TO:	Honorable Jim Murphy, Chair, House Committee on Special Purpose Districts
FROM:	Ursula Parks, Director, Legislative Budget Board
IN RE:	HB4341 by Bailes ( Relating to the creation of the Liberty County Municipal Management District No. 1; 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:
 
The bill creates Liberty County Municipal Management District No. 1 (the 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 4341, 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 Liberty County served by small systems or private wells (County-Other) is 35,397. The Liberty County-Other population projections approved for the 2017 State Water Plan projects the population to grow to 36,449 in 2020, 37,531 in 2030 and 38,560 in 2040.
 
Location - The Proposed district's initial boundaries are described with a combination of Original Texas Land Surveys, Liberty 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 acres in western Liberty County, located in or just east of the City of Plum Grove.  The proposed district does not appear to overlap any existing Certificate of Convenience and Necessity (CCN) boundaries.
 
Comments on Powers/Duties Different from Similar Types of Districts:  The House Committee substitute removes the names of the initial directors and replaces them with the requirement that the initial board consist of two directors appointed by the Cleveland Independent School District; two directors appointed by the county commissioner's court; and one director appointed by the person who owns the largest portion of the assessed value of the real property in the District. The District must enter into an agreement with the developer of land in the District, the Cleveland Independent School District, and Liberty County for the transfer of land for facilities for the school district and for emergency services before issuing bonds. The House Committee substitute clarifies that before the District may issue bonds, the District and any person whom the board intends the proceeds of the bond to be distributed must enter into a written agreement.
 
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 engage in activities that accomplish the economic development purposes of the District; the District may, as authorized by Section 59(f), Article XVI, Texas Constitution, and Section 49.351, Water Code: establish, operate, and maintain a fire department; contract with another political subdivision for the joint operation of a fire department; or contract with any other person to perform firefighting services in the District and may issue bonds and impose taxes to pay for the department and the activities; the District may adopt and enforce all necessary charges, mandatory fees, or rentals, in addition to taxes, for providing or making available any District facility or service, including firefighting activities; the District may not exercise the power of eminent domain; the board by resolution may impose and collect an assessment for any purpose authorized by this chapter in all or any part of the District; 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 value of real property in the District; a District may 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 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 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.
 
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 4341 specifies that the district has powers related to firefighting services "as authorized by Section 59(f), Article XVI, Texas Constitution, and Section 49.351, Water Code". 
 
Within Liberty County, 35 percent of the total water use was groundwater (Gulf Coast Aquifer) in 2014. Ninety five percent of all the groundwater pumping was for municipal use.