85R29617 TSR-F
	By: Zaffirini, et al.	S.B. No. 1198
	(Isaac)
	Substitute the following for S.B. No. 1198:  No.

	A BILL TO BE ENTITLED
	AN ACT
	relating to the conversion of the Hays Caldwell Public Utility
	Agency to the Alliance Regional Water Authority; providing
	authority to issue bonds; granting the power of eminent domain;
	providing authority to impose fees.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1.  (a) The Hays Caldwell Public Utility Agency is
	converted to a conservation and reclamation district to be known as
	the Alliance Regional Water Authority located in Bexar, Caldwell,
	Comal, Guadalupe, and Hays Counties.
	(b)  The Alliance Regional Water Authority is not required to
	hold an election to confirm the creation of the authority.
	SECTION 2.  Subtitle X, Title 6, Special District Local Laws
	Code, is amended by adding Chapter 11010 to read as follows:
	CHAPTER 11010. ALLIANCE REGIONAL WATER AUTHORITY
	SUBCHAPTER A. GENERAL PROVISIONS
	Sec. 11010.001.  DEFINITIONS. In this chapter:
	(1)  "Authority" means the Alliance Regional Water
	Authority.
	(2)  "Board" means the board of directors of the
	authority.
	(3)  "Director" means a member of the board.
	(4)  "District" means any district or authority created
	under Section 52, Article III, or Section 59, Article XVI, Texas
	Constitution, regardless of the manner of creation.
	(5)  "Local government" means:
	(A)  a municipality, county, district, or other
	political subdivision of this state;
	(B)  a local government corporation;
	(C)  a nonprofit corporation created to act on
	behalf of a local government; or
	(D)  a combination of two or more of the entities
	described by this subdivision.
	(6)  "Private entity" includes an individual,
	corporation, organization, business trust, estate, trust,
	partnership, and association and any other legal entity that is not
	a governmental body or agency.
	(7)  "Sponsor" means:
	(A)  the City of Kyle;
	(B)  the City of San Marcos;
	(C)  the City of Buda;
	(D)  the Canyon Regional Water Authority; and
	(E)  any other local government or private entity
	added to the authority as a sponsor under Section 11010.005.
	(8)  "Water" includes:
	(A)  groundwater, percolating or otherwise,
	notwithstanding the quality of the groundwater;
	(B)  any surface water, naturally or artificially
	impounded or in a navigable or nonnavigable watercourse; and
	(C)  municipal wastewater or industrial
	wastewater, including municipal wastewater or industrial
	wastewater that has been treated to a quality suitable for reuse for
	a beneficial use.
	Sec. 11010.002.  NATURE OF AUTHORITY. The authority is a
	regional water authority in Bexar, Caldwell, Comal, Guadalupe, and
	Hays Counties created under and essential to accomplish the
	purposes of Section 59, Article XVI, Texas Constitution.
	Sec. 11010.003.  FINDINGS OF PUBLIC PURPOSE AND BENEFIT.
	(a) The authority is created to serve a public use and benefit.
	(b)  All land and other property included in the territory of
	the authority will benefit from the works and projects to be
	accomplished by the authority under powers conferred by Section 59,
	Article XVI, Texas Constitution, and powers granted under this
	chapter.
	Sec. 11010.004.  AUTHORITY TERRITORY. (a) The authority is
	composed of the territory:
	(1)  of the sponsors, including territory within the
	municipal boundaries of a sponsor that is a municipality;
	(2)  located in the service areas of the sponsors as
	provided by the sponsors' respective certificates of convenience
	and necessity; and
	(3)  added to and not excluded from the authority in
	accordance with applicable law.
	(b)  Territory added to the authority may be in a county
	other than a county listed in Section 11010.002.
	Sec. 11010.005.  METHOD OF ADDING SPONSORS. (a) The
	governing body of a local government or a private entity, including
	a water supply corporation, may petition the board to add that local
	government or private entity as a sponsor.
	(b)  A petition under Subsection (a) must be submitted in the
	manner and form required by board rule.
	(c)  On receipt of a petition under Subsection (a), the board
	shall set a hearing on the petition and provide notice of the date,
	time, place, and purpose of the hearing to:
	(1)  the sponsors of the authority; and
	(2)  the petitioning local government or private
	entity.
