VERNON'S CIVIL STATUTES

TITLE 22. BONDS--COUNTY, MUNICIPAL, ETC.

CHAPTER 1. GENERAL PROVISIONS AND REGULATIONS



This article was amended by the 84th Legislature. Pending publication of the current statutes, see S.B. 1296, 84th Legislature, Regular Session, for amendments affecting this section.

Art. 717r. METROPOLITAN WATER CONTROL AND IMPROVEMENT DISTRICTS AND SUBDISTRICTS; ISSUANCE OF BONDS AND REFUNDING BONDS.

Sec. 1. DEFINITIONS. In this Act:

(1) "Refunding bonds" means refunding bonds issued by a metropolitan water control and improvement district.

(2) "Residential neighborhoods" means an area that, as it develops, will consist of detached single-family residences on no less than 79 percent of its net residential acreage, and no more than an additional 10 percent of its net residential acreage will consist of condominiums or multifamily rental units with a density greater than 15 units per net residential acre. Notwithstanding the foregoing, "residential neighborhoods" means an area that, as it develops, will consist of detached single-family residences on no less than 87-1/2 percent of its net residential acreage if the preliminary engineering report adopted by the board of directors of the metropolitan water control and improvement district before the authorization of bonds stipulated that approximately 87-1/2 percent of the net residential acreage would consist of single-family residences; provided, however, that on the full utilization of all facilities constructed with the proceeds of the bonds so authorized, the definition of "residential neighborhoods" stated in the first sentence of this subdivision shall thereafter apply. Variance of as much as three percent from the percentages set forth above shall be permissible during development so long as the percentages are met on completion of development.

(3) "Subdistrict" means a conservation and reclamation district created pursuant to Article XVI, Section 59, of the Texas Constitution and this Act to provide freshwater supply and distribution, sanitary sewage collection and treatment and storm sewer and drainage facilities and services to residential neighborhoods.

(4) "Metropolitan water control and improvement district" means each conservation and reclamation district containing at least 10,000 acres after all exclusions of land have occurred, created pursuant to Article XVI, Section 59, of the Texas Constitution whether by general law or special Act that is governed by Chapter 51, Water Code, as amended, to the extent those provisions are not inconsistent with the provisions of any special Act creating the district.

Sec. 2. REFUNDING BONDS. (a) A metropolitan water control and improvement district may issue bonds to refund all or part of its outstanding bonds, notes, or other obligations including matured but unpaid interest.

(b) Refunding bonds shall mature serially or otherwise not more than 40 years from their date and shall bear interest at any rate or rates permitted by the constitution and laws of this state.

(c) Refunding bonds may be payable from the same source as the bonds, notes, or other obligations being refunded or from other additional sources or from other different sources.

(d) The refunding bonds shall be approved by the attorney general and shall be registered by the comptroller of public accounts. After that approval and registration, the refunding bonds shall be valid and incontestable for all purposes.

(e) The orders or resolutions authorizing the issuance of the refunding bonds may provide that they shall be sold and the proceeds deposited in the place or places at which the bonds being refunded are payable, in which case the refunding bonds may be issued before the cancellation of the bonds being refunded, provided an amount sufficient to pay the principal of and interest on the bonds being refunded to their maturity dates, or to their option dates if the bonds have been duly called for payment prior to maturity according to their terms, has been deposited in the place or places at which the bonds being refunded are payable. The comptroller of public accounts shall register these refunding bonds without the surrender and cancellation of the bonds being refunded. All resolutions previously adopted by metropolitan water control and improvement districts authorizing the issuance of refunding bonds are ratified and confirmed in all respects.

