89R2670 MP-D

By: Canales H.B. No. 3363

A BILL TO BE ENTITLED

AN ACT

relating to the creation of certain regional conservation and reclamation districts.

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

SECTION 1. Section 59.001(b), Water Code, is amended to read as follows:

(b) This chapter applies only in counties:

(1) with a population of at least 3.3 million or bordering a county with a population of at least 3.3 million; or

(2) located on an international border that have a population of more than 400,000 and contain at least two municipalities, each of which has a population of 70,000 or more.

SECTION 2. Section 59.002(a), Water Code, is amended by adding Subdivisions (4) and (5) to read as follows:

(4) "Water district" means a district created under general law or a special Act operating under Chapter 36, 51, 55, 56, 58, or 65.

(5) "Commission" means the Texas Commission on Environmental Quality.

SECTION 3. Section 59.003, Water Code, is amended by amending Subsection (a) and adding Subsections (a-1), (a-2), (a-3), (a-4), and (e) to read as follows:

(a) This subsection applies only to a district to be created in a county described by Section 59.001(b)(1). A district may be created by the commission pursuant to a petition submitted to the commission as follows:

(1) the [The] boards of at least 20 percent of the total number of municipal districts to be included in the proposed district may jointly petition the commission for creation of a district;[. The petition must describe the territory to be included in the district and must include resolutions endorsing creation of the district adopted by each municipal district to be included in the district.]

(2) the [The] owner or owners of 2,000 or more contiguous acres may petition the commission for creation of a district;[.]

(3) the [The] commissioners courts of one or more counties may petition the commission for the creation of a district in any territory within the county; or[.]

(4) the [The] governing body of any municipality [city] may petition the commission for the creation of a district in any territory within the municipality [city] or its extraterritorial jurisdiction.

(a-1) A petition described by Subsection (a)(1) must:

(1) describe the territory to be included in the proposed district; and

(2) include resolutions endorsing the creation of the proposed district adopted by each municipal district to be included in the district.

(a-2) This subsection applies only to a district to be created in a county described by Section 59.001(b)(2). A district may be created by the commission pursuant to a petition submitted to the commission as follows:

(1) the boards of at least 60 percent of the total number of water districts to be included in the proposed district may jointly petition the commission for the creation of a district in any territory within the water districts;

(2) the commissioners courts of one or more counties may petition the commission for the creation of a district in any territory within the county;

(3) the governing body of one or more municipalities may petition the commission for the creation of a district in any territory within the municipality or its extraterritorial jurisdiction; or

(4) the governing bodies of two or more water districts, counties, or municipalities may jointly petition the commission for the creation of a district.

(a-3) A petition described by Subsection (a-2)(1) must:

(1) describe the territory to be included in the proposed district; and

(2) include resolutions endorsing the creation of the district adopted by each water district to be included in the district.

(a-4) A petition described by Subsection (a-2)(4) must:

(1) describe the territory to be included in the proposed district; and

(2) include resolutions endorsing the creation of the district adopted by each water district, county, or municipality to be included in the district.

(e) Notwithstanding Section 59.021(h), a petition for the creation of a district submitted to the commission under Subsection (a-2) must request that the board of the proposed district be elected to represent a geographic area. If the commission grants the petition, the commission shall establish precincts from which the directors are to be elected in accordance with that subsection and designate polling locations inside the district.

SECTION 4. Section 59.007(c), Water Code, is amended to read as follows:

(c) A copy of the order of the commission granting or denying a petition shall be mailed to each municipality [city] having extraterritorial jurisdiction in the county or counties in which the district is to be located [that has requested notice of hearings as provided by Section 54.019].

SECTION 5. Chapter 59, Water Code, is amended by adding Subchapter A-1 to read as follows:

SUBCHAPTER A-1. PROVISIONS APPLICABLE TO CERTAIN DISTRICTS

Sec. 59.0111. APPLICABILITY. This subchapter applies only to a district located wholly or partially in a county described by Section 59.001(b)(2).

Sec. 59.0112. PURPOSES. (a) The creation of a district must:

(1) serve a public use and benefit; and

(2) be essential to further the public purposes described by this section.

