TO:	Honorable Tom Craddick, Chair, House Committee on Land & Resource Management
FROM:	John McGeady, Assistant Director     Sarah Keyton, Assistant Director Legislative Budget Board
IN RE:	HB4749 by Schaefer (Relating to the creation of the Rose City Municipal Utility District; granting a limited power of eminent domain; providing authority to issue bonds; providing authority to impose assessments and fees.), 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 Rose City Municipal Utility District (District) with the powers and duties of a standard municipal utility district under Water Code Chapters 49 and 54 limited only to provide sewer and wastewater services.

Population - The very specific description of the proposed boundaries does not allow staff to develop precise population estimates. Based on the roads and highways mentioned in HB 4749, staff is able to estimate a 2010 population of less than 18,669 persons.
 
Population growth in the specific area since the 2010 census is unknown. The 2010 population estimate for areas of Smith County served by small water systems or private wells (County-Other) was 8,976. The Smith County-Other population projections adopted for the 2022 State Water Plan projects the population to be 8,656 in 2020 and 10,860 in 2030.
 
Location - The proposed district's initial boundaries are described with a combination of roads and highways. 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 33 square miles in southwest Smith County, located south of the City of Tyler, east of State Highway 155, west of Farm to Market Road 756 (South Paluxy Drive), and north of Farm to Market Road 344. The proposed district's territory appears to overlap an existing boundary of Liberty Utilities sewer systems under Certificate of Convenience and Necessity No. 20670 (Liberty Woodmark) and No. 20694 (Liberty Tall Timbers).

Comments on Powers/Duties Different from Similar Types of Districts:
House Committee Substitute (HCS):
The HCS revises in its entirety, the language in Subchapter B, Board of Directors, to specify that the District is governed by a board of five elected directors; the HCS names the five temporary directors that will serve on the board; the HCS removes from the Introduced version of the bill the language that specifies that the District may provide only sewer and wastewater services, that the District may exercise the power of eminent domain only for the limited purpose of acquiring or constructing sewer and wastewater facilities, that the District may contract with the City of Tyler (City) for the City to operate and maintain the District's sewer and wastewater facilities, that the District may provide sewer and wastewater service without a certificate of convenience and necessity, that the District may contract with a political subdivision to provide legal services for the District, and that at least four board members must vote in favor of a resolution before the board may increase rates or assessments by more than five percent and incur debt or increase the amount of debt that the District has outstanding; the HCS does not make any other changes to the Introduced version of the bill.

Introduced:
The District must receive consent to the creation of the District from each municipality in whose corporate limits or extraterritorial jurisdiction the District is located prior to holding a confirmation election; the bill specifies that Section 49.052, Water Code, relating to the disqualification of directors does not apply to the District; the District may exercise the power of eminent domain only for the limited purpose of acquiring or constructing sewer and wastewater facilities; the District may contract with the City of Tyler (City) for the City to operate and maintain the District's sewer and wastewater facilities; the District may provide sewer and wastewater service without a certificate of convenience and necessity; the District may contract with a political subdivision to provide legal services for the District; the bill specifies that at least four board members must vote in favor of a resolution before the board may increase rates or assessments by more than five percent and incur debt or increase the amount of debt that the District has outstanding; the District may not impose an ad valorem tax for any purpose; the bill specifies that Section 49.107, Water Code, related to an operation and maintenance tax does not apply to the District; and if the bill does not receive a two-thirds vote of all members elected to each house, the District may not exercise the power of eminent domain.

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 Smith County, 61% of the total water use was supplied by surface water, and municipal was the largest volume water use category comprising 92% of the county total water use in 2016. The water source the proposed district might pursue is unknown.