TO:	Honorable Garnet Coleman, Chair, House Committee on County Affairs
FROM:	John McGeady, Assistant Director     Sarah Keyton, Assistant Director Legislative Budget Board
IN RE:	HB4667 by Hernandez (Relating to the creation of the East Houston Management District; 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 East Houston Management 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 boundaries does not allow staff to develop precise population estimates. Based on the district's proposed territory bounded by streets mentioned in HB 4667, staff estimates a 2010 population of approximately 17,000 persons.
     
Population growth in the specific area since the 2010 census is unknown. The 2010 population estimate for the City of Houston Water Utility was 2,058,630 and the 2016 population estimate was 2,264,724. Population projections for the same area, adopted for the 2022 State Water Plan, projects the population to be 2,204,215 in 2020 and 2,383,505 in 2030.
 
Location - The proposed district's initial boundaries are described with a combination of streets, Official Public Records of Real Property of Harris County and metes and bounds. 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 3.81 square miles in central Harris County, located within the City of Houston. The proposed district is near the intersection of Interstate Highway 10 and North Wayside Drive.
 
Comments on Powers/Duties Different from Similar Types of Districts:
House Committee Substitute (HCS):
The HCS removes the language in the Introduced version of the bill that named specific initial directors; the HCS amends the language of the Introduced version of the bill to specify that for the initial directors, three directors must be a resident of the District who is also a registered voter of the District and 11 directors must either be an owner, or an agent, employee, or tenant of an owner, of stock or a partnership or membership interest of a corporate partnership, limited liability company, or other entity owner of a direct or indirect interest in property in the District; the District may not impose an impact fee on a residential property, including a multiunit residential property, or a condominium; the District may not impose an assessment, impact fee, or standby fee on the property, of an electric utility or a power generation company, a gas utility or a person who owns pipelines used for the transportation or sale of oil or gas or a product or constituent of oil or gas, a person who owns pipelines used for the transportation or sale of carbon dioxide, a telecommunications provider, or a cable service provider or a video service provider; the HCS does not make any other changes to the Introduced version of the bill.

Introduced:
On receipt of a petition signed by a majority of the owners of real property in the District according to the most recent certified tax appraisal roll for the county, the initial board shall hold an election to confirm the creation of the District; the District is governed by a board of eleven directors appointed by the City of Houston (City); the District may provide, design, construct, acquire, improve, relocate, operate, maintain, or finance an improvement project or service using money available to the District, or contract with a governmental or private entity to provide, design, construct, acquire, improve, relocate, operate, maintain, or finance an improvement project or service; the District, using money available to the district, may exercise the powers given to a development corporation under Chapter 505, Local Government Code, including the power to own, operate, acquire, construct, lease, improve, or maintain a project; the board by resolution may authorize the creation of a nonprofit corporation with the powers created under Subchapter D, Chapter 431, Transportation Code; the District may contract with a qualified party, including Harris County or the City, 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; if the Legislature grants the District a power that is in addition to the powers approved by the initial resolution of the City consenting to the creation of the District, the District may not exercise that power unless the City consents to that change by resolution; the District may not exercise the power of eminent domain; the board may not finance a service or improvement project with assessments under this chapter unless a written petition requesting that service or improvement has been filed with the board; the District may establish user charges related to the operation of storm water facilities, including the regulation of storm water for the protection of water quality in the District; the District may establish user charges for the use of nonpotable water for irrigation purposes, subject to approval of the City; the City by ordinance may dissolve the district only if the District's outstanding debt or contractual obligations that are payable from ad valorem taxes have been repaid or discharged, or the City has affirmatively assumed the obligation to pay the outstanding debt from City revenue; and the board shall dissolve the District on receipt of a written petition requesting dissolution signed by a majority of the owners of real property in the District only if the District's outstanding debt or contractual obligations that are payable from ad valorem taxes have been repaid or discharged, or the City has affirmatively assumed the obligation to pay the outstanding debt from City revenue.

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 the City of Houston Water Utility, 90% of the total water use was supplied by surface water, and municipal water use was 436,691 acre-feet reported in 2016.