HBA-RBT H.B. 3804 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 3804 By: Crownover Natural Resources 4/10/1999 Introduced BACKGROUND AND PURPOSE The Lake Cities Municipal Utilities Authority (LCMUA) provides the Lake Dallas area with water and wastewater services. It was originally created in the 58th legislative session in 1963. Due to changes in the law, some of LCMUA's are now in conflict with current law. H.B. 3804 is a comprehensive consolidation, clarification, and update of LCMUA's prior statutes and amendments. This bill updates LCMUA's territorial boundaries, annexation, disannexation and eminent domain provisions as well as sections regarding the issuance and payment of bonds and matters which relate to the Texas Natural Resource Conservation Commission. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Creates a conservation and reclamation district known as Lake Cities Municipal Utility Authority (LCMUA), which is a governmental agency, an agency of the State of Texas, a municipal corporation, and a body politic and corporate, under the authority of Article XVI, Section 59 of the Texas Constitution. Provides that the principal offices of LCMUA are and shall be located in Denton County, Texas. SECTION 2. Establishes that the specific territorial boundary of LCMUA is and shall be definitively described in the official records of LCMUA. SECTION 3. Requires all management of LCMUA to be vested in and exercised by a five person Board of Directors (board). Sets forth the method of electing the board, the length of term of members, qualifications of members, and establishes election procedures. Provides that no compensation shall be paid to any board member. SECTION 4. Requires the board to elect from its number a president and vice president of LCMUA and such other officers as in the judgment of the board are necessary or appropriate. Sets forth the duties of the president, the vice president, the secretary, the treasurer, and the general manager. SECTION 5. Establishes the manner in which additional territory may be annexed to the boundaries of LCMUA. SECTION 6. Establishes the manner in which area may be added to the territory of LCMUA upon voluntary petition of all owners of such territory. SECTION 7. Sets forth the powers and authority of LCMUA to develop surface or underground water storage and supply facilities and to construct or cause to be constructed a diversion works, pumps, pumping stations, pipelines, intermediate and terminal storage reservoirs, water treatment plants, distribution systems and all other related facilities which will facilitate or implement the duty of LCMUA to deliver and distribute water within its territory and any other territory for which it holds a certificate of convenience and necessity and to purchase, improve, modify, or extend any existing water system or systems within the certificated territory or outside the certificated territory if reasonably necessary or appropriate for the support of services within the certificated territory. Provides that LCMUA is authorized to make contracts for the purchase of water or water supplies, purchase treated water, purchase waste water treatment facilities and to make contracts for the purchase or sale of treated or untreated water or waste water. SECTION 8. Provides that LCMUA is also empowered and has authority to obtain any and all permits, licenses, consents, and permissions as may be appropriate from the Texas Natural Resource Conservation Commission or any other appropriate regulatory body in order to conduct any of its operations. SECTION 9. Provides that LCMUA is further authorized to purchase and sell all works, machinery, plants, and other facilities and equipment and land, rights-of-way, and easements necessary or appropriate for the purpose of exercising its rights and performing its duties under this Act. SECTION 10. Establishes that LCMUA shall have full power of eminent domain as a municipality and a public utility. SECTION 11. Requires any construction contract to be procured in accordance with Section. 39.271 et seq., Water Code. SECTION 12. Sets forth the manner and procedures in which LCMUA is authorized to issue general obligation and revenue bonds. SECTION 13. Sets forth the manner in which LCMUA is authorized to issue refunding bonds for the purpose of refunding any outstanding bonds authorized by this Act or other authority and any interest thereon. SECTION 14. Provides that any bonds (including refunding bonds) authorized by law, not payable wholly from ad valorem taxes, may be additionally secured by a trust indenture under which the trustee may be a bank, having trust powers, situated either within or outside the State of Texas. Sets forth additional powers of the board with respect to such bonds. SECTION 15. Prohibits bonds payable wholly or partially from ad valorem taxes (except refunding bonds) from being issued unless authorized by an election at which only the qualified voters residing in the LCMUA's voting territory shall be allowed to vote and unless a majority of the votes cast is in favor of the issuance of the bonds. Authorizes bonds not payable wholly or partially from ad valorem taxes to be issued without an election. Sets forth the procedures for an election. SECTION 16. Requires any bonds (including refund bonds) that are authorized by LCMUA, and the record relating to their issuance to be submitted to the attorney general for the attorney general's examination as to their validity. Sets forth the obligations of the attorney general in relation to the bonds. Provides that bonds that are approved must be registered by the state comptroller of public accounts and that the bonds and the contracts shall be valid and binding. SECTION 17. Requires the board to designate one or more banks to serve as depository for the funds of LCMUA. Requires all funds of LCMUA to be deposited in such depository bank or banks except that funds pledged to pay bonds may be deposited with the trustee bank named in the trust agreement or other escrow, and except that funds shall be remitted to the bank or banks of payment for the payment of principal of and interest on bonds. Provides that if funds in the depository bank and the trustee bank are not insured by the Federal Deposit Insurance Corporation they shall be secured in the manner provided by law for the security of municipal funds. Provides that banks selected by the board need not go through any bid process or process regarding invitation of the banks to become designated depositories. SECTION 18. Requires all bonds of LCMUA to be and are hereby declared to be legal and authorized investments for banks, savings banks, trust companies, building and loan associations, savings and loan associations, insurance companies, fiduciaries, trustees, guardians, and for the sinking funds of municipalities, and other political corporations or subdivisions of the State of Texas. Requires the bonds to be eligible to secure the deposit of any and all public funds of the State of Texas, and any and all public funds of municipal corporations and other political corporations or subdivisions of the State of Texas; and such bonds shall be lawful and sufficient security for said deposits to the extent of their value, when accompanied by all attached unmatured coupons. SECTION 19. Provides that LCMUA may be abolished by a majority vote of the qualified voters residing within the voting territory of LCMUA at an election held for the purpose of determining whether or not such Authority shall be abolished. Establishes the procedure for such elections. SECTION 20. States that the accomplishment of the purposes stated in this Act are for the benefit of the people of this state and for the improvement of their properties and industries, and LCMUA, in carrying out the purposes of this Act, will be performing an essential public function under the constitution. Prohibits LCMUA from being required to pay any tax or assessment on any project, operations, equipment, personal or real property or any part thereof, and the bonds issued hereunder and their transfer and the income therefrom, including the profits made on the sale thereof, shall at all times be free from taxation within this State. SECTION 21. Authorizes the Denton County tax assessor and collector to be used as a tax assessor and collector and Denton Central Appraisal District to be designated as a board of equalization and cause taxes to be assessed, valuations to be equalized, and tax rolls to be prepared. Provides for procedures in the event that Denton County and Denton Central Appraisal District does not cooperate. SECTION 22. Prohibits this Act from being interpreted as amending or repealing the statutes regarding the priorities of the use of water or any legislation governing water control. SECTION 23. Severance clause. SECTION 24. Provides that all notice and formal bill introductions have been followed in the passage of this Act. SECTION 25. Emergency clause. Effective date: upon passage.