81R8875 NC-D

By: Watson S.B. No. 2023

A BILL TO BE ENTITLED

AN ACT

relating to the dissolution of certain municipal utility districts that are located in more than one municipality.

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

SECTION 1. Subchapter D, Chapter 43, Local Government Code, is amended by adding Section 43.0741 to read as follows:

Sec. 43.0741. ABOLITION AND ASSUMPTION OF FUNCTIONS OF MUNICIPAL UTILITY DISTRICT LOCATED IN MORE THAN ONE MUNICIPALITY. (a) This section applies only to a home-rule municipality with a population of less than 20,000:

(1) in which is located part of a municipal utility district organized for the primary purpose of providing municipal functions such as supplying fresh water for domestic or commercial uses or furnishing sanitary sewer service; and

(2) the governing body of which adopts, by a majority vote of its entire membership, an ordinance under Subsection (e).

(b) This section applies only if:

(1) the municipal utility district described by Subsection (a)(1) has territory located in more than one municipality;

(2) at least 80 percent of the territory of the municipal utility district is located in the corporate limits and extraterritorial jurisdiction of a municipality described by Subsection (a); and

(3) no more than 100 retail customers of the municipal utility district are located outside the corporate limits of the municipality described by Subsection (a).

(c) The governing body of a municipality may not adopt an ordinance described by Subsection (e) until the municipality:

(1) prepares a report estimating the cost to provide water and wastewater service to the municipal utility district's customers, including an analysis of:

(A) the effect the elimination of the municipal utility district tax would have on the revenues required to operate and maintain the water and wastewater system and services;

(B) the manner in which the municipal utility district's tax revenue would be replaced;

(C) whether tax revenue is required for the provision of service; and

(D) the effect the elimination of the municipal utility district tax would have on the fees and charges paid by the water and sewer customers of the district;

(2) on completion of the report described by Subdivision (1), posts the report on the municipality's Internet website; and

(3) on or before the 15th day before the date the governing body considers an ordinance described by Subsection (e), holds a public hearing regarding the report described by Subdivision (1) at which any member of the public is allowed to appear to present evidence or comments regarding the report.

(d) On or before the 10th day before the date of the public hearing under Subsection (c)(3), the governing body of the municipality must publish notice of the hearing, including the date, time, and location of the hearing, in a newspaper of general circulation in the municipality and mail notice of the hearing to the president or general manager of the municipal utility district.

(e) The governing body of a municipality may adopt an ordinance that provides a date on which the municipality will:

(1) take over all the property and other assets of the municipal utility district described by Subsection (a)(1);

(2) assume all the debts, liabilities, and obligations of the municipal utility district described by Subsection (a)(1); and

(3) perform all the functions of the municipal utility district described by Subsection (a)(1), including the provision of services.

(f) After the adoption of an ordinance described by Subsection (e) and on the date provided in the ordinance, the municipal utility district is abolished and the municipality succeeds to the powers, duties, assets, and obligations of the municipal utility district as provided by this section.

(g) Nothing in this section requires a municipality to annex any territory of the municipal utility district that is located outside the corporate limits of the municipality for the municipality to assume the responsibilities, obligations, and assets of the municipal utility district as provided by this section. If the municipality proposes to annex any of the municipal utility district territory outside the corporate limits of the municipality:

(1) the annexation provisions of Subchapter C apply; and

(2) the municipality shall provide notice in the manner provided by Section 43.052(f) to each affected customer that includes a cost-of-service analysis and discloses any potential rate and tax implications that would result from the annexation.

(h) For the areas in the municipal utility district that are located outside the corporate limits or extraterritorial jurisdiction of a municipality and in which the district has facilities or customers, the municipality, on the date it assumes the functions of the municipal utility district, shall continue to provide services to those customers at the same level of service provided to the customers located inside the corporate limits of the municipality. The municipality may enter into an interlocal agreement with another political subdivision for the other political subdivision to provide services to customers and to maintain facilities not located inside the corporate limits or extraterritorial jurisdiction of the municipality.

(i) If the municipal utility district has outstanding bonds, warrants, or other obligations, the municipality shall assume those liabilities in accordance with this subsection. The governing body of the municipality may issue refunding bonds or warrants in its own name to refund the municipal utility district's outstanding bonds, warrants, or other obligations, including unpaid earned interest on the obligation, that are assumed by the municipality. The municipality may pledge the net revenues or property of the utility system or municipal property taxes to the payment of the outstanding bonds, warrants, or other obligations and refunding bonds or warrants as the governing body considers proper.

SECTION 2. This Act takes effect immediately if it receives a vote of two-thirds of all the 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.