2023S0288-1 03/09/23
By: Bettencourt S.B. No. 2349
A BILL TO BE ENTITLED
AN ACT
relating to consent to the creation of certain political
subdivisions.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Sections 42.042(a), (b), (c), and (f), Local
Government Code, are amended to read as follows:
(a) A political subdivision, one purpose of which is to
supply fresh water for domestic or commercial use or to furnish
sanitary sewer services, roadways, or drainage, may not be created
in the extraterritorial jurisdiction of a municipality unless the
governing body of the municipality gives its written consent by
ordinance or resolution in accordance with this subsection and the
Water Code upon the written request to the municipality by the
persons required by law to seek creation of the political
subdivision. In giving its consent, the municipality may not place
any conditions or other restrictions on the creation of the
political subdivision other than those expressly permitted by
Sections 54.016(i) and 54.0167 [54.016(e) and (i)], Water Code. A
request for municipal consent to create a political subdivision and
the provision of related documents does not constitute an event
that triggers or deems consent to municipal annexation of the land
pursuant to an agreement under Subchapter G, Chapter 212, or
Section 43.016.
(b) If the governing body fails or refuses to give its
consent for the creation of the political subdivision, including a
water district previously created by an act of the legislature, on
mutually agreeable terms within 30 [90] days after the date the
governing body receives a written request for the consent, [a
majority of the qualified voters of the area of the proposed
political subdivision and the owners of at least 50 percent of the
land in the proposed political subdivision may petition the
governing body to make available to the area the water, sanitary
sewer services, or both that would be provided by the political
subdivision.
[(c) If, within 120 days after the date the governing body
receives the petition, the governing body fails to make a contract
with a majority of the qualified voters of the area of the proposed
political subdivision and the owners of at least 50 percent of the
land in the proposed political subdivision to provide the
services,] that failure or refusal constitutes the governing body's
consent to the creation of the proposed political subdivision.
(f) The persons who requested city consent, or their
successors and assigns, [If the municipality fails or refuses to
give its consent to the creation of the political subdivision,
including a water district previously created by an act of the
legislature, or fails or refuses to execute a contract providing
for the water or sanitary sewer services requested within the time
limits prescribed by this section, the applicant] may petition the
Texas Commission on Environmental Quality for the creation of the
political subdivision or the inclusion of the land in a political
subdivision. The commission shall allow creation or confirmation
of the creation of the political subdivision or inclusion of the
land in a proposed political subdivision on finding that the
municipality [either does not have the reasonable ability to serve
or] has failed or refused to give consent [to make a legally binding
commitment with sufficient funds available to provide water and
wastewater service adequate to serve the proposed development at a
reasonable cost to the landowner. The commitment must provide that
construction of the facilities necessary to serve the land will
begin within two years and will be substantially completed within
4-1/2 years after the date the petition was filed with the
municipality].
SECTION 2. Section 42.0425(a), Local Government Code, is
amended to read as follows:
(a) A political subdivision, one purpose of which is to
supply fresh water for domestic or commercial use or to furnish
sanitary sewer services, roadways, or drainage, may not add land
that is located in the extraterritorial jurisdiction of a
municipality unless the governing body of the municipality gives
its written consent by ordinance or resolution in accordance with
Section 42.042 [this section] and the Water Code. In giving its
consent, the municipality may not place any conditions or other
restrictions on [the expansion of] the political subdivision other
than those expressly permitted by Section 54.0167 [54.016(e)],
Water Code.
SECTION 3. The heading to Section 54.016, Water Code, is
amended to read as follows:
Sec. 54.016. CONSENT OF CITY TO IN-CITY DISTRICT.
SECTION 4. Section 54.016, Water Code, is amended by
amending Subsections (a), (b), (c), and (d) and adding Subsections
(a-1), (a-2), and (a-3) to read as follows:
(a) This section applies only to the inclusion of land
within the corporate limits of a city in a district. Section
42.042, Local Government Code, applies to the inclusion of land
within the extraterritorial jurisdiction of a city in a district.
