BILL ANALYSIS

C.S.H.B. 3845

By: Sheffield

Natural Resources

Committee Report (Substituted)

BACKGROUND AND PURPOSE

The CLL Municipal Utility District No. 1 encompasses an area of land within Bell and Williamson Counties outside the corporate limits and extraterritorial jurisdiction of any city that is planned for residential and commercial development.  The district was created several years ago and has certain authority to provide water, sewer, and drainage services, but, in order to facilitate a long-term, coordinated development plan for the district territory, interested parties contend that additional authority needs to be secured for the district.  C.S.H.B. 3845 seeks to address this issue by establishing provisions relating to the powers of the district and providing authority to levy an assessment, impose a tax, and issue bonds.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.

ANALYSIS

C.S.H.B. 3845 amends the Special District Local Laws Code to set out provisions relating to the purpose, declaration of intent, and findings of benefit and public purpose of the CLL Municipal Utility District No. 1. The bill sets out provisions relating to district powers and duties, including provisions granting the district the powers of a general law municipal management district; authority to exercise the powers of certain development corporations; authority to construct, acquire, improve, maintain, and operate an airport and improvements in aid of the airport;  authority to undertake certain road projects and the requirements for approval of a road project; and mandatory compliance with any applicable municipal consent ordinance or resolution. The bill prohibits the district from exercising the power of eminent domain outside the district to acquire a site or easement for an authorized road project or a recreational facility. 

C.S.H.B. 3845 sets out provisions relating to improvement projects, authorizing the district to provide, or to enter into contracts with a governmental or private entity to provide, specified improvement projects and services or activities in support of or incidental to those projects and services. The bill prohibits the district from undertaking an applicable project unless the district board of directors determines the project to be necessary to accomplish a public purpose of the district.  The bill authorizes an improvement project to include a wastewater treatment and disposal facility, water quality projection facility, and facility to enhance groundwater recharge. The bill authorizes an improvement project to include facilities for irrigation and drainage or solid waste management services, including garbage collection, recycling, and composting. The bill sets out provisions providing for an improvement project relating to a convention center, as well as for miscellaneous design, construction, and maintenance and for improvement projects similar to those authorized by the bill.

C.S.H.B. 3845 authorizes the district to levy and collect special assessments in the same manner and for the same purposes as a municipal management district.  The bill authorizes the district to issue bonds or other obligations payable wholly or partly from property taxes, impact fees, revenue, contract payments, grants, hotel occupancy taxes, sales and use taxes, other district money, or any combination of those sources and requires the board, on bonds payable wholly or partly from property taxes, to provide for the annual imposition of a property tax, without limit as to rate or amount, while all or part of the bonds are outstanding. The bill prohibits the total principal amount of bonds or other obligations issued or incurred to finance road projects payable from property taxes from exceeding one-fourth of the assessed value of the real property in the district at the time of issuance.

C.S.H.B. 3845 sets out provisions relating to a district sales and use tax and provides for the applicability of certain Tax Code provisions, establishing that the Municipal Sales and Use Tax Act governs the imposition, computation, administration, enforcement, and collection of an authorized district sales and use tax except to the extent the act is inconsistent with the bill's provisions.  The bill authorizes the district to adopt a sales and use tax if authorized by a majority of the voters of the district voting at an election held for that purpose and sets out related provisions. The bill requires the board, if the tax is approved by voters and within a certain time frame, to determine the initial rate of the tax, which must be in one or more increments of one-eighth of one percent. The bill authorizes the board to decrease the rate of the tax by one or more increments of one-eighth of one percent but prohibits the board from decreasing the rate of the tax if the decrease would impair the repayment of any outstanding debt or obligation payable from the tax. The bill prohibits the initial rate of the tax or any rate resulting from subsequent decreases from exceeding the lesser of the maximum rate authorized by the district voters or a rate that, when added to the rates of all sales and use taxes imposed by other political subdivisions with territory in the district, would result in the prescribed maximum combined rate of two percent at any location in the district. The bill requires the board to notify the comptroller of public accounts of any changes made to the tax rate in the same manner a municipal secretary provides notice. The bill establishes that revenue from the sales and use tax is for the use and benefit of the district and may be used for any district purpose.

C.S.H.B. 3845 sets out provisions relating to a district hotel occupancy tax and provides for the applicability of certain Tax Code provisions, providing that, except as inconsistent with the bill's provisions, statutory provisions relating to the imposition and collection of a municipal hotel occupancy tax govern an authorized district hotel occupancy tax. The bill authorizes the district to impose a hotel occupancy tax for any authorized purpose and prohibits the amount of the tax from exceeding seven percent of the price paid for a room in a hotel. The bill prohibits the district from adopting a hotel occupancy tax at a rate that would cause the combined rate of all hotel occupancy taxes imposed by the district and other political subdivisions of the state at a location in the district to exceed 15 percent. The bill establishes that if a political subdivision's adoption of a hotel occupancy tax rate causes the combined hotel occupancy tax rate imposed at a location in the district to exceed 15 percent, the district's hotel occupancy tax rate in the entire district is automatically reduced to bring the combined rate imposed at that location down to not more than 15 percent. The bill requires the district to notify each hotel in the district of any change in the hotel occupancy tax rate. The bill establishes that any change in the hotel occupancy tax rate takes effect on the first day of the next calendar month following the change.

C.S.H.B. 3845 establishes that the legislature validates and confirms all governmental acts and proceedings of the district relating to the exclusion of land, the annexation of land, and the establishment of the district's boundaries that were taken before the bill's effective date.  The bill makes such validation and confirmation inapplicable to an act or proceeding that was void at the time it occurred, an act that was a misdemeanor or felony at the time it occurred, an annexation or attempted annexation of land in the boundaries or extraterritorial jurisdiction of a municipality that occurred without the consent of the municipality, and any matter that on the bill's effective date is involved in litigation if the litigation ultimately results in the matter being held invalid by a final court judgment or any matter that on the bill's effective date has been held invalid by a final court judgment.

EFFECTIVE DATE

On passage, or, if the bill does not receive the necessary vote, September 1, 2011.

COMPARISON OF ORIGINAL AND SUBSTITUTE

C.S.H.B. 3845 omits a provision included in the original authorizing an improvement project to include an alternative energy facility.