S.B. No. 1194
AN ACT
relating to creating the Central Texas Water Alliance; 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. CENTRAL TEXAS WATER ALLIANCE
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 11020.0101. DEFINITIONS. In this chapter:
(1) "Alliance" means the Central Texas Water Alliance.
(2) "Board" means the board of directors of the
alliance.
(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 alliance under
Section 11020.0105; and
(B) a local government or private entity added to
the alliance as a member under Section 11020.0106.
(8) "Water" includes:
(A) groundwater, percolating or otherwise,
notwithstanding the quality of the groundwater;
(B) any surface water, naturally or artificially
impounded or in a navigable or nonnavigable watercourse; and
(C) municipal wastewater or industrial
wastewater, including municipal wastewater or industrial
wastewater that has been treated to a quality suitable for reuse for
a beneficial use.
Sec. 11020.0102. NATURE OF ALLIANCE. The alliance 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 alliance is created to serve a public use and benefit.
(b) All land and other property included in the territory of
the alliance will benefit from the works and projects to be
accomplished by the alliance under powers conferred by Section 59,
Article XVI, Texas Constitution, and powers granted under this
chapter.
Sec. 11020.0104. ALLIANCE TERRITORY. The territory of the
alliance 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 alliance in
accordance with applicable law.
Sec. 11020.0105. INITIAL SPONSORS. The initial sponsors of
the alliance are:
(1) Bell County;
(2) Bell County Water Control and Improvement District
No. 1;
(3) Clearwater Underground Water Conservation
District; and
(4) McLennan County.
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 alliance; 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 alliance as a sponsor; and
(2) it is in the best interest of the alliance to add
the local government or private entity to the alliance 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 alliance as a sponsor, the board shall issue an order:
(1) adding the local government or private entity to
the alliance;
(2) adding the local government's or private entity's
territory or service area to the territory of the alliance;
(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 alliance to the same
degree as other sponsors already included in the alliance; 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 alliance's
proposal to add the local government to the alliance 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 alliance 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 alliance 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 alliance.
(e) An order issued under Subsection (c) that approves or
conditionally approves a sponsor's petition to be removed from the
alliance 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 alliance 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 alliance, 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 alliance considers necessary
for the winding up of activities in connection with the removal of
the petitioning sponsor as a sponsor from the alliance.
(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
alliance when due and shall satisfy all conditions included in the
order. The board shall approve the petition immediately after all
required payments to the alliance are received and all conditions
included in the order are satisfied as determined by the board.
(g) The removal of a sponsor from the alliance under this
section does not prohibit the former sponsor from contracting with
the alliance for the provision of water supply, wastewater
treatment, or other services provided by the alliance.
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 alliance 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 alliance 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 alliance.
(c) The board by rule shall:
(1) establish the number of directors of the alliance;
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 alliance'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
alliance 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 alliance, 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 alliance
unless other applicable law, or the alliance by rule, requires a
concurrence of a greater number of directors for a specific type of
decision.
(c) Directors of the alliance are public officials and are
entitled to governmental immunity for their actions in their
capacity as directors and officers of the alliance.
Sec. 11020.0210. CONFLICTS OF INTEREST. (a) A director
appointed by a sponsor that has regulatory authority over an issue
before the board shall:
(1) before a vote or decision on the issue, file an
affidavit stating the nature and extent of the regulatory
authority; and
(2) abstain from any further participation on the
issue.
(b) A director required to file an affidavit related to an
issue before the board under Subsection (a) may not:
(1) attend a closed meeting related to the issue; and
(2) vote on a matter related to the issue unless a
majority of the directors are required to file an affidavit under
Subsection (a) related to that issue.
SUBCHAPTER C. POWERS AND DUTIES
Sec. 11020.0301. GENERAL POWERS AND DUTIES. (a) The
alliance may:
(1) acquire, purchase, own, hold, lease, construct,
improve, and maintain a reservoir, groundwater well, or other
source of water supply, including:
(A) groundwater, surface water, and wastewater
reused directly or indirectly; and
(B) aquifer storage and recovery facilities;
(2) acquire, own, construct, operate, repair,
improve, maintain, or extend, inside or outside the alliance'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 alliance 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, water
and wastewater systems, 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 alliance considers to be
unnecessary for the efficient operation or maintenance of the
alliance's facilities.
