82S10073 SGA-D
 
  By: Callegari H.B. No. 42
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to the operation, powers, and duties of certain water
  districts.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 388.005, Health and Safety Code, is
  amended by adding Subsections (g) and (h) to read as follows:
         (g)  Except as provided by Subsection (h), this section does
  not apply to the electricity consumption of a district as defined by
  Section 36.001 or 49.001, Water Code, that relates to the operation
  and maintenance of facilities or improvements for:
               (1)  wastewater collection and treatment;
               (2)  water supply and distribution; or
               (3)  storm water diversion, detention, or pumping.
         (h)  At least once every five years, a political subdivision
  that is a district as defined by Section 36.001 or 49.001, Water
  Code, shall for district facilities described by Subsection (g):
               (1)  evaluate the consumption of electricity;
               (2)  establish goals to reduce the consumption of
  electricity; and
               (3)  identify and implement cost-effective energy
  efficiency measures to reduce the consumption of electricity.
         SECTION 2.  (a)  Section 43.0751(a)(1), Local Government
  Code, is amended to read as follows:
               (1)  "District" means a conservation and reclamation
  [water control and improvement] district [or a municipal utility
  district created or] operating under Chapter 49 [51 or 54], Water
  Code.  The term does not include a groundwater conservation
  district operating under Chapter 36, Water Code, or a special
  utility district operating under Chapter 65, Water Code.
         (b)  If S.B. No. 1082, Acts of the 82nd Legislature, Regular
  Session, 2011, becomes law, this section has no effect.
         SECTION 3.  (a)  Section 43.0751, Local Government Code, is
  amended by adding Subsection (r) to read as follows:
         (r)  To be annexed for limited purposes under this section,
  an area must be:
               (1)  in the municipality's extraterritorial
  jurisdiction; and
               (2)  contiguous to the corporate or limited purpose
  boundaries of the municipality, unless the district consents to
  noncontiguous annexation pursuant to a strategic partnership
  agreement with the municipality.
         (b)  If S.B. No. 1082, Acts of the 82nd Legislature, Regular
  Session, 2011, becomes law, this section has no effect.
         SECTION 4.  Section 375.161, Local Government Code, is
  amended to read as follows:
         Sec. 375.161.  CERTAIN RESIDENTIAL PROPERTY EXEMPT. (a)  
  The board may not impose an impact fee, assessment, tax, or other
  requirement for payment, construction, alteration, or dedication
  under this chapter on single-family detached residential property,
  duplexes, triplexes, and quadraplexes.
         (b)  This section does not apply to an impact fee,
  assessment, tax, or other requirement for payment for water, sewer,
  drainage, reclamation, flood control, road, or park and
  recreational services or improvements of a district operating under
  this chapter that provides, or proposes to provide, those services
  or improvements.
         SECTION 5.  Section 552.014, Local Government Code, is
  amended to read as follows:
         Sec. 552.014.  CONTRACTS WITH WATER DISTRICTS OR NONPROFIT
  CORPORATIONS. (a) In this section:
               (1)  "Project" means a water supply or treatment
  system, a water distribution system, a sanitary sewage collection
  or treatment system, works or improvements necessary for drainage
  of land, recreational facilities, roads and improvements in aid of
  roads, or facilities to provide firefighting services.
               (2)  "Water district" [, "water district"] means a
  district created under Article XVI, Section 59, of the Texas
  Constitution.
         (b)  A municipality may enter into a contract with a water
  district or with a corporation organized to be operated without
  profit under which the district or corporation will acquire for the
  benefit of and convey to the municipality, either separately or
  together, one or more projects [a water supply or treatment system,
  a water distribution system, a sanitary sewage collection or
  treatment system, or works or improvements necessary for drainage
  of land in the municipality]. In connection with the acquisition,
  the district or corporation shall improve, enlarge, or extend the
  existing municipal facilities as provided by the contract.
         (c)  If the contract provides that the municipality assumes
  ownership of the project [water, sewer, or drainage system] on
  completion of construction or at the time that all debt incurred by
  the district or corporation in the acquisition, construction,
  improvement, or extension of the project [system] is paid in full,
  the municipality may make payments to the district or corporation
  for project [water, sewer, or drainage] services to part or all of
  the residents of the municipality. The contract may provide for
  purchase of the project [system] by the municipality through
  periodic payments to the district or corporation in amounts that,
  together with the net income of the district or corporation, are
  sufficient to pay the principal of and interest on the bonds of the
  district or corporation as they become due. The contract may
  provide:
               (1)  that any payments due under this section are
  payable from and are secured by a pledge of a specified part of the
  revenues of the municipality, including revenues from municipal
  sales and use taxes [municipal water system, sewer system, or
  drainage system];
               (2)  for the levying of a tax to make payments due under
  this section; or
               (3)  that the payments due under this section be made
  from a combination of revenues [from the system] and taxes.
         (d)  The contract may provide that the district or
  corporation may use the streets, alleys, and other public ways and
  places of the municipality for project [water, sewer, or drainage]
  purposes for a period that ends at the time the indebtedness of the
  district or corporation is paid in full and the municipality
  acquires title to the project [system] in accordance with this
  section.
