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  S.B. No. 1012
 
AN ACT
relating to the establishment of regional participation agreements
between certain municipalities and districts; authorizing the
issuance of bonds.
       BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
       SECTION 1.  Subchapter D, Chapter 43, Local Government Code,
is amended by adding Section 43.0754 to read as follows:
       Sec. 43.0754.  REGIONAL PARTICIPATION AGREEMENTS. (a)  In
this section:
             (1)  "District" means a political subdivision created
by general or special law that has the powers of a municipal
management district under Chapter 375 and a conservation and
reclamation district under Chapters 49 and 54, Water Code, a
majority by area of the territory of which is located within a
planned community and within the extraterritorial jurisdiction of
one or more municipalities.
             (2)  "Eligible municipality" means a municipality:
                   (A)  that has a population of 1.5 million or more
and that includes in its extraterritorial jurisdiction at least 90
percent by area of the territory of a district; or
                   (B)  that includes in its extraterritorial
jurisdiction not more than 10 percent of the territory of a district
that has entered into a regional participation agreement with
another eligible municipality under this section.
             (3)  "Party" means a district, eligible municipality,
or person that is a party to a regional participation agreement
approved and entered into under this section.
             (4)  "Planned community" means a planned community of
20 square miles or more with a population of 50,000 or more that is
subject in whole or in part to a restrictive covenant that contains
an ad valorem-based assessment on real property used or to be used,
in any part, to fund governmental or quasi-governmental services
and facilities within and for the planned community.
             (5)  "Regional participation agreement" means a
contract or agreement entered into under this section or in
anticipation of the enactment of this section and any amendment,
modification, supplement, addition, renewal, or extension to or of
the contract or agreement or any proceeding relating to the
contract or agreement.
       (b)  Notwithstanding any contrary law or municipal charter
provision, the governing body of an eligible municipality, the
governing body of a district, and, if applicable, a person may
approve and authorize execution and performance of a regional
participation agreement to further regional participation in the
funding of eligible programs or projects.  A regional participation
agreement must include as parties at least one eligible
municipality and one district and may include as parties other
eligible municipalities, districts, or persons.
       (c)  A regional participation agreement may provide or allow
for:
             (1)  the establishment, administration, use,
investment, and application of a regional participation fund, which
shall be a special fund or escrow account to be used solely for
funding the costs and expenses of eligible programs or projects;
             (2)  payments to be made by a party into the regional
participation fund for application, currently or in the future,
toward eligible programs or projects;
             (3)  the methods and procedures by which eligible
programs or projects are prioritized, identified, and selected for
implementation and are planned, designed, bid, constructed,
administered, inspected, and completed;
             (4)  the methods and procedures for accounting for
amounts on deposit in, to the credit of, or expended from the
regional participation fund, as well as any related investment
income or amounts due and owing to or from any party to the fund;
             (5)  credits against payments otherwise due by any
party under the agreement resulting from taxes, charges, fees,
assessments, tolls, or other payments in support of or related to
the usage or costs of eligible programs or projects that are levied
or imposed upon, assessed against, or made applicable to a party or
its citizens, ratepayers, taxpayers, or constituents after the
effective date of the agreement;
             (6)  any type of annexation of any part of the territory
of a district to be deferred by an eligible municipality that is a
party for a mutually agreeable period;
             (7)  the release of all or part of the territory of a
district from the extraterritorial jurisdiction of an eligible
municipality that is a party at a specified time or upon the
occurrence of specified events;
             (8)  the consent of an eligible municipality that is a
party to the incorporation of, or the adoption of an alternate form
of government by, all or part of the territory of a district at a
specified time or upon the occurrence of specified events;
             (9)  remedies for breach of the agreement;
             (10)  the modification, amendment, renewal, extension,
or termination of the agreement;
             (11)  other districts, eligible municipalities, or
persons to join the agreement as a party at any time;
             (12)  third-party beneficiaries to be specifically
designated and conferred rights or remedies under the agreement;
             (13)  the duration of the agreement, including an
unlimited term;
             (14)  the creation and administration of a nonprofit
corporation, joint powers agency, local government corporation, or
other agency for the purpose of administration and management of a
regional participation fund, program, or project under the
agreement; and
             (15)  any other provision or term to which the parties
agree.
