2023S0157-1 02/15/23
By: Hinojosa S.B. No. 1848
A BILL TO BE ENTITLED
AN ACT
relating to the dissolution by election of certain urban area water
control and improvement districts.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 51, Water Code, is amended by adding
Subchapter S to read as follows:
SUBCHAPTER S. DISSOLUTION OF CERTAIN URBAN AREA DISTRICTS
Sec. 51.901. DEFINITION. In this subchapter, "primary
petitioner" means a person who submits a petition for the
dissolution of a district.
Sec. 51.902. DISSOLUTION BY ELECTION. (a) A board shall
order an election on the question of dissolving the district if:
(1) the board receives a petition for the dissolution
of the district in accordance with Section 51.830;
(2) the board receives an ordinance adopted by the
governing body of the municipality within the district's boundaries
supporting the petition and stating that the municipality is both
capable of performing and willing to perform the services and
functions of the district; and
(3) the district meets the following criteria of an
urban area district:
(A) the district is located entirely in a county
with a population of more than 400,000;
(B) the district has 70 percent or more of its
territory within the corporate limits or extraterritorial
jurisdiction of a municipality, as shown by the most recent tax
rolls of the central appraisal district of the county;
(C) the district performs services and functions
that a municipality within the district's boundaries is both
capable of performing and willing to perform;
(D) the district was created or organized before
1971 under general law enacted in 1904, 1913, 1917, 1918, or 1925
for the principal purpose of supplying or the delivery of raw,
untreated, or nonpotable water for irrigation or farming purposes;
and
(E) the district either:
(i) generates more than 70 percent of the
district's operating revenue from a municipality for supplying or
the delivery of raw water used for municipal purposes, as shown by
the district's most recent financial audit report; or
(ii) generates less than 15 percent of the
district's operating revenue from raw, untreated, or nonpotable
water sales and a flat rate assessment collected from nonmunicipal
customers, as shown by the district's most recent annual financial
audit report.
(b) After the board receives a petition that meets the
requirements of Section 51.903, the district may not:
(1) sell, transfer, or encumber a district asset;
(2) issue debt or acquire an additional obligation;
(3) default on or fail to honor a financial, legal, or
other obligation of the district;
(4) fail to keep an asset of the district in a
condition of good repair; or
(5) fail to preserve district records, including
information maintained by the district in an electronic format.
(c) A district action that is in violation of Subsection
(b)(1), (2), or (3) is void.
Sec. 51.903. REQUIREMENTS FOR PETITION TO DISSOLVE
DISTRICT. A petition for an election to dissolve a district under
Section 51.902(a)(1) must:
(1) be signed by:
(A) the owners of a majority of the assessed
value of the real property in the district, as shown by the most
recent certified county property tax rolls; or
(B) 20 percent of the qualified voters, as
defined by Section 11.002, Election Code, residing within the
district, without consideration of any exclusion of land from
inside the district;
(2) include with each signature:
(A) the date on which the person signed the
petition; and
(B) the person's place of residence;
(3) be filed with the county clerk of the county in
which the district is located; and
(4) be filed with the municipality within the
district's boundaries or, if the district is located in more than
one municipality, the municipality in which most of the district is
located.
Sec. 51.904. EXAMINATION OF PETITION TO DISSOLVE DISTRICT.
(a) The county clerk, in consultation with the district attorney
and the county tax assessor-collector, shall examine a petition
submitted under Section 51.902(a)(1).
(b) Not more than 30 days after the petition is submitted,
the county clerk shall determine whether the petition conforms to
the petition requirements under Section 51.903.
(c) If the petition meets the petition requirements under
Section 51.903, the county clerk shall certify the petition and
send it electronically to the district secretary and the primary
petitioner.
(d) If the petition does not meet the petition requirements
under Section 51.903, the county clerk shall notify the primary
petitioner of the reasons for the rejection of the petition. The
primary petitioner may amend the petition to correct the
deficiencies for which the petition was rejected and resubmit the
petition to the board and the county clerk.
