Office of House Bill AnalysisC.S.H.B. 3738
By: Eiland
Natural Resources
Committee Report (Substituted)


The Texas Constitution provides for the creation of certain conservation
and reclamation districts. C.S.H.B. 3738 provides for the creation of
coastal county conservation districts (districts) in counties that border
the Gulf of Mexico and that have a beach parks board; sets forth petition,
hearing, and notice procedures for the creation of a district; and provides
for the apportionment of costs for improvement projects or services based
on benefits accrued to specific property.     


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 1.  Amends Subtitle A, Title 12, Local Government Code, by adding
Chapter 378, as follows: 



Sec.  378.001.  LEGISLATIVE FINDINGS; PURPOSES.  Sets forth legislative
findings and purposes of the Act. 

Sec.  378.002.  CONSTRUCTION OF CHAPTER.  Sets forth construction of the

Sec.  378.003.  DEFINITIONS.  Defines "board" as the board of directors of
a district. Defines "bond."  Defines "commission" as the Texas Natural
Resource Conservation Commission (TNRCC). Defines "district" as a
conservation management district created under this Act.  

Sec.  378.004. GOVERNMENTAL AGENCY; TORT CLAIMS.  Provides that a district
is a governmental agency, a body politic and corporate, and a political
subdivision of the state. Provides that a district is a unit of government
for purposes of Chapter 101 (Texas Tort Claims Act), Civil Practice and
Remedies Code, and operations of a district are considered to be essential
governmental functions and not proprietary functions for all purposes,
including the application of the Texas Tort Claims Act.  


creation of a district only in a county that borders the Gulf of Mexico and
has or had a beach parks board.  

Sec.  378.022. PETITION.  Authorizes the creation of a district only after
the county receives a petition requesting one.  Sets forth the requirements
of the petition. 
 Sec.  378.023. COUNTY HEARING; NOTICE.  Requires the county or a person
authorized by the commissioners court to set a date, time, and place for a
hearing to consider each petition received.  Requires  the commissioners
court or authorized person to issue a notice of the date, time, and place
of hearing.  
Sec.  378.024. PUBLICATION OF NOTICE. (a)  Requires the commissioners court
or authorized person to publish notice of the hearing in a newspaper of
general circulation in the county in which the proposed district is
located.  Provides that the publication must occur not later than the 31st
day before the date on which the hearing will be held.  Requires the
petitioner, not later than the 30th day before the date of the hearing, to
send the notice of the hearing by certified mail to each person who owns
real property in the proposed district, according to the most recent
certified county property tax rolls, other than a property owner who signed
the petition for creation.  Requires the tax assessor and collector to
certify from the tax rolls ownership of property on the date the petition
is filed with the commissioners court.  
Sec.  378.025. HEARING.   Requires the commissioners court, at a hearing
set under this Act, to examine the petition to determine its sufficiency.
Authorizes any interested person to appear before the commissioners court
and offer testimony.  Provides that the commissioners court has
jurisdiction to determine each issue relating to the creation of the
district.  Requires the commissioners court, if after the hearing it finds
that the district is feasible and necessary and would be a benefit to all
or any part of the land proposed to be included in the district and the
public, to grant the petition.  Authorizes the commissioners court to
create the district over only a portion of the area described in the
Sec.  378.026. ORDER; INITIAL DIRECTORS. Requires the commissioners court,
if it grants the petition, in the order creating the district to appoint
the initial directors.  

Sec.  378.041. BOUNDARIES. Provides that the boundaries of a district are
as prescribed by the commissioners court order creating the district.
Authorizes the commissioners court to issue a subsequent order changing the
boundaries of the district.  
Sec.  378.042. ANNEXATION.  Authorizes a  district to annex land as
provided by Chapter 49 (Provisions Applicable to All Districts), Water
Code, subject to the approval of the commissioners court.  
Sec.  378.043. EXCLUDING TERRITORY.  Authorizes the board on its own
motion, at any time during which a district does not have outstanding
bonds, to call a hearing on the question of the exclusion of land from the
district in the manner provided by Chapter 49, Water Code, if the
exclusions are practicable, just, or desirable.  Requires the board to call
a hearing on the exclusion of land or other property from the district if a
landowner or property owner in the district files with the secretary of the
board a written petition requesting the hearing before the issuance of

