TO:	Honorable Doug Miller, Chair, House Committee on Special Purpose Districts
FROM:	Ursula Parks, Director, Legislative Budget Board
IN RE:	HB3605 by Burns (Relating to the creation of the Joshua Farms Municipal Management District No. 2; granting a limited power of eminent domain; providing authority to issue bonds; providing authority to impose assessments or fees.), Committee Report 1st House, Substituted

The Legislative Budget Board, in cooperation with the Texas Water Development Board (TWDB) and the Texas Commission on Environmental Quality (TCEQ), has determined that:
 
The bill (as substituted) creates Joshua Farms Management District No. 2 (the "District") with the powers and duties of a municipal management district under Local Government Code Chapter 375.
 
Population - The very specific description of the location of the district and the proposed boundaries does not allow staff to develop a population estimate.
     
Population growth in the specific area since the 2010 census is unknown. The 2010 population estimate for areas of Johnson County served by small systems or private wells ('County-Other') is 14,888. The Johnson County-Other population projections approved for the 2016 Region G Water Plan projects the population to grow to 15,131 in 2020, 14,810 in 2030 and 15,224 in 2040.
 
Location - The Proposed districts initial boundaries are described with a combination of Original Texas Land Surveys, County Records of Johnson County and metes and bounds. Due to the complexity of these boundaries for the various sub areas of the district, staff is able to determine only the general location of the proposed district.
 
The proposed district's area is approximately less than 1 square miles in central northwest Johnson County, just west of the City of Joshua. The City of Cleburne is south of the proposed district, with Godley to the west, and Burleson to the north east. The proposed district could fall within Johnson County SUD's Certificate of Convenience and Necessity (CCN).
 
Comments on Powers/Duties Different from Similar Types of Districts:  Specifies that the District has the powers of a municipal utility district operating under Chapters 49 and 54 (including road powers) of the Water Code, and public improvement district powers as provided by Chapter 372, Local Government Code.
 
The bill allows the District to create economic development programs and exercise economic development powers under Chapter 380, Local Government Code and Subchapter A, Chapter 1509, Government Code.
 
The bill specifies that the initial directors may not hold a confirmation election until the City of Cleburne (the "City") has entered into a development and operating agreement, and that the District is dissolved March 1, 2018, if the development and operating agreement is not entered into before that date
 
The bill specifies that the District may annex or remove land as provided by Subchapter J, Chapter 49, Water Code.  If the land is within the extraterritorial jurisdiction of the City, the District must receive City approval to add or remove land.
 
Local Government Code Section 375.094 states that an MMD does not have eminent domain powers.  The bill specifies that this section does not apply to the District.  The bill further specifies the processes by which the District may utilize eminent domain.
 
The bill specifies that the District's board must determine that a project is necessary to accomplish a public purpose of the District, and that the project may be located inside or outside the District.  The District may also undertake a project within a defined area of the District, and may collect a special assessment on said property.
 
The bill allows the District to divide into two or more districts only if the District has no outstanding bonded debt.
 
Local Government Code Section 375.208 states that an MMD must receive TCEQ approval of bonds issued for water, wastewater, and drainage facilities.  Section 49.181 provides TCEQ's jurisdiction over the issuance of bonds by districts.  The bill specifies that these sections do not apply to the District.
 
The bill specifies that the District may levy maintenance taxes and a contract tax.
 
Local Government Code Section 375.161 states that an MMD 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 fourplexes.  The bill specifies that this section does not apply to the District.
 
The bill specifies that the City may dissolve the District by ordinance.
 
The bill specifies that the City's consent is required for: the District's creation; any addition of powers of the District; the District establishing police and fire departments; and the District's use of eminent domain.
 
The bill specifies that the District may not levy an ad valorem tax.
 
Overlapping Services:  TCEQ does not have mapping information for water and/or wastewater providers because this function was transferred from the TCEQ to the Public Utility Commission on September 1, 2014.  As a result, TCEQ is unaware of possible overlapping service providers.
 
TCEQ's Supervision:  Similar to general law districts, the TCEQ will have the authority to review of financial reports/audits.
 
 Water Use - HB 3605 specifies that "the district has the powers and duties provided by the general law of the state, including Chapters 49 and 54, Water Code, applicable to municipal utility districts created under Section 59, Article XVI, Texas Constitution".
 
Within Johnson County, 33 Percent of the total water use was groundwater (Trinity-Subcrop Aquifer) in 2012. Eighty percent of all the groundwater pumping was for municipal use. The water source of the proposed district might pursue is unknown.