HBA-NMO H.B. 1602 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 1602 By: Lewis, Ron Natural Resources 3/8/1999 Introduced BACKGROUND AND PURPOSE Current law does not provide a method to exclude land from the boundaries of water districts (districts) with outstanding bonds, warrants, or other certificates of indebtedness secured in part by land or other property. There are situations within the state where some districts may not have sufficient bonding capacity to construct necessary facilities to serve all of the property within the district's boundaries and voter approval to approve a new bond issue to serve the property is unlikely because the cost of providing such service would cause an unacceptable increase in property taxes. Granting a district the authority to exclude land from its boundaries, contingent upon the landowner paying the landowner's pro rata share of the bonds and debt service due on previously issued taxsupported bonds, may provide a solution that is beneficial to both the district and the property owner and may allow development of this land without harming the remainder of the district. H.B. 1602 authorizes a district to exclude land from its boundaries, provided that the landowner pays the landowner's pro rata share of the previously issued tax-supported bonds and debt service payments. 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. Amends Subchapter J, Chapter 49, Water Code, by adding Section 49.315, as follows: Sec. 49.315. EXCLUSION OF LAND WITH OUTSTANDING BOND DEBT. (a) Authorizes a landowner or other property owner in a water district (district) with outstanding bonds, warrants, or other certificates of indebtedness secured in part by the land or other property to petition the district to exclude the owner's land or other property. Provides that the petition must be in writing and filed with the secretary of the governing body of the district (board); describe by metes and bounds or lot and block number any land to be excluded; describe any property other than land to be excluded; and state clearly the particular grounds under Subsection (b) on which exclusion is sought. (b) Authorizes exclusion of land or other property under this section to be made only on the grounds that the district has never provided utility service to the land or other property; the district has discounted utility service to the land or other property; the cost of providing service to the land or other property makes any service offered by the district so prohibitively expensive that it effectively constitutes denial of service; or for a commercial development or a residential development with lot sizes of less that two acres, the cost of obtaining service from the district makes the development economically infeasible but not necessarily prohibitively expensive. (c) Requires the board to consider all engineering data and other evidence presented and determine if the facts support an affirmative finding on the grounds alleged for exclusion. Requires the board, if it finds in the affirmative, to enter an order excluding the land or other property and redefining the boundaries of the district to reflect the exclusion. Requires the board, not later than the 30th day after the date of the board's order, to submit a copy of the exclusion order and a detailed description of the land or other property excluded to the executive director of the Texas Natural Resource Conservation Commission, and to file a copy of the exclusion order in the deed records of the county or counties in which the district is situated. (d) Provides that the exclusion of land or other property under this section does not impair the rights of the holders of any outstanding bonds, warrants, or other certificates of indebtedness of the district. (e) Provides that excluded land or other property pledged as security for any outstanding debt of the district remains pledged for its pro rata share of that debt until final payment is made. Requires the district to continue to levy and collect taxes on the excluded property at the same rate levied on property remaining in the district until the amount of taxes collected from the excluded property equals the pro rata share of the district's debt outstanding at the time the property was excluded attributable to the excluded property. Requires that the taxes collected on the excluded property be applied only to the payment of the excluded property's pro rata share of that debt. (f) Authorizes the owner of any part of the excluded land or other property at any time to pay in full the owner's share of the pro rata share of the district's debt outstanding at the time the property is excluded. (g) Authorizes the district, after any land or other property is excluded under this section, to issue any unissued additional debt approved by the voters of the district before exclusion without holding a new election. Prohibits additional debt issued after property is excluded from the district from being payable from and creating a lien against the taxable value of the excluded property. SECTION 2.Emergency clause. Effective date: upon passage.