(a-1) No land within the corporate limits of a city [or
within the extraterritorial jurisdiction of a city,] shall be
included in a district unless the city grants its written consent,
by resolution or ordinance, to the inclusion of the land within the
district in accordance with [Section 42.042, Local Government Code,
and] this section.
(a-2) The request to a city for its written consent to the
creation of a district, shall conform to the requirements of
Section 54.0166 [be signed by a majority in value of the holders of
title of the land within the proposed district as indicated by the
county tax rolls. A petition for the written consent of a city to
the inclusion of land within a district shall describe the
boundaries of the land to be included in the district by metes and
bounds or by lot and block number, if there is a recorded map or plat
and survey of the area, and 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. If, at the
time a petition is filed with a city for creation of a district, the
district proposes to connect to a city's water or sewer system or
proposes to contract with a regional water and wastewater provider
which has been designated as such by the commission as of the date
such petition is filed, to which the city has made a capital
contribution for the water and wastewater facilities serving the
area, the proposed district shall be designated as a "city service
district." If such proposed district does not meet the criteria for
a city service district at the time the petition seeking creation is
filed, such district shall be designated as a "noncity service
district." The city's consent shall not place any restrictions or
conditions on the creation of a noncity service district as defined
by this chapter other than those expressly provided in Subsection
(e) of this section and shall specifically not limit the amounts of
the district's bonds. A city may not require annexation as a
consent to creation of any district. A city shall not refuse to
approve a district bond issue for any reason except that the
district is not in compliance with valid consent requirements
applicable to the district].
(a-3) If a city grants its written consent without the
concurrence of the petitioner [applicant] to the creation of a
[noncity service] district containing conditions or restrictions
that the petitioning land owner or owners reasonably believe exceed
the city's powers, such land owner or owners, or their successors
and assigns, may petition the commission to create the district and
to modify the conditions and restrictions of the city's consent.
The commission may declare any provision of the consent to be null
and void. The commission may approve the creation of a district
that includes any portion of the land covered by the city's consent
to creation of the district. The legislature may create and may
validate the creation of a district that includes any portion of the
land covered by the city's consent to the creation of the district.
(b) If the governing body of a city fails or refuses to grant
permission for the inclusion of land [within its extraterritorial
jurisdiction] in a district, including a district created by a
special act of the legislature, within 60 [90] days after receipt of
a written request, the petitioning land [a majority of the electors
in the area proposed to be included in the district or the] owner or
owners, or their successors and assigns, [of 50 percent or more of
the land to be included] may petition the governing body of the city
and request the city to provide [make available to the land] the
water or sanitary sewer service on the terms, conditions, cost, and
time frame as contemplated to be provided by the district.
(c) If the governing body of the city and [a majority of the
electors or] the petitioning land owner or owners, or their
successors and assigns, [of 50 percent or more of the land to be
included] in the district fail to execute a mutually agreeable
contract providing for the water or sanitary sewer service
requested within 60 [120] days after receipt of the petition, the
failure shall constitute authorization for the inclusion of the
land in the district under the provisions of this section.
Authorization for the inclusion of such land within the district
under the provisions of this section shall mean only authorization
to initiate proceedings to include the land within the district as
otherwise provided by this Act.
