TO:	Honorable Garnet Coleman, Chair, House Committee on County Affairs
FROM:	John McGeady, Assistant Director     Sarah Keyton, Assistant Director Legislative Budget Board
IN RE:	HB2712 by Hernandez (Relating to the creation of the Channelview Improvement District; providing authority to issue bonds; providing authority to impose fees and 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 Channelview Improvement District (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 change in territory does not allow staff to develop precise population estimates
     
Population growth in the specific area since the 2010 census is unknown. The 2010 population estimate for areas of Harris County served by small water systems or private wells (County-Other) was 35,856. The Harris County-Other population projections adopted for the 2022 State Water Plan projects the population to grow to 119,216 in 2020 and 153,437 in 2030.
 
Location - The proposed district's initial boundaries are described with a combination of City limits, road locations, and water bodies. Due to the complexity of these boundaries for the various subareas of the district, staff is only able to determine the general location of the proposed district.
 
The proposed district's area is approximately 13 square miles in eastern Harris County, located east of the City of Houston, and west of the San Jacinto River. The proposed district appears to be located northeast of the intersection of Interstate Highway 10 and Sam Houston Parkway.

Comments on Powers/Duties Different from Similar Types of Districts:
House Committee Substitute (HCS):
The HCS specifies that Section 375.264, Local Government Code, does not apply to the dissolution of the District if the voters of the District vote to dissolve the District; the HCS, except as limited by Section 375.264, Local Government Code, allows the board to dissolve the District on written petition filed with the board by the owners of 66 percent or more of the assessed value of the property subject to assessment by the District or 66 percent or more of the surface area of the District, excluding roads, streets, highways, utility rights-of-way, other public areas, and other property exempt from assessment by the District; the bill specifies that Sections 375.261 and 375.262, Local Government Code, do not apply to the District; the HCS does not make any other changes to the Introduced version of the bill.

Introduced:
The bill specifies that Chapter 375, Local Government Code, does not apply to the District unless specifically provided otherwise by this chapter; the board president may not vote except to break a tie vote; this bill allows the District to do the following: exercise the powers of a development corporation under Chapter 505, Local Government Code; adopt rules to administer and operate the District; adopt rules for the use, enjoyment, availability, protection, security, and maintenance of the District's facilities, and for the provision of public safety and security in the District; issue bonds and lease, acquire, or construct a building or facility as provided by Subchapter A, Chapter 1509, Government Code; establish and administer a program as provided by Section 380.002, Local Government Code; and, add or exclude territory in the manner provided by Chapter 375, Local Government Code; the District may not employ peace officers; the District may not exercise the power of eminent domain; the District may not impose an ad valorem tax; section 375.207, which requires the approval of bond issues for an improvement project and the plans and specifications of an improvement project by the governing body of the municipality in which the District is located, and Section 375.208, which requires TCEQ approval of bonds to provide water, sewage, or drainage facilities, do not apply to bonds issued under this section; the District may not adopt a sales and use tax if as a result of the adoption of the tax the combined rate of all sales and use taxes imposed by the District and other political subdivisions of this State having territory in the District would exceed two percent at any location in the District; the District may impose the sales and use tax and the excise tax in increments of one-eighth of one percent, with a minimum tax of one-half percent and a maximum tax of one percent; the board may dissolve the district by: board order unless the District has outstanding indebtedness or contractual obligations; or, if the majority of the voters of the District voting at an election called for that purpose vote to dissolve the District.

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 - Within Harris County, 77% of the total water use was supplied by surface water and municipal was the largest volume water use category comprising 70% of the county total water use in 2016. The water source the proposed district might pursue is unknown.