By: Lopez of Cameron H.B. No. 5375
A BILL TO BE ENTITLED
AN ACT
relating to creating the NORTHERN CAMERON AND WILLACY COUNTY WATER
AUTHORITY; providing authority to issue bonds; granting the power
of eminent domain; providing authority to impose fees.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subtitle X, Title 6, Special District Local Laws
Code, is amended by adding Chapter 11020 to read as follows:
CHAPTER 11020. NORTHERN CAMERON AND WILLACY COUNTY WATER AUTHORITY
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 11020.0101. DEFINITIONS. In this chapter:
(1) "Authority" means the NORTHERN CAMERON AND WILLACY
COUNTY WATER AUTHORITY.
(2) "Board" means the board of directors of the
Authority.
(3) "Director" means a member of the board.
(4) "District" means any district or authority created
under Section 52, Article III, or Section 59, Article XVI, Texas
Constitution, regardless of the manner of creation.
(5) "Local government" means:
(A) a municipality, county, district, or other
political subdivision of this state;
(B) a local government corporation;
(C) a nonprofit corporation created to act on
behalf of a local government; or
(D) a combination of two or more of the entities
described by this subdivision.
(6) "Private entity" includes an individual,
corporation, organization, business trust, estate, trust,
partnership, and association and any other legal entity that is not
a governmental body or agency.
(7) "Sponsor" means:
(A) the initial sponsors of the Authority under
Section 11020.0105; and
(B) a local government or private entity added to
the Authority as a member under Section 11020.0106.
(8) "Water" includes:
(A) groundwater, percolating or otherwise,
notwithstanding the quality of the groundwater;
Sec. 11020.0102. NATURE OF AUTHORITY. The Authority is a
regional water authority created under and essential to accomplish
the purposes of Section 59, Article XVI, Texas Constitution.
Sec. 11020.0103. FINDINGS OF PUBLIC PURPOSE AND BENEFIT.
(a) The Authority is created to serve a public use and benefit.
(b) All land and other property included in the territory of
the Authority will benefit from the works and projects to be
accomplished by the Authority under powers conferred by Section 59,
Article XVI, Texas Constitution, and powers granted under this
chapter.
Sec. 11020.0104. AUTHORITY TERRITORY. The territory of the
Authority is composed of the territory:
(1) of the sponsors, including territory within the
municipal boundaries of a sponsor that is a municipality;
(2) if applicable, located in the service areas of the
sponsors, including the territory within the sponsors'
certificates of convenience and necessity; and
(3) added to and not excluded from the Authority in
accordance with applicable law.
Sec. 11020.0105. INITIAL SPONSORS. The initial sponsors of
the Authority are:
(1) Cameron County;
(2) Willacy County;
(3) City of Primera;
(4) City of La Feria;
(5) City of San Benito;
(6) City of Harlingen and Harlingen Water Works System
(7) City of Rio Hondo
(8) City of Santa Rosa
(9) City of Port Isabel
(10) City of Combes
(11) City of Lyford
Sec. 11020.0106. METHOD OF ADDING SPONSORS. (a) A local
government or a private entity may petition the board to add that
local government or private entity as a sponsor.
(b) A petition under Subsection (a) must be submitted in the
manner and form required by board rule.
(c) On receipt of a petition under Subsection (a), the board
shall set a hearing on the petition and provide notice of the date,
time, place, and purpose of the hearing to:
(1) the sponsors of the Authority; and
(2) the petitioning local government or private
entity.
(d) At the hearing, the board shall determine whether:
(1) the local government or private entity will
benefit from being added to the Authority as a sponsor; and
(2) it is in the best interest of the Authority to add
the local government or private entity to the Authority as a
sponsor.
(e) If, after a hearing on the petition, the board
determines that the local government or private entity should be
added to the Authority as a sponsor, the board shall issue an order:
(1) adding the local government or private entity to
the Authority;
(2) adding the local government's or private entity's
territory or service area to the territory of the Authority;
(3) making the local government's or private entity's
territory or service area subject to the privileges, duties,
assets, and financial obligations of the Authority to the same
degree as other sponsors already included in the Authority; and
(4) stating the effective date of the order.
(f) If the subject of the order is a local government, the
effective date of the order must allow enough time for the local
government to comply with Subsection (g).
(g) A local government that is the subject of an order
issued under Subsection (e) shall publish notice of the Authority's
proposal to add the local government to the Authority as a sponsor.
