82R21659 SLB-F

By: Uresti S.B. No. 1898

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, or as requested by the Commission or Committee, 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 ARTICLE 3

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 the commission, after consultation with the secretary of state, shall hold an election in the district on the question of dissolving the district and disposing of the district's assets and obligations.

(c) The commission may contract with one or more entities 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 beginning of early voting for 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 owned by 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, Article 3 of this Act takes effect on the date the results are certified.

(c) If a majority of the voters voting in the election do not approve the proposition, Article 3 of this Act does not take effect.

ARTICLE 3. TRANSFER OF DISTRICT ASSETS AND LIABILITIES IF VOTERS

DISSOLVE THE BEXAR METROPOLITAN WATER DISTRICT UNDER ARTICLE 2

SECTION 3.01. Chapter 306, Acts of the 49th Legislature, Regular Session, 1945, is amended by adding Sections 50, 51, 52, 53, 54, 55, 56, 57, and 58 to read as follows:

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

(b) On the date the election results are certified to the Secretary of State, the System assumes control of the operation and management of the District, except as provided by Sections 51 and 52 of this Act and other law applicable to the System.

(c) Not later than the 90th day after the date the election results are certified to the Secretary of State, the conservator, under the oversight of the Commission and the Committee, shall transfer or assign the:

(1) rights and duties of the District, 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.

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

(e) 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.

(f) 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. (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) prudent utility practices and fiscal policies;

(4) costs and revenue; and

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

(b) During the integration period described by Subsection (a) of this section, 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 of not more than three additional years.

(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, the System shall provide affordable and reliable water services to all of the former ratepayers of the District under the System's certificate of convenience and necessity.

(e) After the integration described by Subsection (a) of this section is complete, the System shall provide water service to former ratepayers of the District in the same manner the System provides water service to other ratepayers of the System. The integration is considered complete if:

(1) the areas of service located in the former District are no longer operated as a special project within the System;

(2) the ratepayers of the former District pay the same rates for services provided by the System as other similarly situated ratepayers of the System; and

(3) the ratepayers of the former District receive water service that meets the requirements of the Commission.

(f) If the System fails to integrate the services and infrastructure of the District into the System in accordance with Subsection (a) of this section, the Commission may find the System in violation of the obligation under the System's certificate of convenience and necessity to provide continuous and adequate service. The Commission may bring an enforcement action against the System, including the imposition of an administrative penalty under Section 13.4151, Water Code.

Sec. 52. (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, as defined by the System's standards of conduct for all employees, 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) For a five-year period following the transfer of the employment of any employee of the former District, the System may not terminate that employee, except for cause, as defined by the System's standards of conduct for all employees, if:

(1) the employee meets the requirements of Subsections (a)(1) and (2) of this section; and

(2) the sum of the years of service of the employee and the employee's age is equal to or greater than 80.

(c) An employee who qualifies under Subsection (a) or (b) 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.

(d) 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. 53. 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. 54. (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, amended, or renewed 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. 55. 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. 56. A state agency at which an administrative or enforcement action is pending against the District shall grant the System special consideration and reasonable extensions to identify and resolve the action in a manner satisfactory to the agency.

Sec. 57. (a) In this section, "advisory committee" means a committee appointed under Subsection (b) of this section.

(b) Not later than the 60th day after the date the District is dissolved under Section 50 of this Act, the System shall work cooperatively with the commissioners court of each county in which the former District was wholly or partly located to establish an advisory committee to advise the System regarding the integration of the services and infrastructure of the former District, including service integration issues and the delivery of water services by the System, in specific areas or water systems located in the area outside the corporate boundaries of the largest municipality served by the System.

(c) The advisory committee shall include one representative from each county served by the System who resides in the boundaries of the former District or the owner or operator of a business located in the boundaries of the former District.

(d) Until the integration described by Section 51 of this Act is complete, the board of directors of the System shall:

(1) consult with the advisory committee about the matters described by Subsection (b) of this section at least quarterly, during a regularly scheduled or specially called board meeting of the System; and

(2) on request by the advisory committee chair, provide members of the advisory committee an opportunity to address the System's board of trustees on matters relating to the duties of the advisory committee.

ARTICLE 4. DEADLINES; NOTICE; EFFECTIVE DATE OF ACT

SECTION 4.01. If a deadline established in Articles 1 through 3 of this Act cannot be met because of a requirement imposed by the federal Voting Rights Act of 1965 (42 U.S.C. Section 1973c or any other provisions of that Act), the deadline is the next available date after the requirement is met.

SECTION 4.02. (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 4.03. 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.