2023S0288-1 03/09/23
 
  By: Bell of Montgomery H.B. No. 5222
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to consent to the creation of certain political
  subdivisions.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Sections 42.042(a), (b), (c), and (f), Local
  Government Code, are amended to read as follows:
         (a)  A political subdivision, one purpose of which is to
  supply fresh water for domestic or commercial use or to furnish
  sanitary sewer services, roadways, or drainage, may not be created
  in the extraterritorial jurisdiction of a municipality unless the
  governing body of the municipality gives its written consent by
  ordinance or resolution in accordance with this subsection and the
  Water Code upon the written request to the municipality by the
  persons required by law to seek creation of the political
  subdivision. In giving its consent, the municipality may not place
  any conditions or other restrictions on the creation of the
  political subdivision other than those expressly permitted by
  Sections 54.016(i) and 54.0167 [54.016(e) and (i)], Water Code. A
  request for municipal consent to create a political subdivision and
  the provision of related documents does not constitute an event
  that triggers or deems consent to municipal annexation of the land
  pursuant to an agreement under Subchapter G, Chapter 212, or
  Section 43.016.
         (b)  If the governing body fails or refuses to give its
  consent for the creation of the political subdivision, including a
  water district previously created by an act of the legislature, on
  mutually agreeable terms within 30 [90] days after the date the
  governing body receives a written request for the consent, [a
  majority of the qualified voters of the area of the proposed
  political subdivision and the owners of at least 50 percent of the
  land in the proposed political subdivision may petition the
  governing body to make available to the area the water, sanitary
  sewer services, or both that would be provided by the political
  subdivision.
         [(c)  If, within 120 days after the date the governing body
  receives the petition, the governing body fails to make a contract
  with a majority of the qualified voters of the area of the proposed
  political subdivision and the owners of at least 50 percent of the
  land in the proposed political subdivision to provide the
  services,] that failure or refusal constitutes the governing body's
  consent to the creation of the proposed political subdivision.
         (f)  The persons who requested city consent, or their
  successors and assigns, [If the municipality fails or refuses to
  give its consent to the creation of the political subdivision,
  including a water district previously created by an act of the
  legislature, or fails or refuses to execute a contract providing
  for the water or sanitary sewer services requested within the time
  limits prescribed by this section, the applicant] may petition the
  Texas Commission on Environmental Quality for the creation of the
  political subdivision or the inclusion of the land in a political
  subdivision. The commission shall allow creation or confirmation
  of the creation of the political subdivision or inclusion of the
  land in a proposed political subdivision on finding that the
  municipality [either does not have the reasonable ability to serve
  or] has failed or refused to give consent [to make a legally binding
  commitment with sufficient funds available to provide water and
  wastewater service adequate to serve the proposed development at a
  reasonable cost to the landowner. The commitment must provide that
  construction of the facilities necessary to serve the land will
  begin within two years and will be substantially completed within
  4-1/2 years after the date the petition was filed with the
  municipality].
         SECTION 2.  Section 42.0425(a), Local Government Code, is
  amended to read as follows:
         (a)  A political subdivision, one purpose of which is to
  supply fresh water for domestic or commercial use or to furnish
  sanitary sewer services, roadways, or drainage, may not add land
  that is located in the extraterritorial jurisdiction of a
  municipality unless the governing body of the municipality gives
  its written consent by ordinance or resolution in accordance with
  Section 42.042 [this section] and the Water Code. In giving its
  consent, the municipality may not place any conditions or other
  restrictions on [the expansion of] the political subdivision other
  than those expressly permitted by Section 54.0167 [54.016(e)],
  Water Code.
         SECTION 3.  The heading to Section 54.016, Water Code, is
  amended to read as follows:
         Sec. 54.016.  CONSENT OF CITY TO IN-CITY DISTRICT.
         SECTION 4.  Section 54.016, Water Code, is amended by
  amending Subsections (a), (b), (c), and (d) and adding Subsections
  (a-1), (a-2), and (a-3) to read as follows:
         (a)  This section applies only to the inclusion of land
  within the corporate limits of a city in a district. Section
  42.042, Local Government Code, applies to the inclusion of land
  within the extraterritorial jurisdiction of a city in a district.
         (a-1)  No land within the corporate limits of a city [or
  within the extraterritorial jurisdiction of a city,] shall be
  included in a district unless the city grants its written consent,
  by resolution or ordinance, to the inclusion of the land within the
  district in accordance with [Section 42.042, Local Government Code,
  and] this section.
