By: Zwiener H.B. No. 5555

A BILL TO BE ENTITLED

AN ACT

relating to municipal utility districts; limiting the rate of a tax.

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

SECTION 1. Section 209.00591, Property Code, is amended by adding Subsection (a-4) to read as follows:

(a-4) A person may not serve on the board of a property owners' association if the person serves as a director of a municipal utility district under Chapter 54, Water Code.

SECTION 2. Subchapter B, Chapter 54, Water Code, is amended by adding Section 54.0135 to read as follows:

Sec. 54.0135. PRE-PETITION NOTICE TO CERTAIN COUNTIES. (a) This section applies only to a proposed district described by Section 54.0161(a).

(b) At least 30 days before a petition requesting creation of a proposed district is filed with the commission under Section 54.014, notice must be sent by certified mail to the commissioners court of each county in which the proposed district is to be located. The notice must:

(1) be sent to the address of the main county mailbox, and the address of each county commissioner and county judge;

(2) generally describe the boundaries of the land to be included in the proposed district, including identifying landmarks such as adjacent streets or geographic features such as rivers or lakes, and if possible, by metes and bounds or by lot and block number if there is a recorded map or plat and survey of the area to be included in the district; and

(3) inform the commissioners court of the right to:

(A) respond to the notice provided under this section;

(B) review the petition requesting creation of the proposed district; and

(C) submit a written opinion on the creation of the proposed district under Section 54.0161.

(c) Notice under this section must be sent by certified mail at least 30 days before the date a petition requesting creation of the proposed district is filed with the commission under Section 54.014.

SECTION 3. Section 54.015, Water Code, is amended to read as follows:

Sec. 54.015. CONTENTS OF PETITION. The petition shall:

(1) describe the boundaries of the proposed district by metes and bounds or by lot and block number, if there is a recorded map or plat and survey of the area;

(2) 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; [and]

(3) include a name of the district which shall be generally descriptive of the locale of the district followed by the words Municipal Utility District, or if a district is located within one county, it may be designated "______ County Municipal Utility District No. ___." (Insert the name of the county and proper consecutive number.) The proposed district shall not have the same name as any other district in the same county; and

(4) for a district described by Section 54.0161(a), include a copy of the notice described by Section 54.0135.

SECTION 4. Section 54.0161, Water Code, is amended by amending Subsection (a) to read as follows:

(a) This section applies [only] to a proposed district:

(1) partly or wholly [all of which is to be] located outside the corporate limits of a municipality, including proposed districts which overlap more than one county; or

(2) partly or wholly located inside the extraterritorial jurisdiction of a municipality.

SECTION 5. Section 54.022, Water Code, is amended by adding Subsection (d) to read as follows:

(d) Notwithstanding any other subsection, the district shall immediately schedule an election to elect permanent directors once 75 percent of the plots under the district's jurisdiction are leased sold, or conveyed in some manner.

SECTION 6. Chapter 54, Water Code, is amended by adding Subsection 54.037 to read as follows:

Sec. 54.037. REVIEW OF CREATION BY A GROUNDWATER CONSERVATION DISTRICT. (a) This section applies to a proposed district, located in or within five miles of the jurisdiction of a groundwater conservation district, as that term is defined by Chapter 36.

(a-1) At least 30 days before a petition requesting creation of a proposed district is filed with the commission under Section 54.014, notice must be sent by certified mail to the groundwater conservation district in which the proposed district is to be located or in proximity to, The notice must:

(1) be sent to the mailing address of the groundwater conservation district;

(2) generally describe the boundaries of the land to be included in the proposed district, including identifying landmarks such as adjacent streets or geographic features such as rivers or lakes, and if possible, by metes and bounds or by lot and block number if there is a recorded map or plat and survey of the area to be included in the district; and

(3) inform the groundwater conservation district of the right to:

(A) respond to the notice provided under this section;

(B) review the petition requesting creation of the proposed district; and

(C) submit a written opinion on the creation of the proposed district under Section 54.0161.

(a-2) The groundwater conservation district in which the district is to be located, or in proximity to, may review the petition for creation and other evidence and information relating to the proposed district that the groundwater conservation district consider necessary. Petitioners for the creation of a district shall submit to the groundwater conservation district any relevant information requested by the groundwater conservation district.

(b) In the event the groundwater conservation district opts to submit information to the commission or to make a recommendation regarding the creation of the proposed district, the groundwater conservation district shall submit to the commission, at least 10 days before the date set for action on the petition, a written opinion stating:

(1) whether the groundwater conservation district recommends the creation of the proposed district; and

(2) any findings, conclusions, and other information that the groundwater conservation district thinks would assist the commission in making a final determination on the petition.

(c) In passing on a petition subject to this section, the commission shall consider the written opinion submitted by the groundwater conservation district.