       (d)  A regional participation agreement may provide for the
funding of any program or project, whether individual,
intermittent, or continuing and whether located or conducted within
or outside the boundaries of a party, for the planning, design,
construction, acquisition, lease, rental, installment purchase,
improvement, provision of furnishings or equipment,
rehabilitation, repair, reconstruction, relocation, preservation,
beautification, use, execution, administration, management,
operation, or maintenance of any works, improvements, or
facilities, or for providing any functions or services, whether
provided to, for, by, or on behalf of a party, that provide a
material benefit to each party in the accomplishment of the
purposes of each party, related to:
             (1)  mobility or transportation, including mass
transportation, traffic circulation, or ground, air, rail, water,
or other means of transportation or movement of people, freight,
goods, or materials;
             (2)  health care treatment, research, teaching, or
education facilities or infrastructure;
             (3)  parks or recreation, open space, and scenic,
wildlife, wetlands, or wilderness areas;
             (4)  public assembly or shelter, including halls,
arenas, stadiums or similar facilities for sporting events,
exhibitions, conventions, or other mass assembly purposes;
             (5)  environmental preservation or enhancement,
including air or water quality protection, improvement,
preservation, or enhancement, and noise abatement;
             (6)  the supply, conservation, transportation,
treatment, disposal, or reuse of water or wastewater;
             (7)  drainage, stormwater management or detention, and
flood control or prevention;
             (8)  solid waste collection, transfer, processing,
reuse, resale, disposal, and management; or
             (9)  public safety and security, including law
enforcement, firefighting and fire prevention, emergency services
and facilities, and homeland security.
       (e)  A regional participation agreement must be:
             (1)  in writing;
             (2)  approved by the governing body of each eligible
municipality or district that is or that becomes a party to the
agreement; and
             (3)  must be recorded in the deed records of any county
in which is located any territory of a district that is or that
becomes a party to the agreement.
       (f)  A district, eligible municipality, or person may join or
become a party to a regional participation agreement in the manner
authorized in the agreement.
       (g)  A regional participation agreement is not required to
describe the land contained within the boundaries of a district
that is a party to the agreement.
       (h)  A regional participation agreement binds each party to
the agreement for the term specified in the agreement and each owner
and future owner of land that is subject to the agreement during any
annexation deferral period established in the agreement.  If a
party, land, or landowner is excluded or removed from an agreement,
the removal or exclusion is effective on the recordation of the
amendment, supplement, modification, or restatement of the
agreement implementing the removal or exclusion.
       (i)  A regional participation agreement may not require a
district to make payments from any funds that are restricted,
encumbered, or pledged for the payment of contractual obligations
or indebtedness of the district. Otherwise, any party may commit or
pledge or may issue bonds payable from or secured by a pledge of any
available source of funds, including unencumbered sales and use
taxes, to make payments due or to become due under an agreement.
       (j)  Notwithstanding any other law, a program or project to
be funded and any bonds to be issued by a district to make payments
under a regional participation agreement are not subject to review
or approval by the Texas Commission on Environmental Quality.
       (k)  A regional participation agreement and any action taken
under the agreement are not subject to any method of approval or
appeal under the Water Code.
       (l)  After due authorization, execution, delivery, and
recordation as provided by this section, a regional participation
agreement, including any related amendment, supplement,
modification, or restatement, and a pledge of funds to make
payments under an agreement shall be final and incontestable in any
court of this state.
       (m)  Notwithstanding any defect, ambiguity, discrepancy,
invalidity, or unenforceability of a regional participation
agreement that has been voluntarily entered into and fully executed
by the parties, or any contrary law, common law doctrine, or
municipal charter provision, and for the duration of any annexation
deferral period established in the agreement during which a
district continues to perform its obligations under the agreement:
             (1)  Section 42.023 and any other law or municipal
charter provision relating to the reduction of the extraterritorial
jurisdiction of an eligible municipality that is a party do not
apply, and Sections 42.041(b)-(e) do not apply to any land or owner
of land within a district that is a party;
             (2)  the governing body of an eligible municipality
that is a party may not initiate or continue an annexation
proceeding relating to that area but may include the area covered by
the agreement in a municipal annexation plan; and
             (3)  any area of a district that is a party to be
released from the extraterritorial jurisdiction of an eligible
municipality that is a party under an agreement, or that is to be
incorporated or included within an alternate form of government
with the consent of a municipality that is a party under an
agreement, shall, by operation of law and without further action by
a party or its governing body, be released from the
extraterritorial jurisdiction, or consent of the municipality to
the incorporation or adoption of an alternate form of government by
the district shall be deemed to have been given, as appropriate
under the agreement, at the time or upon the occurrence of the
events specified in the agreement.