(d) [The provisions of this section relating to the method
of including land in a district without securing the written
consent of a city applies only to land within the extraterritorial
jurisdiction of a city and does not apply to land within the
corporate limits of a city.] If the city fails or refuses to grant
permission for the inclusion of land in a district or to execute a
mutually agreeable contract providing for the water or sanitary
sewer service requested within the time limits contained within
Subsection (b) or (c) of this section, the petitioning land owner or
owners, or their successors or assigns, [applicant] may petition
the commission for creation of the district or inclusion of the land
in a district. The commission shall allow creation or inclusion of
the land in a proposed district upon a finding that the city either
does not have the reasonable ability to serve or has failed to
execute a mutually agreeable contract. [make a legally binding
commitment with sufficient funds available to provide water and
wastewater service adequate to serve the proposed development at a
reasonable cost to the landowner. The commitment shall provide
that construction of the facilities necessary to serve the land
shall be commenced within two years, and shall be substantially
complete within four and one-half years from the date the petition
was filed with the city.] Upon any appeal taken to the district
court from the commission ruling, all parties to the commission
hearing shall be made parties to the appeal. The court shall hear
the case within 120 days from the date the appeal is filed. If the
case is continued or appealed to a higher court beyond such 120-day
period, the court shall require the appealing party in the case of
appeal to a higher court or party requesting such continuance to
post a bond or other adequate security in the amount of damages that
may be incurred by any party as a result of such appeal or delay from
the commission action. The amount of the bond or other security
shall be determined by the court after notice and hearing. Upon
final disposition, a court may award damages, including any damages
for delays, attorney's fees, and costs of court to the prevailing
party. [Under no circumstances shall land within the corporate
limits of a city be included in a district without the written
consent, by ordinance or resolution, of the city.] The provisions
of this section shall apply whether the land is proposed to be
included in the district at the time of creation of a district or to
be included by annexation to a district. A district shall not allow
the owner of a tract to connect to the district's water or
wastewater system unless such tract is a legally subdivided lot
which is part of a recorded subdivision plat or is otherwise legally
exempt from the subdivision requirements of the applicable
governmental authority.
SECTION 5. Section 54.0161, Water Code, is amended to read
as follows:
Sec. 54.0161. REVIEW OF CREATION BY CITY AND COUNTY. (a) A
petitioner seeking to create a district all or part of which is to
be located in the extraterritorial jurisdiction of a city shall
provide evidence to the commission that the petitioner provided the
city with a copy of the petition requesting creation and the
associated application [This section applies only to a proposed
district all of which is to be located outside the corporate limits
of a municipality].
(b) A petitioner seeking [(a-1) Promptly after a petition
is filed with the commission] to create a district all of which is
to be located outside the corporate limits of a city shall provide
evidence to the commission that the petitioner provided the county
with a copy of the petition requesting creation and the associated
application [to which this section applies, the commission shall
notify the commissioners court of any county in which the proposed
district is to be located].
(c) As applicable under Subsection (a) or (b), a city or
county may review the petition requesting creation and the
associated application as to whether the project is feasible and
practicable, is necessary, and would be a benefit to the land to be
included in the district under Section 54.021. A city or county may
reasonably request to meet with the petitioner.
(d) The governing body of a city or [(a-2) The
commissioners court of a county in which the district is to be
located may review the petition for creation and other evidence and
information relating to the proposed district that the
commissioners consider necessary. Petitioners for the creation of a
district shall submit to the county commissioners court any
relevant information requested by the commissioners court.
[(b) In the event the] county may vote [commissioners court
votes] to submit information to the commission. In such instance,
the governing body [or to make a recommendation regarding the
creation of the proposed district, the commissioners court] shall
submit to the commission, at least 30 [10] days before the date set
for action on the petition, a written opinion stating:
(1) whether the governing body [commissioners court]
recommends the creation of the proposed district; and
(2) any findings, conclusions, and other information
that the governing body [commissioners court] thinks would assist
the commission in making a final determination on the petition
under Section 54.021.
(e) [(c)] In passing on a petition subject to this section,
the commission shall consider information relevant to the
determination under Section 54.021 [the written opinion] submitted
by the governing body [county commissioners court].
SECTION 6. Subchapter B, Chapter 54, Water Code, is amended
by adding Sections 54.0166 and 54.0167 to read as follows:
Sec. 54.0166. PETITION FOR CITY CONSENT. A petition to a
city for consent for inclusion of land within the corporate limits
of a city in a district must:
(1) be signed by a majority in value of the holders of
title of the land within the proposed district, as indicated by the
county tax rolls;
(2) describe the boundaries of the land to be included
in the district by metes and bounds or by lot and block number, if
there is a recorded map or plat and survey of the area; and
(3) 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.
