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DR9302-CS 890616H.B. No. 1567 1 2 3 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 2O 21 22 23 24 AN ACT relating to the establishment of municipal drainage utilities. BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: SECTION 1. (a) Subchapter C, Chapter 402, Local Government Code, is amended by this section. (b) Section 402.042, Local read as follows: Sec. 402.042. LEGISLATIVE finds that authority is needed to: (1) Government Code, is amended to FINDING. (a) The legislature permit [ee.~a,n--~eneFa~-~w] system establish a municipal drainage utility [~e] boundaries [e~-~e-m~m~e~m~&~y]; (2) provide rules for financing of the system; municipalities to within municipal a municipal drainage may (3) protect the public health and safety in [~e] municipalities from loss of life and property caused by surface water overflows and surface water stagnation within the boundaries of [~e] municipalities; (4) delegate to [the] municipalities declare, after a public hearing, a drainage system this subchapter to be a public utility; (5) prescribe bases on which u~i!ity system may be funded and fees in support of the system be assessed, levied, and collected; the power to created under the use, operation, and 1 2 3 4 5 6 7 8 9 !0 11 12 13 15 16 17 18 19 20 21 22 23 24 25 26 27 (6) subchapter; and (7) provide exemptions H.B. No. 1567 of certain persons from this prescribe other rules related to municipal drainage. (b) This subchapter is remedial. (c) Section 402.043, Local read as follows: Sec. 402.043. APPLICATION OF the subject of 'Government Code, is amended to SUBCHAPTER TO [~N~RAB-BAW] MUNICIPALITIES [W&~H--PSP~BA~&eN--~F--MeR~--~HAN--~?88e]. This subchapter applies [e~y] to any [a-~e~e~e~-~ew] municipality (d) Section 402.044(3), Local Government Code, is amended to read as follows: (3) "Drainage" means bridges, catch basins, channels, conduits, creeks, culverts, detention ponds, ditches, draws, flumes, pipes, pumps, sloughs, treatment works, and appurtenances to those items, whether natural or artificial, or using force or gravity, that are used to draw off surface water from land, carry the water away, collect~ [e~] store, or treat the water, or divert the water into natural or artificial watercourses. (e) Section 402.045(b), Local Government Code, is amended to read as follows: Before adopting the ordinance, the governing body must (b) find that: (1) will establish a property in the subject to charges under this subchapter; the municipality real drainage charges against all schedule of municipality 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 2O 21 22 23 24 25 26 27 (2) the municipality will provide H.B. No. 1567 drainage for all real property in the municipality on payment of drainage charges, except real property exempted under this subchapter; and (3) [~---~he---m~e~e½~¥--~e~es--a~--ame~--~m ee~b~e~-~e-~~-~e-~e~e~e-~ae~es-~-~he--~a~a~e [%4%] the municipality will offer drainage service on nondiscriminatory, reasonable, and equitable terms. 402.049, Local Government Code, is amended to (f) Section read as follows: Sec. 402.049. drainage utility SEGREGATION OF INCOME. The income of a system must be segregated and completely identifiable in municipal accounts. If drainage charges are solely for the cost of service, the municipality may transfer the charges in whole or in part to the municipal general fund, except for any part pledged to retire any outstanding indebtedness or obligation incurred, or as a reserve for future construction, repair, or maintenance of the drainage system. [A~-ees~-e~-se~ee~-hewe~e~ ~sea~__yea~--e~--eys~em--e~e~a~e~-~m~e~-~s-s~behap~e~] If the governing body has levied, in the drainage charge, an amount in contribution to the funding of future system improvements, including replacement, new construction, or extension, that amount is not transferable to the general fund. (g) Section 402.052(a), Local Government Code, is amended to read as follows: 3 1 2 3 5 7 8 9 10 !! (a) If, after at H.B. No. 1567 least five years of substantially continuous operation of a municipal drainage system, the governing body of the municipality determines that the system should be discontinued, that the powers under this subchapter should be revoked, and that provision for municipal drainage should be made by other revenues [p~e~e~y-~a~ee], the governing body may adopt an ordinance to that effect after providing notice and a public hearing as provided by Section 402.045. (h) Subchapter C, Chapter 402, Local Government Code, is amended by adding Section 402.054 to read as follows: Sec. 402.054. EFFECT OF SUBCHAPTER. This subchapter does 12 13 14 15 16 17 i8 19 20 21 22 23 25 28 27 not: (1) enhance or municipality to establish a drainage diminish the authority of a home-rule utility under Article XI, Section 5, of the Texas Constitution; (2) preclude a municipality from utilizing revenues, other than drainage utility revenues, for drainage purposes; or (3) oreclude a municipality from imposing impact fees or other charges for drainage authorized by law. SECTION 2. If any provision of this Act or its application to any person or circumstances is held invalid, the invalidity does not affect other provisions or applications of this Act that can be given effect without the invalid provision or application, and to this end the provisions of this Act are declared to be severable. SECTION 3. The crowded condition of emergency and an importance of this legislation and the the calendars in both houses create an imperative public necessity that the 2 H.B. No. 1567 constitutional rule requiring bills to be read on three several days in each house be suspended, and this rule is hereby suspended. 