H.B. No. 467




AN ACT
relating to the financing of water and sewer programs in disadvantaged areas. BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: SECTION 1. Section 15.407(a), Water Code, is amended to read as follows: (a) In this section, "economically distressed area" and "political subdivision" have the meanings assigned by Section 17.921 [16.341 of this code]. SECTION 2. Sections 16.341(1) and (2), Water Code, are amended to read as follows: (1) "Affected county" means a county[: [(A)] that has an economically distressed area which has a median household income that is not greater than 75 percent of the median state household income [a per capita income that averaged 25 percent below the state average for the most recent three consecutive years for which statistics are available and an unemployment rate that averaged 25 percent above the state average for the most recent three consecutive years for which statistics are available; or [(B) that is adjacent to an international border]. (2) "Economically distressed area" has the meaning assigned by Section 17.921 [means an area in which: [(A) water supply or sewer services are inadequate to meet minimal needs of residential users as defined by board rules; [(B) financial resources are inadequate to provide water supply or sewer services that will satisfy those needs; and] [(C) an established residential subdivision was located on June 1, 1989, as determined by the board]. SECTION 3. Sections 16.343(b) and (c), Water Code, are amended to read as follows: (b) The model rules must: (1) assure that adequate drinking water is available to the residential areas in accordance with Chapter 341, Health and Safety Code, and the Rules and Regulations for Public Water Systems and the Drinking Water Standards Governing Water Quality and Reporting Requirements for Public Water Supply Systems adopted by the commission [Texas Board of Health] and other law and rules applicable to drinking water; and (2) provide criteria applicable to tracts that were divided into two or more parts to lay out a subdivision and were not platted or recorded before September 1, 2005 [1989]. (c) The model rules must: (1) assure that adequate sewer facilities are available to the residential areas through either septic tanks or an organized sewage disposal system that is a publicly or privately owned system for the collection, treatment, and disposal of sewage operated in accordance with the terms and conditions of a valid waste discharge permit issued by the commission or private sewage facilities in accordance with Chapter 366, Health and Safety Code, and the Construction Standards for On-Site Sewerage Facilities adopted by the commission and other law and rules applicable to sewage facilities; and (2) provide criteria applicable to tracts that were divided into two or more parts to lay out a subdivision and were not platted or recorded before September 1, 2005 [1989]. SECTION 4. Section 17.0112, Water Code, is amended to read as follows: Sec. 17.0112. AUTHORIZATION OF CERTAIN BONDS FOR FINANCIAL ASSISTANCE. (a) The board may issue not more than $25 million in bonds dedicated under Section 17.0111 of this code and may issue not more than $50 million in bonds authorized under Article III, Texas Constitution, during a fiscal year to provide financial assistance for water supply and sewer services as provided under Subchapter K of this chapter. (b) On request of the board, the bond review board by resolution may waive during any state fiscal year the limits [limit] provided by Subsection (a) [of this section] and authorize the board to issue an additional amount of bonds if the bond review board finds that the amount of bonds authorized for that state fiscal year has been exhausted or there is not a sufficient amount of bonds to meet needs of the program during the state fiscal year and that the public health and safety require immediate authorization of additional bonds. Before the bond review board adopts such a resolution, it shall give notice and hold a hearing to determine whether the limits should be waived and the authorization given. SECTION 5. Section 17.921, Water Code, is amended by amending Subdivision (1) and adding Subdivision (6) to read as follows: (1) "Economically distressed area" means an area in which: (A) water supply or sewer services are inadequate to meet minimal needs of residential users as defined by board rules; (B) financial resources are inadequate to provide water supply or sewer services that will satisfy those needs; and (C) an established residential subdivision was located on June 1, 2005 [1989], as determined by the board. (6) "Economically distressed areas account" means the economically distressed areas account in the Texas Water Development Fund or the economically distressed areas program account in the Texas Water Development Fund II. SECTION 6. Section 17.922(b), Water Code, is amended to read as follows: (b) To the extent practicable, the board shall use the funds in the economically distressed areas account in conjunction with the other financial assistance available through the board to encourage the use of cost-effective water supply and wastewater systems, including regional systems, to maximize the long-term economic development of counties eligible for financial assistance under the economically distressed areas program. Any savings derived from the construction of a regional system that includes or serves an economically distressed area project shall be factored into the board's determination of financial assistance for the economically distressed area in a manner that assures the economically distressed area receives appropriate benefits from the savings. In no event shall financial assistance provided from the economically distressed areas account be used to provide water supply or wastewater service to any area that is not [defined as] an economically distressed area [pursuant to Section 17.921(1)(A) of this code]. SECTION 7. Sections 17.927(b), (c), and (d), Water Code, are amended to read as follows: (b) The application and plan must include: (1) the name of the political subdivision and its principal officers [comply with board requirements]; (2) a citation of the law under which the political subdivision was created and operates [describe in detail the method for delivering water supply and sewer services and the persons to whom the services will be provided]; (3) a project plan, prepared and certified by an engineer registered to practice in this state, that must: (A) describe the proposed planning, design, and construction activities necessary to provide water