of a grant of a right-of-way or
  easement, unless otherwise authorized by the Federal Energy
  Regulatory Commission.
               (5)  Beginning on the date of transfer, the Authority
  or Purchaser, whichever is applicable, shall no longer have any
  obligations regarding such Roads. The Roads shall be transferred
  in their "as-is" condition and neither the Authority nor the
  Purchaser shall have any obligation to ensure that the Roads, or any
  portion thereof, comply with the standards in effect at the time of
  transfer in the applicable county for like roads currently
  maintained by that county.
               (6)  Concurrently with the transfer in each year of a
  portion of the Roads, the Authority or Purchaser, as applicable,
  shall transfer to Palo Pinto County the amount, rounded to the
  nearest dollar, computed by multiplying $200,000 by a fraction the
  numerator of which is the number of miles of Roads located in and
  transferred to Palo Pinto County in that year and the denominator of
  which is the total number of miles of Roads located in and
  transferred or to be transferred to Palo Pinto County. For every
  other county in which a portion of the Roads is located, the
  Authority or Purchaser, as applicable, shall transfer an amount
  equal to (A) the per mile road payment (as defined below) multiplied
  by (B) the number of miles of the Roads located in such county. As
  used in this subdivision, "per mile road payment" means the amount,
  rounded to the nearest dollar, computed by dividing $200,000 by the
  total number of miles of Roads located in and transferred or to be
  transferred to Palo Pinto County pursuant to this subsection.
               (7)  Notwithstanding any provision in this subsection
  to the contrary, the Authority or Purchaser, as applicable, shall
  retain ownership of any portion of a Road that is inaccessible to
  the public. For purposes of this subdivision, a portion of the Road
  is considered inaccessible to the public if, as of the effective
  date of the Act enacting this section, the public can only access
  such portion of the Road by crossing property not owned by the
  Authority or Purchaser, as applicable, and not subject to an
  easement or other ownership interest that allows the public to
  cross such property without restriction. If a retained portion of a
  Road subsequently becomes accessible to the public, the Authority
  or Purchaser, as applicable, shall transfer such retained portion,
  including any interest the Authority or Purchaser has in any
  additional Road constructed or acquired by the Authority or
  Purchaser in order to make the retained portion of the Road
  accessible to the public, to the applicable county in accordance
  with the process set forth in this subsection, or in the event such
  portion of the Road becomes accessible to the public after December
  31, 2015, within one (1) year of such retained portion of the Road
  becoming accessible.
         (h)  Platting. A sale of the Leased Tract under this section
  shall not be subject to Chapter 232, Local Government Code, or any
  other platting requirement.
         (i)  Mineral Interests.  The Authority shall reserve its
  interest in all oil, gas, and other minerals in and under the Leased
  Tract (or any portion thereof) sold under this section.
         SECTION 2.  If the provisions of Section 8502.020, Special
  District Local Laws Code, as added by this Act, conflict with any
  other provisions of Chapter 8502 of that code, then the provisions
  of Section 8502.020 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, 2009.
 
 
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
 
 
         I certify that H.B. No. 3031 was passed by the House on April
  28, 2009, by the following vote:  Yeas 149, Nays 0, 1 present, not
  voting.
 
  ______________________________
  Chief Clerk of the House   
 
 
         I certify that H.B. No. 3031 was passed by the Senate on May
  15, 2009, by the following vote:  Yeas 30, Nays 0.
 
  ______________________________
  Secretary of the Senate    
  APPROVED:  _____________________
                     Date          
   
            _____________________
                   Governor