         (a-2)  The request to a city for its written consent to the
  creation of a district, shall conform to the requirements of
  Section 54.0166 [be signed by a majority in value of the holders of
  title of the land within the proposed district as indicated by the
  county tax rolls. A petition for the written consent of a city to
  the inclusion of land within a district shall describe the
  boundaries of the land to be included in the district by metes and
  bounds or by lot and block number, if there is a recorded map or plat
  and survey of the area, and state the general nature of the work
  proposed to be done, the necessity for the work, and the cost of the
  project as then estimated by those filing the petition. If, at the
  time a petition is filed with a city for creation of a district, the
  district proposes to connect to a city's water or sewer system or
  proposes to contract with a regional water and wastewater provider
  which has been designated as such by the commission as of the date
  such petition is filed, to which the city has made a capital
  contribution for the water and wastewater facilities serving the
  area, the proposed district shall be designated as a "city service
  district." If such proposed district does not meet the criteria for
  a city service district at the time the petition seeking creation is
  filed, such district shall be designated as a "noncity service
  district." The city's consent shall not place any restrictions or
  conditions on the creation of a noncity service district as defined
  by this chapter other than those expressly provided in Subsection
  (e) of this section and shall specifically not limit the amounts of
  the district's bonds. A city may not require annexation as a
  consent to creation of any district. A city shall not refuse to
  approve a district bond issue for any reason except that the
  district is not in compliance with valid consent requirements
  applicable to the district].
         (a-3)  If a city grants its written consent without the
  concurrence of the petitioner [applicant] to the creation of a
  [noncity service] district containing conditions or restrictions
  that the petitioning land owner or owners reasonably believe exceed
  the city's powers, such land owner or owners, or their successors
  and assigns, may petition the commission to create the district and
  to modify the conditions and restrictions of the city's consent.
  The commission may declare any provision of the consent to be null
  and void. The commission may approve the creation of a district
  that includes any portion of the land covered by the city's consent
  to creation of the district. The legislature may create and may
  validate the creation of a district that includes any portion of the
  land covered by the city's consent to the creation of the district.
         (b)  If the governing body of a city fails or refuses to grant
  permission for the inclusion of land [within its extraterritorial
  jurisdiction] in a district, including a district created by a
  special act of the legislature, within 60 [90] days after receipt of
  a written request, the petitioning land [a majority of the electors
  in the area proposed to be included in the district or the] owner or
  owners, or their successors and assigns, [of 50 percent or more of
  the land to be included] may petition the governing body of the city
  and request the city to provide [make available to the land] the
  water or sanitary sewer service on the terms, conditions, cost, and
  time frame as contemplated to be provided by the district.
         (c)  If the governing body of the city and [a majority of the
  electors or] the petitioning land owner or owners, or their
  successors and assigns, [of 50 percent or more of the land to be
  included] in the district fail to execute a mutually agreeable
  contract providing for the water or sanitary sewer service
  requested within 60 [120] days after receipt of the petition, the
  failure shall constitute authorization for the inclusion of the
  land in the district under the provisions of this section.
  Authorization for the inclusion of such land within the district
  under the provisions of this section shall mean only authorization
  to initiate proceedings to include the land within the district as
  otherwise provided by this Act.
         (d)  [The provisions of this section relating to the method
  of including land in a district without securing the written
  consent of a city applies only to land within the extraterritorial
  jurisdiction of a city and does not apply to land within the
  corporate limits of a city.] If the city fails or refuses to grant
  permission for the inclusion of land in a district or to execute a
  mutually agreeable contract providing for the water or sanitary
  sewer service requested within the time limits contained within
  Subsection (b) or (c) of this section, the petitioning land owner or
  owners, or their successors or assigns, [applicant] may petition
  the commission for creation of the district or inclusion of the land
  in a district. The commission shall allow creation or inclusion of
  the land in a proposed district upon a finding that the city either
  does not have the reasonable ability to serve or has failed to
  execute a mutually agreeable contract. [make a legally binding
  commitment with sufficient funds available to provide water and
  wastewater service adequate to serve the proposed development at a
  reasonable cost to the landowner. The commitment shall provide
  that construction of the facilities necessary to serve the land
  shall be commenced within two years, and shall be substantially
  complete within four and one-half years from the date the petition
  was filed with the city.] Upon any appeal taken to the district
  court from the commission ruling, all parties to the commission
  hearing shall be made parties to the appeal. The court shall hear
  the case within 120 days from the date the appeal is filed. If the
  case is continued or appealed to a higher court beyond such 120-day
  period, the court shall require the appealing party in the case of
  appeal to a higher court or party requesting such continuance to
  post a bond or other adequate security in the amount of damages that
  may be incurred by any party as a result of such appeal or delay from
  the commission action. The amount of the bond or other security
  shall be determined by the court after notice and hearing. Upon
  final disposition, a court may award damages, including any damages
  for delays, attorney's fees, and costs of court to the prevailing
  party. [Under no circumstances shall land within the corporate
  limits of a city be included in a district without the written
  consent, by ordinance or resolution, of the city.] The provisions
  of this section shall apply whether the land is proposed to be
  included in the district at the time of creation of a district or to
  be included by annexation to a district. A district shall not allow
  the owner of a tract to connect to the district's water or
  wastewater system unless such tract is a legally subdivided lot
  which is part of a recorded subdivision plat or is otherwise legally
  exempt from the subdivision requirements of the applicable
  governmental authority.