Sec.  378.061. NUMBER OF DIRECTORS; TERMS. Provides that a district is
governed by a board of seven directors who serve staggered four-year terms.
Sec.  378.062. TERMS OF INITIAL DIRECTORS. Requires that the initial
directors be divided into one group of four directors and one group of
three directors; the group of four directors serves four- year terms, and
the group of three directors serves two-year terms. Requires that the
grouping of initial directors and terms for the directors in each group be
determined by the commissioners court.  
Sec.  378.063. QUALIFICATIONS OF DIRECTOR. Provides that a person, to be
qualified to serve as a director, must be at least 18 years old and a
resident of the district or an owner  of property in the district. 
Sec.  378.064. APPOINTMENT OF DIRECTORS. Requires that the initial and each
succeeding members of the board of directors be appointed by the
commissioners court. Authorizes board members to serve successive terms.  
Sec.  378.065. REMOVAL OF DIRECTOR. Authorizes the commissioners court,
after notice and hearing, to remove a director for misconduct or failure to
carry out the director's duties on petition by a majority of the remaining
Sec.  378.066. BOARD VACANCY. Requires that a vacancy in the office of
director be filled by the remaining members of the board for the unexpired
Sec.  378.067. DIRECTOR'S BOND AND OATH. (a)  Requires a director,  as soon
as practicable after the director is appointed, to execute a $10,000 bond
payable to the district and conditioned on the faithful performance of the
director's duties. Provides that each director's bond must be approved by
the board, and requires each director to take the oath of office prescribed
by the constitution for public officers.  Requires that the bond and oath
be filed with the district and retained in its records.  
Sec.  378.068. OFFICERS. Requires the directors, after they are appointed
and have qualified by executing a bond and taking the oath, to organize by
electing a president, a vicepresident, a secretary, and any other officers
the board considers necessary.  
Entitles a director, in accordance with Section 49.060 (Fees of Office;
Reimbursement), Water Code,  to compensation for service on the board and
reimbursement for necessary expenses incurred in carrying out the duties
and responsibilities of a director.  
Sec.  378.070. QUORUM. Provides that one-half of the directors constitutes
a quorum, and provides that a concurrence of a majority of a quorum of
directors is required for any official action of the district.  


Sec.  378.091. GENERAL POWERS OF DISTRICT.  Provides that a district has
the rights, powers, privileges, authority, and functions conferred by the
general law of this state applicable to conservation and reclamation
districts created under Article XVI, Section 59, of the Texas Constitution
(Conservation and Development of Natural Resources; Conservation and
Reclamation Districts), including those conferred by Chapter 54 (Municipal
Utility Districts), Water Code, with respect to the purposes for which it
is created. The district may contract and manage its affairs and funds for
any corporate purpose in accordance with Chapter 54, Water Code.  
Sec.  378.092.  SPECIFIC POWERS.  Provides that a district has the powers
necessary or convenient to carry out and effect the purposes and provisions
of this Act, including the powers granted in this section.  Sets forth
specific powers.  
the district to construct all improvements and facilities necessary to
accomplish the purposes for which it was created on lands, whether publicly
or privately owned.  Provides that a district, before constructing an
improvement or facility on lands owned by the county, the state, a
municipality, or another political subdivision, must obtain approval from
the relevant government entity of the plans and specifications of such
improvement or facility. Provides that a district, if it requires certain
modifications to certain facilities or property, must cover all cost and
expense of such modifications. Requires the district to bear damages that
are suffered by the owners of the facilities or property.  
Sec.  378.094. NO EMINENT DOMAIN POWER.  Prohibits a district from
exercising the  power of eminent domain. Authorizes the commissioners court
to exercise its power of eminent domain to implement a district facility or
Sec.  378.095. MANAGEMENT BY BOARD OF DIRECTORS. Vests the responsibility
for the management, operation, and control of the property belonging to a
district in the board.  
Sec.  378.096. SPECIFIC POWERS AND DUTIES OF BOARD. Authorizes the board to
employ necessary persons, dismiss employees, adopt a seal for the district,
invest funds, establish a fiscal year, establish a system of accounts
required to be open for public inspection, and designate depository banks.
Requires that funds of a district be deposited in the depository bank or
banks unless otherwise required by orders or resolutions authorizing the
issuance of the district's bonds or notes.   Provides that funds in the
depository bank or banks, to the extent that they are not insured by the
Federal Deposit Insurance Corporation, must be secured in the manner
provided by law for the security of funds of counties. Authorizes the board
by resolution to authorize a designated representative to supervise the
substitution of securities pledged to secure the district's fund.
Authorizes the board to adopt and enforce reasonable rules and regulations
governing the administration of the district and its programs and projects.
Authorizes the board, by resolution, to establish or change the name of the
the board to appoint a hearings examiner to conduct any hearing called by
the board, including a hearing required by Chapter 395 (Financing Capital
Improvements Required by New Development in Municipalities, Counties, and
Certain Other Local Governments), Local Government Code.  Authorizes that
the hearings examiner be an employee of the district or a member of the
district's board.  Requires that the hearing be conducted in accordance
with Chapter 2001 (Administrative Procedure), Government Code.  