5 Senate H.B. No. 1567 I certify that H.B. No. 1567 was passed by the House 12, 1989, by a non-record vote. on May I 26, 1989, by the following vote: certify that H.B. No. 1567 was passed by the Senate on May Yeas 31, Nays O. Secretary of the Senate APPROVED: Date Governor SUBCHAPTER C. MUNICIPAL DRAINAGE UTILITY SYSTEMS § 402.041. Short Title This subchapter may be cited as the Municipal Drainage Utility Systems Act. 402.042. Legislative Finding (a) The legislature finds that authority is needed to: (1) permit [certain ~ ...... 1 law] municipalities to establish a municipal drainage utility system within~U/L~D~ [tune] boundaries [of the municipality]; (2) provide rules for the use, operation, and financing of the system; (3) protect the public health and safety in municipalities from loss of life and property caused by surface water overflows and surface water stagnation within the boundaries of [tq~e] municipalities; (4) delegate to [%q~e] municipalities the power to declare, after a public hearing, a drainage system created under this subchapter to be a public utility; (5) prescribe bases on which a municipal drainage utility system may be funded and fees in support of the system may be assessed, levied, and collected; (6) provide exemptions of certain persons from this subchapter; and (7) prescribe other rules related t© the subject of municipal drainage. (b) This sub~hapter is remedial. Sec. 402.043. APPLICATION OF SUBCHAPTER TO [G=~=~AL LAW] -~ ..................... "" 00~] This MUNICIPALITIES [WITii ,v~-~---,, v- ,~--'~. "~ '~, · subchapter applies fourth] to ~/1~ fa general la~] municipality [w~ - population -= ......... ~ 0~] 402.044. Definitions In this subchapter: (1) "Benefitted property" means, a lot or tract to which drainage service is made available under this subchapter. (B) the construction, equipment, and property; (2) "Cost of service" as applied to a drainage system service to any benefitted property means: (A) the prorated cost of the acquisition, whether by eminent domain or otherwise, of land, rights-of-way, options to purchase land, easements, and interests in land relating to structures, equipment, and facilities used in draining the benefitted property; prorated cost of the acquisition, repair, and maintenance of structures, facilities used in draining the benefitted (C) the prorated cost of architectural, engineering, legal, and related services, plans and specifications, studies, surveys, estimates of cost and of revenue, and all other expenses necessary or incident to planning, providing, or determining the feasibility and practicability of structures, equipment, and facilities used in draining the benefitted property; (D) the prorated cost of all machinery, equipment, furniture, and facilities necessary or incident to the provision and operation of draining the benefitted property; (E) the prorated cost of funding and financing charges and interest before and during construction and for a maximum of two years after completion of construction, and the start- up cost of a drainage facility during construction and for a maximum of two years after completion of construction used in draining the benefitted property; (F) the prorated cost of debt service and reserve requirements of structures, equipment, and facilities provided by revenue bonds or other drainage revenue-pledge securities or obligations issued by the municipality; or (G) the administrative costs of a drainage utility system. (3) "Drainage" means bridges, Catch basins, c~ .... ~- conduits, creeks, culverts, detention ponds, ditches ~ flumes, pipes, pumps, sloughs, ~r.~I%~ ~, and appu~ to those items, whether natural or artificial, or using gravity, that are used to draw off surface water from lal the water away, collect~ [~ store~_DJ~J.~ the water, . the water into natural or artificial watercourses. (4) "Drainage charge" means: (A) the levy imposed to recover the cost of the service of the municipality in furnishing drainage for any benefitted property; and (B) if specifically provided by the governing body of the municipality by ordinance, an amount made in contribution to funding the future drainage system construction by the municipality. (5) "Drainage system" means the drainage owned or controlled in whole or in part by the municipality and dedicated to the service of benefitted property, including provisions for additions to the system. (6) "Facilities" means the property, either real, personal, or mixed, that is used in providing drainage and included in the system. (7) "Public utility" means a drainage service that is regularly provided by the municipality through municipal property dedicated to that service to every person who has a freehold interest in real property located within the municipal boundaries and that is based on: (A) an established schedule of charges; (B) the use of the police power to implement the service; and (C) nondiscriminatory, reasonable, and equitable terms as declared under this subchapter. § 402.0&5. Adoption of System; Rules (a) Subject to the requirements in Subsections (b) and (c), the governing body of the municipality, by a three- fourths vote of its entire membership, may adopt this subchapter by an