	(d)  At the hearing, the board shall determine whether:
	(1)  the local government or private entity will
	benefit from being added to the authority as a sponsor; and
	(2)  it is in the best interest of the authority to add
	the local government or private entity to the authority as a
	sponsor.
	(e)  If, after a hearing on the petition, the board
	determines that the local government or private entity should be
	added to the authority as a sponsor, the board shall issue an order:
	(1)  adding the local government or private entity to
	the authority;
	(2)  adding the local government's or private entity's
	territory or service area to the territory of the authority;
	(3)  making the local government's or private entity's
	territory or service area subject to the privileges, duties,
	assets, and financial obligations of the authority to the same
	degree as other sponsors already included in the authority; and
	(4)  stating the proposed effective date of the order.
	(f)  An order issued under Subsection (e) takes effect on the
	proposed effective date except as otherwise provided by this
	section. If the subject of the order is a local government, the
	proposed effective date must allow enough time for the local
	government to comply with Subsections (g) and (h).
	(g)  A local government that is the subject of an order
	issued under Subsection (e) shall publish notice of the authority's
	proposal to add the local government to the authority as a sponsor.
	The notice must:
	(1)  be published in a newspaper of general circulation
	in the county in which the local government is located;
	(2)  be published at least once per week for two
	consecutive weeks and with the first publication appearing on or
	before the 14th day before the proposed effective date of the order;
	(3)  state the proposed effective date of the order
	adding the local government to the authority as a sponsor; and
	(4)  include information regarding the right of the
	local government's voters to petition the governing body of the
	local government to call an election on the question of authorizing
	the addition of the local government to the authority as a sponsor
	and the method of making the petition.
	(h)  If the governing body of the local government, before
	the proposed effective date of the order, receives a petition
	calling for an election on the question of authorizing the addition
	of the local government to the authority as a sponsor that is signed
	by at least 10 percent of the local government's registered voters,
	the governing body shall order a special election on the question.
	Section 41.001(a), Election Code, does not apply to an election
	ordered under this subsection.
	(i)  On receipt of a qualifying petition under Subsection
	(h), the effective date of the order issued under Subsection (e) is
	suspended until after the date of the election and the governing
	body of the local government shall notify the board of the petition
	and suspension.
	(j)  If a majority of voters voting in an election held under
	this section vote in favor of the addition of the local government
	to the authority as a sponsor, the order issued under Subsection (e)
	takes effect on the date the result is declared. If a majority of
	voters voting in the election vote against the addition of the local
	government to the authority as a sponsor, the order issued under
	Subsection (e) is ineffective.
	Sec. 11010.006.  METHOD OF REMOVING SPONSORS. (a) The
	governing body of a local government or private entity that is a
	sponsor of the authority may petition the board to be removed from
	the authority as a sponsor.
	(b)  A petition under Subsection (a) must be submitted in the
	manner and form required by board rule.
	(c)  After receiving a petition under Subsection (a), the
	board shall decide whether the petitioning sponsor should be
	removed from the authority as a sponsor and shall by order approve,
	conditionally approve, or disapprove the petition.
	(d)  The board may not approve a petition submitted to the
	board under this section if that action would impair or violate or
	conflict with the terms of any outstanding bonds, notes, or other
	obligations of the authority.
	(e)  An order issued under Subsection (c) that approves or
	conditionally approves a sponsor's petition to be removed from the
	authority as a sponsor must address:
	(1)  all matters related to the removal as determined
	by the board, including the removal of the territory of the sponsor
	and territory located in the service area of the sponsor as provided
	by the sponsor's certificate of convenience and necessity; and
	(2)  if applicable, any conditions imposed by the board
	that the petitioning sponsor must satisfy before the board approves
	the petition, which may include:
	(A)  payment by the petitioning sponsor of all
	bonds, notes, or other obligations issued by the authority on
	behalf of the sponsor;
	(B)  payment by the petitioning sponsor of the
	sponsor's pro rata share of any bond, note, or other obligation
	issued by the authority, other than the bonds, notes, or other
	obligations described by Paragraph (A), if the payment is allowed
	under the terms of the bond, note, or other obligation;
	(C)  conditions related to the ownership or
	transfer of ownership of real property, facilities, equipment,
	personnel, and supplies; and
	(D)  conditions the authority considers necessary
	for the winding up of activities in connection with the removal of
	the petitioning sponsor as a sponsor from the authority.
