HBA-BSM C.S.H.B. 702 77(R) BILL ANALYSIS Office of House Bill AnalysisC.S.H.B. 702 By: Lewis, Ron Natural Resources 3/12/2001 Committee Report (Substituted) BACKGROUND AND PURPOSE 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 C.S.H.B. 702 modernizes provisions that have become outdated and modifies provisions relating to the issuance of bonds and other instruments of indebtedness of drainage districts. 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. ANALYSIS 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. 56.249). 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). EFFECTIVE DATE September 1, 2001. COMPARISON OF ORIGINAL TO SUBSTITUTE 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.