TO:	Honorable Jim Murphy, Chair, House Committee on Special Purpose Districts
FROM:	Ursula Parks, Director, Legislative Budget Board
IN RE:	HB4268 by Sanford ( Relating to the creation of the Celina Municipal Management District No. 2; providing a limited authority of eminent domain; providing authority to issue bonds and impose assessments, fees, and taxes.), 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 Celina Municipal Management District No. 2 (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 HB 4268, 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 the City of Celina is 6,028. The City of Celina population projections approved for the 2017 State Water Plan projects the population to be 22,675 in 2020, 48,000 in 2030 and 89,000 in 2040.
 
Location - The Proposed district's initial boundaries are described with a combination of Original Texas Land Surveys, Collin 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 2.18 square miles in northwestern Collin County, located partially within the northeastern city limits of the City of Celina, and east of State Highway 289.
 
Comments on Powers/Duties Different from Similar Types of Districts: The House Committee Substitute clarifies that consent from the city refers to the governing body of the city, and consent is obtained from the city by ordinance or resolution before a bond authorization election, construction or financing of an improvement project other than a water, sewer, or drainage facility or road, the addition of territory, acquiring limited eminent domain power, and issuing bonds, notes or other obligations to maintain or repair an existing improvement project; the House Committee Substitute adds that Special Districts Local Law 3798.053 also applies to the terms of the governing body; the House Committee Substitute deletes any district and adds that all districts created under Subchapter D collectively may add a total area of not more than 100 acres; the House Committee Substitute adds that territory added must be contiguous to the district at the time of the addition; the House Committee Substitute deletes the district may issue bonds, notes, or other obligations to maintain or repair an existing improvement project only if the district obtains written consent from the governing body of the city; the House Committee Substitute adds Subchapter Z with special bond previsions that the District not advertise for an issuance of bonds from revenue derived from assessments on real property in the District until the completion of at least 25 percent of the projected value of the improvements, including houses and other buildings that are liable for District assessments and necessary to support the District bonds; the House Committee Substitute adds that the District may not issue bonds from revenue derived from assessments on real property until: the District submits to the TCEQ an engineer 's report describing the project for which the bonds will provide funding, including data, profiles, maps, plans, and specifications related to the project and a cash flow analysis to determine the projected rate of assessment; the completion of at least 75 percent of the projected value of the improvements, including houses and other buildings, that are liable for District assessments and necessary to support the District bonds; and the District has obtained an independent market study from a firm recognized in the area of real estate market analysis supporting the development projects for the real property that is liable for District assessments and necessary to support the District bonds; the House Committee Substitute adds that the District may not collect an assessment to be used for the payment of bonds until: the completion of at least 95 percent of the underground water, wastewater, and drainage facilities financed from bond proceeds that are necessary to serve the projected build-out, as certified by the District's engineer; the District or other appropriate party has secured the groundwater, surface water, and water discharge permits that are necessary to secure capacity to support the projected build-out; the completion of at least 95 percent of lift station, water plant, and sewage treatment plant capacity sufficient to serve the connections constructed in the project for a period of not less than 18 months, as certified by the District's engineer; and the completion of at least 95 percent of the streets and roads that are necessary to provide access to the areas served by utilities and financed by the proceeds of bonds issued by the District, as certified by the District's engineer and constructed in accordance with municipal or county standards.
 
The board may not hold an election to authorize the issuance of bonds until the City of Celina (City) has consented by ordinance or resolution to the creation of the District and to the inclusion of land in the District; this bill specifies that if all of the territory of the District is annexed by the City into the City's corporate limits, the District retains all of the District's outstanding debt and obligations and continues to operate under this chapter until the District is dissolved; the District is governed by a board of five directors; the bill requires the TCEQ to appoint four of the five directors upon receipt of a petition from the owners of a majority of the assessed value of the real property in the District; one director is appointed by the City; the board may not create an executive committee to exercise the powers of the board; the District may provide, design, construct, acquire, improve, relocate, operate, maintain, or finance an improvement project or service using money available to the District, or contract with a governmental or private entity to provide, design, construct, acquire, improve, relocate, operate, maintain, or finance an improvement project or service; the District may not construct or finance an improvement project, other than a water, sewer, or drainage facility or road, without obtaining the written consent of the City; the District may not provide retail water or sewer services; the board may add or remove territory, up to a total of 100 acres, as provided by Subchapter J, Chapter 49, Water Code; the District may not exercise the power of eminent domain unless the District obtains written consent from the City; the bill allows the District to divide only if the District has no outstanding bonded debt; the District may not impose an assessment on a municipality, county, or other political subdivision; the City may dissolve the District by ordinance; 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 4268 specifies that the district "may not provide retail water or sewer services" but had limited powers and duties provided by the general law of the state, including Subchapter J of Chapters 49 Water Code, applicable to management districts created under Section 59, Article XVI, Texas Constitution.
 
Within the City of Celina, 64 percent of the total water use was surface water in 2015. Thirty six percent of total water use was from groundwater (Trinity and Woodbine Aquifer) in 2015.