(f) A refunding may be accomplished in one or in several installment deliveries. Refunding bonds constitute negotiable instruments and are investment securities governed by the Uniform Commercial Code (Chapter 8, Business & Commerce Code) notwithstanding any provisions of law or court decision to the contrary and are legal and authorized investments for banks, savings banks, trust companies, savings and loan associations, insurance companies, fiduciaries, trustees, and guardians, and for the sinking funds of cities, counties, school districts, and other political subdivisions or public agencies of this state. Refunding bonds are eligible to secure deposits of any public funds of the state and of any city, county, school district, and any other political subdivision or public agency of the state and are lawful and sufficient security for the deposits to the extent of their market value.

(g) In lieu of the methods set forth in this Act, a metropolitan water control and improvement district may refund bonds, notes, or other obligations in the manner provided by other general laws of this state.

(h) Notice of intention to issue refunding bonds shall be published by the metropolitan water control and improvement district at least once a week for two consecutive weeks in a newspaper of general circulation within the metropolitan water control and improvement district at least 15 days before the meeting of the governing body at which it is proposed to issue such bonds. At any time prior to the issuance of the bonds, if a petition signed by not less than 10 percent of the qualified voters of the metropolitan water control and improvement district is filed with the metropolitan water control and improvement district calling for a referendum on the refunding bond issue, the governing body shall, at its next meeting, order an election to be held within the metropolitan water control and improvement district to determine whether or not the bonds shall be issued. The election shall be held in the manner prescribed by Chapter 1251, Government Code, for the issuance of municipal bonds.

Sec. 3. CREATION OF SUBDISTRICTS. (a) The Texas Water Commission may create subdistricts over designated territory within the boundaries of metropolitan water control and improvement districts as provided by this section.

(b) A petition that contains the substance of the requirements of Sections 51.013 and 51.014, Water Code, shall be filed with the Texas Water Commission.

(c) The Texas Water Commission shall have notice of the hearing given in the manner required by Section 51.018, Water Code.

(d) The hearing shall be conducted in the manner provided by Section 51.020, Water Code, and the Texas Water Commission shall grant or refuse the petition in the manner provided by Section 51.021, Water Code, and the appeal from the decision of the Texas Water Commission shall be made in the manner provided by Sections 51.022 through 51.025, Water Code, as amended. The Texas Water Commission shall appoint five directors to serve as the governing body of the subdistrict, each of whom shall meet the qualifications provided by Section 51.072, Water Code.

(e) Within 60 days after a petition for the creation of a subdistrict is granted by the Texas Water Commission, the board of directors of the subdistrict shall adopt an order calling elections within the boundaries of the subdistrict in the manner provided by Sections 51.221 through 51.224, Water Code, for the following purposes:

(1) to confirm the creation of the subdistrict in the manner provided by Sections 51.033 and 51.034, Water Code;

(2) to authorize the issuance of bonds by the subdistrict or by the metropolitan water control and improvement district on behalf of the subdistrict to be repaid by ad valorem taxes, revenues, or ad valorem taxes and revenues derived by the subdistrict;

(3) to authorize a tax within the boundaries of the subdistrict to make payments under a contract with the metropolitan water control and improvement district to support refunding bonds of the metropolitan water control and improvement district in accordance with the exclusions procedure provided by Section 5 of this Act;

(4) to authorize a maintenance tax within the boundaries of the subdistrict in the manner provided by Sections 51.360 and 51.361, Water Code; and

(5) to elect a permanent board of directors for the subdistrict in the manner provided by Sections 51.074 and 51.075, Water Code.

(f) The subdistrict shall sue and be sued in its own name and shall, until excluded from the boundaries of the metropolitan water control and improvement district in accordance with the provisions of Section 5 of this Act, have concurrent jurisdiction with the metropolitan water control and improvement district that is in the territory within the boundaries of the subdistrict and may exercise any of the rights, powers, and authority of the metropolitan water control and improvement district within the boundaries of the subdistrict.

(g) The ad valorem plan of taxation shall apply to each subdistrict, and there shall be no hearing for exclusions of land from the subdistrict necessary prior to the elections provided in this section.

(h) The subdistrict may be dissolved in the same manner as the metropolitan water control and improvement district.