(b) In addition to the powers specifically provided by this
chapter, the alliance may exercise the powers provided by Section
65.201, Water Code.
Sec. 11020.0302. ALLIANCE POLICIES, RULES, AND BYLAWS. The
alliance 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 alliance by this chapter for the provision of water and
wastewater service.
Sec. 11020.0303. WATER CONSERVATION OR DROUGHT CONTINGENCY
PLANS. The alliance by rule may develop, prepare, revise, adopt,
implement, enforce, and manage water conservation or drought
contingency plans for the alliance or any portion of the alliance.
Sec. 11020.0304. 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 alliance 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. 11020.0305. CONTRACTS. (a) The alliance may contract
with any person to carry out a power authorized by this chapter.
(b) A person who enters into a contract with the alliance
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 alliance
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. 11020.0306. COOPERATIVE CONTRACTS. The alliance may
enter into an interlocal contract with a local government under
Chapter 791, Government Code, to carry out a power of the alliance.
Sec. 11020.0307. RATES AND FEES. (a) The alliance shall
establish rates and fees to be assessed against sponsors and
customers of the alliance. 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 alliance
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 alliance and shall pledge
sufficient amounts to make all payments required under the
contract.
Sec. 11020.0308. EMINENT DOMAIN. (a) The alliance may
exercise the power of eminent domain to acquire a fee simple or
other interest in property if the interest is necessary for the
alliance to exercise the rights or authority conferred by this
chapter.
(b) The alliance shall exercise the right of eminent domain
in the manner provided by Chapter 21, Property Code. The alliance
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 alliance 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.
SUBCHAPTER D. GENERAL FINANCIAL PROVISIONS
Sec. 11020.0401. AD VALOREM TAXES PROHIBITED. The alliance
may not impose an ad valorem tax.
Sec. 11020.0402. GIFTS, GRANTS, LOANS, AND OTHER MONEY.
The alliance 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 alliance is authorized to issue under other
law, to accomplish the purposes of the alliance, the alliance 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 alliance
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;
(H) sewer services; or
(I) any other service or product of the alliance
provided inside or outside the boundaries of the alliance;
(3) grants or gifts;
(4) the ownership or operation of all or a designated
part of the alliance's works, improvements, facilities, plants, or
equipment; and
(5) the proceeds of contracts.
(b) Bonds, notes, or other obligations issued by the
alliance may be first or subordinate lien obligations at the
board's discretion.
(c) In connection with any bonds, notes, or other
obligations of the alliance, the alliance may exercise any power of
an issuer under Chapter 1371, Government Code.
(d) The alliance may conduct a public, private, or
negotiated sale of the bonds, notes, or other obligations.
(e) The alliance may enter into one or more indentures of
trust to further secure its bonds, notes, or other obligations.
(f) The alliance 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 alliance, the alliance may
reserve the right to issue additional bonds, notes, or other
obligations secured by the alliance'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 alliance and the
alliance'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 alliance'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
alliance or any indenture, covenant, mortgage, or other agreement
relating to them.
Sec. 11020.0502. ELECTION NOT REQUIRED. The alliance 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 alliance may demonstrate the
alliance's ability to satisfy the debt service and those
obligations using accumulated funds of the alliance and revenue and
growth projections prepared by a professional utility rate
consultant at the direction of the alliance. If the resolution
authorizing the issuance of the bonds, notes, or other obligations
provides that the alliance 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 alliance.
Sec. 11020.0504. REFUNDING BONDS. The alliance 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 Central Texas Water
Alliance 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 striking Section 11020.0308 and
substituting Section 11020.0308 to read as follows:
Sec. 11020.0308. 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.
______________________________ ______________________________
President of the Senate Speaker of the House
I hereby certify that S.B. No. 1194 passed the Senate on
March 27, 2025, by the following vote: Yeas 27, Nays 3.
______________________________
Secretary of the Senate
I hereby certify that S.B. No. 1194 passed the House on
April 30, 2025, by the following vote: Yeas 121, Nays 20, two
present not voting.
______________________________
Chief Clerk of the House
Approved:
______________________________
Date
______________________________
Governor