SECTION 7. Section 54.102, Water Code, is amended to read as follows:

Sec. 54.102. QUALIFICATIONS FOR DIRECTORS. (a) To be qualified to serve as a director, a person shall be at least 18 years old, a resident citizen of the State of Texas, and either own land subject to taxation in the district or be a qualified voter within the district.

(a-1) a minimum of three directors must be qualified voters within the district, and reside within the district.

(b) A person is disqualified from serving as a director if that person is serving on the board of a property owners' association under Chapter 209, Property Code.

SECTION 8. Chapter 54, Water Code, is amended by adding Sec. 54.103 to read as follows:

LENGTH OF TERMS FOR DIRECTORS. Notwithstanding any other Chapter, the length of a term for a director shall not exceed four years. This Section does not impose term limits.

SECTION 9. Subchapter C, Chapter 54, Water Code, is amended by adding Section 54.104 to read as follows:

Sec. 54.103. POSTING OF NOTICE; POSTING OF BUDGET; TIME AND PLACE OF MEETINGS; GENERAL RULE.

(a) Notwithstanding Section 49.062, Water Code or Section 551.043, Government Code, a notice of a meeting of the district's board must be posted in a place readily accessible to the general public at all times for at least three business days before the scheduled date of the meeting, except as provided by Sections 551.044, 551.045, and 551.046, Government Code.

(b) If the board of a district conducts meetings at least quarterly, the board shall conduct a meeting at a designated meeting location inside the district or within 10 miles of the boundary of the district at least once per quarter. Notwithstanding Chapter 551, Government Code, a district to which this section applies may satisfy the requirements of this Subsection by conducting quarterly meetings by telephone conference call or video conference call. A meeting to discuss the tax rate of the district must be conducted in person.

(d) The notice of a meeting required to be posted under this Section, Sec. 551.043(a), Government Code or Sec. 49.063, Water Code, at which the district's board will discuss or adopt a budget for the district or board must include a physical copy of the budget.

SECTION 10. Subchapter G, Chapter 54, Water Code, is amended by adding Section 54.605 to read as follows:

Sec. 54.605 APPLICABILITY OF TAX HEARINGS; AUTOMATIC ELECTIONS FOR CERTAIN TAXES; LIMITATIONS ON TAX RATES; GENERAL RULE. (a) For the purposes of providing notice of a tax hearing and automatic elections to approve tax rates under Sections 49.236, 49.23601, 49.23602, and 49.23603, and notwithstanding those sections, a district under this section shall be considered a developed district under Section 49.23602, regardless of whether the district has financed, completed, and issued all bonds to pay for all lands, works, improvements, facilities, plants, equipment, and appliances necessary to serve at least 95 percent of the projected build-out of the district in accordance with the purposes for its creation or the purposes authorized by the constitution, this code, or any other law.

(b) For the purposes of providing notice of a tax hearing under Section 49.236, notices shall also apply and include reference to the district's interest and sinking fund rate.

(c) For the purposes of an automatic election to approve tax rates under Section 49.23602, the district shall also account for its interest and sinking fund rate under Sec. 49.23602(a)(4) and Sec. 49.23602(c).

(d) Notwithstanding any other statutes, the district shall not assess or impose an interest and sinking fund rate in any tax year that exceeds a rate of 50 cents on the $100 of assessed value.

(e) Notwithstanding any other statutes, no district shall levy an ad valorem tax rate in excess of One Dollar and Twenty Five Cents ($1.25) on the $100 of assessed valuation in any one tax year for combined district taxes.

SECTION 11. Sections 209.00591(a-4), Property Code, and 54.102(b), as added by this Act, apply only to a person elected or appointed to serve as the presiding officer of the board of a property owners ' association or president of the board of a municipal utility district on or after the effective date of this Act.

SECTION 12. Section 54.0135, Water Code, as added by this Act, and Section 54.015, Water Code, as amended by this Act, apply only to a petition requesting creation of a municipal utility district that is filed with the Texas Commission on Environmental Quality on or after the effective date of this Act. A petition requesting creation of a municipal utility district that was filed with the commission before the effective date of this Act is governed by the law in effect on the date the petition was filed, and the former law is continued in effect for that purpose.

SECTION 13. Section 54.102, Water Code, as amended by this Act, does not affect the entitlement of a member serving immediately before the effective date of this Act on the board of directors of a municipal utility district described by that section to continue to carry out the board's functions for the remainder of the member's term. That section applies only to a member of the board of directors of such a district elected or appointed on or after the effective date of this Act. That section does not prohibit a person who is a member of the board of directors of such a district on the effective date of this Act from being reelected or reappointed to the board if the person has the qualifications required for a member under that section.

SECTION 14. This Act takes effect September 1, 2025.