TO:	Honorable Jim Murphy, Chair, House Committee on Special Purpose Districts
FROM:	Ursula Parks, Director, Legislative Budget Board
IN RE:	HB4320 by Zerwas ( Relating to the creation of the Fort Bend County Municipal Management District No. 2; providing authority to issue bonds; providing authority to impose assessments, fees, or 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 Fort Bend County 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 4320, 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 Fort Bend County served by small systems or private wells (County-Other) is 67,197. The Fort Bend County-Other population projections approved for the 2017 State Water Plan projects the population to grow to 184,306 in 2020, 235,839 in 2030 and 269,995 in 2040.
 
Location - The Proposed district's initial boundaries are described with a combination of Original Texas Land Surveys, Fort Bend 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 0.16 square miles in north central Fort Bend County, located north of the City of Richmond and east of the City of Fulshear along State Highway 99.
 
Comments on Powers/Duties Different from Similar Types of Districts: The House Committee Substitute amends the filed version by changing the board of director requirements; the House Committee Substitute removes the requirement that the TCEQ shall appoint voting directors from persons recommended by the board and adds the requirement that the district is to be governed by a board of five directors elected in the manner provided by Sections 49.102 and 49.103 of Texas Water Code, with directors serving staggered four-year terms; the House Committee Substitute deletes the provision that the board may appoint nonvoting directors and deletes nonvoting director from the quorum requirements; the Committee Substitute changes 'initial' voting directors to 'temporary' voting directors; the Committee Substitute requires the temporary directors to hold an election to elect five permanent directors as provided by Section 49.102, Texas Water Code; if permanent directors are not elected, the owner(s) of a majority of the assessed value of real property in the District may submit a petition to the TCEQ requesting appointment of five temporary directors named in the petition; the House Committee Substitute deletes the provision that the temporary voters section expires on September 1, 2021.
 
The District is to be governed by a board of five voting directors that are appointed by the TCEQ from persons recommended by the board; the District may contract to provide law enforcement services in the District for a fee; the District may join and pay dues to a charitable or nonprofit organization that performs a service or provides an activity consistent with the furtherance of a District purpose; the District may engage in activities that accomplish the economic development purposes of the District; the District may acquire, lease as lessor or lessee, construct, develop, own, operate, and maintain parking facilities or a system of parking facilities, including lots, garages, parking terminals, or other structures or accommodations for parking motor vehicles off the streets and related appurtenances; the District may annex land as provided by Subchapter J, Chapter 49, Water Code; the District may not exercise the power of eminent domain; the District may issue, without an election, bonds, notes, and other obligations secured by: revenue other than ad valorem taxes; or contract payments; the District must hold an election to obtain voter approval before the District may impose an ad valorem tax or issue bonds payable from ad valorem taxes; Local Government Code Section 375.243 states that the board may not call a bond election unless a written petition has been filed with the board requesting an election. The bill specifies that this section does not apply to the District; Section 49.107(h), Water Code states that an operation and maintenance tax to be used for recreational facilities, as defined by Section 49.462, Water Code, levied by a district located in a county with a population of more than 3.3 million or in a county adjacent to that county may not exceed 10 cents per $100 of assessed valuation of taxable property in the District. The bill specifies that this section does not apply to the District; 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; before the District may impose an ad valorem tax or issue bonds payable from ad valorem taxes of the defined area or designated property, the board shall hold an election in the defined area or in the designated property only; Local Government Code Section 375.264 states that a district may not be dissolved by its board if the district has any outstanding bonded indebtedness until that bonded indebtedness has been repaid or defeased in accordance with the order or resolution authorizing the issuance of the bonds. The bill specifies that this section does not apply to the District; this bill is similar to Senate Bill 2259 by Rep. Kolkhorst in the 85th Regular Legislative Session.
 
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 4320 specifies that the district "may annex land as provided by Subchapter J of Chapters 49 Water Code" applicable to management districts created under Section 59, Article XVI, Texas Constitution.
 
Within Fort Bend County, 52 percent of the total water use was groundwater (Gulf Coast Aquifer) in 2014. Eighty two percent of all the groundwater pumping was for municipal use.