Relating to the creation of municipal utility districts in the extraterritorial jurisdiction of a municipality.

89(R) HB 4978 - Introduced version - Bill Text

89R10466 MP-D

By: Hickland

H.B. No. 4978

A BILL TO BE ENTITLED

AN ACT

relating to the creation of municipal utility districts in the

extraterritorial jurisdiction of a municipality.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Sections 42.042(c), (f), and (g), Local

Government Code, are amended to read as follows:

(c) If, within 120 days after the date the governing body

receives the petition, the governing body fails to make a contract

with a majority of the qualified voters of the area of the proposed

political subdivision and the owners of at least 50 percent of the

land in the proposed political subdivision to provide the services,

that failure constitutes the governing body's consent to the

creation of the proposed political subdivision.
This subsection

does not apply to the creation of a municipal utility district.

(f) If the municipality fails or refuses to give its consent

to the creation of the political subdivision, including a water

district previously created by an act of the legislature, or fails

or refuses to execute a contract providing for the water or sanitary

sewer services requested within the time limits prescribed by this

section, the applicant may petition the Texas Commission on

Environmental Quality for the creation of the political subdivision

or the inclusion of the land in a political subdivision. The

commission shall allow creation or confirmation of the creation of

the political subdivision or inclusion of the land in a proposed

political subdivision on finding that the municipality either does

not have the reasonable ability to serve or has failed to make a

legally binding commitment with sufficient funds available to

provide water and wastewater service adequate to serve the proposed

development at a reasonable cost to the landowner. The commitment

must provide that construction of the facilities necessary to serve

the land will begin within two years and will be substantially

completed within 4-1/2 years after the date the petition was filed

with the municipality.
This subsection does not apply to the

creation of a municipal utility district.

(g) On an appeal taken to the district court from the ruling

of the Texas Commission on Environmental Quality, all parties to

the commission hearing must be made parties to the appeal. The

court shall hear the appeal within 120 days after the date the

appeal is filed. If the case is continued or appealed to a higher

court beyond the 120-day period, the court shall require the

appealing party or party requesting the continuance to post a bond

or other adequate security in the amount of damages that may be

incurred by any party as a result of the appeal or delay from the

commission action. The amount of the bond or other security shall

be determined by the court after notice and hearing. On final

disposition, a court may award damages, including any damages for

delays, attorney's fees, and costs of court to the prevailing

party.
This subsection does not apply to the creation of a

municipal utility district.

SECTION 2. Section 54.016(a), Water Code, is amended to

read as follows:

(a) No land within the corporate limits of a city or within

the extraterritorial jurisdiction of a city, shall be included in a

district
created under this chapter or by local law
unless the city

grants its written consent, by resolution or ordinance, to the

inclusion of the land within the district in accordance with

Section 42.042, Local Government Code, and this section. The

request to a city for its written consent to the creation of a

district, shall be signed by a majority in value of the holders of

title of the land within the proposed district as indicated by the

county tax rolls. A petition for the written consent of a city to

the inclusion of land within a district shall describe the

boundaries of the land to be included in the district by metes and

bounds or by lot and block number, if there is a recorded map or plat

and survey of the area, and state the general nature of the work

proposed to be done, the necessity for the work, and the cost of the

project as then estimated by those filing the petition. [
If, at the

time a petition is filed with a city for creation of a district, the

district proposes to connect to a city's water or sewer system or

proposes to contract with a regional water and wastewater provider

which has been designated as such by the commission as of the date

such petition is filed, to which the city has made a capital

contribution for the water and wastewater facilities serving the

area, the proposed district shall be designated as a "city service

district."

If such proposed district does not meet the criteria for

a city service district at the time the petition seeking creation is

filed, such district shall be designated as a "noncity service

district."

The city's consent shall not place any restrictions or

conditions on the creation of a noncity service district as defined

by this chapter other than those expressly provided in Subsection

(e) of this section and shall specifically not limit the amounts of

the district's bonds.
] A city may not require annexation as a

consent to creation of any district. A city shall not refuse to

approve a district bond issue for any reason except that the

district is not in compliance with valid consent requirements

applicable to the district. [
If a city grants its written consent

without the concurrence of the applicant to the creation of a

noncity service district containing conditions or restrictions

that the petitioning land owner or owners reasonably believe exceed

the city's powers, such land owner or owners may petition the

commission to create the district and to modify the conditions and

restrictions of the city's consent.

The commission may declare any

provision of the consent to be null and void.

The commission may

approve the creation of a district that includes any portion of the

land covered by the city's consent to creation of the district.

The

legislature may create and may validate the creation of a district

that includes any portion of the land covered by the city's consent

to the creation of the district.
]

SECTION 3. Section 8324.107, Special District Local Laws

Code, is amended to read as follows:

Sec. 8324.107. LIMITATION ON ANNEXATION OF LAND BY

DISTRICT.
The
[
Notwithstanding Section 54.016(d), Water Code,

the
] district may not annex land that is located in the

extraterritorial jurisdiction of a municipality unless the City of

Weatherford provides written consent to that annexation.

SECTION 4. Section 8325.107, Special District Local Laws

Code, is amended to read as follows:

Sec. 8325.107. LIMITATION ON ANNEXATION OF LAND BY

DISTRICT.
The
[
Notwithstanding Section 54.016(d), Water Code, the
]

district may not annex land that is located in the extraterritorial

jurisdiction of a municipality unless the City of Weatherford

provides written consent to that annexation.

SECTION 5. Subchapter B, Chapter 54, Water Code, is amended

by adding Section 54.017 to read as follows:

Sec.

54.017.

MEMORANDUM OF UNDERSTANDING BETWEEN DISTRICT,

MUNICIPALITY, AND COUNTY.

(a)

If a municipality approves the

creation of a district within the extraterritorial jurisdiction of

the municipality under Section 54.016, the district, municipality,

and county in which the district will be located shall enter into a

memorandum of understanding as to how services will be provided to

the district.

(b)

The memorandum of understanding entered into under this

section must detail the provision of:

(1) water services; and

(2) road services.

SECTION 6. The following provisions of the Water Code are

repealed:

(1) Sections 54.016(c) and (d); and

(2) Sections 54.0165(b) and (c).

SECTION 7. The changes in law made by this Act apply only to

the creation of a municipal utility district on or after the

effective date of this Act. A petition for the creation of a

municipal utility district pending before the Texas Commission on

Environmental Quality on the effective date of this Act is governed

by the law in effect on the date the petition was filed, and the

former law is continued in effect for that purpose.

SECTION 8. This Act takes effect September 1, 2025.