By: Uresti, Wentworth S.B. No. 341

(In the Senate - Filed January 12, 2011; February 14, 2011, read first time and referred to Committee on Natural Resources; March 14, 2011, reported adversely, with favorable Committee Substitute by the following vote: Yeas 10, Nays 0; March 14, 2011, sent to printer.)

COMMITTEE SUBSTITUTE FOR S.B. No. 341 By: Uresti

A BILL TO BE ENTITLED

AN ACT

relating to the appointment of a conservator for and authorizing the dissolution of the Bexar Metropolitan Water District; providing a penalty.

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

ARTICLE 1. CONSERVATORSHIP ESTABLISHED

SECTION 1.01. Section 1, Chapter 306, Acts of the 49th Legislature, Regular Session, 1945, is amended to read as follows:

Sec. 1. In obedience to the provisions of Article 16, Section 59 of the Constitution of Texas, there is hereby created Bexar Metropolitan Water District.[, hereinafter in this Act sometimes called the "District."]

SECTION 1.02. Chapter 306, Acts of the 49th Legislature, Regular Session, 1945, is amended by adding Sections 1A, 34, 35, 36, 37, 38, and 39 to read as follows:

Sec. 1A. In this Act:

(1) "Board" means the District's Board of Directors.

(2) "Commission" means the Texas Commission on Environmental Quality.

(3) "Committee" means the Bexar Metropolitan Water District Oversight Committee.

(4) "Director" means a Board member.

(5) "District" means the Bexar Metropolitan Water District.

(6) "System" means a water utility owned by a municipality with a population of more than one million in the area served by the District.

Sec. 34. (a) The Commission shall appoint as conservator for the District an individual who, at the time of the individual's appointment:

(1) has demonstrated a high level of expertise in water utility management;

(2) is not a Director; and

(3) has no financial interest in the District or any entity that has a contract with the District or that is likely to develop a contractual relationship with the District.

(b) The conservator's term expires on the date the Commission determines that the duties of the conservator under this Act have been discharged.

Sec. 35. (a) The conservator shall use District staff to carry out the duties assigned to the conservator. The conservator may hire up to three additional persons who will report to and assist the conservator if:

(1) assistance from District staff is not provided; or

(2) the conservator needs special expertise from one or more of the persons.

(b) A conservator appointed under Section 34 of this Act and any additional persons hired by the conservator under this section are entitled to receive a salary determined by the executive director of the Commission for performing those duties.

(c) The District shall pay the compensation of the conservator and any additional persons hired by the conservator under this section.

(d) The executive director of the Commission shall set the compensation of the conservator after considering the conservator's:

(1) level of expertise in water utility management; and

(2) certifications and education.

Sec. 36. (a) A conservator appointed under Section 34 and the persons hired under Section 35 of this Act are entitled to reimbursement of the reasonable and necessary expenses incurred by the conservator or the persons hired under Section 35 of this Act in the course of performing duties under this Act.

(b) The District shall pay the expenses incurred by the conservator and the persons hired under Section 35 of this Act. The executive director of the Commission shall determine if an expense is reasonable and necessary after considering whether the expense is:

(1) necessary to complete the duties of the conservator as assigned by law;

(2) at or below the cost of a similar expense incurred by other utilities;

(3) documented by an invoice, bill, or work order that includes details relating to the:

(A) time spent on services; or

(B) cost of supplies; and

(4) in accordance with procedures used to minimize expenses, including comparing vendor rates or competitive bidding.

Sec. 37. (a) The Board shall work cooperatively with the conservator to identify the policies, assets, liabilities, and resources of the District.