The notice must:
(1) be published in a newspaper of general circulation
in the county in which the local government is located;
(2) be published at least once per week for two
consecutive weeks and with the first publication appearing on or
before the 14th day before the effective date of the order; and
(3) state the effective date of the order.
Sec. 11020.0107. METHOD OF REMOVING SPONSORS. (a) The
governing body of a sponsor may petition the board to remove the
entity from the Authority as a sponsor.
(b) A petition must be submitted in the manner and form
required by board rule.
(c) After receiving a petition under Subsection (a), the
board shall:
(1) decide whether the petitioning sponsor should be
removed from the Authority as a sponsor; and
(2) by order approve, conditionally approve, or
disapprove the petition.
(d) The board may not approve a petition submitted under
this section if that action would impair or violate or conflict with
the terms of any outstanding bonds, notes, or other obligations of
the Authority.
(e) An order issued under Subsection (c) that approves or
conditionally approves a sponsor's petition to be removed from the
Authority as a sponsor must address:
(1) all matters related to the removal as determined
by the board, including the removal of the territory of the sponsor
and, if applicable, territory located in the service area of the
sponsor as provided by the sponsor's certificate of convenience and
necessity; and
(2) if applicable, any conditions imposed by the board
that the petitioning sponsor must satisfy before the board approves
the petition, which may include:
(A) payment by the petitioning sponsor of all
bonds, notes, or other obligations issued by the Authority on
behalf of the sponsor;
(B) payment by the petitioning sponsor of the
sponsor's pro rata share of any bond, note, or other obligation
issued by the Authority, other than the bonds, notes, or other
obligations described by Paragraph (A), if the payment is allowed
under the terms of the bond, note, or other obligation;
(C) conditions related to the ownership or
transfer of ownership of real property, facilities, equipment,
personnel, and supplies; and
(D) conditions the Authority considers necessary
for the winding up of activities in connection with the removal of
the petitioning sponsor as a sponsor from the Authority.
(f) If the board by order issued under Subsection (c)
conditionally approves a sponsor's petition, the petitioning
sponsor remains a sponsor and shall make all payments owed to the
Authority when due and shall satisfy all conditions included in the
order. The board shall approve the petition immediately after all
required payments to the Authority are received and all conditions
included in the order are satisfied as determined by the board.
(g) The removal of a sponsor from the Authority under this
section does not prohibit the former sponsor from contracting with
the Authority for the provision of water supply, wastewater
treatment, or other services provided by the Authority.
Sec. 11020.0108. REAPPORTIONMENT OF DIRECTORS. After the
addition or removal of a sponsor under this subchapter, the board by
rule shall reapportion the directors of the Authority among the
sponsors in accordance with Section 11020.0201(c)(2). The board
may increase or decrease the number of directors on the board in
accordance with Section 11020.0201(a).
Sec. 11020.0109. LIBERAL CONSTRUCTION OF CHAPTER. This
chapter shall be liberally construed to effect its purposes.
SUBCHAPTER B. BOARD OF DIRECTORS
Sec. 11020.0201. DIRECTORS. (a) Except for the initial
board of directors, the Authority is governed by a board of
directors consisting of at least 5 and not more than 18 members.
(b) The board is responsible for the management, operation,
and control of the Authority.
(c) The board by rule shall:
(1) establish the number of directors of the
Authority; and
(2) apportion the directors for each sponsor based on
the amount of water contracted to be supplied to the sponsor under
the terms of the Authority's water supply contract with the
sponsor, subject to Section 11020.0203(a).
Sec. 11020.0202. ELIGIBILITY TO SERVE AS DIRECTOR. (a) To
be eligible to serve as a director, a person must be:
(1) at least 18 years of age; and
(2) a resident of the territory located in the
Authority or an employee of a sponsor.
(b) A director who also serves on the governing body of a
sponsor is not a dual officeholder and is not prohibited by the
common law doctrine of incompatibility from serving on both the
board and the governing body.
(c) Service on the board by a public officeholder is an
additional duty of that person's office.
Sec. 11020.0203. APPOINTMENT OF DIRECTORS. (a) Each
sponsor is entitled to appoint at least one director.
(b) Each director must be appointed by the governing body of
a sponsor in accordance with the rules adopted under Section
11020.0201 that govern the apportionment of directors among the
sponsors.
