TO:	Honorable Jim Murphy, Chair, House Committee on Special Purpose Districts
FROM:	Ursula Parks, Director, Legislative Budget Board
IN RE:	HB4294 by Holland ( Relating to the creation of the North Celina Municipal Management District No. 3; providing a limited authority of eminent domain; providing authority to impose taxes, levy assessments, and issue bonds.), 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 North Celina Municipal Management District No. 3 (District) with the powers and duties of a standard municipal management district under Local Government Code Chapter 375 and a standard public improvement district under Local Government Code Chapter 372.

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 4294, 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 5.06 square miles in northwestern Collin County, located partially within the northern city limits of the City of Celina.
 
Comments on Powers/Duties Different from Similar Types of Districts:  The House Committee Substitute revises language of Special District Local Laws Code by removing exceptions to provisions of Chapter 375, and adding language for requirements of consent of the municipality to hold an election; the House Committee Substitute also adds five names to the Board of Directors to fulfill the positions of initial directors; the House Committee Substitute also revises language to the section for Division of District, which describes the prerequisites and procedures for division; the House Committee Substitute also adds language to Subchapter E Taxes and Bonds regarding when issuance of bonds payable by taxes are permitted.
 
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; Local Government Code Section 375.164 states that the board may exempt residential property from all or a part of the assessments levied on that property or determine that residential property will not be benefited by the proposed improvement project or services. The bill specifies that this section does not apply to the District; Local Government Code Chapter 375, Subchapter B, relating the creation of a district, and Subchapter O, relating to defense adjustment management authority, do not apply to the District; this bill specifies that if all of the territory of the District is annexed by the City of Celina (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 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 in accordance with: Chapter 372, Local Government Code; or Chapter 375, Local Government Code; 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's governing body; a District improvement project may be located inside or outside of the District; before a District improvement project may be put into operation, the District must transfer ownership of the project to the City. The transfer of ownership is complete on the City's acceptance of ownership; the District may not provide retail water or sewer services; the board may add or remove territory as provided by Subchapter J, Chapter 49, Water Code. The district may add territory only if the District obtains written consent from the governing body of the City; the District and any district created by division may not add a total area of more than 100 acres; the District may not exercise the power of eminent domain unless the District obtains written consent from the governing body of the City; the District, including territory added to the district under Section 3959.107, may be divided into two or more new districts only if the District has no outstanding bonded debt. Territory previously added to the District under Section 3959.107 may be included in a new district.

The board, on its own motion or on receipt of a petition signed by an owner of real property in the District, may adopt an order proposing to divide the District; the new districts may contract with each other for any matter the boards of the new districts consider appropriate; 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 4294 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 Chapter 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.