By: Taylor	S.B. No. 619
	(In the Senate - Filed February 18, 2013; February 25, 2013,
	read first time and referred to Committee on Natural Resources;
	May 3, 2013, reported adversely, with favorable Committee
	Substitute by the following vote:  Yeas 8, Nays 0; May 3, 2013,
	sent to printer.)
	COMMITTEE SUBSTITUTE FOR S.B. No. 619	By:  Estes

	A BILL TO BE ENTITLED
	AN ACT
	relating to exclusion of land from certain water districts that
	fail to provide service to the land; clarifying and limiting the
	authority of those districts with outstanding bonds payable from ad
	valorem taxes to impose taxes on excluded land; providing for a
	financial review.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1.  Section 49.3076, Water Code, is amended by
	amending Subsections (a), (b), (c), (d), and (f) and adding
	Subsections (c-1) and (g-1) to read as follows:
	(a)  The board of a district that has a total area of more
	than 10,000 [5,000] acres shall call a hearing on the exclusion of
	land from the district on or before the 60th day after receiving a
	written petition filed with the secretary of the board by one or
	more owners of [a landowner whose] land more than half the acreage
	of which has been for more than 20 years included in and taxable by
	the district [for more than 28 years] if any bonds issued by the
	district payable in whole or in part from taxes of the district are
	outstanding and the petition:
	(1)  is [includes a] signed by [petition evidencing the
	consent of] the owners of a majority of the acreage proposed to be
	excluded, as reflected by the most recent certified tax roll of the
	district;
	(2)  includes a claim that the district does [has] not
	provide [provided] the land with retail utility services;
	(3)  describes the property to be excluded; and
	(4)  provides facts necessary for the board to make the
	findings required by Subsection (b)[; and
	[(5) is filed before August 31, 2007].
	(b)  The board of a district shall [may] exclude land under
	this section if [only on finding that]:
	(1)  the district does not provide [has never provided]
	retail utility service [services] to the land described by the
	petition;
	(2)  the district has imposed a tax on more than half
	the acreage of the land for at least 20 years [more than:
	[(A)     28 years if the board calls a hearing under
	Subsection (a); or
	[(B)     40 years if the board calls a hearing under
	Subsection (a-1)]; and
	(3)  all taxes the district has levied and assessed
	against the land and all fees and assessments the district has
	imposed against the land or the owner that are due and payable on or
	before the date of the petition are fully paid.
	(c)  Subject to Subsection (c-1), unless [Unless] the
	district presents evidence at the hearing that conclusively
	demonstrates that the requirements and grounds for exclusion
	described by Subsection (a) [or (a-1), as appropriate, and
	Subsection (b)] have not been met, the board shall enter an order
	excluding the land from the district and shall redefine in the order
	the boundaries of the district to embrace all land not excluded.
	(c-1)  If on or before the date of the exclusion hearing
	required by Subsection (a) the district and the owner or owners
	enter into an agreement for utility service to the land proposed to
	be excluded, the district is not required to enter an order
	excluding the land from the district. An owner of all or part of the
	land is not required to enter into a utility agreement that as of
	the date of the petition:
	(1)  is not comparable economically or in the level of
	service provided to the land to the owner's current source of
	utility service, as may be determined by the owner; or
	(2)  does not include all utility services required to
	serve the land.
	(d)  A copy of an order excluding land and redefining the
	boundaries of the district shall be filed in the deed records of
	each county in which the district is located and with the
	commission.
	(f)  After any land is excluded under this section, the
	district may issue any unissued additional debt approved by the
	voters of the district before exclusion of the land under this
	section without holding a new election.  Additional debt issued
	after land is excluded from the district may not be payable from
	taxes levied against and does not create a lien against the taxable
	value of the excluded land.
	(g-1)  This section does not apply to a district:
	(1)  whose primary activity is the wholesale supply of
	raw water; and
	(2)  that has fewer than 500 retail customers.
	SECTION 2.  Section 49.3077, Water Code, is amended to read
	as follows:
	Sec. 49.3077.  TAX LIABILITY OF EXCLUDED LAND; BONDS
	OUTSTANDING.  (a)  In this section:
	(1)  "Adjusted gross value" means the gross assessed
	value of property, as of January 1, including land, improvements,
	and personal property, as determined by the appraisal district for
	the tax year in which the determination is made, reduced by any
	state-mandated exemptions but not reduced for any exemptions from
	taxation that are within the discretion of the governing body of the
	district.
	(2)  "Carry costs" means interest calculated at an
	annual rate equal to the weighted average interest rate of the
	district debt that accrues on the excluded land's share of the
	district debt, with reductions for prior payments, from the later
	of the exclusion date or the last interest payment date for district
	debt for which district taxes have been levied and collected to the
	earlier of:
	(A)  the date of the final interest payment on
	district debt before the next delinquency for the district's tax
	collection; or
	(B)  the earliest dates on which an aggregate
	amount of district obligations equal to the district debt may be
	paid at maturity or redeemed at the option of the district, provided
	the amount is paid in advance of any future district tax levy, using
	the redemption dates available for the district's outstanding
	obligations as of the exclusion date.
