83R10454 JXC-D

By: Rodriguez S.B. No. 1227

A BILL TO BE ENTITLED

AN ACT

relating to the creation of an on-bill repayment program to encourage improvements to real property related to water efficiency; authorizing a fee.

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

SECTION 1. Subchapter A, Chapter 5, Property Code, is amended by adding Section 5.021 to read as follows:

Sec. 5.021. NOTICE OF ON-BILL REPAYMENT OBLIGATIONS. (a) A seller of residential real property that is subject to an obligation under Subchapter P, Chapter 13, Water Code, shall give to the purchaser of the property a written notice that discloses the obligation.

(b) The seller shall deliver the notice to the purchaser before the date the executory contract binds the purchaser to purchase the property.

(c) This section does not apply to a transfer:

(1) under a court order or foreclosure sale;

(2) by a trustee in bankruptcy;

(3) to a mortgagee by a mortgagor or successor in interest or to a beneficiary of a deed of trust by a trustor or successor in interest;

(4) by a mortgagee or a beneficiary under a deed of trust who has acquired the land at a sale conducted under a power of sale under a deed of trust or a sale under a court-ordered foreclosure or has acquired the land by a deed in lieu of foreclosure;

(5) by a fiduciary in the course of the administration of a decedent's estate, guardianship, conservatorship, or trust;

(6) from one co-owner to another co-owner of an undivided interest in the real property;

(7) to a spouse or a person in the lineal line of consanguinity of the seller;

(8) to or from a governmental entity; or

(9) of only a mineral interest, leasehold interest, or security interest.

(d) A violation of this section does not invalidate a conveyance. A seller who fails to make a disclosure as required by this section is liable to the transferee for three times the actual damages incurred.

SECTION 2. Chapter 13, Water Code, is amended by adding Subchapter P to read as follows:

SUBCHAPTER P. ON-BILL REPAYMENT PROGRAM

Sec. 13.601. DEFINITIONS. In this subchapter:

(1) "Charge" means an amount included on a retail water or sewer service bill that is due under an on-bill repayment program.

(2) "Eligible water improvement" means a water improvement that meets the requirements for participation in an on-bill repayment program.

(3) "Improved property" means property on which a water improvement has been built under an on-bill repayment program.

(4) "Lender" means a person who provides financing on an eligible water improvement or to whom payment is owed for financing an eligible water improvement that is being repaid through an on-bill repayment program.

(5) "Obligation" means money owed under an agreement to repay financed eligible water improvements through an on-bill repayment program.

Sec. 13.602. ON-BILL REPAYMENT PROGRAM. (a) The commission by rule shall establish an on-bill repayment program to facilitate financing and repayment of eligible water improvements between customers, lenders, and retail public utilities.

(b) Under the program, a customer and a lender who finances an eligible water improvement on the customer's property may agree to add the customer's loan payments to the customer's retail water or sewer service bill. The commission shall require the retail public utility that provides service to the customer to participate in the program after the commission receives a written request for participation from the customer or lender.

Sec. 13.603. MASTER SERVICER. (a) The commission shall appoint a government agency or a private person to administer the program as master servicer. The master servicer shall:

(1) manage payments and maintain documentation for all program participants;

(2) collect money paid to retail public utilities under the program and promptly remit payment to lenders as applicable; and

(3) perform all other duties assigned by commission rule.

(b) The commission by rule shall:

(1) authorize the master servicer to collect fees, as approved by the commission, from on-bill repayment program lenders to cover costs; and

(2) grant the master servicer any other rights or powers the commission considers necessary.

Sec. 13.604. PROGRAM STANDARDS. The commission by rule shall adopt minimum standards for the on-bill repayment program. A retail public utility may exceed the standards. The minimum standards must include:

(1) a list of water improvement projects that are eligible for the on-bill repayment program;

(2) a limitation or prohibition on the removal of water improvements from a property before an outstanding on-bill repayment obligation is satisfied;

(3) a requirement that any outstanding obligation created under the program:

(A) remains in effect regardless of any change in ownership or possession of the improved property; and

(B) at all times constitutes an obligation of the retail water or sewer service customer of record on the improved property;

(4) a requirement that any arrearages on charges under the program accruing before transfer of the approved property, unless expressly assumed, remain the responsibility of the retail water or sewer service customer of record on the improved property at the time the arrearage accrued; and

(5) a requirement that charges under the program be included on a customer's retail water or sewer service bill.

Sec. 13.605. FAILURE TO PAY. If a customer fails to pay the full amount of a monthly charge under the program, the failure to pay is treated as a failure to pay for retail water or sewer service.

Sec. 13.606. PARTIAL PAYMENT. The commission shall adopt rules to determine the division of a partial payment between the retail water or sewer services billed and the on-bill repayment program charge.

Sec. 13.607. LENDERS. (a) A lender shall determine loan eligibility, including credit evaluations.

(b) A lender who participates in the program must work with the master servicer when providing a loan under the program.

(c) The commission by rule shall approve the financing structures through which a lender may provide financing under the on-bill repayment program.

Sec. 13.608. ACCEPTANCE OF OBLIGATION. If a customer applies for and accepts retail water or sewer service on an improved property that is subject to an outstanding obligation under an on-bill repayment program, the customer is considered to have accepted the obligation for the charges that accrue under the on-bill repayment program during the receipt of services.

Sec. 13.609. EXCEPTION RELATING TO REMOVING IMPROVEMENT. Notwithstanding any other provision of this subchapter, the commission by rule may exempt any eligible water improvement or any class or category of eligible water improvement from a limitation or prohibition prescribed by the commission under Section 13.604(3).

Sec. 13.610. RECORD FILED WITH COUNTY CLERK. (a) The commission by rule shall require a retail public utility or the utility's agent to record notice of an obligation on an improved property with the county clerk of the county in which the property is located.

(b) The notice required by this section does not create a security interest in the improved property.

(c) On satisfaction of the obligation, the retail public utility or the utility's agent shall file notice with the county clerk in the county in which the property is located that the obligation has been satisfied.

(d) The county clerk shall file notices under this section with the deed records.

Sec. 13.611. REVENUES FOR RATE PURPOSES. Payments collected by a utility under this subchapter are not revenues that may be considered for the purposes of Subchapter F.

SECTION 3. As soon as practicable after the effective date of this Act, but not later than January 1, 2014, the Texas Commission on Environmental Quality shall adopt rules to implement the provisions of this Act.

SECTION 4. This Act takes effect September 1, 2013.