(b) The conservator shall:

(1) complete an inventory of and evaluate each distinct water system in the District to determine:

(A) the District's basis in or the intrinsic value of the infrastructure associated with that water system;

(B) the District's bonded debt and commercial paper reasonably associated with or allocable to the infrastructure in that water system; and

(C) the adequacy of the water supply sources, water storage facilities, and distribution systems located in that water system's service area to supply current and projected demands in that service area;

(2) identify any District assets whose transfer to another appropriate public water utility would be likely to improve:

(A) service to the former customers of the District who would be served by that utility; or

(B) the District's overall efficiency;

(3) compile a list and copies of existing contracts to which the District is a party, including for each contract:

(A) effective and termination dates;

(B) general scope of the property and services involved;

(C) obligations of the District, including financial obligations;

(D) how the District benefits from the contract; and

(E) whether the District has waived governmental immunity;

(4) compile a list of the following in regard to the District:

(A) property;

(B) rights, including certificates of convenience and necessity, pumping rights, and any other rights;

(C) staff; and

(D) internal policies, including employment rules, benefits, and an evaluation of the usefulness and efficacy of each policy;

(5) develop a comprehensive rehabilitation plan for the District that:

(A) identifies strategies for restoring the District's financial integrity and developing a system of sound financial management;

(B) describes a standard of ethics, professionalism, and openness expected of each Director and employee of the District;

(C) provides a mechanism to enforce compliance with District policies, including procurement policies;

(D) identifies ways to enhance the District's operational efficiency and improve the District's provision of redundancy in water services; and

(E) provides for educating the Board and management personnel on improving management practices and complying with District policy and state and federal laws and regulations; and

(6) assess the District's ability to provide reliable, cost-effective, quality service to customers, including an assessment of operations compared to the best management practices of modern utilities.

Sec. 38. The conservator shall report to the Commission and the Committee quarterly on the progress the conservator has made in carrying out the duties under Section 37 of this Act.

Sec. 39. At the conservator's request, the state auditor's office may audit the District under Chapter 321, Government Code. The District shall reimburse the state auditor's office for the cost of the audit.

SECTION 1.03. Not later than the 60th day after the effective date of this Act, the Texas Commission on Environmental Quality shall appoint a conservator for the Bexar Metropolitan Water District as required by Section 34, Chapter 306, Acts of the 49th Legislature, Regular Session, 1945, as added by this Act.

ARTICLE 2. ELECTION; EFFECTIVE DATE OF ARTICLES 3 AND 4

SECTION 2.01. (a) In this article:

(1) "Commission" means the Texas Commission on Environmental Quality.

(2) "District" means the Bexar Metropolitan Water District.

(b) On the next uniform election date following the date of preclearance under Section 5 of the federal Voting Rights Act of 1965 (42 U.S.C. Section 1973c) of all provisions of the Act enacting this section that are subject to that preclearance, the commission shall hold an election in the district on the question of dissolving the district and disposing of the district's assets and obligations. If the commission determines that preclearance under Section 5 of the federal Voting Rights Act of 1965 is not required, the commission shall hold the election on the next uniform election date after the date the commission makes that determination.

(c) The commission may contract with another entity to conduct the election. The district shall pay any cost of conducting the election.

(d) The order calling the election must state:

(1) the nature of the election, including the proposition to appear on the ballot;

(2) the date of the election;

(3) the hours during which the polls will be open; and

(4) the location of the polling places.

(e) The commission shall give notice of an election under this section by publishing once a week for two consecutive weeks a substantial copy of the election order in a newspaper with general circulation in the district. The first publication of the notice must appear not later than the 35th day before the date of the election.

(f) The ballot for an election under this section must be printed to permit voting for or against the proposition: "The dissolution of the Bexar Metropolitan Water District and the transfer of all the District's assets, obligations, and duties to the water utility of the municipality with the largest population in the area served by the District."

(g) The commission shall certify that a majority of the voters voting in the district have voted:

(1) in favor of dissolution; or

(2) not in favor of dissolution.

SECTION 2.02. (a) Not later than the 20th day after the date on which the election results are officially declared, the commission shall certify that result to the secretary of state.

(b) If the proposition is approved by a majority of the voters voting in the election:

(1) Article 3 of this Act does not take effect; and

(2) Article 4 of this Act takes effect on the date the results are officially declared.

(c) If a majority of the voters voting in the election do not approve the proposition:

(1) Article 3 of this Act takes effect on the date the results are officially declared; and

(2) Article 4 of this Act does not take effect.