         (e)  The contract may provide for the operation of the
  project [system] by the municipality, and, if so authorized, the
  municipality may operate the project [system].
         (f)  A contract under this section must be authorized by a
  majority vote of the governing body of the municipality.
         (g)  This section does not authorize a water district or
  corporation described by Subsection (b) to participate in a project
  that the water district or corporation is not authorized to
  participate in under other law.
         SECTION 6.  Section 49.059, Water Code, is amended to read as
  follows:
         Sec. 49.059.  [DISQUALIFICATION OF] TAX ASSESSOR AND
  COLLECTOR. (a) The district may employ or contract with any person
  to serve as its tax assessor and collector who is:
               (1)  an individual certified as a registered Texas
  assessor-collector; or
               (2)  a firm, organization, association, partnership,
  corporation, or other legal entity if an individual certified as a
  registered Texas assessor-collector owns an interest in or is
  employed by the firm, organization, association, partnership,
  corporation, or other legal entity.
         (b)  A tax assessor and collector employed or contracted for
  under this section is not required to be a natural person.
         (c)  A firm, organization, association, partnership,
  corporation, or other legal entity serving as district tax assessor
  and collector shall give a bond as required by Section 49.057 for a
  natural person.
         (d)  No person may serve as tax assessor and collector of a
  district providing potable water or sewer utility services to
  household users if that person:
               (1)  is a natural person related within the third
  degree of affinity or consanguinity to any developer of property in
  the district, a member of the board, or the manager, engineer, or
  attorney for the district;
               (2)  is or was within two years immediately preceding
  the assumption of assessment and collection duties with the
  district an employee of any developer of property in the district or
  any director, manager, engineer, or attorney for the district;
               (3)  owns an interest in or is employed by any
  corporation organized for the purpose of tax assessment and
  collection services, a substantial portion of the stock of which is
  owned by a developer of property within the district or any
  director, manager, engineer, or attorney for the district; or
               (4)  is directly or through a corporation developing
  land in the district or is a director, engineer, or attorney for the
  district.
         (e) [(b)]  Within 60 days after the board determines a
  relationship or employment exists which constitutes a
  disqualification under Subsection (d) [(a)], it shall replace the
  person serving as tax assessor and collector with a person who would
  not be disqualified.
         (f) [(c)]  Any person who wilfully violates the provisions
  of Subsection (d) [(a)] is guilty of a misdemeanor and on conviction
  shall be fined not less than $100 nor more than $1,000.
         (g) [(d)]  As used in this section, "developer of property in
  the district" has the same meaning as in Section 49.052(d).
         SECTION 7.  Section 49.063, Water Code, is amended to read as
  follows:
         Sec. 49.063.  NOTICE OF MEETINGS. (a)  Notice of meetings of
  the board shall be given as set forth in the open meetings law,
  Chapter 551, Government Code, except that if a district does not
  have a meeting place within the district, the district shall post
  notice of its meeting at a public place within the district
  specified by the board in a written resolution, rather than at its
  administrative office. The board shall specify such public place
  to be a bulletin board or other place within the district which is
  reasonably available to the public.
         (b)  The validity of an action taken at a board meeting is not
  affected by:
               (1)  [Neither] failure to provide notice of the meeting
  if the meeting is a regular meeting;
               (2)  [nor] an insubstantial defect in notice of the
  [any] meeting; or
               (3)  failure of a county clerk to timely or properly
  post or maintain public access to a notice of the meeting if notice
  of the meeting is furnished to the county clerk in sufficient time
  for posting under Section 551.043(a) or 551.045, Government Code
  [shall affect the validity of any action taken at the meeting].
         SECTION 8.  Sections 49.102(a), (b), (c), and (h), Water
  Code, are amended to read as follows:
         (a)  Before issuing any bonds or other obligations, an
  election shall be held within the boundaries of the proposed
  district on a uniform election date provided by Section 41.001,
  Election Code, to determine if the proposed district shall be
  established and, if the directors of the district are required by
  law to be elected, to elect permanent directors.
         (b)  Notice of a confirmation or director election shall
  state the day and place or places for holding the election, the
  propositions to be voted on, and, if applicable, the number of
  directors to be voted on.
         (c)  The ballots for a confirmation election shall be printed
  to provide for voting "For District" and "Against District."
  Ballots for a directors election shall provide the names of the
  persons appointed by the governing body who qualified and are
  serving as temporary directors at the time the election is called.
  If the district has received an application by a write-in
  candidate, the [The] ballots shall also have blank places after the
  names of the temporary directors in which a voter may write the
  names of any candidates appearing on the list of write-in
  candidates required by Section 146.031, Election Code [other
  persons for directors].
         (h)  Unless otherwise agreed, the elected directors shall
  decide the initial terms of office by lot, with a simple majority of
  the elected directors serving until the second succeeding directors
  election and the remaining elected directors serving until the next
  directors election.
         SECTION 9.  Sections 49.103(a) and (b), Water Code, are
  amended to read as follows:
         (a)  Except as provided by Section 49.102, the members of the
  board of a district shall serve staggered [for] four-year terms.