(c) Each sponsor shall appoint the appropriate number of
directors not earlier than January 1 and not later than February 28
of each year.
Sec. 11020.0204. TERMS OF OFFICE. (a) Directors serve
staggered three-year terms, with one-third or as near as possible
to one-third of the members' terms expiring February 28 of each
year.
(b) A director's term begins on March 1 of the year the
director is appointed.
(c) A director may not serve more than five consecutive
terms as a director.
Sec. 11020.0205. REMOVAL OF DIRECTOR. A sponsor that
appoints a director may remove the director from office at any time,
with or without cause.
Sec. 11020.0206. BOARD VACANCY. If there is a vacancy on
the board, the governing body of the sponsor that appointed the
director who vacated the office shall appoint a director to serve
the remainder of the term.
Sec. 11020.0207. VOTING AUTHORITY. (a) Except as provided
by Subsection (b), each director is entitled to one vote on any
issue before the board.
(b) The board may establish a graduated voting procedure
after each sponsor has appointed a director to the board.
Sec. 11020.0208. OFFICERS. At the first meeting of the
board after March 1 of each year, the board shall elect officers for
the Authority, including a chair, vice chair, secretary, and
treasurer.
Sec. 11020.0209. MEETINGS AND ACTIONS OF BOARD; QUORUM.
(a) The board may meet as many times each year as the board
considers appropriate.
(b) A concurrence of a majority of the directors present and
voting is sufficient for transacting any business of the Authority
unless other applicable law, or the Authority by rule, requires a
concurrence of a greater number of directors for a specific type of
decision.
(c) Directors of the Authority are public officials and are
entitled to governmental immunity for their actions in their
capacity as directors and officers of the Authority.
SUBCHAPTER C. POWERS AND DUTIES
Sec. 11020.0301. GENERAL POWERS AND DUTIES. (a) The
Authority may:
(1) acquire, purchase, own, hold, lease, construct,
improve, and maintain a reservoir, groundwater well, or other
source of water supply, including:
(A) groundwater, and
(B) aquifer storage and recovery facilities;
(2) acquire, own, construct, operate, repair,
improve, maintain, or extend, inside or outside the Authority's
boundaries, water and wastewater works, improvements, facilities,
plants, pipelines, equipment, and appliances for:
(A) the treatment and transportation of water and
wastewater;
(B) the direct or indirect reuse of wastewater;
(C) aquifer storage and recovery projects; and
(D) the provision of wholesale water and
wastewater services to Authority customers, municipalities,
districts, water supply corporations, and other persons in this
state;
(3) acquire, purchase, own, hold, lease, and maintain
interests, including capacity rights and other contractual rights,
in sources of water supply, reservoirs, groundwater wells,
treatment works, improvements, facilities, plants, equipment,
appliances, aquifer storage and recovery projects, and the direct
or indirect reuse of wastewater;
(4) finance any purchase or acquisition through a
bond, note, or other obligation under Subchapter E, or through a
lease-purchase agreement; and
(5) sell, lease, convey, or otherwise dispose of any
right, interest, or property the Authority considers to be
unnecessary for the efficient operation or maintenance of the
Authority's facilities.
(b) In addition to the powers specifically provided by this
chapter, the Authority may exercise the powers provided by Section
65.201, Water Code.
Sec. 11020.0302. AUTHORITY POLICIES, RULES, AND BYLAWS.
The Authority may adopt and enforce policies, rules, and bylaws
reasonably required to implement this chapter, including rules
governing procedures before the board and rules regarding
implementation, enforcement, and any other matters related to the
exercise of the rights, powers, privileges, and functions conferred
on the Authority by this chapter for the provision of water and
wastewater service.
Sec. 11020.0303. EMINENT DOMAIN. (a) The Authority may
exercise the power of eminent domain to acquire a fee simple or
other interest in property if the interest is necessary for the
Authority to exercise the rights or authority conferred by this
chapter.
(b) The Authority shall exercise the right of eminent domain
in the manner provided by Chapter 21, Property Code. The Authority
is not required to give bond for appeal or bond for costs in a
condemnation suit or other suit to which it is a party.
(c) The Authority may not use the power of eminent domain
for the condemnation of land for the purpose of acquiring rights to
groundwater or for the purpose of acquiring water or water rights.
