TO:	Honorable Jim Murphy, Chair, House Committee on Special Purpose Districts
FROM:	Ursula Parks, Director, Legislative Budget Board
IN RE:	HB3136 by Wray ( Relating to the creation of the Windsor Hills Municipal Management District No. 1; providing authority to issue bonds; providing authority to impose assessments.), 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:
 
This bill creates Windsor Hills Municipal Management District No. 1 (District) with the powers and duties of a standard municipal management district under Local Government Code Chapter 375. 

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 CSHB 3136, staff is unable to determine a population estimate.
     
Population growth in the specific area since the 2010 census is unknown. The 2010 population estimate for areas of Ellis County served by small systems or private wells (County-Other) is 6,012. The Ellis County-Other population projections approved for the 2017 State Water Plan projects the population to grow to 6,100 in 2020, 6,500 in 2030 and 7,177 in 2040.
 
Location - The Proposed district's initial boundaries are described with a combination of Original Texas Land Surveys, Ellis 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 1.41 square miles in northwestern Ellis County, located north of U.S. Highway 287 between the cities of Midlothian and Mansfield.  The proposed district may overlap portions of an existing Certificate of Convenience and Necessity (CCN) boundary held by the City of Midlothian.
 
Comments on Powers/Duties Different from Similar Types of Districts:  The House Committee Substitute defines the Commission as the TCEQ; the House Committee Substitute clarifies that the development agreement allows for a maximum of 545 residential units; the House Committee Substitute removes reference to the term services from the finance plan; the House Committee Substitute adds that the District may not exercise any powers until the finance plan is executed; the House Committee Substitute clarifies that the District territory refers to the initial territory; the House Committee Substitute removes the District's eligibility of inclusion in special zones; the board of directors is governed by five elected voters; the House Committee Substitute names the directors that will serve on the initial board and describes term limits until permanent directors are elected; board director qualifications are governed by Local Government Code Section 375.063; members of the board will fill a vacancy on the board; the House Committee substitute adds that Local Government Code Chapter 171 governs conflicts of interest; the House Committee Substitute removes Sections 3946.103-105: water district powers, road district powers, and public improvement district powers; improvement projects may be located inside or outside the district; the House Committee Substitute specifies that the District may adopt rules to administer or operate the district and enforce its rules by injunctive relief; the House Committee Substitute removes District authority to acquire, lease as lessor or lessee, construct, develop, own, operate, and maintain parking facilities; the House Committee Substitute removes the stipulation that the District may not construct, acquire, maintain, or operate a toll road; the House Committee Substitute removes the requirement that the District must comply with the development agreement before undertaking an improvement project; the House Committee Substitute adds city requirements for improvement projects and grants additional city powers regarding improvement projects; the City may, by ordinance, order, or resolution require that title to all or any portion on an improvement projects vest in the city; authorize the District to convey the project to the City; comply with any City Ordinance; the House Committee Substitute creates terms for contracts the District enters into, and specifies the District may contract for improvement projects; the House Committee Substitute specifies that Chapter 372, Local Government Code applies to improvements financed by an obligation that will be conveyed to or operated and maintained by a municipality or retail utility provider; District bonds may be secured and made payable wholly or partly by a pledge of any part of the money the District receives from improvement revenue; the House Committee Substitute specifies that an assessment may be imposed to pay the cost of any authorized district improvement; the House Committee Substitute specifies that the District may not impose an impact fee; the House Committee Substitute specifies that after the City dissolves the District, the City shall succeed to the rights and obligations of the District regarding enforcement and collection of assessments or other revenue; have and exercise all district powers to enforce and collect; and assume assets and liabilities. 
 

The District may not exercise any powers under this chapter until the development agreement is executed; the District is to be governed by a board of five voting directors that are appointed by the governing body of the City of Midlothian (City); the board of directors will also include the City's manager, and chief financial officer that will serve as non-voting directors; Texas Water Code, Section 49.052 (Disqualifications of Directors) will not apply to the District's board members; the District may contract with a governmental or private entity, on terms determined by the board, to carry out a power or duty authorized by this chapter or to accomplish a purpose for which the District is created; the district may acquire, lease as lessor or lessee, construct, develop, own, operate, and maintain parking facilities; the District may not exercise the power of eminent domain; the District may not construct, acquire, maintain, or operate a toll road; the District may not undertake an improvement project or service unless the board determines the project or service: is necessary to accomplish a public purpose of the district; and complies with the development agreement or the parties to the development agreement agree to the project or service, in writing; the District may undertake an improvement project or service that confers a special benefit on a definable area in the district and levy and collect a special assessment on benefited property in the district; before the District may issue bonds, impose taxes, or borrow money, the obligation must be authorized by the City's finance plan; 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 District may not impose an ad valorem tax; the governing body of the City may dissolve the district by ordinance.
 
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 - CSHB 3136 specifies that "the district has the powers provided by the general laws "relating to a special district created under Section 59, Article XVI, and Section 52 and 52-a, Article III Texas Constitution."
 
Within Ellis County, 69 percent of the total water use was surface water in 2014. Seventy eight percent of all the surface water use was for municipal use. The water source of the proposed district might pursue is unknown.