TO:	Honorable Eddie Lucio, Jr., Chair, Senate Committee on Intergovernmental Relations
FROM:	Ursula Parks, Director, Legislative Budget Board
IN RE:	HB2566 by Stucky (Relating to the creation of the Denton County Municipal Utility District No. 9; granting a limited power of eminent domain; providing authority to issue bonds; providing authority to impose assessments, fees, and taxes.), As Engrossed

The Legislative Budget Board, in cooperation with the Texas Water Development Board (TWDB) and the Texas Commission on Environmental Quality (TCEQ), has determined that:
 
This bill creates Denton County Municipal Utility District No. 9 (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 2566, the population is estimated to be less than 5 people according to 2010 Census blocks.
     
Population growth in the specific area since the 2010 census is unknown. The 2010 population estimate for areas of Denton County served by small systems or private wells (County-Other) is 28,448. The Denton County-Other population projections approved for the 2017 State Water Plan projects the population to grow to 30,207 in 2020, 33,609 in 2030 and 37,232 in 2040.

Location - The Proposed district's initial boundaries are described with a combination of Original Texas Land Surveys, Denton County Real Property Records 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 0.36 square miles in western Denton County, located west of the City of Denton, and Northwest of the Town of Ponder. The proposed district may overlap portions of an existing Certificate of Convenience and Necessity (CCN) boundary held by Aqua Texas, INC.
 
Comments on Powers/Duties Different from Similar Types of Districts:  The House Committee Substitute adds Section 7977.106 to the Special District Local Laws Code, which allows the District to: establish, operate, and maintain a fire department; contract with another political subdivision for the joint operation of a fire department; or contract with any other person to perform firefighting services in the District and may issue bonds and impose taxes to pay for the department and the activities; the House Committee Substitute adds Section 7977.107 to the Special District Local Laws Code, which allows the District to adopt and enforce all necessary changes, mandatory fees, or rentals, in addition to taxes, for providing or making available any District facility or service, including firefighting activities.
 
The bill requires the TCEQ to appoint the initial directors upon receipt of a petition from the owners of a majority of the assessed value of the real property in the district; this bill grants the District authority for road projects; the bill specifies that at the time of issuance, the total principal amount of bonds or other obligations issued or incurred to finance road projects and payable from ad valorem taxes may not exceed one-fourth of the assessed value of real property in the District; 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 bond review authority and review of financial reports.
 
Water Use - HB 2566 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 Denton County, 88 percent of the total water use was surface water in 2014. Ninety seven percent of all the surface water use was for municipal purposes. The water source of the proposed district might pursue is unknown.