         SECTION 5.  Section 54.0161, Water Code, is amended to read
  as follows:
         Sec. 54.0161.  REVIEW OF CREATION BY CITY AND COUNTY. (a) A
  petitioner seeking to create a district all or part of which is to
  be located in the extraterritorial jurisdiction of a city shall
  provide evidence to the commission that the petitioner provided the
  city with a copy of the petition requesting creation and the
  associated application [This section applies only to a proposed
  district all of which is to be located outside the corporate limits
  of a municipality].
         (b)  A petitioner seeking [(a-1) Promptly after a petition
  is filed with the commission] to create a district all of which is
  to be located outside the corporate limits of a city shall provide
  evidence to the commission that the petitioner provided the county
  with a copy of the petition requesting creation and the associated
  application [to which this section applies, the commission shall
  notify the commissioners court of any county in which the proposed
  district is to be located].
         (c)  As applicable under Subsection (a) or (b), a city or
  county may review the petition requesting creation and the
  associated application as to whether the project is feasible and
  practicable, is necessary, and would be a benefit to the land to be
  included in the district under Section 54.021. A city or county may
  reasonably request to meet with the petitioner. 
         (d)  The governing body of a city or [(a-2)  The
  commissioners court of a county in which the district is to be
  located may review the petition for creation and other evidence and
  information relating to the proposed district that the
  commissioners consider necessary. Petitioners for the creation of a
  district shall submit to the county commissioners court any
  relevant information requested by the commissioners court.
         [(b)  In the event the] county may vote [commissioners court
  votes] to submit information to the commission. In such instance,
  the governing body [or to make a recommendation regarding the
  creation of the proposed district, the commissioners court] shall
  submit to the commission, at least 30 [10] days before the date set
  for action on the petition, a written opinion stating:
               (1)  whether the governing body [commissioners court]
  recommends the creation of the proposed district; and
               (2)  any findings, conclusions, and other information
  that the governing body [commissioners court] thinks would assist
  the commission in making a final determination on the petition
  under Section 54.021.
         (e) [(c)]  In passing on a petition subject to this section,
  the commission shall consider information relevant to the
  determination under Section 54.021 [the written opinion] submitted
  by the governing body [county commissioners court].
         SECTION 6.  Subchapter B, Chapter 54, Water Code, is amended
  by adding Sections 54.0166 and 54.0167 to read as follows:
         Sec. 54.0166.  PETITION FOR CITY CONSENT. A petition to a
  city for consent for inclusion of land within the corporate limits
  of a city in a district must:
               (1)  be signed by a majority in value of the holders of
  title of the land within the proposed district, as indicated by the
  county tax rolls;
               (2)  describe the boundaries of the land to be included
  in the district by metes and bounds or by lot and block number, if
  there is a recorded map or plat and survey of the area; and 
               (3)  state the general nature of the work proposed to be
  done, the necessity for the work, and the cost of the project as
  then estimated by those filing the petition.
