2023S0157-1 02/15/23

By: Hinojosa S.B. No. 1848

A BILL TO BE ENTITLED

AN ACT

relating to the dissolution by election of certain urban area water control and improvement districts.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Chapter 51, Water Code, is amended by adding Subchapter S to read as follows:

SUBCHAPTER S. DISSOLUTION OF CERTAIN URBAN AREA DISTRICTS

Sec. 51.901. DEFINITION. In this subchapter, "primary petitioner" means a person who submits a petition for the dissolution of a district.

Sec. 51.902. DISSOLUTION BY ELECTION. (a) A board shall order an election on the question of dissolving the district if:

(1) the board receives a petition for the dissolution of the district in accordance with Section 51.830;

(2) the board receives an ordinance adopted by the governing body of the municipality within the district's boundaries supporting the petition and stating that the municipality is both capable of performing and willing to perform the services and functions of the district; and

(3) the district meets the following criteria of an urban area district:

(A) the district is located entirely in a county with a population of more than 400,000;

(B) the district has 70 percent or more of its territory within the corporate limits or extraterritorial jurisdiction of a municipality, as shown by the most recent tax rolls of the central appraisal district of the county;

(C) the district performs services and functions that a municipality within the district's boundaries is both capable of performing and willing to perform;

(D) the district was created or organized before 1971 under general law enacted in 1904, 1913, 1917, 1918, or 1925 for the principal purpose of supplying or the delivery of raw, untreated, or nonpotable water for irrigation or farming purposes; and

(E) the district either:

(i) generates more than 70 percent of the district's operating revenue from a municipality for supplying or the delivery of raw water used for municipal purposes, as shown by the district's most recent financial audit report; or

(ii) generates less than 15 percent of the district's operating revenue from raw, untreated, or nonpotable water sales and a flat rate assessment collected from nonmunicipal customers, as shown by the district's most recent annual financial audit report.

(b) After the board receives a petition that meets the requirements of Section 51.903, the district may not:

(1) sell, transfer, or encumber a district asset;

(2) issue debt or acquire an additional obligation;

(3) default on or fail to honor a financial, legal, or other obligation of the district;

(4) fail to keep an asset of the district in a condition of good repair; or

(5) fail to preserve district records, including information maintained by the district in an electronic format.

(c) A district action that is in violation of Subsection (b)(1), (2), or (3) is void.

Sec. 51.903. REQUIREMENTS FOR PETITION TO DISSOLVE DISTRICT. A petition for an election to dissolve a district under Section 51.902(a)(1) must:

(1) be signed by:

(A) the owners of a majority of the assessed value of the real property in the district, as shown by the most recent certified county property tax rolls; or

(B) 20 percent of the qualified voters, as defined by Section 11.002, Election Code, residing within the district, without consideration of any exclusion of land from inside the district;

(2) include with each signature:

(A) the date on which the person signed the petition; and

(B) the person's place of residence;

(3) be filed with the county clerk of the county in which the district is located; and

(4) be filed with the municipality within the district's boundaries or, if the district is located in more than one municipality, the municipality in which most of the district is located.

Sec. 51.904. EXAMINATION OF PETITION TO DISSOLVE DISTRICT. (a) The county clerk, in consultation with the district attorney and the county tax assessor-collector, shall examine a petition submitted under Section 51.902(a)(1).

(b) Not more than 30 days after the petition is submitted, the county clerk shall determine whether the petition conforms to the petition requirements under Section 51.903.

(c) If the petition meets the petition requirements under Section 51.903, the county clerk shall certify the petition and send it electronically to the district secretary and the primary petitioner.

(d) If the petition does not meet the petition requirements under Section 51.903, the county clerk shall notify the primary petitioner of the reasons for the rejection of the petition. The primary petitioner may amend the petition to correct the deficiencies for which the petition was rejected and resubmit the petition to the board and the county clerk.