(b) A district may be created to:

(1) enhance water security through collaboration and cooperation;

(2) coordinate regional solutions and consolidation of areawide water and wastewater services to enhance efficiency by streamlining operations and decision making;

(3) develop an areawide water supply and wastewater system in order to encourage:

(A) efficient service delivery;

(B) cost-effective rate structures;

(C) expanded capacity;

(D) the use of innovative technologies; and

(E) improved management performance; and

(4) develop strategies that will:

(A) reduce loss and waste of water;

(B) improve efficiency in the use of water;

(C) increase recycling and reuse of water;

(D) provide a sustainable water supply; and

(E) provide for wastewater management.

(c) A district shall:

(1) to improve reliability of the regional water supply and reduce the vulnerability to drought, prioritize projects that secure:

(A) reliable water supplies to cover the projected water demands; or

(B) additional or new sources of water;

(2) improve efficiency by:

(A) streamlining operations;

(B) ensuring compliance with water quality standards; and

(C) protecting existing water uses; and

(3) promote the public health, safety, and general welfare of residents by:

(A) discouraging noncompliant water systems; or

(B) improving inefficient water systems.

Sec. 59.0113. GENERAL POWERS. (a) A district has all powers necessary or incidental to exercise or implied by the specific powers granted by this chapter.

(b) A district may take any action necessary or appropriate to accomplish the purposes of the district.

Sec. 59.0114. IMPROVEMENT PROJECTS. (a) Except as otherwise provided by this chapter, a district may provide, design, construct, acquire, improve, relocate, operate, maintain, or finance an improvement project to accomplish the public purposes stated in this chapter using any money available to the district.

(b) A district may undertake an improvement project:

(1) inside the boundaries of the district; or

(2) in an area outside the district but adjacent to the boundaries of the district if the project is for the purpose of extending public infrastructure improvements beyond the district's boundaries to a logical terminus to accomplish the public purposes stated in this chapter.

(c) An improvement project may consist of:

(1) controlling, storing, preserving, treating, reclaiming, or distributing stormwater, floodwater, or water from a river or stream in the district for irrigation, power, municipal, domestic, commercial, or other useful purposes;

(2) identifying new or additional water sources;

(3) constructing, acquiring, or improving water and wastewater projects to serve an economically distressed area or colonia;

(4) developing, operating, and maintaining infrastructure to transport water that is made available by a project described by this section;

(5) obtaining regulatory authority at the local, state, or federal level to conserve, convey, and develop water resources in the district;

(6) planning, developing, managing, maintaining, or coordinating water and wastewater systems and services in the district;

(7) collaborating for the construction, acquisition, improvement, or enlargement of projects involving water conservation, water supply development, water quality enhancement, flood control, or drainage of stormwater and floodwater, including aquifer recharge, chloride control, subsidence control, brush control, regionalization, or desalination projects;

(8) implementing water conservation, water supply development, desalination, brush control, regionalization, flood control, drainage of stormwater and floodwater, wastewater collection and treatment, or other projects that incorporate multiple service areas into an areawide service facility or system that serves the district;

(9) consolidating water or sewer systems into one system with common ownership, management, and operation;

(10) interconnecting wastewater systems for regional treatment or water systems for regional water supply;

(11) developing water supply projects that create new or additional water sources for the district, including:

(A) desalination;

(B) aquifer storage and recovery projects; or

(C) the acquisition of groundwater or surface water rights;

(12) planning and coordinating regional public water and wastewater systems or sewer service facilities or systems owned by a neighboring political subdivision through consolidation, merger, or interconnection of public water and wastewater systems;

(13) acquiring the water supply or sewer service facilities or systems owned by a neighboring political subdivision through consolidation, merger, or interconnection of public water and wastewater systems; or

(14) acquiring property or an interest in property in connection with an authorized improvement project.

(d) A district may not undertake an improvement project unless the board of directors of the district determines that the project is necessary to accomplish a public purpose of the district.

Sec. 59.0115. AUTHORITY TO ENTER INTO INTERLOCAL AGREEMENTS. (a) A district may enter into an interlocal agreement with a groundwater conservation district or water supply corporation to:

(1) provide services related to water supply, wastewater treatment, or flood control and mitigation;

(2) develop, operate, or maintain infrastructure related to water supply, wastewater treatment, or flood control and mitigation; or

(3) share facilities, resources, or personnel as necessary to undertake an improvement project to accomplish a public purpose of the district.

(b) An interlocal agreement under this section must be approved by the governing bodies of the participating entities.

(c) The participating entities in an interlocal agreement under this section may allocate costs based on any method, including proportionate use, benefit, or another equitable basis.

