TO:	Honorable Doug Miller, Chair, House Committee on Special Purpose Districts
FROM:	Ursula Parks, Director, Legislative Budget Board
IN RE:	HB4201 by Smith (Relating to the creation of the Harris County Municipal Utility District No. 544; granting a limited power of eminent domain; providing authority to issue bonds; providing authority to impose assessments, fees, and taxes.), As Introduced

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 creates Harris County Municipal Utility District No. 544 (the "District") with the powers and duties of a standard municipal utility district under Water Code Chapters 49 and 54.
 
Population - The very specific description of the proposed boundaries does not allow staff to develop precise population estimates. Based on the Original Texas Land Surveys mentioned in HB 4201, staff is not able to determine a population estimate.
     
Population growth in the specific area since the 2010 census is unknown. The 2010 population estimate for areas of Harris County served by small systems or private wells (County-Other) is 204,630. The Harris County-Other population projections approved for the 2016 Region H Water Plan projects the population to grow to 245,944 in 2020, 291,438 in 2030 and 311,968 in 2040.
 
Location - The Proposed districts initial boundaries are described with a combination of Original Texas Land Surveys, Official Public Records of Harris 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 0.22 square miles in Northeast   Harris County. The proposed district is located northeast of Houston, and north of Baytown. The proposed district does not appear to fall within any existing Certificate of Convenience and Necessity.
 
 
Comments on Powers/Duties Different from Similar Types of Districts:  The bill grants the District road powers. The City of Houston (the "City") may annex all or part of the district into its corporate limits without annexing the entire District under the terms of a development agreement between the City of Houston and the owners of the land in the district that is covered by the development agreement. If a development agreement is not executed or the agreement has expired, nothing in this chapter limits the right of the City of Houston to annex the District.

 
If the City annexes all or part of the District into its corporate limits: (1) the District is not dissolved; (2) the ability of the District to issue bonds is not impaired or precluded; and (3) unless otherwise approved by the board and the governing body of the City, the city: (A) may not take over the property or other assets of the District; (B) may not assume any debts, liabilities, or other obligations of the District; (C) is not obligated to perform any functions of the District; and (D) is not obligated to pay a landowner or developer for expenses incurred by the landowner or developer in connection with the District that would otherwise be eligible for reimbursement from the proceeds of bonds issued by the District.


Notwithstanding Water Code Sections to the contrary, an allocation agreement between the City and the District that provides for the allocation of the taxes or revenues of the District and the city following the date of inclusion of all the District's territory in the corporate limits of the city may provide that the total annual ad valorem taxes collected by the City and the District from taxable property in the district may exceed the City's ad valorem tax on that property.   The District may not exercise the power of eminent domain outside the District without the written consent of the City; and If the bill does not receive a two-thirds vote of all members elected to each house, the District may not exercise the power of eminent domain. 

 
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:  As with general law districts, the TCEQ will have general supervisory authority, including the review of bonds issued by the District and the review of financial reports.
 
Water Use - HB 4201 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 Harris County, 29 percent of the total water use was groundwater (Gulf Coast Aquifer) in 2012. Eighty-six percent of all the groundwater pumping was for municipal use. The water source of the proposed district might pursue is unknown.