Sec. 51.905. PROCEDURE FOR HOLDING ELECTION. (a) An election to determine whether a district will be dissolved must be held in accordance with this subchapter. The election must be held within the shared boundaries of the territory of the district and the municipality described in Section 51.902(a)(2) to determine if the eligible voters within those boundaries support the district's dissolution and the transfer of the district's assets, debts, contractual rights, and other obligations to the municipality. The boundaries shall not take into consideration any exclusion of land from inside the district when determining the district's territory.

(b) To be eligible to vote in an election to dissolve the district, a person must be a qualified voter, as defined by Section 11.002, Election Code, residing within the shared boundaries of both the district and the municipality described in Section 51.902(a)(2).

(c) The ballots for the election shall be printed to provide for voting for or against the proposition to dissolve the district and to transfer all district assets, debts, contractual rights, and other obligations to the municipality.

(d) Notwithstanding Section 41.001(d), Election Code, on request of the primary petitioner, the board shall contract with the county elections administrator as provided by Subchapter D, Chapter 31, Election Code, to perform all duties and functions of the district in relation to an election for the dissolution of the district.

(e) If the primary petitioner requests that the board contract with the county elections administrator, the primary petitioner must deposit with the board an amount estimated to cover expenses in accordance with a cost schedule agreed on by the board and county elections administrator. The primary petitioner must make the deposit not later than the 10th day after the date the primary petitioner receives a copy of the executed contract from the board.

Sec. 51.906. HEARING; FINDINGS OF FACT. (a) Not later than the 10th day after the date the board receives a certified petition, the board shall publish notice of the hearing in accordance with Section 51.782. The notice must include notice to creditors of the district to present claims owed by the district to the board before the date set for the dissolution hearing.

(b) Not later than the 10th day after the date the board receives a certified petition, the primary petitioner shall deposit with the board an amount estimated to cover the actual cost of giving notice and holding the hearing.

(c) Not later than the 40th day after the date the board receives a certified petition, the board shall conduct a hearing for the purpose of soliciting oral or written public comment in accordance with Section 51.783.

(d) The board shall make findings of fact regarding the dissolution of the district, including:

(1) a description of each parcel of real property owned by the district and interest in real property owned by the district and, if the property was acquired for delinquent taxes or assessments, the amount of such taxes and assessments on each parcel of property;

(2) the amount of each outstanding bond or other indebtedness of the district and the contractual obligation of the district, with the name of the holder and owner of each and a general description of the bond, other indebtedness, or contractual obligation;

(3) the amount of uncollected taxes, assessments, and charges levied by the district and the amount levied on each lot or tract of land;

(4) a description of the personal property and all other assets of the district; and

(5) the estimated cost of dissolution.

(e) Not later than 30 days after the dissolution hearing, the board shall file its findings of fact with the county clerk. Not later than 48 hours after the filing, the county clerk shall provide a copy to the governing body of the municipality described by Section 51.903(4). The board shall make the findings of fact available for inspection by the public.

Sec. 51.907. MUNICIPAL ORDINANCE REQUIRED. (a) The board may not adopt an election order to dissolve the district unless, not later than 60 days after receiving a copy of the filing described by Section 51.906(e), the governing body of the municipality adopts an ordinance by a two-thirds vote stating that the municipality will assume the assets, debts, contractual rights, and any other obligation of the district upon dissolution of the district. The municipality must submit a copy of the adopted ordinance to the district.

(b) The governing body of a municipality that adopts an ordinance under Subsection (a) shall prepare a plan of succession as provided by Sections 43.075(c)-(l), Local Government Code, for the uninterrupted provision of services.

(c) An ordinance adopted under Subsection (a) must contain provisions that:

(1) eliminate the required payment of any flat tax or assessments paid to the district by landowners in the district;

(2) ensure that all water rights are held in trust by the municipality for the uses previously adjudicated;

(3) ensure that all individual water users are entitled to continue to use or have access to the same amount of water they were entitled to before the dissolution of the district;

(4) require the municipality to perform all the functions of the district, including the provision of services; and

(5) ensure delivery of water to landowners at or below the lowest comparable delivery charge imposed by any irrigation district in the county in which the district is located.

