Office of House Bill AnalysisC.S.H.B. 702
By: Lewis, Ron
Natural Resources
Committee Report (Substituted)


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.  C.S.H.B. 702 modernizes provisions that have become outdated and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. 


C.S.H.B. 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 officer (Sec. 56.015).  The bill sets forth provisions
regarding the authority of the governing body of a district (board) to
adopt a resolution proposing that the district operate under Article XVI,
Section 59, of the Texas Constitution (Sec. 56.032). 

C.S.H.B. 702 provides that to be eligible to serve as a director on the
board, a person must satisfy the requirements for public office set forth
in the Election Code (Sec. 56.062).   The bill provides that in any
district in which the board is elected, the transfer of the board's powers,
rights, and duties to the commissioners court is prohibited unless the
transfer is approved by a majority of the voters voting on that issue at an
election held in the district. (Sec. 56.069). 

C.S.H.B. 702 increases from $100 to $1,000 the maximum fine for a
conviction for wilfully injuring a drainage canal or ditch (Sec. 56.128). 

C.S.H.B. 702 modifies provisions relating to bonds, taxes, and elections to
transfer to the board the same requirements and authority that the
commissioners court, the county judge, or the county clerk have under
current law.  C.S.H.B. 702 removes provisions regarding bond denominations
and requires that  bonds be issued in denominations and bear interest as
authorized by the board.  After the bonds are sold the district is required
to submit to the attorney general the actual bonds, a certified copy of the
order levying a tax, and a statement of the district's total bonded
indebtedness as shown by the last official assessment of the appraisal
district in which the district participates. (Secs. 56.182, 56.202-56.205,
56.207, 56.209, 56.211, 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).          

C.S.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 a maintenance
tax and sets forth guidelines regarding the notes.  The bill also
authorizes the board to issue negotiable notes to pay any lawful
expenditure of the district (Sec. 56.242).  An election to approve the levy
of taxes on the benefit basis must be held on the earliest legal date that
occurs on or after the 30th day after the board orders the election (Sec.

C.S.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 five percent 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 surety on the trustee's  bond 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 provided
to the trustee (Sec. 56.311).  

C.S.H.B. 702 repeals provisions relating to the bond of a county judge, the
registration of bonds, and certain purchases and contracts (Secs. 56.137,
56.206, and 56.208). 


September 1, 2001.


C.S.H.B. 702 differs from the original to conform the substitute to Texas
Legislative Council style and format.  The substitute differs from the
original by requiring the district to send the original bonds instead of  a
copy to the attorney general after the bonds are sold.  C.S.H.B. 702
restores Subchapter K regarding the consolidation of districts which was
deleted in the original.