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Texas Local Government Code - Section 43.076. Abolition Of Water-Related Special District That Becomes Part Of More Than One Municipality

Legal Research Home > Texas Laws > Local Government Code > Texas Local Government Code - Section 43.076. Abolition Of Water-Related Special District That Becomes Part Of More Than One Municipality

§ 43.076. ABOLITION OF WATER-RELATED SPECIAL DISTRICT 
THAT BECOMES PART OF MORE THAN ONE MUNICIPALITY.  (a) This section 
applies to a municipality that contains, as a result of the 
annexation by or the incorporation of the municipality, any part of 
the area in a water control and improvement district, fresh water 
supply district, or municipal utility district organized for the 
primary purpose of providing municipal functions such as the 
supplying of fresh water for domestic or commercial uses or the 
furnishing of sanitary sewer service, if:
		(1)  the balance of the area in the district is located 
in one or more other municipalities;  
		(2)  the district is not created by a special act of the 
legislature and the balance of the area is located in one or more 
other municipalities and in an unincorporated area;  or
		(3)  the district is a conservation and reclamation 
district of more than 10,000 acres which provides water and 
sanitary sewer service to households and parts of which are located 
in two or more municipalities, one of which has a population of more 
than 1.6 million.
	(b)  The municipality succeeds to the powers, duties, 
assets, and obligations of the district as provided by this 
section.  This section does not prohibit the municipality from 
continuing to operate utility facilities in the district that are 
owned and operated by the municipality on the date the part of the 
district area becomes a part of the municipality.
	(c)  If the district is located wholly in two or more 
municipalities, the district may be abolished by agreement among 
the district and the municipalities in which the district is 
located.  Subject to Subsection (f), the agreement must provide for 
the distribution among the municipalities of the property and other 
assets of the district and for the pro rata assumption by the 
municipalities of all the debts, liabilities, and obligations of 
the district.  The assumption by each municipality must be based on 
the ratio that the value of the property and other assets 
distributed to that municipality bears to the total value of all the 
property and other assets of the district.  The determination of 
value may be made on an original cost basis, a reproduction cost 
basis, a fair market value basis, or by any other valuation method 
agreed on by the parties that reasonably reflects the value of the 
property and other assets, debts, liabilities, and obligations of 
the district.  The agreement must specify the date on which the 
district is abolished.
	(d)  If the district is located wholly in two or more 
municipalities and in unincorporated area, the district may be 
abolished by agreement among the district and all of the 
municipalities in which parts of the district are located.  The 
abolition agreement must provide for the distribution of assets and 
liabilities as provided by Subsection (c).  The agreement must also 
provide for the distribution among one or more of the 
municipalities of the pro rata assets and liabilities located in 
the unincorporated area and must provide for service to customers 
in unincorporated areas in the service area of the abolished 
district.  The municipality that provides the service in the 
unincorporated area may charge its usual and customary fees and 
assessments to the customers in that area.
	(e)  An agreement made under Subsection (c) or (d) must be 
approved by an ordinance adopted by the governing body of each 
municipality and by an order or resolution adopted by the governing 
board of the district before the date specified in the agreement for 
the abolition, distribution, and assumption.
	(f)  If the abolished district has outstanding bonds, 
warrants, or other obligations payable in whole or in part from the 
net revenue from the operation of the district utility system or 
property, the affected municipalities shall take over and operate 
the system or property through a board of trustees as provided by 
this section.  The municipalities shall apply the net revenue from 
the operation of the system or property to the payment of 
outstanding revenue bonds, warrants, or other obligations as if the 
district had not been abolished.  The system or property shall be 
operated in that manner until all the revenue bonds, warrants, or 
obligations are retired in full by payment or by the refunding of 
the bonds, warrants, or other obligations into municipal 
obligations.  The board of trustees must be composed of not more 
than five members appointed by the governing bodies of the 
municipalities.  The trustees are appointed for the terms and shall 
perform the duties as provided by the agreement made under 
Subsection (c) or (d).  The board also shall perform the duties and 
other functions that are imposed by law or by contract on the 
abolished district and its governing board and that relate to the 
outstanding revenue bonds.  The board shall charge and collect 
sufficient rates for the services of the system or property and 
shall apply the revenue to comply with each covenant or agreement 
contained in the proceedings relating to the revenue bonds, 
warrants, or other obligations with respect to the payment of 
principal and interest and the maintenance of reserves and other 
funds.  When all the revenue bonds, warrants, and other obligations 
are retired in full, the property and other assets of the district 
shall be distributed among the municipalities as provided by 
Subsection (c) or (d).  On the distribution, the board is abolished.
	(g)  When the pro rata share of any district bonds, warrants, 
or other obligations payable in whole or in part from property taxes 
has been assumed by the municipality, the governing body of the 
municipality shall levy and collect taxes on all taxable property 
in the municipality to pay the principal of and interest on its 
share as the principal and interest become due and payable.
	(h)  The municipality may issue general obligation refunding 
bonds in its own name to refund in whole or in part its pro rata 
share of any outstanding district bonds, warrants, or other 
obligations, including unpaid earned interest on them, that are 
assumed by the municipality and that are payable in whole or in part 
from property taxes.  The refunding bonds must be issued in the 
manner provided by Chapter 1207, Government Code. Refunding bonds 
must bear interest at the same rate or at a lower rate than that 
borne by the refunded obligations unless it is shown mathematically 
that a different rate results in a savings in the total amount of 
interest to be paid.
	(i)  The municipality may issue revenue refunding bonds or 
general obligation refunding bonds in its own name to refund in 
whole or in part its pro rata share of any outstanding district 
bonds, warrants, or other obligations, including unpaid earned 
interest on them, that are assumed by the municipality and that are 
payable solely from net revenues.  The municipality may combine the 
different issues or the bonds of different issues of both district 
and municipal revenue bonds, warrants, or other obligations into 
one or more series of revenue refunding bonds.  The municipality may 
pledge the net revenues of the district utility system or property 
to the payment of those bonds, warrants, or other obligations.  The 
municipality may also combine the different issues or the bonds of 
the different issues into one or more series of general obligation 
refunding bonds.  An originally issued municipal revenue bond may 
not be refunded into municipal general obligation refunding bonds.  
Except as otherwise provided by this section, Subchapter B, Chapter 
1502, Government Code, applies to the revenue refunding bonds, but 
an election for the issuance of the bonds is not required.  Revenue 
refunding bonds or general obligation refunding bonds must be 
issued in the manner provided by Chapter 1207, Government Code. The 
revenue refunding bonds and the general obligation refunding bonds 
must bear interest at the same rate or at a lower rate than that 
borne by the refunded obligations unless it is shown mathematically 
that a different rate results in a savings in the total amount of 
interest to be paid.

Acts 1987, 70th Leg., ch. 149, § 1, eff. Sept. 1, 1987.  Amended 
by Acts 1997, 75th Leg., ch. 1339, § 1, eff. Sept. 1, 1997;  Acts 
1999, 76th Leg., ch. 1064, § 37, eff. Sept. 1, 1999.

Last modified: August 11, 2007