         (b)  After confirmation of a district, an [An] election shall
  be held on the uniform election date, provided by Section 41.001, 
  [established by the] Election Code, in May of each even-numbered
  year to elect the appropriate number of directors.
         SECTION 10.  Subchapter D, Chapter 49, Water Code, is
  amended by adding Section 49.1045 to read as follows:
         Sec. 49.1045.  CERTIFICATION OF ELECTION RESULTS IN LESS
  POPULOUS DISTRICTS. (a) This section applies only to a district
  that:
               (1)  has 10 or fewer registered voters; and
               (2)  holds an election jointly with a county in which
  the district is wholly or partly located.
         (b)  A district may provide for an inquiry into and
  certification of the voting results of an election under this
  section if:
               (1)  the election results indicate that the number of
  votes cast in the election was greater than the number of registered
  voters in the district;
               (2)  the board determines that the election results are
  likely to be disputed in court; and
               (3)  the board can determine from the official list of
  registered voters prepared by the county voter registrar or county
  elections administrator for the district election which voters were
  qualified to vote in the district election and can determine from
  the signature roster from the joint election who voted in the joint
  election.
         (c)  To certify the district votes, the board by rule shall
  adopt a procedure to determine for each person who signed the
  signature roster as a voter in the joint election:
               (1)  whether the person's address on the day of the
  election was in the district; and
               (2)  how the person voted in the district election.
         (d)  The certified votes are the official election results.
         (e)  Certification of the results under this section does not
  preclude the filing of an election contest.
         SECTION 11.  Sections 49.105(c) and (d), Water Code, are
  amended to read as follows:
         (c)  If the number of directors is reduced to fewer than a
  majority or if a vacancy continues beyond the 90th day after the
  date the vacancy occurs, the vacancy or vacancies may [shall] be
  filled by appointment by the commission if the district is required
  by Section 49.181 to obtain commission approval of its bonds or by
  the county commissioners court if the district was created by the
  county commissioners court, regardless of whether a petition has
  been presented to the board under Subsection (b). An appointed
  director shall serve for the unexpired term of the director he or
  she is replacing.
         (d)  In the event of a failure to elect one or more members of
  the board of a district resulting from the absence of, or failure to
  vote by, the qualified voters in an election held by the district,
  the current members of the board or temporary board holding the
  positions not filled at such election shall be deemed to have been
  elected [reelected] and shall serve an additional term of office,
  or, in the case of a temporary board member deemed elected under
  this subsection, the initial term of office.
         SECTION 12.  Section 49.108, Water Code, is amended by
  adding Subsections (g), (h), and (i) to read as follows:
         (g)  On or before the first day for early voting by personal
  appearance at an election held to authorize a contract, a
  substantially final form of the contract must be filed in the office
  of the district and must be open to inspection by the public. The
  contract is not required to be attached as an exhibit to the order
  calling the election to authorize the contract.
         (h)  A single contract may contain multiple purposes or
  provisions for multiple facilities authorized by one or more
  constitutional provisions. The contract may generally describe the
  facilities to be acquired or financed by the district without
  reference to specific constitutional provisions. A contract
  described by this subsection may be submitted for approval in a
  single proposition at an election.
         (i)  A contract between districts to provide facilities or
  services is not required to specify the maximum amount of bonds or
  expenditures authorized under the contract if:
               (1)  the contract provides that the service area cannot
  be enlarged without the consent of at least two-thirds of the boards
  of directors of the districts that are:
                     (A)  included in the service area as proposed to
  be enlarged; or
                     (B)  served by the facilities or services provided
  in the contract;
               (2)  the contract provides that bonds or expenditures,
  payable wholly or partly from contract taxes, are issued or made:
                     (A)  on an emergency basis; or
                     (B)  to purchase, construct, acquire, own,
  operate, repair, improve, or extend services or facilities
  necessary to comply with changes in applicable regulatory
  requirements; or
               (3)  the contract provides that the bonds or
  expenditures require prior approval by any district that is
  obligated to pay debt service on those bonds or to pay for those
  expenditures wholly or partly with contract taxes.
         SECTION 13.  Subchapter D, Chapter 49, Water Code, is
  amended by adding Sections 49.109, 49.110, 49.111, 49.112, and
  49.113 to read as follows:
         Sec. 49.109.  AGENT DURING ELECTION PERIOD. The board may
  appoint a person, including a district officer, employee, or
  consultant, to serve as the district's agent under Section 31.123,
  Election Code.
         Sec. 49.110.  ELECTION JUDGE. (a) The notice requirements
  for the appointment of a presiding election judge under Section
  32.009, Election Code, do not apply to an election held by a
  district.
         (b)  To serve as an election judge in an election held by a
  district, a person must be a registered voter of the county in which
  the district is wholly or partly located. To the extent of any
  conflict with Section 32.051, Election Code, this section controls.