         Sec. 54.0167.  CITY CONSENT CONDITIONS. (a) A city consent
  to the inclusion of land within the corporate limits of the city or
  within the extraterritorial jurisdiction of a city in a district
  may impose no condition, restriction, or requirement other than the
  requirements that: 
               (1)  the district design and construct all water and
  sewer facilities to serve the land in accordance with the
  requirements of the commission or, for a district within the
  corporate limits of a city, the generally applicable city
  requirements;
               (2)  the district design and construct all streets,
  roads, and drainage facilities to serve the land in accordance with
  subdivision requirements adopted by the county in which the
  district is located under Section 232.003, Local Government Code,
  or, for a district within the corporate limits of a city, the
  generally applicable city requirements; 
               (3)  the district engineer certify to the city that all
  district facilities are designed and constructed in accordance with
  applicable regulatory requirements;
               (4)  the purposes for which the district may issue
  bonds are restricted to purposes authorized by law for the
  district;
               (5)  bonds issued by the district will expressly
  provide that the district reserves the right to redeem the bonds on
  any date subsequent to a date not later than the 15th anniversary of
  the date of issuance without premium;
               (6)  bonds, other than refunding bonds, be sold by
  public sale only after the taking of bids;
               (7)  no bonds, other than refunding bonds, will be sold
  by the district for less that 95 percent of par;
               (8)  the net effective interest rate on bonds sold by
  the district, taking into account any discount or premium as well as
  the interest rate borne by the bonds, will not exceed two percent
  above the highest average interest rate reported by the Bond Buyer
  in its weekly "20-Bond Index" during the one-month period next
  preceding the date notice of the sale of the bonds is given, and
  that bids for the bonds will be received not more than 45 days after
  notice of sale of the bonds is given, unless otherwise approved by
  the city or the commission;
               (9)  refunding bonds provide both gross debt service
  savings and net present value savings of three percent or more of
  the principal amount of the refunded bonds, as determined by the
  district financial advisor, unless otherwise approved by the city
  or the commission; and
               (10)  the date of the latest scheduled maturity of
  refunding bonds be not later than the date of the latest scheduled
  maturity of the refunded bonds, unless otherwise approved by the
  city or the commission.
         (b)  A city consent to the inclusion of land in a district may
  not impose a condition, restriction, or requirement other than the
  requirements of Subsection (a). By way of illustration, a city
  consent may not include a condition, restriction, or requirement
  that:
               (1)  limits the amounts or the timing of issuance of the
  bonds of the district;
               (2)  limits the maturities of the bonds of the
  district;
               (3)  requires annexation into the city or inclusion in
  the extraterritorial jurisdiction of the city;
               (4)  requires connection to the water or wastewater
  system of the city or requires the city to be the retail or
  wholesale water or wastewater provider, except for a district
  within the corporate limits of a city;
               (5)  requires the payment of costs to design and
  construct streets, roads, or bridges in excess of the proposed
  project's rough proportionate share under Section 212.904, Local
  Government Code;
               (6)  requires the payment of costs to design and
  construct water, sewer, or drainage facilities in excess of the
  district's pro rata share under the rules of the commission;
               (7)  requires the design or construction of facilities,
  including water, sewer, drainage, and roads, in excess of
  facilities otherwise necessary to serve the proposed project;
               (8)  requires a payment to the city, except for a
  reasonable fee not to exceed $5,000 to cover the costs of processing
  the city's review of the creation petition and application;
               (9)  requires the district or a developer of land
  within the district to pay to the city a portion of the proceeds of
  bonds issued by the district or any funds used by the district to
  reimburse a developer;
               (10)  imposes any land use controls or zoning;
               (11)  imposes any ordinances or platting, subdivision,
  or development requirements not generally applicable in the
  extraterritorial jurisdiction; and
               (12)  requires a developer of land within the district
  to enter into a development agreement.
         (c)  If a city grants its written consent to the creation of a
  district containing conditions or restrictions that violate this
  section, such conditions or restrictions are null, void, and
  unenforceable and a landowner may petition the commission to create
  the district and to modify the conditions and restrictions of a
  city's consent. If a city has previously granted its written
  consent to the creation of a district containing conditions or
  restrictions that violate this section, such conditions or
  restrictions are null, void, and unenforceable and a landowner or
  district may petition the commission to modify the conditions and
  restrictions of the city's consent. Upon the petition of a
  landowner or a district, or upon the commission's own motion, the
  commission shall declare any provision of the consent that violates
  this section to be null, void, and unenforceable. 
         SECTION 7.  The following laws are repealed:
               (1)  Section 42.0425(c), Local Government Code;
               (2)  Section 42.043, Local Government Code; and
               (3)  Sections 54.016(e) and (f), Water Code.
         SECTION 8.  This Act takes effect immediately if it receives
  a vote of two-thirds of all the members elected to each house, as
  provided by Section 39, Article III, Texas Constitution. If this
  Act does not receive the vote necessary for immediate effect, this
  Act takes effect September 1, 2023.