supply and sewer services that meet minimum state standards; and (B) identify the households to which the water supply and sewer services will be provided [describe the method for complying with minimum state standards for water supply and sewer services adopted by the board under Section 16.342 of this code]; (4) [include] a budget that estimates the total cost of providing water supply and sewer services to the economically distressed area and a proposed schedule and method for repayment of financial assistance consistent with board rules and guidelines; (5) a description of the [describe] existing water supply and sewer facilities located in the [economically distressed] area to be served by the proposed project, including a statement [and include with the description: [(A) the county map required by Section 366.036, Health and Safety Code; or [(B) a document] prepared and certified by an engineer registered to practice in this state that the facilities do not meet minimum state standards [describing the plan for providing water supply and sewer services to the economically distressed area]; (6) documentation [provide proof] that the appropriate political subdivision has adopted the model rules developed under Section 16.343 [of this code]; (7) [include] information identifying the median household income for the area to be served by the proposed project [on the ability of potential customers to pay for the services provided by the project including composite data prepared by the applicant pursuant to board rules and guidelines from surveys of those potential customers covering income, family size, personal expenses, employment status, and other information required by board rule]; and (8) the total amount of assistance requested from the economically distressed areas account[include an estimate of the per household cost of providing the services contemplated by the project with supporting data; [(9) describe the procedures to be used to collect money from residents who use the proposed water supply and sewer services including procedures for collection of delinquent accounts; [(10) include a requirement that a contractor who agrees to acquire, construct, extend, or provide water supply and sewer services executes a performance bond in the amount of 100 percent of the contract price; [(11) contain an agreement to comply with applicable procurement procedures in contract awards for water supply and sewer services; [(12) if located in the service area of a retail public utility or public utility that has a certificate of public convenience and necessity under Chapter 13 of this code, include a document in the form of an affidavit signed by the chief executive officer of the utility, which shall cooperate with the political subdivision, stating that the utility does not object to the construction and operation of the services and facilities in its service area; [(13) include a map of the economically distressed area together with supporting information relating to dwellings in the area; [(14) describe in detail the methods for incorporating water conservation into the provision of water and sewer services to the economically distressed area; [(15) include, on request of the board, a written determination by the commission on the managerial, financial, and technical capabilities of the applicant to operate the system for which assistance is being requested; and [(16) include any other information required by the board]. (c) Before the board approves the application or provides any funds under an application, it shall require an applicant to adopt a program of water conservation for the more effective use of water that meets the criteria established under Section 17.125 [If an applicant is a district or nonprofit water supply corporation, the applicant must include with the application proof that the appropriate county and municipalities have given their consent]. (d) Before considering an application, the board may require the applicant to: (1) provide documentation to the executive administrator sufficient to allow review of the applicant's managerial, financial, and technical capabilities to operate the system for which assistance is being requested; (2) provide a written determination by the commission on the applicant's managerial, financial, and technical capabilities to operate the system for which assistance is being requested; (3) request that the comptroller perform a financial management review of the applicant and, if the review is performed, provide the board with the results of the review; or (4) provide any other information required by the board or the executive administrator [In an application to the board for financial assistance for a water supply project or for sewer services, the applicant shall include: [(1) the name of the political subdivision and its principal officers; [(2) a citation of the law under which the political subdivision operates and was created; [(3) a description of the water supply project or the sewer services for which the financial assistance will be used; [(4) the estimated total cost of the water supply project or sewer services construction; [(5) the amount of state financial assistance requested; [(6) the plan for repaying the financial assistance provided for the water supply project or sewer services; and [(7) any other information the board requires]. SECTION 8. Section 17.929, Water Code, is amended to read as follows: Sec. 17.929. CONSIDERATIONS IN PASSING ON APPLICATION. (a) In passing on an application for financial assistance, the board shall consider: (1) the need of the economically distressed area to be served by the water supply and sewer services in relation to the need of other political subdivisions requiring financial assistance under this subchapter and the relative costs and benefits of all applications; (2) the availability to the area to be served by the project of revenue or financial assistance from alternative sources for the payment of the cost of the proposed project [efforts by the residents of the economically distressed area to provide necessary water supply and sewer services]; (3) [the proposed use of labor from inside the political subdivision to perform contracts for providing water supply and sewer services; [(4) the relationship of the proposed water supply and sewer services to minimum state standards for water supply and sewer services adopted under Section 16.343 of this code; [(5)] the financing of the proposed water supply and sewer project including consideration of: (A) the budget and repayment schedule submitted under Section 17.927(b)(4) [of this code]; (B) other