ARTICLE 3. CHANGES TO THE BEXAR METROPOLITAN WATER DISTRICT IF

VOTERS DO NOT DISSOLVE THE DISTRICT UNDER ARTICLE 2

SECTION 3.01. Section 8, Chapter 306, Acts of the 49th Legislature, Regular Session, 1945, is amended to read as follows:

Sec. 8. (a) [.] The seven [five (5)] members of the Board of Directors are [shall hereafter be] elected to staggered two-year terms in an election held on the uniform election date in November. Directors are elected from numbered single-member districts established by the Board. The Board shall revise each single-member district after each decennial census to reflect population changes and to conform with state law, the federal Voting Rights Act of 1965 (42 U.S.C. Section 1973 et seq.), and any applicable court order [for a term of six (6) years each, provided that an election for two (2) Directors for a term of six (6) years shall be held on the first Tuesday in April, 1954; the terms of three (3) members of the present Board shall be, and are, hereby, extended to the first Tuesday in April, 1957; and the present Directors shall determine such three (3) by lot. Three (3) Directors shall be elected on the first Tuesday in April, 1957, and two (2) Directors and three (3) Directors, alternately, shall be elected each three (3) years thereafter on the first Tuesday in April as the six-year terms expire]. At an election of Directors, the candidate from each single-member district who receives [The two (2) or three (3) persons, respectively, receiving] the greatest number of votes is [shall be declared] elected to represent that single-member district. Each Director shall hold office until his successor is [shall have been] elected or appointed and has [shall have] qualified.

(a-1) A person is not eligible to serve as a Director for more than three terms or for more than a total of seven years of service.[;]

(b) Such [such] elections shall be called, conducted and canvassed in the manner provided by the Election Code. [Chapter 25, General Laws of the Thirty-ninth Legislature, Regular Session, 1925, and any amendments thereto;]

(c) The [the] Board of Directors shall fill all vacancies on the Board by appointment and such appointees shall hold office until a successor elected at the next scheduled election date has qualified. [for the unexpired term for which they were appointed;]

(d) Any four [any three] members of the Board are [shall constitute] a quorum for the adoption or [of] passage of any resolution or order or the transaction of any business of the District.[;]

(e) A Director must [Directors succeeding the first Board, whether now or hereafter elected, shall] be a qualified voter of the single-member district from which the Director is elected [resident electors of Bexar County, Texas, and owners of taxable property within the area comprising said District, and shall organize in like manner].

(f) A payment to a Director for fees of office under Section 49.060, Water Code, may not be made for a meeting that occurs in a different fiscal year from the one in which the payment is made.

SECTION 3.02. Section 33A, Chapter 306, Acts of the 49th Legislature, Regular Session, 1945, is amended by amending Subsection (c) and adding Subsection (g) to read as follows:

(c) The oversight committee is comprised of seven [5] members appointed as follows [to represent the following members]:

(1) two Senators who represent Senate districts that include territory within the Bexar Metropolitan Water District, [the Senator sponsor of this Act, or, in the event this Senator cannot serve, a Senator] appointed by the Lieutenant Governor;

(2) two Representatives who represent [the] House districts that include territory within the District, [author of this Act, or, in the event this Representative cannot serve, a Representative] appointed by the Speaker of the Texas House of Representatives;

(3) one member with special expertise in the operation of public water utilities appointed by the Governor;

(4) one member appointed by the Governor to represent the public; and

(5) one [a] member of the Bexar County Commissioners Court who represents a precinct in which customers of the District reside.

(g) On or before December 31, 2012, the oversight committee shall provide a report under Subsection (e) of this section to the legislature. The committee is abolished and this section expires January 1, 2013.

SECTION 3.03. Chapter 306, Acts of the 49th Legislature, Regular Session, 1945, is amended by adding Sections 8A, 8B, 8C, 10A, and 10B to read as follows:

Sec. 8A. (a) To be eligible to be a candidate for or to be elected or appointed as a Director, a person must have:

(1) resided continuously in the single-member district that the person seeks to represent for 12 months immediately preceding the date of the regular filing deadline for the candidate's application for a place on the ballot;

(2) viewed the open government training video provided by the attorney general and provided to the Board a signed affidavit stating that the candidate viewed the video;

(3) obtained 200 signatures from individuals living in the District; and

(4) paid a filing fee of $250 or filed a petition in lieu of the filing fee that satisfies the requirements prescribed by Section 141.062, Election Code.