Sec. 54.0167. CITY CONSENT CONDITIONS. (a) A city consent
to the inclusion of land within the corporate limits of the city or
within the extraterritorial jurisdiction of a city in a district
may impose no condition, restriction, or requirement other than the
requirements that:
(1) the district design and construct all water and
sewer facilities to serve the land in accordance with the
requirements of the commission or, for a district within the
corporate limits of a city, the generally applicable city
requirements;
(2) the district design and construct all streets,
roads, and drainage facilities to serve the land in accordance with
subdivision requirements adopted by the county in which the
district is located under Section 232.003, Local Government Code,
or, for a district within the corporate limits of a city, the
generally applicable city requirements;
(3) the district engineer certify to the city that all
district facilities are designed and constructed in accordance with
applicable regulatory requirements;
(4) the purposes for which the district may issue
bonds are restricted to purposes authorized by law for the
district;
(5) bonds issued by the district will expressly
provide that the district reserves the right to redeem the bonds on
any date subsequent to a date not later than the 15th anniversary of
the date of issuance without premium;
(6) bonds, other than refunding bonds, be sold by
public sale only after the taking of bids;
(7) no bonds, other than refunding bonds, will be sold
by the district for less that 95 percent of par;
(8) the net effective interest rate on bonds sold by
the district, taking into account any discount or premium as well as
the interest rate borne by the bonds, will not exceed two percent
above the highest average interest rate reported by the Bond Buyer
in its weekly "20-Bond Index" during the one-month period next
preceding the date notice of the sale of the bonds is given, and
that bids for the bonds will be received not more than 45 days after
notice of sale of the bonds is given, unless otherwise approved by
the city or the commission;
(9) refunding bonds provide both gross debt service
savings and net present value savings of three percent or more of
the principal amount of the refunded bonds, as determined by the
district financial advisor, unless otherwise approved by the city
or the commission; and
(10) the date of the latest scheduled maturity of
refunding bonds be not later than the date of the latest scheduled
maturity of the refunded bonds, unless otherwise approved by the
city or the commission.
(b) A city consent to the inclusion of land in a district may
not impose a condition, restriction, or requirement other than the
requirements of Subsection (a). By way of illustration, a city
consent may not include a condition, restriction, or requirement
that:
(1) limits the amounts or the timing of issuance of the
bonds of the district;
(2) limits the maturities of the bonds of the
district;
(3) requires annexation into the city or inclusion in
the extraterritorial jurisdiction of the city;
(4) requires connection to the water or wastewater
system of the city or requires the city to be the retail or
wholesale water or wastewater provider, except for a district
within the corporate limits of a city;
(5) requires the payment of costs to design and
construct streets, roads, or bridges in excess of the proposed
project's rough proportionate share under Section 212.904, Local
Government Code;
(6) requires the payment of costs to design and
construct water, sewer, or drainage facilities in excess of the
district's pro rata share under the rules of the commission;
(7) requires the design or construction of facilities,
including water, sewer, drainage, and roads, in excess of
facilities otherwise necessary to serve the proposed project;
(8) requires a payment to the city, except for a
reasonable fee not to exceed $5,000 to cover the costs of processing
the city's review of the creation petition and application;
(9) requires the district or a developer of land
within the district to pay to the city a portion of the proceeds of
bonds issued by the district or any funds used by the district to
reimburse a developer;
(10) imposes any land use controls or zoning;
(11) imposes any ordinances or platting, subdivision,
or development requirements not generally applicable in the
extraterritorial jurisdiction; and
(12) requires a developer of land within the district
to enter into a development agreement.
(c) If a city grants its written consent to the creation of a
district containing conditions or restrictions that violate this
section, such conditions or restrictions are null, void, and
unenforceable and a landowner may petition the commission to create
the district and to modify the conditions and restrictions of a
city's consent. If a city has previously granted its written
consent to the creation of a district containing conditions or
restrictions that violate this section, such conditions or
restrictions are null, void, and unenforceable and a landowner or
district may petition the commission to modify the conditions and
restrictions of the city's consent. Upon the petition of a
landowner or a district, or upon the commission's own motion, the
commission shall declare any provision of the consent that violates
this section to be null, void, and unenforceable.
SECTION 7. The following laws are repealed:
(1) Section 42.0425(c), Local Government Code;
(2) Section 42.043, Local Government Code; and
(3) Sections 54.016(e) and (f), Water Code.
SECTION 8. This Act takes effect immediately if it receives
a vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect September 1, 2023.