By: Taylor S.B. No. 619
(In the Senate - Filed February 18, 2013; February 25, 2013,
read first time and referred to Committee on Natural Resources;
May 3, 2013, reported adversely, with favorable Committee
Substitute by the following vote: Yeas 8, Nays 0; May 3, 2013,
sent to printer.)
COMMITTEE SUBSTITUTE FOR S.B. No. 619 By: Estes
A BILL TO BE ENTITLED
AN ACT
relating to exclusion of land from certain water districts that
fail to provide service to the land; clarifying and limiting the
authority of those districts with outstanding bonds payable from ad
valorem taxes to impose taxes on excluded land; providing for a
financial review.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 49.3076, Water Code, is amended by
amending Subsections (a), (b), (c), (d), and (f) and adding
Subsections (c-1) and (g-1) to read as follows:
(a) The board of a district that has a total area of more
than 10,000 [5,000] acres shall call a hearing on the exclusion of
land from the district on or before the 60th day after receiving a
written petition filed with the secretary of the board by one or
more owners of [a landowner whose] land more than half the acreage
of which has been for more than 20 years included in and taxable by
the district [for more than 28 years] if any bonds issued by the
district payable in whole or in part from taxes of the district are
outstanding and the petition:
(1) is [includes a] signed by [petition evidencing the
consent of] the owners of a majority of the acreage proposed to be
excluded, as reflected by the most recent certified tax roll of the
district;
(2) includes a claim that the district does [has] not
provide [provided] the land with retail utility services;
(3) describes the property to be excluded; and
(4) provides facts necessary for the board to make the
findings required by Subsection (b)[; and
[(5) is filed before August 31, 2007].
(b) The board of a district shall [may] exclude land under
this section if [only on finding that]:
(1) the district does not provide [has never provided]
retail utility service [services] to the land described by the
petition;
(2) the district has imposed a tax on more than half
the acreage of the land for at least 20 years [more than:
[(A) 28 years if the board calls a hearing under
Subsection (a); or
[(B) 40 years if the board calls a hearing under
Subsection (a-1)]; and
(3) all taxes the district has levied and assessed
against the land and all fees and assessments the district has
imposed against the land or the owner that are due and payable on or
before the date of the petition are fully paid.
(c) Subject to Subsection (c-1), unless [Unless] the
district presents evidence at the hearing that conclusively
demonstrates that the requirements and grounds for exclusion
described by Subsection (a) [or (a-1), as appropriate, and
Subsection (b)] have not been met, the board shall enter an order
excluding the land from the district and shall redefine in the order
the boundaries of the district to embrace all land not excluded.
(c-1) If on or before the date of the exclusion hearing
required by Subsection (a) the district and the owner or owners
enter into an agreement for utility service to the land proposed to
be excluded, the district is not required to enter an order
excluding the land from the district. An owner of all or part of the
land is not required to enter into a utility agreement that as of
the date of the petition:
(1) is not comparable economically or in the level of
service provided to the land to the owner's current source of
utility service, as may be determined by the owner; or
(2) does not include all utility services required to
serve the land.
(d) A copy of an order excluding land and redefining the
boundaries of the district shall be filed in the deed records of
each county in which the district is located and with the
commission.
(f) After any land is excluded under this section, the
district may issue any unissued additional debt approved by the
voters of the district before exclusion of the land under this
section without holding a new election. Additional debt issued
after land is excluded from the district may not be payable from
taxes levied against and does not create a lien against the taxable
value of the excluded land.
(g-1) This section does not apply to a district:
(1) whose primary activity is the wholesale supply of
raw water; and
(2) that has fewer than 500 retail customers.
SECTION 2. Section 49.3077, Water Code, is amended to read
as follows:
Sec. 49.3077. TAX LIABILITY OF EXCLUDED LAND; BONDS
OUTSTANDING. (a) In this section:
(1) "Adjusted gross value" means the gross assessed
value of property, as of January 1, including land, improvements,
and personal property, as determined by the appraisal district for
the tax year in which the determination is made, reduced by any
state-mandated exemptions but not reduced for any exemptions from
taxation that are within the discretion of the governing body of the
district.
(2) "Carry costs" means interest calculated at an
annual rate equal to the weighted average interest rate of the
district debt that accrues on the excluded land's share of the
district debt, with reductions for prior payments, from the later
of the exclusion date or the last interest payment date for district
debt for which district taxes have been levied and collected to the
earlier of:
(A) the date of the final interest payment on
district debt before the next delinquency for the district's tax
collection; or
(B) the earliest dates on which an aggregate
amount of district obligations equal to the district debt may be
paid at maturity or redeemed at the option of the district, provided
the amount is paid in advance of any future district tax levy, using
the redemption dates available for the district's outstanding
obligations as of the exclusion date.