ordinance that declares the adoption and that declares the drainage of the municipality to be a public utility. (b) Before adopting the ordinance, the governing body must find that: (1) the municipality will establish a schedule of drainage charges against all real property in the municipality subject to charges under this subchapter; 3 (2) the municipality will provide drainage for all real property in the municipality on payment of drainage charges, except real property exempted under this subchapter; and [~4~] the municipality will offer drainage service on nondiscriminatory, reasonable, and equitable terms. (c)-Before adopting the ordinance, the governing body must publish a notice in a newspaper of general circulation in the municipality stating the time and place of a public hearing to consider the proposed ordinance. The proposed ordinance must be published in full in the notice. The governing body shall publish the notice three times before the date of the hearing. The first publication must occur on or before the 30th day before the date of the hearing. After convening the hearing, the governing body may recess the hearing once for not more than the next five consecutive days before reconvening without republication of notice. If the recess is more than five days, notice of the time and place of the recessed hearing must be published before the third calendar day before the date of the hearing. (d) After passage of the ordinance adopting this subchapter, the municipality may levy a schedule of drainage charges. The municipality must hold a public hearing on the charges before levying the charges. The municipality must give notice of the hearing in the manner provided by Subsection (c). The proposed ordinance to institute the drainage charges must be published in the notice. (e) If, after the hearing, the proposed charges, as implemented, differ by 25 percent or less of the total amount that the original charges were projected to have generated within a year after being instituted, an additional notice or hearing is not necessary. (f) The municipality by ordinance may adopt and enforce rules as it considers appropriate to operate the drainage utility system. 402.046. Incorporation of Existing Facilities The municipality may incorporate existing drainage facilities, materials, and supplies into the drainage utility system. 4 § 402.0&7. Drainage Charges (a) The governing body of the municipality may charge a lot or tract of benefitted property for drainage service on any basis other than the value of the property, but the basis must be directly related to drainage and the terms of the leVY, and any classification of the benefitted properties in the municipality must be nondiscriminatory, equitable, and reasonable. (b) In setting the schedule of charges for drainage service, the governing body must base its calculations on an inventory of the lots and tracts within the municipal boundaries. The governing body may use approved municipal tax plats and assessment rolls for that purpose. The governing body may also consider the use made of the benefitted property, using official zoning maps of the municipality for that purpose. The governing body may consider the size, in area, and topography of a parcel of benefitted property, in assessing the drainage charge to the property. (c) The governing body may fix rates for drainage charges in advance and may change, adjust, and readjust the rates and charges for drainage service from time to time. The rates must be equitable for similar services in all areas of the municipality. (d) Unless a person's lot or tract is exempted under this subchapter, the person may not use the drainage system for the lot or tract unless the person pays the full, established, drainage charge. 402.048. Billings; Deposit Not Required (a) The municipality may bill drainage charges, identified separately, with the municipality's other public utility billings. If the freehold owner does not receive any other municipal public utility service at the benefitted property, the municipality may mail the billing with the municipal tax plat number or other identification of the benefitted property to the owner at the address at which the owner receives municipal billing for property that receives other municipal utility services. If the owner does not receive a municipal public utility service at any other location in the municipality, the municipality may send the bill to any known address of the owner. If there is no known address, the municipality shall forward the billing to the agency or department that handles property tax collection for the municipality, and the billing shall be collected as a lien on the benefitted property under the procedure prescribed by this subchapter. (b) The municipality may not require a deposit for drainage service as a precondition to accepting surface flow in the drainage utility system. 