items included in the application relating to financing; and (C) other financial information and data available to the board; (4) [(6) whether the applicant has proposed methods for incorporating water conservation into the provision of water and sewer services to the economically distressed area; [(7)] whether the county and other appropriate political subdivisions have [has] adopted model rules pursuant to Section 16.343 [of this code] and the manner of enforcement of model rules; [(8) the feasibility of creating a conservation and reclamation district under Article XVI, Section 59, of the Texas Constitution, to provide the services and finance the water supply and sewer services covered by the application with district bonds issued and sold through the regular bond market; [(9) the percentage of the total project cost that the financial assistance will comprise;] and (5) [(10)] the feasibility of achieving cost savings by providing a regional facility for water supply or wastewater service and the feasibility of financing the facility by using funds from the economically distressed areas account or any other financial assistance. (b) At the time an application for financial assistance is considered, the board also must find that the area to be served by a proposed project has a median household income that is not greater than 75 percent of the median state household income [an average per capita income that is at least 25 percent below the state average] for the most recent year [three consecutive years] for which statistics are available. SECTION 9. Section 17.930(b), Water Code, is amended to read as follows: (b) After making the considerations provided by Section 17.929 [of this code], the board by resolution shall: (1) approve the plan and application as submitted; (2) approve the plan and application subject to the requirements identified by the board or commission for the applicant to obtain the managerial, financial, and technical capabilities to operate the system and any other requirements, including training under Subchapter M, the board considers appropriate; (3) deny the application and identify the requirements or remedial steps the applicant must complete before the applicant may be reconsidered for financial assistance; (4) if the board finds that the applicant will be unable to obtain the managerial, financial, or technical capabilities to build and operate a system, deny the application and issue a determination that a service provider other than the applicant is necessary or appropriate to undertake the proposed project; or (5) deny the application. SECTION 10. Sections 17.933(a) and (c), Water Code, are amended to read as follows: (a) The board may use money in the economically distressed areas account to provide financial assistance to a political subdivision [to be repaid] in the form of a loan, including a loan with zero interest, grant, or other type of financial assistance to be determined[, manner, and time provided] by the board [rules and in the agreement between the board and the political subdivision] taking into consideration the information provided by Section 17.927(b)(7) [ of this code]. (c) The total amount of financial assistance provided by the board to political subdivisions under this subchapter from state-issued bonds for which repayment is not required may not exceed at any time 90 percent of the total principal amount of issued and unissued bonds authorized under Article III[, Section 49-d-7] of the Texas Constitution, for purposes of this subchapter plus outstanding interest on those bonds. SECTION 11. Section 17.952, Water Code, is amended to read as follows: Sec. 17.952. ISSUANCE OF WATER FINANCIAL ASSISTANCE BONDS. The board by resolution may provide for the issuance of water financial assistance bonds, which shall be general obligation bonds of the state, in an aggregate principal amount not to exceed the principal amount authorized to be issued by the [Section 49-d-8, Article III,] Texas Constitution. SECTION 12. Section 17.993(a), Water Code, is amended to read as follows: (a) The commission or the board may evaluate whether an operating entity needs training if the operating entity: (1) requests financial assistance or an amendment to the project plan or budget [additional funding]; (2) requests more time to meet its obligations under a repayment schedule; (3) does not provide required documentation; or (4) has a history of compliance problems, as determined by the commission. SECTION 13. Section 212.0105(a), Local Government Code, is amended to read as follows: (a) This section applies only to a person who: (1) is the owner of a tract of land in [either: [(A) a county that is contiguous to an international border; or [(B)] a county in which a political subdivision that is eligible for and has applied for [has received] financial assistance through Subchapter K, Chapter 17, Water Code; (2) divides the tract in a manner that creates any lots that are intended for residential purposes and are five acres or less; and (3) is required under this subchapter to have a plat prepared for the subdivision. SECTION 14. Section 232.071, Local Government Code, is amended to read as follows: Sec. 232.071. APPLICABILITY. This subchapter applies only to the subdivision of land located: (1) outside the corporate limits of a municipality; and (2) in a county: (A) in which is located a political subdivision that is eligible for and has applied for financial assistance under Section 15.407, Water Code, or Subchapter K, Chapter 17, Water Code; and (B) to which Subchapter B does not apply. SECTION 15. Section 15.407(i), Section 16.343(f), Sections 17.923 through 17.926, and Section 17.933(g), Water Code, are repealed. SECTION 16. The changes in law made by this Act apply only to an application for financial assistance pending or filed on or after the effective date of this Act. SECTION 17. This Act takes effect on September 1, 2005. ______________________________ ______________________________ President of the Senate Speaker of the House I certify that H.B. No. 467 was passed by the House on April 20, 2005, by the following vote: Yeas 143, Nays 0, 1 present, not voting; and that the House concurred in Senate amendments to H.B. No. 467 on May 27, 2005, by the following vote: Yeas 139, Nays 0, 2 present, not voting. ______________________________ Chief Clerk of the House I certify that H.B. No. 467 was passed by the Senate, with amendments, on May 25, 2005, by the following vote: Yeas 30, Nays 1. ______________________________ Secretary of the Senate APPROVED: __________________ Date __________________ Governor