	(f)  If the board by order conditionally approves a sponsor's
	petition under Subsection (c), the petitioning sponsor remains a
	sponsor and shall make all payments owed to the authority when due
	and shall satisfy all conditions included in the order. The board
	shall approve the petition immediately after all required payments
	to the authority are received and all conditions included in the
	order are satisfied as determined by the board.
	(g)  The removal of a local government or private entity from
	the authority as a sponsor under this section does not prohibit the
	local government or private entity from contracting with the
	authority for the provision of water supply, wastewater treatment,
	or other services provided by the authority.
	Sec. 11010.007.  REAPPORTIONMENT OF DIRECTORS. After the
	addition or removal of a sponsor under this subchapter, the board by
	rule shall reapportion the directors of the authority among the
	sponsors in accordance with Section 11010.051(c)(2). The board may
	increase or decrease the number of directors on the board in
	accordance with Section 11010.051(a).
	Sec. 11010.008.  LIBERAL CONSTRUCTION OF CHAPTER. This
	chapter shall be liberally construed to effect its purposes.
	SUBCHAPTER B. BOARD OF DIRECTORS
	Sec. 11010.051.  DIRECTORS. (a) The authority is governed
	by a board of directors consisting of at least 7 and not more than 17
	members.
	(b)  The board is responsible for the management, operation,
	and control of the authority.
	(c)  The board by rule shall:
	(1)  establish the number of directors of the
	authority; and
	(2)  apportion the directors for each sponsor based on
	the amount of water contracted to be supplied to the sponsor under
	the terms of the authority's water supply contract with the
	sponsor, subject to Section 11010.053(a).
	Sec. 11010.052.  ELIGIBILITY TO SERVE AS DIRECTOR. (a) To
	be eligible to serve as a director, a person must be:
	(1)  at least 18 years of age; and
	(2)  a resident of the territory located in the
	authority or an employee of a sponsor.
	(b)  A director who also serves on the governing body of a
	sponsor is not a dual officeholder and is not prohibited by the
	common law doctrine of incompatibility from serving on both the
	board and the governing body.
	(c)  Service on the board by a public officeholder is an
	additional duty of that person's office.
	Sec. 11010.053.  APPOINTMENT OF DIRECTORS. (a) Each
	sponsor is entitled to appoint at least one director.
	(b)  Each director must be appointed by the governing body of
	a sponsor in accordance with the rules adopted under Section
	11010.051 that govern the apportionment of directors among the
	sponsors.
	(c)  Directors must be appointed not earlier than April 1 and
	not later than April 30 of each year.
	Sec. 11010.054.  TERMS OF OFFICE. (a) Directors serve
	staggered three-year terms, with one-third or as near as possible
	to one-third of the members' terms expiring April 30 of each year.
	(b)  A director's term begins on May 1 of the year the
	director is appointed.
	(c)  A director may not serve more than five consecutive
	terms as a director.
	Sec. 11010.055.  REMOVAL OF DIRECTOR. A sponsor that
	appoints a director may remove the director from office at any time,
	with or without cause.
	Sec. 11010.056.  BOARD VACANCY. If there is a vacancy on the
	board, the governing body of the sponsor that appointed the
	director who vacated the office shall appoint a director to serve
	the remainder of the term.
	Sec. 11010.057.  VOTING AUTHORITY. Each director is
	entitled to one vote on any issue before the board.
	Sec. 11010.058.  OFFICERS. At the first meeting of the board
	after May 1 of each year, the board shall elect officers for the
	authority, including a chair, vice chair, secretary, and treasurer.
	Sec. 11010.059.  MEETINGS AND ACTIONS OF BOARD; QUORUM.
	(a)  The board may meet as many times each year as the board
	considers appropriate.
	(b)  A majority of the membership of the board constitutes a
	quorum at a meeting of the board.
	(c)  A concurrence of a majority of the directors present and
	voting is sufficient for transacting any business of the authority
	unless other applicable law, or the authority by rule, requires a
	concurrence of a greater number of directors for a specific type of
	decision.
