TO:	Honorable Jim Murphy, Chair, House Committee on Special Purpose Districts
FROM:	Ursula Parks, Director, Legislative Budget Board
IN RE:	HB4301 by Isaac (Relating to the creation of the Driftwood Conservation District; granting a limited power of eminent domain; providing authority to issue bonds; providing authority to impose assessments, fees, and taxes.), As Introduced

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 Driftwood Conservation District (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 4301, 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 Hays County served by small systems or private wells (County-Other) is 35,048. The Hays County-Other population projections approved for the 2017 State Water Plan projects the population to grow to 42,032 in 2020, 49,902 in 2030 and 78,147 in 2040.
 
Location - The Proposed district's initial boundaries are described with a combination of Original Texas Land Surveys, Hays County Real Property Records and metes and bounds. Due to the complexity of these boundaries for the various sub areas of the district, staff was able to determine only the general location of the proposed district.
 
The proposed district's area is approximately 0.82 square miles in central Hays County, located east of the City of Dripping Springs, and west of the City of Buda along Farm to Market Road 967. The proposed district does not appear to overlap any existing Certificate of Convenience and Necessity (CCN) boundary.
 
Comments on Powers/Duties Different from Similar Types of Districts:  The bill requires the TCEQ to appoint the temporary directors upon receipt from the owners of a majority of the assessed value of the real property in the District; the bill requires the temporary directors to hold an election to confirm the creation of the district and to elect five permanent directors as provided by Section 49.102, Water Code; the temporary directors may not hold an election for permanent directors until each municipality in whose corporate limits or extraterritorial jurisdiction the District is located has consented by ordinance or resolution to the creation of the District and to the inclusion of land in the District; the bill grants the District authority for road projects; the bill specifies that the District may provide or finance, or contract to provide or finance the following types of projects: a public improvement, facility, or service that may be provided by a municipal utility district or a municipal management district (MMD), including: water, wastewater, reclamation, drainage, road, trail, or bridge improvement, utilization and reuse of treated effluent in landscape and other features, including temporary holding features, transportation of treated effluent for reuse, and injection of treated stormwater runoff or stormwater collected from roofs into aquifers as storage or to recharge the aquifer; and the purchase and maintenance of conservation land for endangered species, including the cost of any permits relating to endangered species or the maintenance of the land and purchasing land or easements for conservation mitigation; the District may inject stormwater without the consent, concurrence, or authorization of a groundwater conservation district, but only if the District acquires a permit as required by Section 27.011, Water Code; 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 375.163 relation to the exemption of recreational, park, or scenic use property does not apply to the District; the bill allows the District to divide; the District may not issue bonds payable from ad valorem taxes to finance a road project unless the issuance is approved by a vote of a two-thirds majority of the District voters voting at an election held for that purpose; the District may not impose an impact fee or assessment on the property of: an electric utility or a power generation company; a gas utility; a telecommunications provider; or a person who provides to the public cable television or advanced telecommunications services; 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 valuation; the District may define areas or designate certain property of the district to pay for improvements, facilities, or services that primarily benefit that area or property and do not generally and directly benefit the District as a whole; 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 4301 specifies that "the district has the powers and duties provided by the general law of this state, including Chapters 49 and 54, Water Code, applicable to municipal utility districts created under Section 59, Article XVI, Texas Constitution".
 
Within Hays County, 40 percent of the total water use was groundwater (Edwards Aquifer) in 2014. Eighty two percent of all the groundwater pumping was for municipal use. The water source of the proposed district might pursue is unknown.