Sec.  378.111. GENERAL POWERS RELATING TO ASSESSMENTS. (a)  Authorizes the
board to levy and collect an assessment for any purpose authorized by this
Act.  Authorizes the board of a district to undertake improvement projects
and services that confer a special benefit on all or a definable part of
the district.  Authorizes the board to levy and collect special assessments
on property in that area, based on the benefit conferred by the improvement
project or services, to pay all or part of the cost of the project and
services. Authorizes the district to provide improvements and services to
an area outside the boundaries of the district, if the board determines
that there is a benefit to the district.  
that an improvement project or services provided by the district include
the construction, acquisition, improvement, relocation, operation,
maintenance, or provision of certain improvements, projects, or services;
and expenses incurred in the establishment, administration, maintenance,
and operation of the district or any of its improvements, projects, or
Sec.  378.113. PROPOSED ASSESSMENTS. Authorizes that services or
improvement projects be financed under this Act after a hearing notice
given as required by this Act and a public hearing by the board on the
advisability of the improvements and services and the proposed assessments.
Sec.  378.114. PETITION REQUIRED. Prohibits the board from financing
services and improvement projects under this Act unless a written petition
has been filed with the board requesting those improvements or services
signed by at least 25 persons who own real property in the district if,
according to the most recent certified property tax rolls, more than 25
persons own real property in the district.  
Sec.  378.115. ASSESSMENT ELECTION.  Prohibits assessments from  being
levied unless  approved by a majority of the qualified voters in the
district voting at an election held for that purpose unless a written
petition has been filed with the board requesting the improvements or
services which is signed by the owners of 50 percent or more of the
assessed value of the property in the district to be assessed as determined
from the most recent certified county property tax rolls. Requires that
elections required by this section  be conducted in accordance with Chapter
376 (Specific Municipal Management Districts), Local Government Code.  
Sec.  378.116. NOTICE OF HEARING.  Requires that notice of the hearing be
given in a newspaper with general circulation in the county in which the
district is located.  Provides that the final publication must be made not
later than the 30th day before the date of the hearing.   Sets forth the
composition of the notice.   Requires that the written notice be sent by
certified mail not later than the 30th day before the date of the hearing.
Requires that the notice be mailed to each property owner in the district
who will be subject to assessment at the current address of the property to
be assessed as reflected on the tax rolls.  
Sec.  378.117. CONCLUSION OF HEARING; FINDINGS. Authorizes that a hearing
on the services or improvement project, whether conducted by the board or a
hearings examiner, be adjourned from time to time.  Requires the board, at
the conclusion of the hearing to make findings by resolution or order
relating to the advisability of the improvement project or services, the
nature of the improvement project or services, the estimated cost, the area
benefitted, the method of assessment, and the method and time for payment
of the assessment.  Requires the hearings examiner, if a hearings examiner
is appointed to conduct the hearing, to file with the board a report
stating the examiner's findings and conclusions after conclusion of the
Sec.  378.118. AREA TO BE ASSESSED. (a)  Authorizes that the area of the
district to be assessed according to the findings of the board be the
entire district or any part of the district and be less than the area
proposed in the notice of the hearing.  
(b)  Prohibits the area to be assessed, except as provided by Subsection
(c), from including property that is not within the district boundaries at
the time of the hearing unless there is an additional hearing, preceded by
the required notice.  
(c)  Authorizes the owner of improvements constructed or land annexed to
the district after the district has imposed assessments to waive the right
to notice and an assessment hearing and to agree to the imposition and
payment of assessments at an agreed rate for improvements constructed or
land annexed to the district.  
Sec.  378.119. OBJECTIONS; LEVY OF ASSESSMENT. (a) Requires the board, at a
hearing on proposed assessments, at any adjournment of the hearing, or
after consideration of the hearings examiner's report, to hear and rule on
all objections to each proposed assessment.  
(b)  Authorizes the board to amend proposed assessments for any parcel. 
(c)   Requires the board, by order or resolution, after all objections have
been heard and action has been taken with regard to those objections, to
levy the assessments as special assessments on the property and to specify
the method of payment of the assessments. Authorizes the board to provide
that those assessments be paid in periodic installments, including