(3) "District debt" means the principal outstanding
from time to time of the tax-supported debt of the district
outstanding on the exclusion date, including debt used to refund
district debt outstanding on the exclusion date.
(4) "Excluded land" means land that is excluded from a
district under Section 49.3076.
(5) "Excluded land payment" means, with respect to
excluded land, the sum of the excluded land's share of district debt
plus the carry costs, less any taxes collected by the district under
Subsection (b).
(6) "Excluded land's share of district debt" means the
portion of the district debt that is calculated by multiplying the
district debt by a fraction the numerator of which is the adjusted
gross value of the excluded land on the exclusion date and the
denominator of which is the adjusted gross value of all property in
the district on the exclusion date.
(7) "Exclusion date" means the date that the owner
files the petition requesting that the excluded land be excluded
from the district with the district secretary.
(8) "Termination date" means the earlier of:
(A) the date on which the amount of taxes
collected from the excluded land equals the excluded land payment;
or
(B) the date on which the excluded land payment
is made in full.
(b) Excluded land that has been pledged as security for any
outstanding debt of the district remains pledged for the excluded
land's share of district debt until the excluded land payment is
paid. A district is entitled to continue to levy and collect debt
service taxes on the excluded land until the termination date at the
same rate those taxes are levied on the land remaining in the
district. From the exclusion date to the termination date, the
excluded land remains in the district for the limited purpose of
assessment and collection of such taxes. After the termination
date, the excluded land is excluded from the district for all
purposes, and the district may not levy any further tax on the
excluded land.
(c) The district shall apply the taxes collected on the
excluded land only to payment of the excluded land payment, which
shall be reduced by the amount of taxes collected.
(d) A person is entitled to pay to the district the excluded
land payment, in whole or in part, at any time on or after the
exclusion date by delivering payment to the district tax
assessor-collector. If partial payment is made, the payment is
credited first against all carry costs due and owing, and any
remainder is credited against the excluded land's share of district
debt. After a partial payment, carry costs must be calculated and
assessed and collected only on the remaining excluded land's share
of district debt. [Land excluded from a district under Section
49.3076 that is pledged as security for any outstanding debt of the
district remains pledged for its pro rata share of the debt until
final payment is made. The district shall continue to levy and
collect taxes on the excluded land at the same rate levied on land
remaining in the district until the amount of taxes collected from
the excluded land equals the land's pro rata share of the district's
debt outstanding at the time the land was excluded from the
district.
[(b) The district shall apply the taxes collected on the
excluded land only to the payment of the excluded land's pro rata
share of the debt.
[(c) The owner of any part of the excluded land may pay in
full the owner's share of the pro rata share of the district's debt
outstanding at the time the land is excluded.]
SECTION 3. Subchapter J, Chapter 49, Water Code, is amended
by adding Section 49.3078 to read as follows:
Sec. 49.3078. PETITION FOR EXCLUSION: ADDITIONAL DUTIES.
A landowner who signs a petition for the exclusion of land that is
filed with a district under Section 49.3076 must submit a copy of
the petition to the commission. On receipt of a copy of a petition,
the executive director shall review the most recent financial
information for the applicable district, including current debt
requirements, debt service cash flow, and proposed debt
obligations, to confirm that an exclusion of land conducted in
accordance with Sections 49.3076 and 49.3077 does not adversely
affect the interests of district bondholders. The executive
director shall notify the landowner and the district when the
review is complete.
SECTION 4. Subsections (a) and (c), Section 49.312, Water
Code, are amended to read as follows:
(a) Except as provided by Section 49.3077, on [Upon]
issuance of an order excluding property, that property is no longer
a part of the district and is not entitled to water service from the
district.
(c) Except as provided by Section 49.3077, once land is
[Once] excluded, the landowner has no further liability to the
district for future taxes, assessments, or other charges of the
district.
SECTION 5. Subsection (a-1), Section 49.3076, Water Code,
is repealed.
SECTION 6. Section 49.3076, Water Code, as amended by this
Act, applies only to a petition for exclusion of land that is filed
with a district on or after the effective date of this Act. A
petition filed before the effective date of this Act is governed by
the law in effect on the date the petition is filed, and that law
continues in effect for that purpose.
SECTION 7. This Act takes effect September 1, 2013.
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