         Sec. 49.111.  EXEMPTIONS FROM USE OF ACCESSIBLE VOTING
  SYSTEMS. (a) Notwithstanding Sections 61.012 and 61.013, Election
  Code, a district is exempt from the acquisition, lease, or use of an
  electronic voting system for an election if:
               (1)  the election is a confirmation election or an
  election held jointly with a confirmation election on the same date
  and in conjunction with the confirmation election, except for an
  election in which a federal office appears on the ballot;
               (2)  the most recently scheduled district directors'
  election was not held, as provided by Section 2.053(b), Election
  Code; or
               (3)  fewer than 250 voters voted at the most recently
  held district directors' election.
         (b)  A district eligible for the exemption under Subsection
  (a) must publish notice in a newspaper of general circulation in an
  area that includes the district or mail notice to each voter in the
  district regarding the district's intention to hold an election
  without providing a voting station that meets the requirements for
  accessibility under 42 U.S.C. Section 15481(a)(3) on election day
  and during the period for early voting by personal appearance. The
  notice must be published or mailed not later than the later of:
               (1)  the 75th day before the date of the election; or
               (2)  the date on which the district adopts the order
  calling the election.
         (c)  The notice required by Subsection (b) must:
               (1)  provide that any voter in the district may request
  the use of a voting station that meets the accessibility
  requirements for voting by a person with a disability; and
               (2)  provide information on how to submit such a
  request.
         (d)  The district shall comply with a request for an
  accessible voting station if the request is received not later than
  the 45th day before the date of the election.
         Sec. 49.112.  CANCELLATION OF ELECTION; REMOVAL OF BALLOT
  MEASURE. Before the first day of early voting by personal
  appearance, the board by order or resolution may cancel an election
  called at the discretion of the district or may remove from the
  ballot a measure included at the discretion of the district. A copy
  of the order or resolution must be posted during the period for
  early voting by personal appearance and on election day at each
  polling place that is used or that would have been used in the
  election.
         Sec. 49.113.  NOTICE FOR FILING FOR PLACE ON BALLOT. A
  notice required by Section 141.040, Election Code, must be posted
  at the district's administrative office in the district or at the
  public place established by the district under Section 49.063 of
  this chapter not later than the 30th day before the deadline for a
  candidate to file an application for a place on the ballot of a
  district directors' election.
         SECTION 14.  Section 49.151(c), Water Code, is amended to
  read as follows:
         (c)  The board may allow disbursements of district money to
  be transferred by federal reserve wire system or by electronic
  means. The board by resolution may allow the wire or electronic
  transfers to accounts in the name of the district or accounts not in
  the name of the district.
         SECTION 15.  Sections 49.154(a) and (c), Water Code, are
  amended to read as follows:
         (a)  The board may declare an emergency in the matter of
  funds not being available to pay principal of and interest on any
  bonds of the district payable in whole or in part from taxes or to
  meet any other needs of the district and may issue [negotiable] tax
  anticipation notes or [negotiable] bond anticipation notes to
  borrow the money needed by the district without advertising or
  giving notice of the sale. A district's bond anticipation notes or
  tax anticipation notes are negotiable instruments within the
  meaning and purposes of the Business & Commerce Code
  notwithstanding any provision to the contrary in that code. Bond
  anticipation notes and tax anticipation notes shall mature within
  one year of their date.
         (c)  Bond anticipation notes may be issued for any purpose
  for which bonds of the district may be issued [have previously been
  voted] or [may be issued] for the purpose of refunding previously
  issued bond anticipation notes. A district may covenant with the
  purchasers of the bond anticipation notes that the district will
  use the proceeds of sale of any bonds in the process of issuance for
  the purpose of refunding the bond anticipation notes, in which case
  the board will be required to use the proceeds received from sale of
  the bonds in the process of issuance to pay principal, interest, or
  redemption price on the bond anticipation notes.
         SECTION 16.  Section 49.181(a), Water Code, as amended by
  H.B. No. 1901, Acts of the 82nd Legislature, Regular Session, 2011,
  is amended to read as follows:
         (a)  A district may not issue bonds to finance a project for
  which the commission has adopted rules requiring review and
  approval unless the commission determines that the project [to be
  financed by the bonds] is feasible and issues an order approving the
  issuance of the bonds.  This section does not apply to:
               (1)  refunding bonds if the commission issued an order
  approving the issuance of the bonds or notes that originally
  financed the project;
               (2)  refunding bonds that are issued by a district
  under an agreement between the district and a municipality allowing
  the issuance of the district's bonds to refund bonds issued by the
  municipality to pay the cost of financing facilities;
               (3)  bonds issued to and approved by the Farmers Home
  Administration, the United States Department of Agriculture, the
  North American Development Bank, or the Texas Water Development
  Board;
               (4)  refunding bonds issued to refund bonds described
  by Subdivision (3); or
               (5)  bonds issued by a public utility agency created
  under Chapter 572, Local Government Code, any of the public
  entities participating in which are districts if at least one of
  those districts is a district described by Subsection (h)(1)(E).
         SECTION 17.  Section 49.194, Water Code, is amended by
  amending Subsections (a), (b), and (c) and adding Subsection (h) to
  read as follows:
         (a)  Except as provided by Subsection (h), after [After] the
  board has approved the audit report, it shall submit a copy of the
  report to the executive director for filing within 135 days after
  the close of the district's fiscal year.