Sec. 51.905. PROCEDURE FOR HOLDING ELECTION. (a) An
election to determine whether a district will be dissolved must be
held in accordance with this subchapter. The election must be held
within the shared boundaries of the territory of the district and
the municipality described in Section 51.902(a)(2) to determine if
the eligible voters within those boundaries support the district's
dissolution and the transfer of the district's assets, debts,
contractual rights, and other obligations to the municipality. The
boundaries shall not take into consideration any exclusion of land
from inside the district when determining the district's territory.
(b) To be eligible to vote in an election to dissolve the
district, a person must be a qualified voter, as defined by Section
11.002, Election Code, residing within the shared boundaries of
both the district and the municipality described in Section
51.902(a)(2).
(c) The ballots for the election shall be printed to provide
for voting for or against the proposition to dissolve the district
and to transfer all district assets, debts, contractual rights, and
other obligations to the municipality.
(d) Notwithstanding Section 41.001(d), Election Code, on
request of the primary petitioner, the board shall contract with
the county elections administrator as provided by Subchapter D,
Chapter 31, Election Code, to perform all duties and functions of
the district in relation to an election for the dissolution of the
district.
(e) If the primary petitioner requests that the board
contract with the county elections administrator, the primary
petitioner must deposit with the board an amount estimated to cover
expenses in accordance with a cost schedule agreed on by the board
and county elections administrator. The primary petitioner must
make the deposit not later than the 10th day after the date the
primary petitioner receives a copy of the executed contract from
the board.
Sec. 51.906. HEARING; FINDINGS OF FACT. (a) Not later than
the 10th day after the date the board receives a certified petition,
the board shall publish notice of the hearing in accordance with
Section 51.782. The notice must include notice to creditors of the
district to present claims owed by the district to the board before
the date set for the dissolution hearing.
(b) Not later than the 10th day after the date the board
receives a certified petition, the primary petitioner shall deposit
with the board an amount estimated to cover the actual cost of
giving notice and holding the hearing.
(c) Not later than the 40th day after the date the board
receives a certified petition, the board shall conduct a hearing
for the purpose of soliciting oral or written public comment in
accordance with Section 51.783.
(d) The board shall make findings of fact regarding the
dissolution of the district, including:
(1) a description of each parcel of real property
owned by the district and interest in real property owned by the
district and, if the property was acquired for delinquent taxes or
assessments, the amount of such taxes and assessments on each
parcel of property;
(2) the amount of each outstanding bond or other
indebtedness of the district and the contractual obligation of the
district, with the name of the holder and owner of each and a
general description of the bond, other indebtedness, or contractual
obligation;
(3) the amount of uncollected taxes, assessments, and
charges levied by the district and the amount levied on each lot or
tract of land;
(4) a description of the personal property and all
other assets of the district; and
(5) the estimated cost of dissolution.
(e) Not later than 30 days after the dissolution hearing,
the board shall file its findings of fact with the county clerk.
Not later than 48 hours after the filing, the county clerk shall
provide a copy to the governing body of the municipality described
by Section 51.903(4). The board shall make the findings of fact
available for inspection by the public.
Sec. 51.907. MUNICIPAL ORDINANCE REQUIRED. (a) The board
may not adopt an election order to dissolve the district unless, not
later than 60 days after receiving a copy of the filing described by
Section 51.906(e), the governing body of the municipality adopts an
ordinance by a two-thirds vote stating that the municipality will
assume the assets, debts, contractual rights, and any other
obligation of the district upon dissolution of the district. The
municipality must submit a copy of the adopted ordinance to the
district.
(b) The governing body of a municipality that adopts an
ordinance under Subsection (a) shall prepare a plan of succession
as provided by Sections 43.075(c)-(l), Local Government Code, for
the uninterrupted provision of services.
(c) An ordinance adopted under Subsection (a) must contain
provisions that:
(1) eliminate the required payment of any flat tax or
assessments paid to the district by landowners in the district;
(2) ensure that all water rights are held in trust by
the municipality for the uses previously adjudicated;
(3) ensure that all individual water users are
entitled to continue to use or have access to the same amount of
water they were entitled to before the dissolution of the district;
(4) require the municipality to perform all the
functions of the district, including the provision of services; and
(5) ensure delivery of water to landowners at or below
the lowest comparable delivery charge imposed by any irrigation
district in the county in which the district is located.