	(d)  Directors of the authority are public officials and are
	entitled to governmental immunity for their actions in their
	capacity as directors and officers of the authority.
	SUBCHAPTER C. POWERS AND DUTIES
	Sec. 11010.101.  GENERAL POWERS AND DUTIES. (a) The
	authority may:
	(1)  acquire, purchase, own, hold, lease, construct,
	improve, and maintain a reservoir, groundwater well, or other
	source of water supply, including:
	(A)  groundwater, surface water, and wastewater
	reused directly or indirectly; and
	(B)  aquifer storage and recovery facilities;
	(2)  acquire, own, construct, operate, repair,
	improve, maintain, or extend, inside or outside the authority's
	boundaries, water and wastewater works, improvements, facilities,
	plants, pipelines, equipment, and appliances for:
	(A)  the treatment and transportation of water and
	wastewater;
	(B)  the direct or indirect reuse of wastewater;
	(C)  aquifer storage and recovery projects; and
	(D)  the provision of wholesale water and
	wastewater services to authority customers, municipalities,
	districts, water supply corporations, and other persons in this
	state;
	(3)  acquire, purchase, own, hold, lease, and maintain
	interests, including capacity rights and other contractual rights,
	in sources of water supply, reservoirs, groundwater wells, water
	and wastewater systems, treatment works, improvements, facilities,
	plants, equipment, appliances, aquifer storage and recovery
	projects, and the direct or indirect reuse of wastewater;
	(4)  finance any purchase or acquisition through a
	bond, note, or other obligation under Subchapter E, or through a
	lease-purchase agreement; and
	(5)  sell, lease, convey, or otherwise dispose of any
	right, interest, or property the authority considers to be
	unnecessary for the efficient operation or maintenance of the
	authority's facilities.
	(b)  In addition to the powers specifically provided by this
	chapter, the authority may exercise the powers provided by Section
	65.201, Water Code.
	Sec. 11010.102.  AUTHORITY POLICIES, RULES, AND BYLAWS. The
	authority may adopt and enforce policies, rules, and bylaws
	reasonably required to implement this chapter, including rules
	governing procedures before the board and rules regarding
	implementation, enforcement, and any other matters related to the
	exercise of the rights, powers, privileges, and functions conferred
	on the authority by this chapter for the provision of water and
	wastewater service.
	Sec. 11010.103.  EMINENT DOMAIN. (a) The authority may
	exercise the power of eminent domain to acquire a fee simple or
	other interest in property if the interest is necessary for the
	authority to exercise the rights or authority conferred by this
	chapter.
	(b)  The authority shall exercise the right of eminent domain
	in the manner provided by Chapter 21, Property Code. The authority
	is not required to give bond for appeal or bond for costs in a
	condemnation suit or other suit to which it is a party.
	(c)  The authority may not use the power of eminent domain
	for the condemnation of land for the purpose of acquiring rights to
	groundwater or for the purpose of acquiring water or water rights.
	Sec. 11010.104.  WATER CONSERVATION OR DROUGHT CONTINGENCY
	PLANS. The authority by rule may develop, prepare, revise, adopt,
	implement, enforce, and manage water conservation or drought
	contingency plans for the authority or any portion of the
	authority.
	Sec. 11010.105.  SPONSOR CONVEYANCES AND ACQUISITIONS.
	(a)  In this section, "utility system" has the meaning assigned by
	Section 1502.001, Government Code.
	(b)  A sponsor may convey a utility system facility or asset
	or the sponsor's interest in a utility system facility or asset to
	the authority without holding an election to approve the
	conveyance.
	(c)  A sponsor is exempt from the provisions of Chapter 1502,
	Government Code, regarding the conveyance, sale, or acquisition of
	a utility system, or any related works, improvements, facilities,
	plants, equipment, or appliances.
	Sec. 11010.106.  CONTRACTS. (a) The authority may contract
	with any person to carry out a power authorized by this chapter.
	(b)  A person who enters into a contract with the authority
	may pledge to the payment of the contract any source of revenue that
	may be available to the person, including ad valorem taxes, if the
	person has the authority to impose those taxes.
