VERNON'S TEXAS CIVIL STATUTES

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

CHAPTER 1. GENERAL PROVISIONS AND REGULATIONS




Art. 717r. Metropolitan water control and improvement districts and 
subdistricts;  issuance of bonds and refunding bonds

Definitions

Sec. 1. 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.

Refunding Bonds

Sec. 2. (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.

Creation of Subdistricts

Sec. 3. (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.

Bonds of the Subdistrict

Sec. 4. (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.

Exclusion of Territory Within Subdistrict

Sec. 5. (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.

Water and Sewer Rates

Sec. 6. 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.

Election Dates

Sec. 7. 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).

Public Purpose

Sec. 8. 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.

Construction

Sec. 9. 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.

Severability

Sec. 10. 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.