Sec. 51.908. MUNICIPAL APPROVAL; ELECTION ORDER. (a) Not later than 10 days after the municipality sends a copy of the ordinance adopted under Section 51.907(a) to the board, the board shall order an election on the question of dissolving the district and, if applicable, of transferring the district's assets and obligations to the municipality in accordance with the ordinance.

(b) An order calling an election to be held under this section must:

(1) state the nature of the election and include the proposition that is to appear on the ballot;

(2) provide the date of the election;

(3) provide the hours during which the polls will be open;

(4) provide the location of the polling places;

(5) provide a statement of the functions performed by the district;

(6) provide a summary of the plan for dissolution;

(7) state the district's current water rate and the date on which the district adopted the rate; and

(8) state the most recent district tax rate.

Sec. 51.909. NOTICE OF DISSOLUTION ELECTION. (a) The board shall give notice of an election ordered under Section 51.908 by:

(1) publishing a substantial copy of the election order in a newspaper with general circulation in the district once a week for two consecutive weeks; and

(2) if the district maintains an Internet website, posting a substantial copy of the election order on the district's Internet website.

(b) The first publication under Subsection (a)(1) must appear not later than the 30th day before the date set for the election.

Sec. 51.910. ELECTION DATE. An election under this subchapter shall be held on the next practicable uniform election date prescribed by Section 41.001, Election Code, but in no event later than the 365th day after the date on which the board adopted the election order.

Sec. 51.911. ELECTION RESULTS. (a) The returns of the election shall be canvassed and the result declared by the county elections administrator contracted to administer the election held under Section 51.905.

(b) If a majority of the votes in an election held under Section 51.905 favor dissolution, the board shall order that the district be dissolved and shall comply with Section 51.912. The board shall enter an order in its minutes declaring the result of the election.

(c) If a majority of the votes in an election held under this subchapter do not favor dissolution, the board shall continue to administer the district, and another election on the question of dissolution may not be held before the first anniversary of the date of the most recent election held on the question of dissolving the district.

(d) The order under Subsection (b) shall be filed in the office of the county clerk of the county in which the district is situated and recorded in the deed records.

Sec. 51.912. TRANSFER OF ASSETS, OBLIGATIONS, AND PROVISION OF SERVICES. (a) Following the issuance of an order under Section 51.911, the board shall:

(1) not later than the 10th day after the date the order was issued, make arrangements for the uninterrupted provision of services;

(2) not later than the 30th day after the date the order was issued, notify the commission of the dissolution election;

(3) not later than the 180th day after the date the order was issued:

(A) transfer the ownership of any water rights and certificates of adjudication to the municipality; and

(B) transfer the assets, debts, contractual rights, and other obligations of the district to the municipality;

(4) provide the district's management and operational records to the municipality; and

(5) provide notice and make recordings of transfers under this subsection as required by law.

(b) The municipality shall notify the commission regarding any transfer of a certificate of adjudication held by the district to the municipality.

(c) Not later than the 45th day after the date the commission receives the notification under Subsection (a)(2) and determines that the requirements of this subchapter have been fulfilled, the commission shall enter an order dissolving the district.

(d) The transfer of a district's water rights and any certificate of adjudication to a municipality does not affect the priority, extent, validity, or purpose of a water right or certificate.

Sec. 51.913. RECEIVER. (a) If the district fails to comply with Section 51.912, the executive director shall request that the attorney general bring suit for the appointment of a receiver.

(b) If the attorney general brings suit for the appointment of a receiver under Subsection (a), a district court shall appoint a receiver if the court finds the appointment is necessary for the transfer of the assets and obligations of the district.

(c) The receiver shall execute a bond in the amount set by the court to ensure the proper performance of the receiver's duties.

(d) After execution of the bond, the receiver shall take possession of the assets specified by the court.

(e) Until discharged by the court, the receiver shall perform the duties as directed by the court to preserve the assets and ensure that district assets and obligations are transferred.

SECTION 2. This Act takes effect September 1, 2023.