	(c)  Payments made under a contract with the authority
	constitute an operating expense of the person served under the
	contract, unless otherwise prohibited by a previously outstanding
	obligation of the person. To the extent a person pledges funds to
	the payment of the contract that are to be derived from the person's
	own water system, the payments constitute an operating expense of
	that system.
	Sec. 11010.107.  COOPERATIVE CONTRACTS. The authority may
	enter into an interlocal contract with a local government under
	Chapter 791, Government Code, to carry out a power of the authority.
	Sec. 11010.108.  RATES AND FEES. (a) The authority shall
	establish rates and fees to be assessed against sponsors and
	customers of the authority. The rates and fees may be established
	by classes of customers, by project, or by area of service.
	(b)  A sponsor, local government, water supply corporation,
	private entity, or other person that contracts with the authority
	shall establish, charge, and collect fees, rates, charges, rentals,
	and other amounts for any service or facility provided under or in
	connection with a contract with the authority and shall pledge
	sufficient amounts to make all payments required under the
	contract.
	SUBCHAPTER D. GENERAL FINANCIAL PROVISIONS
	Sec. 11010.151.  AD VALOREM TAXES PROHIBITED. The authority
	may not impose an ad valorem tax.
	Sec. 11010.152.  GIFTS, GRANTS, LOANS, AND OTHER FUNDS. The
	authority may apply for, accept, receive, and administer gifts,
	grants, loans, and other funds available from any source.
	SUBCHAPTER E. BONDS, NOTES, AND OTHER OBLIGATIONS
	Sec. 11010.201.  REVENUE BONDS, NOTES, AND OTHER
	OBLIGATIONS. (a) In addition to bonds, notes, and other
	obligations that the authority is authorized to issue under other
	law, to accomplish the purposes of the authority, the authority may
	issue bonds, notes, or other obligations payable solely from and
	secured by all or part of any funds or any revenue from any source or
	sources, including:
	(1)  fees, rates, and other charges the authority
	imposes or collects;
	(2)  the sale of:
	(A)  water;
	(B)  water or wastewater services;
	(C)  water rights or capacity;
	(D)  water transmission rights, capacity, or
	services;
	(E)  water pumping;
	(F)  wastewater reused directly or indirectly;
	(G)  aquifer storage and recovery services;
	(H)  sewer services; or
	(I)  any other service or product of the authority
	provided inside or outside the boundaries of the authority;
	(3)  grants or gifts;
	(4)  the ownership or operation of all or a designated
	part of the authority's works, improvements, facilities, plants, or
	equipment; and
	(5)  the proceeds of contracts.
	(b)  Bonds, notes, or other obligations issued by the
	authority may be first or subordinate lien obligations at the
	board's discretion.
	(c)  In connection with any bonds, notes, or other
	obligations of the authority, the authority may exercise any power
	of an issuer under Chapter 1371, Government Code.
	(d)  The authority may conduct a public, private, or
	negotiated sale of the bonds, notes, or other obligations.
	(e)  The authority may enter into one or more indentures of
	trust to further secure its bonds, notes, or other obligations.
	(f)  The authority may issue bonds, notes, or other
	obligations in more than one series as necessary to carry out the
	purposes of this chapter. In issuing bonds, notes, or other
	obligations secured by revenue of the authority, the authority may
	reserve the right to issue additional bonds, notes, or other
	obligations secured by the authority's revenue that are on parity
	with or are senior or subordinate to the bonds, notes, or other
	obligations issued earlier.
	(g)  A resolution of the board or a trust indenture securing
	the bonds, notes, or other obligations may specify additional
	provisions that constitute a contract between the authority and the
	authority's bondholders, noteholders, or other obligation holders.
	(h)  Bonds, notes, or other obligations may be additionally
	secured by deed of trust or mortgage on any or all of the
	authority's facilities.
	(i)  The authority provided by this chapter for the
	authorization and issuance of bonds, notes, and other obligations
	is in addition to, and not in lieu of, the authority otherwise
	established under general law and may not be construed as a
	limitation on, or a modification of, general law providing for
	authorization and issuance of bonds, notes, and other forms of
	obligations. Nothing in this chapter may be construed as affecting
	any existing contract, bond, note, or other obligation of the
	authority or any indenture, covenant, mortgage, or other agreement
	relating to them.