Sec. 51.908. MUNICIPAL APPROVAL; ELECTION ORDER. (a) Not
later than 10 days after the municipality sends a copy of the
ordinance adopted under Section 51.907(a) to the board, the board
shall order an election on the question of dissolving the district
and, if applicable, of transferring the district's assets and
obligations to the municipality in accordance with the ordinance.
(b) An order calling an election to be held under this
section must:
(1) state the nature of the election and include the
proposition that is to appear on the ballot;
(2) provide the date of the election;
(3) provide the hours during which the polls will be
open;
(4) provide the location of the polling places;
(5) provide a statement of the functions performed by
the district;
(6) provide a summary of the plan for dissolution;
(7) state the district's current water rate and the
date on which the district adopted the rate; and
(8) state the most recent district tax rate.
Sec. 51.909. NOTICE OF DISSOLUTION ELECTION. (a) The board
shall give notice of an election ordered under Section 51.908 by:
(1) publishing a substantial copy of the election
order in a newspaper with general circulation in the district once a
week for two consecutive weeks; and
(2) if the district maintains an Internet website,
posting a substantial copy of the election order on the district's
Internet website.
(b) The first publication under Subsection (a)(1) must
appear not later than the 30th day before the date set for the
election.
Sec. 51.910. ELECTION DATE. An election under this
subchapter shall be held on the next practicable uniform election
date prescribed by Section 41.001, Election Code, but in no event
later than the 365th day after the date on which the board adopted
the election order.
Sec. 51.911. ELECTION RESULTS. (a) The returns of the
election shall be canvassed and the result declared by the county
elections administrator contracted to administer the election held
under Section 51.905.
(b) If a majority of the votes in an election held under
Section 51.905 favor dissolution, the board shall order that the
district be dissolved and shall comply with Section 51.912. The
board shall enter an order in its minutes declaring the result of
the election.
(c) If a majority of the votes in an election held under this
subchapter do not favor dissolution, the board shall continue to
administer the district, and another election on the question of
dissolution may not be held before the first anniversary of the date
of the most recent election held on the question of dissolving the
district.
(d) The order under Subsection (b) shall be filed in the
office of the county clerk of the county in which the district is
situated and recorded in the deed records.
Sec. 51.912. TRANSFER OF ASSETS, OBLIGATIONS, AND PROVISION
OF SERVICES. (a) Following the issuance of an order under Section
51.911, the board shall:
(1) not later than the 10th day after the date the
order was issued, make arrangements for the uninterrupted provision
of services;
(2) not later than the 30th day after the date the
order was issued, notify the commission of the dissolution
election;
(3) not later than the 180th day after the date the
order was issued:
(A) transfer the ownership of any water rights
and certificates of adjudication to the municipality; and
(B) transfer the assets, debts, contractual
rights, and other obligations of the district to the municipality;
(4) provide the district's management and operational
records to the municipality; and
(5) provide notice and make recordings of transfers
under this subsection as required by law.
(b) The municipality shall notify the commission regarding
any transfer of a certificate of adjudication held by the district
to the municipality.
(c) Not later than the 45th day after the date the
commission receives the notification under Subsection (a)(2) and
determines that the requirements of this subchapter have been
fulfilled, the commission shall enter an order dissolving the
district.
(d) The transfer of a district's water rights and any
certificate of adjudication to a municipality does not affect the
priority, extent, validity, or purpose of a water right or
certificate.
Sec. 51.913. RECEIVER. (a) If the district fails to comply
with Section 51.912, the executive director shall request that the
attorney general bring suit for the appointment of a receiver.
(b) If the attorney general brings suit for the appointment
of a receiver under Subsection (a), a district court shall appoint a
receiver if the court finds the appointment is necessary for the
transfer of the assets and obligations of the district.
(c) The receiver shall execute a bond in the amount set by
the court to ensure the proper performance of the receiver's
duties.
(d) After execution of the bond, the receiver shall take
possession of the assets specified by the court.
(e) Until discharged by the court, the receiver shall
perform the duties as directed by the court to preserve the assets
and ensure that district assets and obligations are transferred.
SECTION 2. This Act takes effect September 1, 2023.