(d)  Provides that periodic installments must be in amounts sufficient to
meet annual costs for services and improvements as provided by this Act and
continue for the number of years required to retire indebtedness or pay for
the services to be rendered.  Authorizes the board to provide interest
charges or penalties for failure to make timely payment and also to levy an
amount to cover delinquencies and expenses of collection.  
(e) Authorizes the board, if assessments are levied for more than one
service or  improvement project, to authorize that assessments collected
for one service or improvement project be borrowed to be used for another
service or improvement project.  
(f)  Requires the board to establish a procedure for the distribution or
use of any assessments in excess of those necessary to finance the services
or improvement project for which those assessments were collected.  
Sec.  378.120. APPORTIONMENT OF COST.  Requires that the portion of the
cost of an improvement project or services be assessed against the property
in the district be apportioned by the board based on the special benefits
accruing to the property because of the improvement project or services.
Authorizes that the cost be assessed equally by front foot or by square
foot of land area against all property in the district; against property
according to the value of the property as determined by the board, with or
without regard to structures or other improvements on the  property; or on
any other reasonable assessment plan that results in imposing fair and
equitable shares of the cost on property similarly benefitted.  
Sec.  378.121. ASSESSMENT ROLL.  Requires the board, if the total cost of
an improvement project or services is determined, to levy the assessments
against each parcel of land against which an assessment may be levied in
the district.  Authorizes the board, with regard to an assessment for
services, to levy an annual assessment that may be lower but not higher
than the initial assessment.  Requires the board to have an assessment roll
prepared showing the assessments against each property and the board's
basis for the assessment. Requires that the assessment roll be filed with
the secretary of the board or other officer who performs the function of
secretary and be open for public inspection.  
Sec.  378.122. INTEREST ON ASSESSMENTS; LIEN. (a)  at Prohibits the rate
specified by the board at which assessments bear interest from exceeding
the interest rate permitted by Chapter 3, Acts of the 61st Legislature,
Regular Session, 1969 (Article 717k-2, V.T.C.S.).  
(b)  Requires that interest on an assessment between the effective date of
the order or resolution levying the assessment and the date the first
installment and any related penalty is  payable be added to the first
installment.  Requires that the interest or penalties on all unpaid
installments be added to each subsequent installment until paid.  
(c)  Provides that assessments, reassessments or assessments resulting from
an addition to or correction of the assessment roll by the district,
penalties and interest on an assessment or reassessment, expenses of
collection, and reasonable attorneys' fees incurred by the district are a
first and prior lien against the property assessed; are superior to any
other lien or claim other than a lien or claim for county, school district,
or municipal ad valorem taxes; and are the personal liability of and charge
against the owners of the property even if the owners are not named in the
assessment proceedings.  
(d)  Provides that the lien is effective from the date of the resolution of
the board levying the assessment until the assessment is paid.  Authorizes
the board to enforce the lien in the same manner that the board is
authorized to enforce an ad valorem tax lien against real property.  
(e)  Authorizes the owner of any property assessed to pay at any time the
entire assessment against any lot or parcel with accrued interest to the
date of the payment.  
Sec.  378.123. SUPPLEMENTAL ASSESSMENTS. Authorizes the board, after notice
and hearing in the manner required for original assessments, to make
supplemental assessments to correct omissions or mistakes in the assessment
relating to the total cost of the improvement project or services; or
covering delinquencies or costs of collection.  
Sec.  378.124. APPEAL. (a)  Authorizes a property owner, after
determination of an assessment, to appeal the assessment to the board.
Sets forth the appeal process. 
Sec.  378.125. APPEAL OF ORDER. Authorizes a person against whom an
assessment is made by board order, if notice has been given as required by
this Act,  to appeal the assessment to a district court in the county in
which the district is located in the manner provided for the appeal of
contested cases under Chapter 2001, Government Code. Provides that review
by the district court is by trial de novo.  