       (n)  Notwithstanding the provisions of any municipal charter
or other law, a district or an eligible municipality is not required
to hold an election to authorize a regional participation
agreement. As long as such funds remain restricted for use under an
agreement, payments to or income from a regional participation fund
shall not be deemed revenues to an eligible municipality for
purposes of any law or municipal charter provision relating to
revenue or property tax caps or limits.
       (o)  This section is cumulative of all other authority to
make, enter into, and perform a regional participation agreement.
In case of any conflict or ambiguity between this section and any
other law or municipal charter provision, this section shall
prevail and control.
       (p)  This section shall be liberally construed so as to give
effect to its legislative purposes and to sustain the validity of a
regional participation agreement if the agreement was entered into
under or in anticipation of enactment of this section.
       SECTION 2.  The legislature finds and determines that the
financial burdens of implementing essential economic development
programs and related regional public improvement projects,
including programs and projects located inside or outside municipal
boundaries that are of substantial benefit to areas within a
municipality and its extraterritorial jurisdiction, or to the state
as a whole, often are borne by large municipalities in the state;
that there exists insufficient legislative authority to promote and
facilitate regional participation in the funding and
implementation of such programs and projects; that annexation of
adjacent areas by large municipalities in many instances does not
provide a satisfactory means of apportioning such financial burdens
and may create or exacerbate public service delivery and financial
burdens of municipalities; that financial participation in such
programs or projects by populous, defined communities in close
proximity to large municipalities by mutual agreement provides an
equitable, material, and effective alternative means of addressing
such circumstances without resort to municipal annexation; that to
prevent the fragmentation of, or nonuniform allocation of costs to,
participating defined communities, provision should also be made
for similar agreements with other municipalities with
extraterritorial jurisdiction over insubstantial portions of such
defined communities; and that implementation of the provisions of
this Act will be of substantial benefit to participating
communities and municipalities, to the regions of the state that
include such participants, and to the state as a whole as a program
for promoting and facilitating regional governmental cooperation
and the funding of essential economic development and public
improvement projects under Section 52-a, Article III, Texas
Constitution, thereby accomplishing the public purposes of
promoting and advancing employment and economic diversification
and development and stimulating business within the state,
conserving and preserving the natural resources of the state,
permitting the improvement of traffic circulation, the movement of
people, freight, goods, and materials, mass transportation, and
health care facilities and infrastructure within the state,
promoting the enhancement and improvement of air and water quality
and noise abatement measures within the state, promoting the
development of parks, recreational facilities, and public assembly
facilities within the state, and encouraging the preservation and
protection of scenic, wildlife, wetlands, and wilderness areas in
the state, and other purposes beneficial to the state.
       SECTION 3.  The provisions of this Act are severable.  If any
word, phrase, clause, sentence, section, provision, or part of this
Act is held invalid or unconstitutional, it shall not affect the
validity of the remaining portions, and it is declared to be the
legislative intent that this Act would have been passed as to the
remaining portions regardless of the invalidity of any part.
       SECTION 4.  A regional participation agreement entered into
in anticipation of this Act is not invalid because of the
agreement's authorization, execution, or delivery before the
effective date of this Act.
       SECTION 5.  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, 2007.
______________________________    ______________________________
President of the Senate             Speaker of the House
       I hereby certify that S.B. No. 1012 passed the Senate on
April 4, 2007, by the following vote: Yeas 30, Nays 0; and that the
Senate concurred in House amendment on May 1, 2007, by the following
vote: Yeas 31, Nays 0.
______________________________ 
   Secretary of the Senate
       I hereby certify that S.B. No. 1012 passed the House, with
amendment, on April 27, 2007, by the following vote: Yeas 133,
Nays 0, two present not voting.
______________________________ 
   Chief Clerk of the House
Approved:
______________________________ 
______________________________ 
            Date
______________________________ 
______________________________ 
          Governor