Sec. 59.0116. REPORTING AND ACCOUNTABILITY. (a) A district shall submit an annual report to the governing bodies of the water districts, counties, and municipalities included within the boundaries of the district detailing the district's activities, expenditures, and finances.

(b) The water districts, counties, and municipalities shall ensure that the district is subject to the appropriate auditing and accountability measures applicable to the district.

Sec. 59.0117. ELECTIONS. (a) A district shall hold an election on the uniform election date prescribed by Section 41.001, Election Code, in November of each even-numbered year to elect the appropriate number of directors.

(b) Except for a confirmation election described by Section 59.025 and a director election described by Subsection (a), a district may not hold a bond election, maintenance tax election, contract election, or other election on a date other than the uniform election date prescribed by Section 41.001, Election Code, in November of the applicable tax year.

(c) Notwithstanding Section 59.025(c), if the creation of a district is defeated at a confirmation election, a subsequent confirmation election may be held not less than six months after the date of the preceding confirmation election.

(d) After confirmation of a district, the district shall contract with the county election officer as provided by Subchapter D, Chapter 31, Election Code, to perform all duties and functions of the district in relation to a director election.

Sec. 59.0118. ELIGIBILITY TO VOTE. After confirmation of a district, to be eligible to vote in an election of the district, a person must be:

(1) a qualified voter as defined by Section 11.002, Election Code; and

(2) a resident of the district.

Sec. 59.0119. PROCEDURES FOR IDENTIFYING VOTERS; PROVISIONAL VOTING. (a) After the confirmation of a district, the district shall submit to the voter registrar for the county a legal description or map of the territory defined by the boundaries of the district that is in sufficient detail to enable the voter registrar to produce the official list of the district's eligible voters.

(b) The district shall submit the information required under this section not later than the 30th day after the date of the last day to order a general or special election.

(c) If the county election officer is unable to verify whether a voter is eligible under Section 59.0118, the voter may be accepted for provisional voting under Section 63.011, Election Code.

Sec. 59.0120. EXCLUSION OF LAND OR TERRITORY. (a) The board may exclude land or territory from the district only as provided by Section 49.303, 49.3075, 49.3076, 49.310, or 54.748.

(b) The board may not exclude land or territory unless the board receives a petition requesting the exclusion as provided by Section 49.303, 49.3075, 49.3076, 49.310, or 54.748, as applicable. A landowner who signs a petition for the exclusion of land or territory from a district that is filed with the board of the district as provided by the applicable section must submit a copy of the petition to the commission.

(c) On receipt of a copy of a petition as provided by Subsection (b), the executive director of the commission shall request and review the most recent financial information pertaining to the district to confirm that any exclusion of land or territory from the district is conducted in accordance with the applicable provisions of law.

(d) The executive director of the commission shall notify the landowner and the district of the results of the review conducted under Subsection (c) when the review is complete.

Sec. 59.0121. QUALIFICATIONS FOR DIRECTOR. To be qualified to serve as a director, a person:

(1) must be eligible to hold office under Section 141.001, Election Code;

(2) may not be disqualified from serving as a director under Section 59.0122; and

(3) must be a qualified voter of the district under Section 59.0118.

Sec. 59.0122. DISQUALIFICATION OF DIRECTORS. (a) A person is disqualified from serving as a director if the person:

(1) is currently a member of or has been appointed or elected to the governing body of another political subdivision; or

(2) would be disqualified from serving as a director under Section 49.052(a) if that subsection applied to the district.

(b) Sections 49.052(b), (c), and (d) apply to a district in the same manner as those subsections apply to a district described by Section 49.052(a).

(c) Sections 49.052(e) and (g) apply to a district.

Sec. 59.0123. INFORMATION REQUIRED ON DISTRICT WEBSITE. (a) A district shall maintain and update an Internet website that is searchable and intuitive to users.

(b) A district shall post regularly for public viewing on the district's Internet website:

(1) the annual financial statement required by Section 140.005, Local Government Code;

(2) the annual audit report required by Section 49.191 or the annual financial dormancy affidavit submitted to the executive director of the commission under Section 49.197;

(3) budget information of the district described by Sections 26.18(4)-(8), Tax Code;

(4) property tax rate information of the district described by Sections 26.18(9), (10), (12), and (13), Tax Code;

(5) operating information of the district described by Sections 2051.202(d)(2)-(14), Government Code, as applicable, including the name of the general manager of the district; and

(6) financial information of the district that satisfies the requirements of Sections 403.0241(c)(9)-(11), Government Code.

