TO:	Honorable Eddie Lucio, Jr., Chair, Senate Committee on Intergovernmental Relations
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 2nd 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:   House Committee Substitute 2 removes dollar limit amounts on board of directors' compensation and instead states that directors are entitled to receive fees of office and reimbursement for actual expenses in the manner provided by Water Code, Chapter 49.060. House Committee Substitute 2 specifies that Local Government Code Section 375.069, stating that a position on the board may not be construed to be a civil office of emolument for any purpose, including those purposes described by Article XVI, Section 40, of the Texas Constitution, does not apply to the board. Local Government Code Section 375.070 stating that a director is not entitled to compensation for service on the board but is entitled to be reimbursed for necessary expenses incurred in carrying out the duties and responsibilities of a directors does not apply to the board.
 
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.