	Sec. 11010.202.  ELECTION NOT REQUIRED. The authority is
	not required to hold an election to approve the issuance of revenue
	bonds or notes or of other obligations under this subchapter.
	Sec. 11010.203.  USE OF REVENUE AND GROWTH PROJECTIONS. For
	the purposes of attorney general review and approval and in lieu of
	any other manner of demonstrating the ability to pay debt service
	and satisfy any other pecuniary obligations relating to bonds,
	notes, or other obligations, the authority may demonstrate the
	authority's ability to satisfy the debt service and those
	obligations using accumulated funds of the authority and revenue
	and growth projections prepared by a professional utility rate
	consultant at the direction of the authority. If the resolution
	authorizing the issuance of the bonds, notes, or other obligations
	provides that the authority intends to increase rates to the extent
	necessary to pay debt service and satisfy any other pecuniary
	obligations arising under the bonds, notes, or other obligations,
	the revenue projections prepared by a professional utility rate
	consultant may include forecast rate increases and accumulated and
	available fund balances as determined by the authority.
	Sec. 11010.204.  REFUNDING BONDS. The authority may issue
	refunding bonds, notes, and other obligations to refund any of its
	bonds, notes, or other obligations in any manner provided by law,
	including Chapter 1207, Government Code.
	Sec. 11010.205.  BONDS, NOTES, AND OTHER OBLIGATIONS EXEMPT
	FROM TAXATION. A bond, note, or other obligation issued under this
	chapter, a transaction related to the bond, note, or other
	obligation, the interest on the bond, note, or other obligation,
	and the profit from the sale of the bond, note, or other obligation
	are exempt from taxation by this state or a political subdivision of
	this state.
	SECTION 3.  On the effective date of this Act:
	(1)  the Alliance Regional Water Authority shall assume
	all assets, liabilities, bonds, notes, and other obligations of the
	Hays Caldwell Public Utility Agency;
	(2)  all contracts and written agreements of the Hays
	Caldwell Public Utility Agency are assigned to and assumed by the
	Alliance Regional Water Authority; and
	(3)  the Alliance Regional Water Authority may refund
	all or a portion of the bonds, notes, or other obligations issued by
	the Hays Caldwell Public Utility Agency in any manner provided by
	law, including Chapter 1207, Government Code.
	SECTION 4.  (a) The sponsors of the Alliance Regional Water
	Authority shall appoint the initial directors under Section
	11010.053, Special District Local Laws Code, as added by this Act,
	not earlier than April 1, 2018, and not later than April 30, 2018.
	Directors of the Hays Caldwell Public Utility Agency serving on the
	effective date of this Act shall serve as the temporary directors of
	the Alliance Regional Water Authority until the initial directors
	take office on May 1, 2018.
	(b)  As soon as practicable after the initial directors have
	been appointed under Section 11010.053, Special District Local Laws
	Code, as added by this Act, the initial directors shall draw lots to
	determine which directors serve a one-year term expiring April 30,
	2019, which directors serve a two-year term expiring April 30,
	2020, and which directors serve a three-year term expiring April
	30, 2021. The lots must be split into thirds or as near to thirds as
	possible.
	(c)  This section expires January 1, 2022.
	SECTION 5.  (a) The legal notice of the intention to
	introduce this Act, setting forth the general substance of this
	Act, has been published as provided by law, and the notice and a
	copy of this Act have been furnished to all persons, agencies,
	officials, or entities to which they are required to be furnished
	under Section 59, Article XVI, Texas Constitution, and Chapter 313,
	Government Code.
	(b)  The governor, one of the required recipients, has
	submitted the notice and Act to the Texas Commission on
	Environmental Quality.
	(c)  The Texas Commission on Environmental Quality has filed
	its recommendations relating to this Act with the governor, the
	lieutenant governor, and the speaker of the house of
	representatives within the required time.
	(d)  All requirements of the constitution and laws of this
	state and the rules and procedures of the legislature with respect
	to the notice, introduction, and passage of this Act are fulfilled
	and accomplished.
	SECTION 6.  This Act takes effect immediately if it receives
	a vote of two-thirds of all the members elected to each house, as
	provided by Section 39, Article III, Texas Constitution. If this
	Act does not receive the vote necessary for immediate effect, this
	Act takes effect September 1, 2017.