Sec. 11020.0304. WATER CONSERVATION OR DROUGHT CONTINGENCY
PLANS. The Authority by rule may develop, prepare, revise, adopt,
implement, enforce, and manage water conservation or drought
contingency plans for the Authority or any portion of the
Authority.
Sec. 11020.0305. SPONSOR CONVEYANCES AND ACQUISITIONS. (a)
In this section, "utility system" has the meaning assigned by
Section 1502.001, Government Code.
(b) A sponsor may convey a utility system facility or asset
or the sponsor's interest in a utility system facility or asset to
the Authority without holding an election to approve the
conveyance.
(c) A sponsor is exempt from the provisions of Chapter 1502,
Government Code, regarding the conveyance, sale, or acquisition of
a utility system, or any related works, improvements, facilities,
plants, equipment, or appliances.
Sec. 11020.0306. CONTRACTS. (a) The Authority may
contract with any person to carry out a power authorized by this
chapter.
(b) A person who enters into a contract with the Authority
may pledge to the payment of the contract any source of revenue that
may be available to the person, including ad valorem taxes, if the
person has the authority to impose those taxes.
(c) Payments made under a contract with the Authority
constitute an operating expense of the person served under the
contract, unless otherwise prohibited by a previously outstanding
obligation of the person. To the extent a person pledges funds to
the payment of the contract that are to be derived from the person's
own water system, the payments constitute an operating expense of
that system.
Sec. 11020.0307. COOPERATIVE CONTRACTS. The Authority may
enter into an interlocal contract with a local government under
Chapter 791, Government Code, to carry out a power of the Authority.
Sec. 11020.0308. RATES AND FEES. (a) The Authority shall
establish rates and fees to be assessed against sponsors and
customers of the Authority. The rates and fees may be established
by classes of customers, by project, or by area of service.
(b) A sponsor, local government, water supply corporation,
private entity, or other person that contracts with the Authority
shall establish, charge, and collect fees, rates, charges, rentals,
and other amounts for any service or facility provided under or in
connection with a contract with the Authority and shall pledge
sufficient amounts to make all payments required under the
contract.
SUBCHAPTER D. GENERAL FINANCIAL PROVISIONS
Sec. 11020.0401. AD VALOREM TAXES PROHIBITED. The
Authority may not impose an ad valorem tax.
Sec. 11020.0402. GIFTS, GRANTS, LOANS, AND OTHER MONEY.
The Authority may apply for, accept, receive, and administer gifts,
grants, loans, and other money available from any source.
SUBCHAPTER E. BONDS, NOTES, AND OTHER OBLIGATIONS
Sec. 11020.0501. REVENUE BONDS, NOTES, AND OTHER
OBLIGATIONS. (a) In addition to bonds, notes, and other
obligations that the Authority is authorized to issue under other
law, to accomplish the purposes of the Authority, the Authority may
issue bonds, notes, or other obligations payable solely from and
secured by all or part of any funds or any revenue from any source or
sources, including:
(1) fees, rates, and other charges the Authority
imposes or collects;
(2) the sale of:
(A) water;
(B) water or wastewater services;
(C) water rights or capacity;
(D) water transmission rights, capacity, or
services;
(E) water pumping;
(F) wastewater reused directly or indirectly;
(G) aquifer storage and recovery services; or
(H) any other service or product of the Authority
provided inside or outside the boundaries of the Authority;
(3) grants or gifts;
(4) the ownership or operation of all or a designated
part of the Authority's works, improvements, facilities, plants, or
equipment; and
(5) the proceeds of contracts.
(b) Bonds, notes, or other obligations issued by the
Authority may be first or subordinate lien obligations at the
board's discretion.
(c) In connection with any bonds, notes, or other
obligations of the Authority, the Authority may exercise any power
of an issuer under Chapter 1371, Government Code.
(d) The Authority may conduct a public, private, or
negotiated sale of the bonds, notes, or other obligations.
(e) The Authority may enter into one or more indentures of
trust to further secure its bonds, notes, or other obligations.
(f) The Authority may issue bonds, notes, or other
obligations in more than one series as necessary to carry out the
purposes of this chapter. In issuing bonds, notes, or other
obligations secured by revenue of the Authority, the Authority may
reserve the right to issue additional bonds, notes, or other
obligations secured by the Authority's revenue that are on parity
with or are senior or subordinate to the bonds, notes, or other
obligations issued earlier.