(b) In this subsection, "political contribution" and "specific-purpose committee" have the meanings assigned by Section 251.001, Election Code. A Director or a candidate for the office of Director may not knowingly accept political contributions from a person that in the aggregate exceed $500 in connection with each election in which the person is involved. For purposes of this subsection, a contribution to a specific-purpose committee for the purpose of supporting a candidate for the office of Director, opposing the candidate's opponent, or assisting the candidate as an officeholder is considered to be a contribution to the candidate.

Sec. 8B. (a) A person who is elected or appointed to and qualifies for office as a Director on or after the effective date of this section may not vote, deliberate, or be counted as a member in attendance at a meeting of the Board until the person completes a training program on District management issues. The training program must provide information to the person regarding:

(1) the enabling legislation that created the District;

(2) the operation of the District;

(3) the role and functions of the Board;

(4) the rules of the Board;

(5) the current budget for the Board;

(6) the results of the most recent formal audit of the Board;

(7) the requirements of the:

(A) open meetings law, Chapter 551, Government Code;

(B) public information law, Chapter 552, Government Code; and

(C) administrative procedure law, Chapter 2001, Government Code;

(8) the requirements of the conflict of interest laws and other laws relating to public officials; and

(9) any applicable ethics policies adopted by the Board or the Texas Ethics Commission.

(b) The Commission may create an advanced training program designed for a person who has previously completed a training program described by Subsection (a) of this section. If the Commission creates an advanced training program under this subsection, a person who completes that advanced training program is considered to have met the person's obligation under Subsection (a) of this section.

(c) Each Director who is elected or appointed on or after the effective date of this section shall complete a training program described by Subsection (a) or (b) of this section at least once in each term the Director serves.

(d) The Board shall adopt rules regarding the completion of the training program described by Subsection (a) or (b) of this section by a person who is elected or appointed to and qualifies for office as a Director before the effective date of this section. A Director described by this subsection who does not comply with Board rules is considered incompetent as to the performance of the duties of a Director in any action to remove the Director from office.

(e) A Director may not:

(1) accept or solicit a gift, favor, or service, the value of which exceeds $50 per gift, favor, or service, that:

(A) might reasonably influence the Director in the discharge of an official duty; or

(B) the Director knows or should know is being offered with the intent to influence the Director's official conduct;

(2) accept other employment or engage in a business or professional activity that the Director might reasonably expect would require or induce the Director to disclose confidential information acquired by reason of the official position;

(3) accept other employment or compensation that could reasonably be expected to impair the Director's independence of judgment in the performance of the Director's official duties;

(4) make personal investments that could reasonably be expected to create a substantial conflict between the Director's private interest and the interest of the District;

(5) intentionally or knowingly solicit, accept, or agree to accept any benefit for having exercised the Director's official powers or performed the Director's official duties in favor of another; or

(6) have a personal interest in an agreement executed by the District.

(f) Not later than April 30 each year, a Director shall file with the Bexar County clerk a verified financial statement complying with Sections 572.022, 572.023, 572.024, and 572.0252, Government Code. The District shall keep a copy of a financial statement filed under this section in the main office of the District.

Sec. 8C. (a) A Director may be recalled for:

(1) incompetency or official misconduct as defined by Section 21.022, Local Government Code;

(2) conviction of a felony;

(3) incapacity;

(4) failure to file a financial statement as required by Section 8B(f) of this Act;

(5) failure to complete a training program described by Section 8B(a) or (b) of this Act; or

(6) failure to maintain residency in the District.

(b) If at least 10 percent of the registered voters in a single-member voting district of the District submit a petition to the Board requesting the recall of the Director who serves that single-member voting district, the Board, not later than the 10th day after the date the petition is submitted, shall mail a written notice of the petition and the date of its submission to each registered voter in the single-member voting district.

(c) Not later than the 30th day after the date a petition requesting the recall of a Director is submitted, the Board shall order an election on the question of recalling the Director.

