TO:	Honorable DeWayne Burns, Chair, House Committee on Land & Resource Management
FROM:	Jerry McGinty, Director, Legislative Budget Board
IN RE:	HB5366 by Kacal (Relating to the creation of the Grimes County Municipal Utility District No. 3; granting a limited power of eminent domain; providing authority to issue bonds; providing authority to impose assessments, fees, and taxes.), As Introduced

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 Grimes County Municipal Utility District No. 3 (the “District”) with the powers and duties of a standard municipal utility district under Water Code Chapters 49 and 54.

Population: The 2020 population estimate for areas of Grimes County served by small water systems or private wells (‘County-Other') was 9,810. The Grimes County-Other population projections adopted for the 2022 State Water Plan projects the population to be 9,035 in 2030 and 9,064 in 2040.

Location: The proposed district's initial boundaries are described with a combination of Original Texas Land Surveys, Grimes County Deed Record, Grimes County Clerk's File, 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 1.33 square miles in the southeastern corner of Grimes County, located southeast of the City of Plantersville, and northwest of the City of Todd Mission.

Comments on Powers/Duties Different from Similar Types of Districts: 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 requires the TCEQ to appoint the five initial temporary directors upon receipt of a petition from the owners of a majority of the assessed value of the real property in the district. The bill grants the District authority for road projects. The bill allows the District to divide, as long as the district has never issued any bonds and is not imposing ad valorem taxes. The bill specifies that at the time of issuance, the total principal amount of bonds or other obligations issued or incurred to finance road projects and payable from ad valorem taxes may not exceed one-fourth of the assessed value of real property in the District. The District may not exercise the power of eminent domain if the bill does not receive a two-thirds vote of all the members elected to each house.

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 Grimes County, 51% of the total water use was supplied by surface water, and steam-electric power was the largest volume water use category comprising 42% of the county total water use in 2020. Municipal use accounted for 38% of the county total water use in 2020. The water source the proposed district might pursue is unknown.