HBA-KDB C.S.H.B. 2817 77(R)BILL ANALYSIS Office of House Bill AnalysisC.S.H.B. 2817 By: Lewis, Ron Natural Resources 4/12/2001 Committee Report (Substituted) BACKGROUND AND PURPOSE The Texas Constitution provides for the establishment of water districts, while the Water Code governs such districts. The governance of such districts may be more efficient if fire plans for districts are addressed, drainage or flood control projects and services are defined, the sale or exchange of property by districts is addressed, septic systems are prohibited, prevailing wage rates are established, and districts are authorized to add and exclude land. C.S.H.B. 2817 provides for more efficient governance of water districts by implementing these changes and provides for penalties. 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. 2817 amends the Water Code to authorize a municipality to sell all or a portion of a water or sewer system owned by the municipality to a general law district (district) without the approval of the voters in the municipality if the district purchasing the system is doing so for the conservation and development of natural resources (Sec. 49.068). The bill authorizes a district to submit to the voters of the district the proposition of whether the district should implement a plan for a fire department to be funded by the issuance of bonds and other obligations (Sec. 49.102). The bill provides that a district is not obligated to obtain the approval of the executive director of the Texas Natural Resource Conservation Commission (TNRCC) before the district enters into an obligation to collect contract taxes that are levied to pay for a district's share of bonds that have been issued by a municipality (Sec. 49.108). The bill authorizes a district that is authorized by law to engage in drainage or flood control activities to include specified projects, facilities and structures, lands, and improvements of water among the district's land, works, improvements, facilities, plants, equipment, and appliances (Sec. 49.211). The bill prohibits a charge or fee by a district for construction, installation, or inspection of a tap or connection to district water, sanitary sewer, or drainage facilities, or for wholesale facilities that serve such water, sanitary sewer, or drainage facilities from being deemed to be an impact fee if the fee is made by a district for retail or wholesale service on land that, at the time of platting, was not being provided with water or wastewater service by the district. The bill authorizes a district to pledge revenue of its utility system to pay the principal of or interest on bonds issued to construct the capital improvements for which the fee was imposed. The revenue from the fees is considered to be revenue of the district's utility system for purposes of the district's bond covenants (Sec. 49.212). If a district contracts with the municipality to provide all or part of the water or wastewater services to a municipality, the bill authorizes a municipality to issue bonds payable from the revenue of its water and wastewater system to provide money to make payments owed by the municipality to the district under the contract (Sec. 49.215). The bill authorizes a district or corporation to issue bonds, notes, or other obligations to acquire property (Sec. 49.218). The bill authorizes the proceeds derived from the sale of real property, in addition to personal property to be used for any lawful purpose if the district does not have any outstanding bonds (Sec. 49.226). The bill authorizes a district or water supply corporation (corporation) that operates a wastewater collection system to serve land within its boundaries by rule to prohibit the installation of private on-site wastewater holding or treatment facilities on land within the district that is not served by the district's or corporation's wastewater collection system. The bill prohibits a district or corporation that has not received funding as an economically distressed area from requiring a property owner who has already installed an on-site wastewater holding or treatment facility to connect to the district's or corporation's wastewater collection system. The bill requires a district or corporation that prohibits such an installation to agree to pay the owner of a particular tract the costs of connecting the tract to the district's wastewater collection system if the distance along a public right-of-way or utility easement from the nearest point of the district's or the corporation's wastewater collection system to the boundary line of the tract requiring wastewater collection services is 300 feet or more, subject to commission rules regarding reimbursement of those costs (Sec. 49.234). The bill provides that the payment, performance, and bid bonding requirements for a construction work contract do not apply to contracts for the purchase of equipment, materials, and machinery not otherwise incorporated into a construction project (Sec. 49.271). The bill authorizes the governing board of a district (board), if changes in plans or specifications are necessary after the performance of the contract is begun or if it is necessary to decrease or increase the quantity of the work to be performed or of the materials, equipment, or supplies to be furnished, to approve change orders making the changes. The bill prohibits the original contract price from being increased by more than 10 percent of the aggregate of those change orders. The board is not required to advertise or seek competitive bids for the repair of district facilities if the scope or extent of the repair work cannot be readily ascertained or if the nature of the repair work does not readily lend itself to competitive bidding (Sec. 49.273). The bill authorizes a district located wholly or partially within one or more municipalities or within the extraterritorial jurisdiction of one or more municipalities, in addition to the alternative procedures set forth in provisions relating to determination of prevailing wage rates, to establish