         (b)  Except as provided by Subsection (h), if [If] the board
  refuses to approve the annual audit report, the board shall submit a
  copy of the report to the executive director for filing within 135
  days after the close of the district's fiscal year, accompanied by a
  statement from the board explaining the reasons for its failure to
  approve the report.
         (c)  Copies of the audit report, the annual financial
  dormancy affidavit, or annual financial report described in
  Sections 49.197 and 49.198 shall be filed annually in the office of
  the district.
         (h)  A special water authority shall submit a copy of the
  audit report to the executive director for filing not later than the
  160th day after the date the special water authority's fiscal year
  ends.
         SECTION 18.  Section 49.212, Water Code, is amended by
  amending Subsection (d) and adding Subsections (d-1) and (d-2) to
  read as follows:
         (d)  Notwithstanding any provision of law to the contrary, a
  district that charges a fee that is an impact fee as described in
  Section 395.001(4), Local Government Code, must comply with Chapter
  395, Local Government Code. A charge or fee is not an impact fee
  under that chapter if:
               (1)  the charge or fee is imposed by a district for
  construction, installation, or inspection of a tap or connection to
  district water, sanitary sewer, or drainage facilities, including
  all necessary service lines and meters, for capacity in storm water
  detention or retention facilities and related storm water
  conveyances, or for wholesale facilities that serve such water,
  sanitary sewer, [or] drainage, or storm water detention or
  retention facilities; and
               (2)  the charge or fee:
                     (A)  [that (i)] does not exceed three times the
  actual [and reasonable] costs to the district for such tap or
  connection;
                     (B)  [, (ii)] if made to a nontaxable entity for
  retail or wholesale service, does not exceed the actual costs to the
  district for such work and for all facilities that are necessary to
  provide district services to such entity and that are financed or
  are to be financed in whole or in part by tax-supported or revenue
  bonds of the district; [,] or
                     (C)  is [(iii) if] made by a district for retail or
  wholesale service on land that at the time of platting was not being
  provided with water, [or] wastewater, drainage, or storm water
  detention or retention service by the district[, shall not be
  deemed to be an impact fee under Chapter 395, Local Government
  Code].
         (d-1)  Actual costs under Subsection (d), as determined by
  the board in its reasonable discretion, may include nonconstruction
  expenses attributable to the design, permitting, financing, and
  construction of those facilities, and reasonable interest on those
  costs calculated at a rate not to exceed the net effective interest
  rate on any district bonds issued to finance the facilities.
         (d-2)  A district may pledge the revenues of the district's
  utility system to pay the principal of or interest on bonds issued
  to construct the capital improvements for which a fee is [was]
  imposed under Subsection (d) [this subsection], and money received
  from the fees shall be considered revenues of the district's
  utility system for purposes of the district's bond covenants.
         SECTION 19.  Section 49.2121(b), Water Code, is amended to
  read as follows:
         (b)  A district may:
               (1)  accept a credit card for the payment of any fees
  and charges imposed by the district;
               (2)  collect a fee[, not to exceed five percent of the
  amount of the fee or charge being paid,] that is reasonably related
  to the expense incurred by the district in processing the payment by
  credit card; and
               (3)  collect a service charge for the expense incurred
  by the district in collecting the original fee or charge if the
  payment by credit card is not honored by the credit card company on
  which the funds are drawn.
         SECTION 20.  Section 49.216, Water Code, is amended by
  amending Subsection (e) and adding Subsection (f) to read as
  follows:
         (e)  Any peace officer who is directly employed by a
  district, before beginning to perform any duties and at the time of
  appointment, must take an oath and execute a bond conditioned on
  faithful performance of such officer's duties in the amount of
  $1,000 payable to the district. The oath and the bond shall be
  filed in the district office.
         (f)  A peace officer contracted for by the district,
  individually or through a county, sheriff, constable, or
  municipality, is an independent contractor, and the district is
  responsible for the acts or omissions of the peace officer only to
  the extent provided by law for other independent contractors.
         SECTION 21.  Sections 49.273(d) and (e), Water Code, are
  amended to read as follows:
         (d)  For contracts over $75,000 [$50,000], the board shall
  advertise the letting of the contract, including the general
  conditions, time, and place of opening of sealed bids.  The notice
  must [shall] be published in one or more newspapers circulated in
  each county in which [part of] the district is located.  [If one
  newspaper meets both of these requirements, publication in such
  newspaper is sufficient.]  If there are more than four counties in
  the district, notice may be published in any newspaper with general
  circulation in the district.  The notice must [shall] be published
  once a week for two consecutive weeks before the date that the bids
  are opened, and the first publication must [shall] be not later than
  the 14th [21st] day before the date of the opening of the sealed
  bids.
         (e)  For contracts over $25,000 but not more than $75,000
  [$50,000], the board shall solicit written competitive bids on
  uniform written specifications from at least three bidders.