402.049. Segregation of Income The income of a drainage utility system must be segregated and completely identifiable in municipal accounts. If drainage charges are solely for the cost of service, the municipality may transfer the charges in whole or in part to the municipal general fund, except for any part pledged to retire any outstanding indebtedness or obligation incurred, or as a reserve for future construction, repair, or maintenance of the drainage system ...... ......... h ...... , ,,,~l ~= expended only f~,,, drainage ~ystem .... m~ subchapter.] If the governing body has levied, in the drainage charge, an amount in contribution to the funding of future system improvements, including replacement, new construction, or extension, that amount is not transferable to the general fund. § 402.050. Delinquent Charges (a) The municipality shall periodically compile lists of delinquent drainage charges as of January 1 against benefitted property within its municipal boundaries. The list must include the names of the record freehold owners, if known, and their addresses, the dollar amounts owed, and the penalties and interest prescribed by general ordinance. The municipality shall send the information to each owner with, or as a part of, the owner's property tax statement or shall send the information, as notice, to any known address of the owner by certified mail, properly stamped, and return receipt requested. After the municipality has delivered notice of the delinquency to the address of the owner, the municipality may fix a lien for the charges, penalties, and interest against the benefitted property by publishing the list once in a newspaper of general circulation in the municipality, together with a list of the. unknown owners and the owners with unknown addresses. The chief executive officer of the municipality may then execute a certificate to the county clerk attesting that the lists are correct,, that notices and publications required under the ~ubchapter have been accomplished, and that the delinquencies are unpaid. Certified copies of the lists and the publisher's affidavits for the notices shall be attached to the certificate, with a separately reproduced certificate for each benefitted property executed by the municipal officer charged with administration of the drainage utility system. (b) Instead of a separate delinquency certificate for each benefitted property, the municipality may enter, .on computer property tax liens filings made by the municipal tax collection officer or agency, a separate lien on the filings designated "Dm. Chg." that shows the tax plat or other identifying number for the benefitted property, the names of the record owners, if known, the notation "owners unknown" for unknown record owners, the year in which due, and the total amount of money owned and delinquent. The tax lien filing shall be considered the filing of the drainage charge lien. (c) For each separate delinquency certificate filed for a benefitted property, the county clerk shall charge the applicable fee for filing and recording a document that is not listed in Chapter 118. The county clerk shall maintain a "Drainage Lien Index" for the certificates. (d) A petition in a suit to foreclose a drainage lien must be filed in a civil court at law that has jurisdiction of the amount in controversy. The court may assess reasonable attorney's fees and other costs of collection, but the costs must be set at least at the cost of the suit, penalties, and simple interest not exceeding 10 percent. § 402.051. Drainage Revenue Bonds By majority vote of the governing body, the municipality may issue drainage revenue bonds. The municipality may use the Bond Procedures Act of 1981 (Article 717k-6, Vernon's Texas Civil Statutes). In addition, the municipality may pledge income received by contracts for the provision of drainage to other governments or governmental subdivisions located inside or outside the municipal boundaries. § 402.052. Discontinuation of Drainage System. (a) If, after at least five years of substantially continuous operation of a municipal drainage system, the governing body of the municipality determines that the system should be discontinued, that the powers under this subchapter should be revoked, and that provision for municipal drainage should be made by other revenues [property taxes], the governing body may adopt an ordinance to that effect after providing notice and a public hearing as provided by Section 402.045. (b) If the municipality discontinues a system under Subsection (a), it may not adopt a system under this subchapter for at least five years after the discontinuation. (c) A discontinuation does not affect a written obligation incurred by the municipality for funding or for the purchase of equipment, materials, or labor for the drainage system that is not then fully paid or otherwise discharged. (d) A claim for damages based on an alleged failure of the drainage system that is filed with the municipality before the adoption of the ordinance discontinuing the drainage system is not abated by the discontinuation. 402.053. Exemptions (a) A governmental entity or person described by Subsection (b) and a lot or tract in which the governmental entity or person holds a freehold interest may be exempt from this subchapter and all ordinances, resolutions, and rules adopted under this subchapter. (b) The following may be exempt:' (1) this state; (2) a county; (3) a municipality; (4) a school district; and (5) a person with a wholly sufficient, complete, and private drainage system that discharges into a stream. 402.054. EFFECT OF SUBCHAPTER. This subchaDter does not: (1) enhance or diminish the authority of a home-rule municipality to establish a drainage utility under Article XI. Section 5. of the Texas Constitution; (2) preclude a municipality from utilizing revenues. other than drainage utility revenues~ for drainage purposes: or (3) preclude a municipality from imposing impact fees or other charges for drainage authorized by law.