(g) A resolution of the board or a trust indenture securing
the bonds, notes, or other obligations may specify additional
provisions that constitute a contract between the Authority and the
Authority's bondholders, noteholders, or other obligation holders.
(h) Bonds, notes, or other obligations may be additionally
secured by deed of trust or mortgage on any or all of the
Authority's facilities.
(i) The authority provided by this chapter for the
authorization and issuance of bonds, notes, and other obligations
is in addition to, and not in lieu of, the authority otherwise
established under general law and may not be construed as a
limitation on, or a modification of, general law providing for
authorization and issuance of bonds, notes, and other forms of
obligations. Nothing in this chapter may be construed as affecting
any existing contract, bond, note, or other obligation of the
Authority or any indenture, covenant, mortgage, or other agreement
relating to them.
Sec. 11020.0502. ELECTION NOT REQUIRED. The Authority is
not required to hold an election to approve the issuance of revenue
bonds or notes or of other obligations under this subchapter.
Sec. 11020.0503. USE OF REVENUE AND GROWTH PROJECTIONS.
For the purposes of attorney general review and approval and in lieu
of any other manner of demonstrating the ability to pay debt service
and satisfy any other pecuniary obligations relating to bonds,
notes, or other obligations, the Authority may demonstrate the
Authority's ability to satisfy the debt service and those
obligations using accumulated funds of the Authority and revenue
and growth projections prepared by a professional utility rate
consultant at the direction of the Authority. If the resolution
authorizing the issuance of the bonds, notes, or other obligations
provides that the Authority intends to increase rates to the extent
necessary to pay debt service and satisfy any other pecuniary
obligations arising under the bonds, notes, or other obligations,
the revenue projections prepared by a professional utility rate
consultant may include forecast rate increases and accumulated and
available fund balances as determined by the Authority.
Sec. 11020.0504. REFUNDING BONDS. The Authority may issue
refunding bonds, notes, and other obligations to refund any of its
bonds, notes, or other obligations in any manner provided by law,
including Chapter 1207, Government Code.
Sec. 11020.0505. BONDS, NOTES, AND OTHER OBLIGATIONS EXEMPT
FROM TAXATION. A bond, note, or other obligation issued under this
chapter, a transaction related to the bond, note, or other
obligation, the interest on the bond, note, or other obligation,
and the profit from the sale of the bond, note, or other obligation
are exempt from taxation by this state or a political subdivision of
this state.
SECTION 2. (a) The sponsors of the Authority shall appoint
the initial directors under Section 11020.0203, Special District
Local Laws Code, as added by this Act, not earlier than 30 days and
not later than 90 days after the effective date of this Act.
(b) As soon as practicable after the initial directors have
been appointed under Section 11020.0203, Special District Local
Laws Code, as added by this Act, the initial directors shall draw
lots to determine which directors serve a one-year term expiring
February 28, 2027, which directors serve a two-year term expiring
February 28, 2028, and which directors serve a three-year term
expiring February 28, 2029. The lots must be split into thirds or
as near to thirds as possible.
SECTION 3. (a) The legal notice of the intention to
introduce this Act, setting forth the general substance of this
Act, has been published as provided by law, and the notice and a
copy of this Act have been furnished to all persons, agencies,
officials, or entities to which they are required to be furnished
under Section 59, Article XVI, Texas Constitution, and Chapter 313,
Government Code.
(b) The governor, one of the required recipients, has
submitted the notice and Act to the Texas Commission on
Environmental Quality.
(c) The Texas Commission on Environmental Quality has filed
its recommendations relating to this Act with the governor, the
lieutenant governor, and the speaker of the house of
representatives within the required time.
(d) All requirements of the constitution and laws of this
state and the rules and procedures of the legislature with respect
to the notice, introduction, and passage of this Act are fulfilled
and accomplished.
SECTION 4. (a) If this Act does not receive a two-thirds
vote of all the members elected to each house, Subchapter C, Chapter
11020, Special District Local Laws Code, as added by Section 1 of
this Act, is amended by adding Section 11020.0309 to read as
follows:
Sec. 11020.0309. NO EMINENT DOMAIN POWER. The district may
not exercise the power of eminent domain.
(b) This section is not intended to be an expression of a
legislative interpretation of the requirements of Section 17(c),
Article I, Texas Constitution.
SECTION 5. 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, 2025.