(d) A recall election under this section may be held on any uniform election date.

(e) If a majority of the voters of a single-member voting district voting at an election held under this section favor the recall of the Director who serves that single-member voting district, the Director is recalled and ceases to be a Director.

Sec. 10A. All Board reimbursements and expenditures must be approved by the Board in a regularly scheduled meeting.

Sec. 10B. The Board may not select the same auditor to conduct an audit required by Section 49.191, Water Code, for more than three consecutive annual audits.

SECTION 3.04. Chapter 306, Acts of the 49th Legislature, Regular Session, 1945, is amended by adding Sections 40 and 41 to read as follows:

Sec. 40. (a) If the conservator reports to the Commission that the District has been sufficiently rehabilitated to provide reliable, cost-effective, quality service to its customers, the Commission shall evaluate the condition of the District and determine whether:

(1) the District has been sufficiently rehabilitated to enable the District to provide reliable, cost-effective, quality service to its customers; and

(2) the conservatorship is no longer necessary.

(b) Not later than the 60th day after the date the Commission receives a report under this section, the Commission shall issue an order dissolving the conservatorship if the Commission determines the conservatorship is no longer necessary.

Sec. 41. (a) The conservator appointed under Section 34 of this Act continues to serve until the conservatorship is dissolved under Section 40 of this Act.

(b) The Commission may order the District to implement any part of the rehabilitation plan developed under Section 37 of this Act.

(c) If the District fails to comply with a Commission order, the Commission may assess a penalty against the District in the manner provided by Section 13.4151, Water Code.

SECTION 3.05. (a) Section 8, Chapter 306, Acts of the 49th Legislature, Regular Session, 1945, as amended by this Act, applies only to a member of the board of directors of the Bexar Metropolitan Water District who is elected to the board on or after the effective date of this Act.

(b) Section 8A, Chapter 306, Acts of the 49th Legislature, Regular Session, 1945, as added by this Act, applies only to a member of the board of directors of the Bexar Metropolitan Water District who is elected to the board on or after the effective date of this Act. A director who is elected before the effective date of this Act is governed by the law in effect when the director was elected, and the former law is continued in effect for that purpose.

(c) For two of the numbered single-member district director's positions that expire in 2012, the Bexar Metropolitan Water District shall call and hold an election on a uniform election date in that year to elect the directors for those positions for terms that expire on the uniform election date in November 2013. For the other two director's positions that expire in 2012, the district shall call and hold an election on the same uniform election date in that year to elect the directors for those positions for terms that expire on the uniform election date in November 2014. The district shall determine by lot which single-member districts shall elect directors to serve one-year terms and which shall elect directors to serve two-year terms.

ARTICLE 4. TRANSFER OF DISTRICT ASSETS AND LIABILITIES IF VOTERS

DISSOLVE THE BEXAR METROPOLITAN WATER DISTRICT UNDER ARTICLE 2

SECTION 4.01. Chapter 306, Acts of the 49th Legislature, Regular Session, 1945, is amended by adding Sections 50, 51, 52, 53, 54, 55, 56, and 57 to read as follows:

Sec. 50. (a) The term of each person who is serving as a Director of the District on the date of the canvass of the election authorized by Article 2 of the Act enacting this section expires on that date.

(b) Under the Commission's and Committee's oversight, the conservator shall transfer or assign to the System, beginning not later than the 60th day after the date the election results are certified the:

(1) rights and duties of the District associated with the provision of water services, including existing contracts, assets, and obligations of the District;

(2) files, records, and accounts of the District, including those that pertain to the control, finances, management, and operation of the District; and

(3) permits, approvals, and certificates necessary to provide water services.

(c) To the extent that the transfer of an item listed in Subsection (b) of this section requires the approval of a state agency, the state agency shall grant approval without additional notice or hearing.

(d) After the conservator has transferred the property, assets, and liabilities as prescribed by this section, the conservator shall file a written report with the Commission and the Committee summarizing the conservator's actions in dissolving the District.