Sec.  378.141. PUBLIC UTILITIES. Prohibits the district from imposing an
assessment on the property, equipment, or facilities of a public utility,
as defined by Section 2.0011 or 3.007, Article 144C-O, V.T.C.S. (Public
Utility Regulatory Act of 1995).  
Sec.  378.142. GOVERNMENTAL ENTITIES; ASSESSMENTS. Requires that payment of
assessments by municipalities, counties, other political subdivisions, and
organizations exempt from federal income tax under Section 501(c)(3),
Internal Revenue Code of 1986, be established by contract. Authorizes
municipalities, counties, and other political subdivisions to contract with
the district under terms and conditions those entities consider advisable
to provide for the payment of assessments.  

Authorizes that the cost of any improvement project or services, including
interest during construction and costs of issuance of bonds, be paid from
general or available funds, assessments, or the proceeds of bonds payable
from revenues, assessments, grants, gifts, contracts, leases, or any
combination of those funds.  Authorizes the board,  during the progress of
an improvement project or services,  to issue temporary notes to pay the
costs of the improvement project or services and issue bonds on completion.
Authorizes that the costs of more than one improvement project or service
be paid from a single issue and sale of bonds without other consolidation
proceedings before the bond issue.  
Sec.  378.162. BONDS. (a)  Authorizes the board, for the payment of all or
part of the costs of an improvement project or services, to issue bonds in
one or more series payable from and secured by assessments, revenues,
grants, gifts, contracts, leases, or any combination of those funds.
Authorizes that  bonds be liens on all or part of the revenue derived from
improvements authorized under this Act, including installment payments of
special assessments or from any other source pledged to their payment.
Requires that the district have the power to issue bonds and they and
requires that the  bonds be approved in the manner set forth in Subchapter
J, Chapter 375, Local Government Code, relating to bonds issued by
municipal management districts.  Requires that bonds be issued and approved
by the board of directors of the district without the consent of the
county, any municipality, or the TNRCC.  

Provides that contracts of the district are subject to the competitive
bidding requirements of Chapter 49, Water Code.  
Sec.  378.182. SUPERSEDES OTHER LAW. Provides that this Act states the
required procedures necessary for the district to award contracts and
supersedes any law or other requirement with respect to award of contracts.

Sec.  378.201. ELECTION TO APPROVE ISSUANCE OF BONDS. Prohibits bonds
secured by assessments from being issued unless approved by a majority of
the qualified voters in the district voting at an election held for that
purpose; or the district received a  petition requesting the assessment and
the issuance of bonds which is signed by the owners of 50 percent or more
of the assessed value of the property in the district to be assessed as
determined from the most recent certified county property tax rolls.
Provides that bonds not secured by assessments are not subject to the
requirement of an election and authorizes their issuance without an
election.  Requires that an election required by this section be conducted
in accordance with Chapter 376, Local Government Code.  

Sec.  378.221. DISSOLUTION BY BOARD VOTE. Authorizes the board of a
district by majority vote to dissolve the district at any time.  
Sec.  378.222. DISSOLUTION BY  COUNTY ORDER. (a)  Authorizes the
commissioners court of the county in which a district is located, by a vote
of not less than two-thirds, to adopt a resolution dissolving the district.
Sec.  378.223. LIMITATION. Prohibits the dissolution of a district by its
board or by a county if the district has any outstanding bonded
indebtedness until that bonded indebtedness has been repaid or defeased in
accordance with the order or resolution authorizing the issuance of the

Sec.  378.241. CONTRACTS WITH DISTRICT. (a)  Authorizes a municipality,
county, or any other political subdivision of the state to contract with
the district to implement a project of the district or aid and assist the
district in providing the services authorized under this Act. Authorizes
that a contract under this section be for a period on which the parties
agree; include terms on which the parties agree;  be payable from
assessments or any other sources of revenue that may be available for such
purpose; and provide that assessments or other revenue collected at a
district project or from a person using or purchasing a commodity or
service at a district project may be paid or rebated to the district under
the terms of the contract. (Section 57 does not present a Subsection (b).)  

(b) Authorizes the district to enter into a contract, lease, or agreement
with or make or accept grants and loans to or from the United States,
including federal departments and agencies; the state or a state agency; a
county, municipality, or other political subdivision of the state; a public
or private corporation; and any other person.  
(c)  Authorizes the district to perform all acts necessary for the full
exercise of the powers vested in the district on terms and conditions and
for the term the board is authorized to determine as advisable.  
SECTION 2.Emergency clause.
  Effective date: upon passage.

The substitute differs from the original by placing this Act in Chapter
378, Subtitle A, Title 12, Local Government Code, and by conforming to
Legislative Council format.