         SECTION 22.  Section 49.351, Water Code, is amended by
  amending Subsections (a), (b), (c), (f), (i), and (l) and adding
  Subsection (m) to read as follows:
         (a)  A district providing potable water or sewer service to
  household users may, separately or jointly with another district,
  municipality, or other political subdivision, establish, operate,
  and maintain, finance with ad valorem taxes, mandatory fees, or
  voluntary contributions, and issue bonds for a fire department to
  perform all fire-fighting services within the district as provided
  in this subchapter and may provide for [issue bonds or impose a
  mandatory fee, with voter approval, for financing a plan approved
  in accordance with this section, including] the construction and
  purchase of necessary buildings, facilities, land, and equipment
  and the provision of an adequate water supply.
         (b)  After complying with the requirements of this section
  [approval of the district electors of a plan to operate, jointly
  operate, or jointly fund the operation of a fire department, and
  after complying with Subsections (g), (h), and (i)], the district
  or districts shall provide an adequate system and water supply for
  fire-fighting purposes, may purchase necessary land, may construct
  and purchase necessary buildings, facilities, and equipment, and
  may employ or contract with a fire department to employ all
  necessary personnel including supervisory personnel to operate the
  fire department.
         (c)  For [Bonds for] financing a plan approved in accordance
  with this section, bonds and ad valorem taxes must [shall] be
  authorized and may be issued or imposed[, and a district shall be
  authorized to levy a tax to pay the principal of and interest on
  such bonds,] as provided by law for the authorization and issuance
  of other bonds and the authorization and imposition of other ad
  valorem taxes of the district.
         (f)  Before a district imposes an ad valorem tax or issues
  bonds payable wholly or partly from ad valorem taxes to finance the
  establishment of [establishes] a fire department, contracts to
  operate a joint fire department, or contracts with another person
  to perform fire-fighting services within the district, the district
  must comply with [the provisions of] Subsections (g), (h), and (i).
  A district that funds fire-fighting services with revenue,
  including mandatory fees or voluntary contributions, is not
  required to comply with Subsections (g), (h), and (i).
         (i)  After approval of a plan by the commission, the district
  shall hold an [submit to the electors of the district at the]
  election to approve the plan, approve bonds payable wholly or
  partly from ad valorem taxes, and [or to] impose ad valorem taxes [a
  mandatory fee] for financing the plan. The election [, or if no
  bonds or fees are to be approved, at an election called for approval
  of the plan, which] may be held in conjunction with an election
  required by Section 49.102[, the proposition of whether or not the
  plan should be implemented or entered into by the district]. [The
  ballots at the election shall be printed, as applicable, to provide
  for voting for or against the proposition: "The implementation of
  the plan for (operation/joint operation) of a fire department"; or
  "The plan and contract to provide fire-fighting services for the
  district."]
         (l)  A [Notwithstanding the requirements of Subsections
  (a)-(j), a] district providing potable water or sewer service to
  household users may, as part of its billing process, collect from
  its customers a voluntary contribution on behalf of organizations
  providing fire-fighting services to the district. A district that
  chooses to collect a voluntary contribution under this subsection
  must give reasonable notice to its customers that the contribution
  is voluntary. Water and sewer service may not be terminated as a
  result of failure to pay the voluntary contribution.
         (m)  If a customer makes a partial payment of a district bill
  for water or sewer service and includes with the payment a voluntary
  contribution for fire-fighting services under Subsection (l), the
  district shall apply the voluntary contribution first to the bill
  for water or sewer service, including any interest or penalties
  imposed. The district shall use any amount remaining for
  fire-fighting services.
         SECTION 23.  Section 49.462(1), Water Code, is amended to
  read as follows:
               (1)  "Recreational facilities" means parks,
  landscaping, parkways, greenbelts, sidewalks, trails, public
  right-of-way beautification projects, and recreational equipment
  and facilities. The term includes associated street and security
  lighting. The term does not include a minor improvement or
  beautification project to land acquired or to be acquired as part of
  a district's water, sewer, or drainage facilities.
         SECTION 24.  Subchapter N, Chapter 49, Water Code, is
  amended by adding Section 49.4641 to read as follows:
         Sec. 49.4641.  RECREATIONAL FACILITIES ON SITES ACQUIRED FOR
  WATER, SEWER, OR DRAINAGE FACILITIES.  (a)  A district may develop
  and maintain recreational facilities on a site acquired for the
  purpose of developing water, sewer, or drainage facilities.
         (b)  A district is not required to prorate the costs of a site
  described by Subsection (a) between the primary water, sewer, or
  drainage purpose and any secondary recreational facilities purpose
  if a licensed professional engineer certifies that the site is
  reasonably sized for the intended water, sewer, or drainage
  purpose.
         (c)  The engineer may consider the following factors in
  determining the reasonableness of the size of a water, sewer, or
  drainage site:
               (1)  the rules, regulations, and design guidelines or
  criteria of a municipality, county, or other entity exercising
  jurisdiction;
               (2)  sound engineering principles;
               (3)  the impact on adjoining property;
               (4)  the availability of sites that meet the
  requirements for the proposed use;
               (5)  requirements for sanitary control;
               (6)  the need for a buffer zone to mitigate noise or for
  aesthetic purposes;
               (7)  benefits to storm water quality; and
               (8)  anticipated expansions of facilities resulting
  from:
                     (A)  future growth and demand for district
  facilities; or
                     (B)  changes in regulatory requirements.