(e) Not later than the 60th day after the date the Commission receives the report and determines that the requirements of this section have been fulfilled, the Commission shall enter an order dissolving the District and releasing the conservator from any further duty or obligation.

Sec. 51. This section expires on the fifth anniversary of the date the Commission enters an order dissolving the District.

Sec. 52. (a) Not later than five years after the date the election results were certified in favor of dissolution under Article 2 of the Act enacting this section, the System shall integrate the services and infrastructure of the District into the System in a reasonable and orderly manner based on the consideration of relevant information, including:

(1) the location and condition of the infrastructure;

(2) debt obligations;

(3) costs and revenue; and

(4) potential impacts on the customers of the District and the System.

(b) The System shall provide an annual report on the progress of integration to the Commission. The Commission for good cause may grant an extension to complete integration. If the System fails to comply with the requirements of this section, the Commission may assess a penalty against the System in the manner provided by Section 13.4151, Water Code.

(c) Until the date specified in Subsection (a) of this section, the System may operate the former District as a special project under the System's existing senior lien revenue bond ordinances.

(d) Once the conservator has transferred the assets, obligations, and duties to the System, and at least until the date specified in Subsection (a) of this section, the System shall provide affordable and reliable water services to all of the former ratepayers of the District.

Sec. 53. (a) For a 24-month period following the transfer of the employment of any employee of the former District, the System may not terminate that employee, except for cause, if the employee:

(1) is vested in the retirement program of the District on the effective date of this Act; and

(2) earns an annual base salary of less than $50,000 on the effective date of the Act enacting this section.

(b) An employee who qualifies under Subsection (a) of this section and who is terminated by the System has the same opportunity for appeal as a person employed by the System who is not an employee of the former District.

(c) The System is not required to employ an employee of the District if that person was formerly terminated from, or resigned in lieu of termination from, the System.

Sec. 54. From the effective date of the Act enacting this section until the date election results dissolving the District are certified to the Secretary of State, the attorney general may not approve any public security, as defined by Chapter 1201, Government Code, of the District unless:

(1) the Commission consents in writing before approval; or

(2) the District provides written evidence that issuing the public security represents a refunding of outstanding debt for the purpose of realizing debt service savings in each year that outstanding obligations are refunded and that results in a cumulative net present value savings of three percent compared to refunded debt service.

Sec. 55. (a) From the effective date of the Act enacting this section until the date election results dissolving the District are certified to the Secretary of State, a contract or other agreement entered into during that period to which the District is a party must include a provision that the contract or other agreement is subject to:

(1) review by the System; and

(2) termination by the System at the System's sole discretion, including the termination of all rights, duties, obligations, and liabilities of the District or the System under the contract or other agreement, if the contract or other agreement is assumed by the System.

(b) A person is not entitled to compensation for loss or other damages resulting from the termination of the contract or other agreement under Subsection (a)(2) of this section.

Sec. 56. From the effective date of the Act enacting this section until the date the election results dissolving the District are certified to the Secretary of State, the District may not dispose of, sell, transfer, assign, impair, or restrict any of the District's rights or assets outside the normal and customary course of business.

Sec. 57. A state agency at which an administrative or enforcement action is pending shall grant the District special consideration and reasonable extensions to identify and resolve the action in a manner satisfactory to the agency.

ARTICLE 5. NOTICE; EFFECTIVE DATE OF ACT

SECTION 5.01. (a) The legal notice of the intention to introduce this Act, setting forth the general substance of this Act, has been published as provided by law, and the notice and a copy of this Act have been furnished to all persons, agencies, officials, or entities to which they are required to be furnished under Section 59, Article XVI, Texas Constitution, and Chapter 313, Government Code.

(b) The governor, one of the required recipients, has submitted the notice and Act to the Texas Commission on Environmental Quality.

(c) The Texas Commission on Environmental Quality has filed its recommendations relating to this Act with the governor, the lieutenant governor, and the speaker of the house of representatives within the required time.

(d) All requirements of the constitution and laws of this state and the rules and procedures of the legislature with respect to the notice, introduction, and passage of this Act are fulfilled and accomplished.

SECTION 5.02. Except as otherwise provided by Article 2 of this Act, 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, 2011.

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