TO:	Honorable Jim Murphy, Chair, House Committee on Special Purpose Districts
FROM:	Ursula Parks, Director, Legislative Budget Board
IN RE:	SB2293 by Creighton ( Relating to the creation of Montgomery County Improvement District No. 1; providing authority to issue bonds; providing authority to impose assessments, fees, or taxes.), Committee Report 2nd 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 amends the Special District Local Laws Code by adding Chapter 3955 which creates Montgomery County Improvement District No. 1 (District) with the powers and duties of a standard municipal management district (MMD) under Local Government Code Chapter 375 with the following specificities.

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 SB 2293, 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 Montgomery County served by small systems or private wells (County-Other) is 185,829. The Montgomery County-Other population projections approved for the 2017 State Water Plan projects the population to grow to 293,282 in 2020, 427,682 in 2030 and 585,027 in 2040.
 
Location - The Proposed district's initial boundaries are described with a combination of Original Texas Land Surveys, Montgomery 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 0.163 square miles in southwestern Montgomery County located northwest of the City of Tomball and east of the City of Stagecoach. The proposed district does not appear to overlap portions of any existing Certificate of Convenience and Necessity (CCN) boundaries.
 
Comments on Powers/Duties Different from Similar Types of Districts: The Committee Substitute removes Section 3955.206, Bonds for Recreational Facilities, relating to the limitation on the outstanding principal amount of bonds, notes, and other obligations provided by Section 49.4645, Water Code, not being applicable to the district.

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 bill specifies that Chapter 49.052, Water Code, disqualification of directors, does not apply to the District; the District may exercise the powers given to a development corporation; the board by resolution may authorize the creation of a nonprofit corporation to assist and act for the District in implementing a project or providing a service authorized by this chapter; the board by resolution may authorize the creation of a public facility corporation in the District to finance or provide for public facilities under Local Government Code Chapter 303; the District may contract with a qualified party, including the county, 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 has the powers provided by the general laws relating to road utility districts created under Section 52(b), Article III, Texas Constitution, including Chapter 441, Transportation Code; the District may negotiate and enter into a written strategic partnership agreement under Local Government Code Section 43.0751, with a municipality in whose extraterritorial jurisdiction the District is located; the District may not exercise the power of eminent domain; 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: a tax imposed by the District or a required payment for a service provided by the District; Sections 375.221 and 375.223, Local Government Code, relating to competitive bidding, do not apply to the District. The bill specifies that Subchapter I, Chapter 49, Water Code, relating to competitive bidding applies to the district; 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; Chapter 49.4645, Water Code, states that the District's outstanding principal debt for recreational facilities cannot exceed one percent of the District's current estimated taxable assessed valuation. The bill specifies that this section does not apply to the District; and, the bill allows the District to dissolve. 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 the bonded indebtedness has been repaid or defeased in accordance with the order or resolution authorizing the issuance of bonds. The bill specifies that this section does not apply to the dissolution of the District by a municipality.
 
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 -SB 2293 specifies that "the district has the powers and duties provided by the general law of this state, including Chapter 49, Water Code, applicable to improvement districts created under Section 59, Article XVI, Texas Constitution".
 
Within Montgomery County, 95 percent of the total water use was groundwater (Gulf Coast Aquifer) in 2014. Ninety one percent of all the groundwater pumping was for municipal use.