its prevailing wage rate for public works by adopting the prevailing wage rate of one of the municipalities or the county in which the district is located, and authorizes a district not located wholly or partially within the extraterritorial jurisdiction of any municipality to establish the district's prevailing wage rate by adopting the wage rate of the county in which the district is located (Sec. 49.279). The bill provides that a district construction project must comply with any applicable municipal platting or zoning requirements within the municipality's corporate limits and extraterritorial jurisdiction and with applicable requirements of a consent agreement or other agreement between the district and the municipality. A district construction project is not otherwise subject to any requirements of a municipality if the project is located outside the municipality's corporate limits (Sec. 49.280). The bill authorizes a district to add or exclude land after a district is created by order of TNRCC or another governmental entity or by special Act of the legislature and before a confirmation election is held. The bill requires such an election, if land is added or excluded to the district, to confirm the district as modified (Sec. 49.315). The bill provides that a district has the right to conduct contract elections without the approval of the executive director of TNRCC (Sec. 51.149). The bill provides that it is a Class C misdemeanor if a person violates a regulation adopted by a district under provisions regarding water control and improvement districts or other law (Sec. 51.131). EFFECTIVE DATE September 1, 2001. COMPARISON OF ORIGINAL TO SUBSTITUTE C.S.H.B. 2817 adds new language to authorize a municipality to sell all or a portion of a water or sewer system without voter approval if the district purchasing the system is doing so for the conservation and development of natural resources (Sec. 49.068). The substitute modifies the original bill by providing that a district can levy contract taxes to pay for a district's share of bonds that have been issued by a municipality without the approval of the executive director of the Texas Natural Resource Conservation Commission (TNRCC) (Sec. 49.108). The substitute modifies the original by prohibiting certain charges or fees of a district from being deemed to be impact fees if the fees were made by a district for retail or wholesale service on land that, at the time of platting, was not being provided with water or wastewater service by the district. The substitute authorizes a district to pledge revenue of its utility system to pay the principal of or interest on bonds issued to construct the capital improvements for which the fee was imposed. The substitute provides that revenue from the fees is considered to be revenue of the district's utility system for purposes of the district's bond covenants (Sec. 49.212). The substitute removes provisions from the original that authorize a water supply corporation (corporation) to provide services or facilities outside the district or corporation and to use the water sold by a political subdivision under a contract to provide service to the service area of the corporation provided the service does not affect a term of the contract relating to the amount of water to be supplied. The substitute authorizes a municipality, if a district contracts with the municipality to provide all or part of the water or wastewater services to the municipality, to issue bonds payable from the revenue of its water and wastewater system to provide money to make payments owed by the municipality to the district under the contract (Sec. 49.215). The substitute modifies the original bill by authorizing a corporation, in addition to a district, that operates a wastewater collection system to serve land within its boundaries by rule to prohibit the installation of private on-site wastewater holding or treatment facilities on land within the district that is not served by the district's or corporation's wastewater collection system. The substitute modifies the original by prohibiting a district or corporation that has not received funding as an economically distressed area from requiring a property owner who has already installed an on-site wastewater holding or treatment facility to connect to the district's or corporation's wastewater collection system. The original bill prohibited a district from requiring a property owner who has already installed an on-site wastewater holding or treatment facility to connect to the district's wastewater collection system (Sec. 49.234). The substitute adds new language to provide that a district construction project must comply with any applicable municipal platting or zoning requirements and with applicable requirements of a consent agreement or other agreement between the district and the municipality. The substitute provides that a district construction project is not otherwise subject to any requirements of a municipality if the project is located outside the municipality's corporate limits (Sec. 49.280). The substitute removes provisions that authorize a district, if approved by a majority of the members of the board, to enter into a contract with any person and to purchase an interest in any project used for any purpose or function of the district. The substitute modifies the original bill by providing that a district has the right to conduct contract elections without the approval of the executive director of TNRCC regardless of whether all land that would be subject to the contract election was or was not in the boundaries of a district that was party to an agreement with a municipality before September 1, 1997, and the contract is or is not approved by the municipality (Sec. 51.149). The substitute includes in the definition of "recreational facilities" landscaping, parkways, greenbelts, sidewalks, trails, and public rights-of-way beautification projects (Sec. 54.772). The substitute provides that a violation of a regulation is a Class C misdemeanor (Sec. 51.131).