         SECTION 25.  Sections 49.4645(a) and (b), Water Code, are
  amended to read as follows:
         (a)  A district all or part of which is located in Bastrop
  County, Bexar County, Waller County, Travis County, Williamson
  County, Harris County, Galveston County, Brazoria County,
  Montgomery County, or Fort Bend County may issue bonds supported by
  ad valorem taxes to pay for the development and maintenance of
  recreational facilities only if the bonds are authorized by a
  majority vote of the [qualified] voters of the district voting in an
  election held for that purpose.  The outstanding principal amount
  of bonds, notes, and other obligations issued to finance parks and
  recreational facilities supported by ad valorem taxes [payable from
  any source] may not exceed an amount equal to one percent of the
  value of the taxable property in the district or, if supported by
  contract taxes under Section 49.108, may not exceed an amount equal
  to one percent of the sum of the value of the taxable property in the
  districts making payments under the contract as shown by the tax
  rolls of the central appraisal district at the time of the issuance
  of the bonds, notes, and other obligations or an amount greater than
  the estimated cost provided in the park plan under Subsection (b),
  whichever is smaller. An estimate of the value provided by the
  central appraisal district may be used to establish the value of the
  taxable property in the district or districts under this section.
  The district may not issue bonds supported by ad valorem taxes to
  pay for the development and maintenance of:
               (1)  indoor or outdoor swimming pools; or
               (2)  golf courses.
         (b)  On or before the 10th day before the first day for early
  voting by personal appearance at [Not later than the 10th day
  before] an election [is] held to authorize the issuance of bonds for
  the development and maintenance of recreational facilities, the
  board shall file in the district office for review by the public a
  park plan covering the land, improvements, facilities, and
  equipment to be purchased or constructed and their estimated cost,
  together with maps, plats, drawings, and data fully showing and
  explaining the park plan. The park plan is not part of the
  proposition to be voted on, [and the park plan] does not create a
  contract with the voters, and may be amended at any time after the
  election held to authorize the issuance of bonds for the
  development and maintenance of recreational facilities provided
  under the plan. The estimated cost stated in the amended park plan
  may not exceed the amount of bonds authorized at that election.
         SECTION 26.  Section 51.072, Water Code, is amended to read
  as follows:
         Sec. 51.072.  QUALIFICATIONS FOR DIRECTOR. (a) To be
  qualified for election as a director, a person must:
               (1)  be a resident of the state;
               (2)  [,] own land subject to taxation in the district or
  be a qualified voter in the district; [,] and
               (3)  be at least 18 years of age.
         (b)  Section 49.052 does not apply to a district governed by
  this chapter whose principal purpose is providing water for
  irrigation.
         SECTION 27.  Section 51.335, Water Code, is amended by
  amending Subsection (b) and adding Subsection (c) to read as
  follows:
         (b)  The district shall not usurp functions or duplicate a
  service already adequately exercised or rendered by the other
  governmental agency except:
               (1)  under a valid contract with the other governmental
  agency; or
               (2)  as provided by Subsection (c).
         (c)  The district may finance, develop, and maintain
  recreational facilities under Subchapter N, Chapter 49, even if
  similar facilities may be provided by a political subdivision or
  other governmental entity included wholly or partly in the
  district.
         SECTION 28.  Section 51.523, Water Code, is amended to read
  as follows:
         Sec. 51.523.  BALLOTS. The ballot for an election under this
  subchapter shall be printed to provide for voting for or against
  substantially the proposition: "Designation of the area, issuance
  of bonds, [and] levy of a tax to retire the bonds, and levy of a
  maintenance tax."
         SECTION 29.  Section 51.527, Water Code, is amended by
  adding Subsection (c) to read as follows:
         (c)  After bonds issued for the defined area or designated
  property are fully paid or defeased, the board may declare the
  defined area dissolved or may repeal the designation of the
  designated property.  After that declaration or repeal, the board
  shall cease imposing any special taxes authorized under the adopted
  tax plan on the property located in the defined area or on the
  designated property.
         SECTION 30.  Section 54.016(f), Water Code, is amended to
  read as follows:
         (f)  A city may provide in its written consent for the
  inclusion of land in a district that is initially located wholly or
  partly outside the corporate limits of the city that a contract
  ("allocation agreement") between the district and the city be
  entered into prior to the first issue of bonds, notes, warrants, or
  other obligations of the district. The allocation agreement shall
  contain the following provisions:
               (1)  a method by which the district shall continue to
  exist following the annexation of all territory within the district
  by the city, if the district is initially located outside the
  corporate limits of the city;
               (2)  an allocation of the taxes or revenues of the
  district or the city which will assure that, following the date of
  the inclusion of all the district's territory within the corporate
  limits of the city, the total annual ad valorem taxes collected by
  the city and the district from taxable property within the district
  does not exceed an amount greater than the city's ad valorem tax
  upon such property;
               (3)  an allocation of governmental services to be
  provided by the city or the district following the date of the
  inclusion of all of the district's territory within the corporate
  limits of the city; and
               (4)  such other terms and conditions as may be deemed
  appropriate by the city.
