By: Wentworth S.B. No. 1960
A BILL TO BE ENTITLED
AN ACT
relating to increased oversight, openness, transparency, and
accountability for water supply or sewer service corporations.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 67.005, Water Code, is amended by adding
Subsection (g) to read as follows:
(g) If more than 50 percent of the corporation's connections
to provide water or sewer service are within the corporate limits of
a general-law municipality, the municipality, by ordinance or
resolution adopted at least 30 days before the date of the annual
meeting of the members or shareholders of the corporation, may
create a new position on the board of the corporation and appoint a
director to serve in that position as a nonvoting member of the
board. An appointed director serves a two-year term. A director
appointed under this subsection has all of the rights and
responsibilities of an elected director except that such director
does not have the right to vote or the right to participate in an
executive session of the board of the corporation in which the board
will receive legal advice concerning contracts or litigation
relating to the municipality.
SECTION 2. Subchapter A, Chapter 67, Water Code, is amended
by adding Sections 67.0061, 67.0062, and 67.0063 to read as
follows:
Sec. 67.0061. DIRECTOR NOMINATIONS. (a) To be listed on
the ballot as a candidate for election to a director's position, a
person must file with the corporation an application that includes:
(1) the person's written consent to serve, if elected;
(2) biographical information about the person; and
(3) a statement of the person's qualifications,
including:
(A) a statement that the person meets the
requirements of Sections 11.002(1), (3), and (4), Election Code;
and
(B) whether the person is a member of the
corporation.
(b) The application must be filed with the corporation not
later than the 70th day before the date of the annual meeting.
(c) The corporation shall make available director candidate
application forms at the main office of the corporation.
Sec. 67.0062. BALLOT FOR ELECTION OF DIRECTORS. The
secretary-treasurer of the board shall:
(1) have the names of all candidates for each
director's position printed on the ballot; and
(2) not later than the 45th day before the date of the
annual meeting, mail the ballot to each person who is a member or
shareholder, along with a statement of the number of directors to be
elected and the biographical information about each candidate,
including the candidate's qualifications as provided by each
candidate for director in the candidate's application.
Sec. 67.0063. ELECTION OF DIRECTORS. (a) A member or
shareholder may vote:
(1) in person at the annual meeting;
(2) by delivering a completed ballot to the member's
proxy to submit at the annual meeting;
(3) by mailing a completed ballot postmarked not later
than the sixth day before the date of the annual meeting to the
office of the independent election auditor selected by the members
or shareholders at the preceding annual meeting; or
(4) by delivering a completed ballot to the main
office of the corporation not later than noon of the day before the
date of the annual meeting.
(b) The corporation shall place each ballot received under
Subsection (a)(4) in a sealed envelope and shall deliver the sealed
envelopes to the independent election auditor at the annual
meeting.
(c) No person, including the corporation, may use any type
of incentive to encourage a member or shareholder to authorize the
corporation, a committee of the corporation, or another person to
act as the member's proxy in casting the vote of the member in a
director's election. The corporation may provide incentives to
obtain proxies or to encourage attendance at an annual or special
meeting of the members solely for the purpose of establishing a
quorum.
(d) The independent election auditor shall receive and
count the ballots before the annual meeting is adjourned.
(e) For each director's position, the nominee who receives
the highest number of votes is elected.
(f) If two or more candidates for a director's position tie
for the highest number of votes for that position, those candidates
shall draw lots under the direction of the independent election
auditor to determine who is elected.
(g) The independent election auditor shall provide the
board with a written report of the election results.
(h) The board may adopt rules as needed to implement this
section, including rules to ensure the fairness, integrity, and
openness of the voting process.
SECTION 3. Section 67.007, Water Code, is amended by
amending Subsection (b) and adding Subsection (d) to read as
follows:
(b) The board shall adopt written procedures for conducting
an annual or special meeting of the members or shareholders, which
shall include the following:
(1) notification to eligible members or shareholders
of the proposed agenda, location, and date of the meeting;
(2) establishment of a quorum consisting of proxies
and the votes of members or shareholders present;
(3) nomination and election procedures;
(4) procedures for selecting an independent election
auditor required by Section 67.0063;
(5) approval of the proxy and ballot form to be used;
and
(6) [(5)] validation of eligible voters, proxies,
ballots, and election results.
(d) An independent election auditor must be selected at each
annual meeting for the following annual meeting at which one or more
directors are scheduled to be elected. The independent auditor is
not required to be an experienced election judge or auditor and may
serve as an unpaid volunteer. At the time of selection and while
serving in the capacity of an independent election auditor, the
independent election auditor may not be associated with the
corporation as:
(1) an employee or independent contractor; or
(2) a director or candidate for director.
SECTION 4. Subchapter A, Chapter 67, Water Code, is amended
by adding Section 67.0085 to read as follows:
Sec. 67.0085. AUDIT REQUIREMENTS. Subchapter G, Chapter
49, applies to a corporation with 500 or more members in the same
manner that it applies to a district under that chapter. For
purposes of applying that subchapter to a corporation:
(1) "board" means the board of directors of a
corporation; and
(2) "district" means a corporation.
SECTION 5. A water supply or sewer service corporation
operating under Chapter 67, Water Code, is subject to the audit
requirements of Section 67.0085, Water Code, as added by this Act,
beginning with the first fiscal year of the corporation that begins
on or after September 1, 2009.
SECTION 6. The board of directors of a water supply or sewer
service corporation operating under Chapter 67, Water Code, shall
select an independent election auditor at least 30 days before the
scheduled date of the 2010 annual meeting of the corporation.
SECTION 7. This Act takes effect September 1, 2009.