(i) The subdistrict shall be governed by Chapter 51, Water Code, as amended, and all other general laws of this state to the extent those laws are not inconsistent with this Act.

Sec. 4. BONDS OF THE SUBDISTRICT. (a) Before adopting the order calling elections provided by Subsection (e) of Section 3 of this Act, the engineers for the subdistrict shall present a report to the governing body of the subdistrict that conforms to Section 51.410, Water Code, with regard to the bonds to be issued by the subdistrict or by the metropolitan water control and improvement district on behalf of the subdistrict.

(b) After the engineer's report is filed and approved, the governing body of the subdistrict shall order an election within the boundaries of the subdistrict to authorize the issuance of bonds by the subdistrict or by the metropolitan water control and improvement district on behalf of the subdistrict in accordance with the provisions of this Act and Sections 51.411 and 51.412, Water Code.

(c) Bonds authorized at an election within the subdistrict may only be repaid from ad valorem taxes imposed on all taxable property within the boundaries of the subdistrict or income, increment, and revenue derived from the ownership or operation of any part of the assets of the subdistrict or any combination of the foregoing, and the metropolitan water control and improvement district is not liable for the repayment of those bonds other than specifically set forth in this subsection.

(d) Bonds issued by a subdistrict or by the metropolitan water control and improvement district on behalf of the subdistrict shall be submitted to the attorney general for approval and to the comptroller of public accounts for registration in the method specified by Sections 51.416 through 51.418, Water Code, and shall be subject to the provisions of Sections 51.419 through 51.438, Water Code, as amended. Refunding bonds may be issued by a subdistrict as provided by Section 2 of this Act.

(e) Bonds issued by a subdistrict or by the metropolitan water control and improvement district on behalf of the subdistrict are investment securities under Chapter 726, Acts of the 67th Legislature, Regular Session, 1981 (Article 2529b-1, Vernon's Texas Civil Statutes), and are bonds under Chapter 845, Acts of the 67th Legislature, Regular Session, 1981 (Article 717k-6, Vernon's Texas Civil Statutes), and are otherwise subject to the provisions of general laws of this state relating to bonds of a water control and improvement district to the extent that those general laws are not inconsistent with this Act.

Sec. 5. EXCLUSION OF TERRITORY WITHIN SUBDISTRICT. (a) Under Subsection (e) of Section 3 of this Act, the governing body of the subdistrict shall call an election within the subdistrict to coincide with the confirmation election, at which election a proposition shall be submitted to the qualified voters that would authorize the subdistrict to enter into a contract with the metropolitan water control and improvement district under which the subdistrict would levy an unlimited ad valorem tax on all taxable property within the subdistrict to repay to the metropolitan water control and improvement district a portion of the metropolitan water control and improvement district's total outstanding indebtedness, that portion to be calculated by multiplying the total outstanding indebtedness of the metropolitan water control and improvement district on the date of the first payment under the contract by a percentage equal to the proportion of the total taxable property within the metropolitan water control and improvement district borne by the total taxable property within the subdistrict, as of the date of the next preceding tax roll.

(b) The ballots in the election under Subsection (a) of this section shall be printed to provide for voting for or against the following proposition: "The execution of a contract and the levy of taxes to pay for the contract." A copy of the proposed contract shall be available at the office of the metropolitan water control and improvement district for inspection before the election. The election shall otherwise be conducted in conformity with Chapter 51, Water Code, as amended, for elections to approve a tax-supported contract with the United States.

(c) If the proposition is approved at the election within a subdistrict, the governing board of the metropolitan water control and improvement district shall, on receipt of a petition that conforms substantially to Section 51.694, Water Code, and that describes all of the territory within the subdistrict, conduct a hearing within 30 days after receipt of the petition on the exclusion of the subdistrict from the boundaries of the metropolitan water control and improvement district.