	(3)  "District debt" means the principal outstanding
	from time to time of the tax-supported debt of the district
	outstanding on the exclusion date, including debt used to refund
	district debt outstanding on the exclusion date.
	(4)  "Excluded land" means land that is excluded from a
	district under Section 49.3076.
	(5)  "Excluded land payment" means, with respect to
	excluded land, the sum of the excluded land's share of district debt
	plus the carry costs, less any taxes collected by the district under
	Subsection (b).
	(6)  "Excluded land's share of district debt" means the
	portion of the district debt that is calculated by multiplying the
	district debt by a fraction the numerator of which is the adjusted
	gross value of the excluded land on the exclusion date and the
	denominator of which is the adjusted gross value of all property in
	the district on the exclusion date.
	(7)  "Exclusion date" means the date that the owner
	files the petition requesting that the excluded land be excluded
	from the district with the district secretary.
	(8)  "Termination date" means the earlier of:
	(A)  the date on which the amount of taxes
	collected from the excluded land equals the excluded land payment;
	or
	(B)  the date on which the excluded land payment
	is made in full.
	(b)  Excluded land that has been pledged as security for any
	outstanding debt of the district remains pledged for the excluded
	land's share of district debt until the excluded land payment is
	paid.  A district is entitled to continue to levy and collect debt
	service taxes on the excluded land until the termination date at the
	same rate those taxes are levied on the land remaining in the
	district.  From the exclusion date to the termination date, the
	excluded land remains in the district for the limited purpose of
	assessment and collection of such taxes.  After the termination
	date, the excluded land is excluded from the district for all
	purposes, and the district may not levy any further tax on the
	excluded land.
	(c)  The district shall apply the taxes collected on the
	excluded land only to payment of the excluded land payment, which
	shall be reduced by the amount of taxes collected.
	(d)  A person is entitled to pay to the district the excluded
	land payment, in whole or in part, at any time on or after the
	exclusion date by delivering payment to the district tax
	assessor-collector.  If partial payment is made, the payment is
	credited first against all carry costs due and owing, and any
	remainder is credited against the excluded land's share of district
	debt.  After a partial payment, carry costs must be calculated and
	assessed and collected only on the remaining excluded land's share
	of district debt.  [Land excluded from a district under Section
	49.3076 that is pledged as security for any outstanding debt of the
	district remains pledged for its pro rata share of the debt until
	final payment is made.   The district shall continue to levy and
	collect taxes on the excluded land at the same rate levied on land
	remaining in the district until the amount of taxes collected from
	the excluded land equals the land's pro rata share of the district's
	debt outstanding at the time the land was excluded from the
	district.
	[(b)     The district shall apply the taxes collected on the
	excluded land only to the payment of the excluded land's pro rata
	share of the debt.
	[(c)     The owner of any part of the excluded land may pay in
	full the owner's share of the pro rata share of the district's debt
	outstanding at the time the land is excluded.]
	SECTION 3.  Subchapter J, Chapter 49, Water Code, is amended
	by adding Section 49.3078 to read as follows:
	Sec. 49.3078.  PETITION FOR EXCLUSION:  ADDITIONAL DUTIES.
	A landowner who signs a petition for the exclusion of land that is
	filed with a district under Section 49.3076 must submit a copy of
	the petition to the commission.  On receipt of a copy of a petition,
	the executive director shall review the most recent financial
	information for the applicable district, including current debt
	requirements, debt service cash flow, and proposed debt
	obligations, to confirm that an exclusion of land conducted in
	accordance with Sections 49.3076 and 49.3077 does not adversely
	affect the interests of district bondholders.  The executive
	director shall notify the landowner and the district when the
	review is complete.
	SECTION 4.  Subsections (a) and (c), Section 49.312, Water
	Code, are amended to read as follows:
	(a)  Except as provided by Section 49.3077, on [Upon]
	issuance of an order excluding property, that property is no longer
	a part of the district and is not entitled to water service from the
	district.
	(c)  Except as provided by Section 49.3077, once land is
	[Once] excluded, the landowner has no further liability to the
	district for future taxes, assessments, or other charges of the
	district.
	SECTION 5.  Subsection (a-1), Section 49.3076, Water Code,
	is repealed.
	SECTION 6.  Section 49.3076, Water Code, as amended by this
	Act, applies only to a petition for exclusion of land that is filed
	with a district on or after the effective date of this Act. A
	petition filed before the effective date of this Act is governed by
	the law in effect on the date the petition is filed, and that law
	continues in effect for that purpose.
	SECTION 7.  This Act takes effect September 1, 2013.
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