Office of House Bill AnalysisH.B. 702
By: Lewis, Ron
Natural Resources


Drainage districts were originally created under the Texas Constitution
during the early part of the 20th century.  The drainage district laws were
subsequently adopted by the legislature in 1907 and later codified into the
Water Code.  Until the last few years, the laws had remained virtually
unchanged since their enactment.   Recent attempts to modify these
provisions did not include the issuance of bonds or other financing
statutes.  House Bill 702 modernizes provisions that have become outdated
and modifies provisions relating to the issuance of bonds and other
instruments of indebtedness of drainage districts.      


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. 


House Bill 702 amends the Water Code to modify provisions relating to the
administration and issuing of bonds and other instruments of indebtedness
of a drainage district (district).  The bill requires that any person
filing a petition for the creation of a district deposit cash with the
clerk of the commissioners court in an amount to be determined by the
county elections official.  The bill sets forth procedures requiring the
governing body of a district (board) to adopt a resolution and to post
notice of a subsequent hearing to be scheduled on the resolution (Secs.
56.015 and 56.032). 

H.B. 702 provides that qualifications to serve as a director on the board
are governed by the eligibility requirements for public office set forth in
the Election Code (Sec. 56.062).   H.B. 702 states that in any district in
which the board  is elected, the transfer of the board's powers, rights,
and duties to the commissioners court shall not be made unless such a
proposition shall first be submitted to the qualified voters of such
district and the proposition adopted (Sec. 56.069). 

H.B. 702 increases, from $100 to $1,000, the maximum fine for a conviction
of wilfully filling up, cutting, injuring, destroying, or impairing the
usefulness of any work of a district used to drain and protect from
overflow of water (Sec. 56.128). 

The bill authorizes the interest and sinking fund of a district to be
invested for the benefit of the district as provided by law.  The board is
authorized to transfer money between the interest and sinking fund and the
construction and maintenance fund to restore any funds which were
improperly used (Sec. 56.182).  

H.B. 702 modifies the provisions relating to bonds, taxes, and elections to
make the board subject to the requirements and authority that the
commissioners court, the county judge, or the county clerk has under
current law.  The bill removes provisions entitling the county clerk to
receive fees for recording district bonds.  The bill requires bonds,
including refunding bonds, to be signed by the board president, attested by
the board secretary, and to have the seal of the district affixed to each
bond.  The bill also requires refunding bonds to be registered by the board
secretary.   H.B. 702 requires that bonds be issued in  denominations and
bear interest as authorized by the board of directors.  The bill requires
the district to submit to the attorney general, after the bonds are sold, a
copy of the bonds, a certified copy of the order levying a tax to pay
interest, and a statement of the district's total bonded indebtedness.  The
bill requires the board to deposit all money from the sale of bonds into
the construction and maintenance fund (Secs. 56.202-56.205,56.207, 56.209,
and 56.212).   

The bill deletes provisions regarding refunding bonds and authorizes a
district to refund outstanding bonds by issuing new bonds in accordance
with current law (Sec.  56.210).          

H.B. 702 removes the requirement that a maintenance tax be assessed at the
same time that taxes are levied to pay bonded indebtedness.  The bill
authorizes the board to issue negotiable notes payable from this
maintenance tax and sets forth guidelines regarding the notes.  The bill
also authorizes the board to borrow money for the payment of maintenance
expenses and to evidence those loans with negotiable notes (Sec. 56.242). 

An election to approve the levy of taxes on the benefit basis must be held
at the earliest legal time, no earlier than 30 days after the board orders
an election (Sec.  56.249). 

H.B. 702 authorizes any resident freehold taxpayer of the district to
present a petition requesting the dissolution of the district signed by at
least 5% of the qualified voters of the district at a regular meeting of
the board (Sec. 56.292).  Any person filing a petition is required to
deposit with the board an amount sufficient to pay the cost of conducting
an election within the district (Sec. 56.293). 

The bill requires the commissioners court, prior to entering an order
discharging the trustee and the trustee's bondsman and closing the trust
estate, to order all transactions of the trustee audited by an independent
certified public accountant.  The bill requires a copy of the audit to be
filed with the commissioners court, a copy to be filed with the Texas
Natural Resource Conservation Commission, and a copy to be supplied to the
trustee (Sec. 56.311).  

H.B. 702 deletes provisions relating to consolidation of districts.
Provisions relating to the bond of a county judge, the registration of
bonds, and certain purchases and contracts are also repealed in their
entirety (Secs. 56.137, 56.206, 56.208, and 56.801-56.804). 


September 1, 2001.