(d) If the governing body of the subdistrict establishes at the hearing that the subdistrict has been created, has authorized issuance of bonds by the subdistrict or by the metropolitan water control and improvement district on behalf of the subdistrict, has authorized the tax-supported contract payment, and has elected a permanent board of directors, the governing board of the metropolitan water control and improvement district shall, at the conclusion of the hearing, enter an order approving the contract supported by a tax within the subdistrict, and excluding all land within the subdistrict from the boundaries of the metropolitan water control and improvement district contingent only on the completion of the refunding bond issue.

(e) Refunding bonds may be issued by a metropolitan water control and improvement district to implement the exclusion of land within a subdistrict under any terms and conditions that are deemed advisable by the governing body of the metropolitan water control and improvement district and shall only be subject to the interest rate limitations imposed by the constitution and laws of this state. In the event refunding bonds are not issued by a metropolitan water control and improvement district within 30 days after the hearing at which the subdistrict establishes all items in Subsection (d) of this section, all property within the subdistrict shall be deemed to be excluded from the boundaries of the metropolitan water control and improvement district on the expiration of the 30th day.

(f) Any subdistrict located within a service area as defined by an Environmental Protection Agency grant utilized by a metropolitan water control and improvement district to expand its wastewater treatment plant shall obtain wastewater treatment services to the extent of capacity provided with Environmental Protection Agency funds from the wastewater treatment plant constructed with the prior proceeds of the Environmental Protection Agency grant in accordance with the terms of a contract approved by the governing bodies of the subdistrict and the metropolitan water control and improvement district.

(g) To reduce the cost of services to its residents and taxpayers, the subdistrict shall utilize the employees, consultants, staff, and services of the metropolitan water control and improvement district and shall reimburse the metropolitan water control and improvement district for all costs of furnishing those services. The services could be terminated for good cause. In the event of dispute, the subdistrict and metropolitan water control and improvement district will obtain arbitration of the dispute.

Sec. 6. WATER AND SEWER RATES. The metropolitan water control and improvement district shall establish rates for all services to subdistricts after their exclusion from the boundaries of the metropolitan water control and improvement district that shall not exceed 150 percent of the rates for similar service for residents of the metropolitan water control and improvement district.

Sec. 7. ELECTION DATES. All of the elections authorized by this Act may be held on any day of the year other than a general election date and shall not be limited to the uniform election dates established by Section 9b, Texas Election Code, as amended (Article 2.01b, Vernon's Texas Election Code).

Sec. 8. PUBLIC PURPOSE. The legislature finds and determines that this Act will facilitate and advance the conservation and reclamation of the natural resources of this state by permitting certain water control and improvement districts to extend freshwater supply and distribution facilities, storm water and flood control facilities, and sanitary sewage collection and treatment facilities into areas that have previously not received such facilities. The reclamation of land for development and use as residential neighborhoods will be implemented and the health, welfare, and safety of residents of those neighborhoods will be additionally protected.

Sec. 9. CONSTRUCTION. The powers granted by this Act to metropolitan water control and improvement districts shall be construed liberally to effectuate the legislative intent and the purposes of this Act, and all those powers shall be broadly interpreted to effectuate that intent and those purposes and not as a limitation of powers.

Sec. 10. SEVERABILITY. If one or more of the sections, provisions, clauses, or words of this Act or the application of those sections, provisions, clauses, or words to any situation or circumstance shall for any reason be held to be invalid or unconstitutional, the invalidity or unconstitutionality shall not affect any other sections, provisions, clauses, or words of this Act or the application of those sections, provisions, clauses, or words to any other situation or circumstance, and it is intended that this Act shall be severable and shall be construed and applied as if the invalid or unconstitutional section, provision, clause, or word had not been included in this Act.

Acts 1983, 68th Leg., p. 4370, ch. 702, eff. June 19, 1983; Sec. 2(h) amended by Acts 1999, 76th Leg., ch. 1064, Sec. 45, eff. Sept. 1, 1999.