(c) A district shall publish on the district's Internet website:

(1) the agenda for a board meeting not later than the third day before the date the meeting is held; and

(2) the minutes of a board meeting not later than the third day after the date the minutes are adopted.

(d) A district shall update the information posted on the district's Internet website as required by this section routinely as the information becomes available to the district.

Sec. 59.0124. SEARCHABLE DISTRICT EXPENDITURE DATABASE. (a) A district shall establish and post on the district's Internet website a database of district check register reports, including district expenditures and contracts. The database must include the amount, date, description, payor, and payee of the expenditures and, if applicable, the parties to the contract.

(b) A district may not include in the database developed under Subsection (a) a district employee's salary or personal identifying information, as defined by Section 521.002, Business & Commerce Code.

(c) A district shall display prominently a link to the database established under this section on the district's Internet website.

(d) The information provided in a district check register report must be updated monthly.

(e) A district shall keep in the database information required by this section related to an adopted budget until the third anniversary of the date the budget was adopted.

Sec. 59.0125. ANNUAL FINANCIAL AUDIT REPORT PROVIDED TO COMMISSION. (a) A district is subject to the audit requirements of Section 49.191 unless the district is financially dormant under Section 49.197. A district is not exempt under Section 49.198 from the audit requirements unless the district:

(1) had no outstanding debt obligations during the fiscal year; and

(2) did not issue any public securities, as defined by Section 1201.002, Government Code, during the fiscal year.

(b) The district shall include in the annual audit report budget-to-actual comparisons in connection with general purpose external financial reporting to demonstrate compliance with applicable law. The district shall include a budgetary comparison schedule of the proprietary fund or enterprise fund to demonstrate compliance with applicable law and contractual provisions.

(c) The district shall include in the annual audit report a statistical section that provides a range of trend data covering key financial indicators from the preceding 10 fiscal years, if applicable, including general government revenue and expenditures, property tax collections, and debt burden.

(d) The district shall prepare and present the commission's supplementary information schedules in the district's annual audit report.

(e) The information required by this section must be subjected to the auditing procedures applied in the audit of the basic financial statements and the independent auditor's opinion of the information.

(f) Not later than the third day after the date the audit required by this section is completed, the district shall publish the audit on the district's Internet website.

Sec. 59.0126. REVIEW AND COMMENT ON BUDGET. A district shall provide to the district's wholesale customers an opportunity to review and comment on the district's annual budget for services to those customers before the board adopts that budget.

Sec. 59.0127. INTERNET POSTING OF MEETING MATERIALS; RECORDING OF CERTAIN HEARINGS. Section 551.1283, Government Code, applies to a district in the same manner as that section applies to districts described by that section.

SECTION 6. Section 59.052, Water Code, is amended to read as follows:

Sec. 59.052. FILING OF PETITION. A petition requesting the annexation of a defined area that is signed by a majority in value of the owners of land in the defined area, as shown by the tax rolls of the county or counties in which that area is located, that is signed by 50 landowners if the number of landowners is more than 50, that is signed by the single landowner of 2,000 or more acres of land in the area, or that is signed by a majority of the governing body of a municipal district, a water district, a county, or a municipality [city] requesting annexation shall be filed with the secretary of the board.

SECTION 7. Section 59.072, Water Code, is amended by amending Subsection (b) and adding Subsection (d) to read as follows:

(b) Except as specifically provided by this chapter, Chapter 49 and Sections 54.018, [54.019(a), (b), (c), and (d),] 54.020, 54.021, 54.023, 54.024, 54.201, 54.205, 54.207, 54.208, 54.502 through 54.505, 54.507(b) and (c), 54.510, [through] 54.512, 54.514, [54.515,] 54.518, 54.520, 54.521, 54.601 through 54.604, and 54.735 through 54.737 apply under this chapter.

(d) The following provisions do not apply to a district located wholly or partly in a county described by Section 59.001(b)(2):

(1) Section 141.001(d), Election Code; and

(2) Sections 49.063(d) and (e), 49.102(j) and (k), 49.222(c), 49.316, 51.7131, and 54.739 through 54.747.

SECTION 8. Section 59.072(c), Water Code, is repealed.

SECTION 9. This Act takes effect September 1, 2025.