         SECTION 31.  Section 54.236, Water Code, is amended to read
  as follows:
         Sec. 54.236.  STREET OR SECURITY LIGHTING. (a)  Subject to
  the provisions of this section, a district may purchase, install,
  operate, and maintain street lighting or security lighting within
  public utility easements or public rights-of-way or property owned
  by [within the boundaries of] the district.
         (b)  A district may not issue bonds supported by ad valorem
  taxes to pay for the purchase, installation, and maintenance of
  street or security lighting, except as authorized by Section 54.234
  or Subchapter N, Chapter 49.
         SECTION 32.  Section 54.739, Water Code, is amended to read
  as follows:
         Sec. 54.739.  SUBSTITUTING LAND OF EQUAL VALUE. After the
  district is organized and has obtained voter approval for the
  issuance of, or has sold, bonds payable wholly or partly from ad
  valorem taxes [acquires facilities with which to function for the
  purposes for which it was organized, and votes, issues and sells
  bonds for such purposes], land within the district boundaries
  subject to taxation that does not need or utilize the services of
  the district may be excluded and other land not within the
  boundaries of the district may be included within the boundaries of
  the district without impairment of the security for payment of the
  bonds or invalidation of any prior bond election, as provided by
  this section and Sections 54.740 through 54.747.
         SECTION 33.  Section 54.744, Water Code, is amended to read
  as follows:
         Sec. 54.744.  IMPAIRMENT OF SECURITY.  (a)  For purposes of
  the board's consideration of the applications, the lands proposed
  for inclusion shall be deemed to be sufficient to avoid an
  impairment of the security for payment of obligations of the
  district if:
               (1)  according to the most recent tax roll of the
  district or the most recently certified estimates of taxable value
  from the chief appraiser of the appropriate appraisal district, the
  taxable value of such included lands equals or exceeds the taxable
  value of the excluded lands; and
               (2)  either the estimated costs of providing district
  facilities and services to such included lands is equal to or less
  than the estimated costs of providing district facilities and
  services to the excluded lands or any increased estimated costs of
  providing district facilities and services to the included land, as
  determined by the district's engineer, can be amortized at
  prevailing bond interest rates and maturity schedules and the
  prevailing debt service tax rate of the district, as determined by
  the district's professional financial advisor, when applied to the
  increase in taxable value of the included land over the taxable
  value of the excluded land. [; and]
         (b)  If the district has any [(3)  the district's]
  outstanding bonds or contract obligations [are] payable in whole or
  in part by a pledge of net revenues from the ownership or operation
  of the district's facilities at the time the board considers an
  application, the lands proposed for inclusion shall be deemed to be
  sufficient to avoid an impairment of the security for payment of
  obligations of the district if[, and] the projected net revenues to
  be derived from the lands to be included during the succeeding
  12-month period, as determined by the district's engineer, equals
  or exceeds the projected net revenues that would otherwise have
  been derived from the lands to be excluded during the same period.
         (c)  In this section, the taxable value of included land
  means the market value of the land if, before or contemporaneously
  with the inclusion of the land in the district, the owner of the
  land waives the right to special appraisal of the land as to the
  district under Section 23.20, Tax Code.
         SECTION 34.  Section 49.103(g), Water Code, is repealed.
         SECTION 35.  Section 43.0751, Local Government Code, as
  amended by this Act, applies only to an annexation for limited
  purposes of an area for which a municipality institutes proceedings
  to annex the area on or after the effective date of this Act.  The
  annexation of an area for limited purposes for which a municipality
  institutes annexation proceedings before that date is governed by
  the law in effect immediately before the effective date of this Act,
  and the former law is continued in effect for that purpose.
         SECTION 36.  The legislature finds that an agreement entered
  into before October 1, 2011, by a municipality and a municipal
  utility district is an allocation agreement only if:
               (1)  the district is initially located wholly or partly
  outside the corporate limits of the municipality;
               (2)  the agreement strictly complies with the
  requirements of Section 54.016(f), Water Code, as that section
  existed immediately before the effective date of this Act; and
               (3)  the agreement is specifically designated by the
  parties to the agreement as an "allocation agreement" under Section
  54.016(f), Water Code.
         SECTION 37.  Not later than December 1, 2011, the Texas
  Commission on Environmental Quality shall adopt any rules or
  amendments to existing rules necessary to implement Section
  49.4641, Water Code, as added by this Act.
         SECTION 38.  (a) Except as provided by Subsection (b) of
  this section, this Act takes effect October 1, 2011.
         (b)  Sections 54.739 and 54.744, Water Code, as amended by
  this Act, take effect immediately if this Act receives a vote of
  two-thirds of all the members elected to each house, as provided by
  Section 39, Article III, Texas Constitution; otherwise, those
  sections take effect October 1, 2011.