By: Lopez of Cameron H.B. No. 5375       A BILL TO BE ENTITLED   AN ACT   relating to creating the NORTHERN CAMERON AND WILLACY COUNTY 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.  Subtitle X, Title 6, Special District Local Laws   Code, is amended by adding Chapter 11020 to read as follows:   CHAPTER 11020. NORTHERN CAMERON AND WILLACY COUNTY WATER AUTHORITY   SUBCHAPTER A. GENERAL PROVISIONS          Sec. 11020.0101.  DEFINITIONS. In this chapter:                (1)  "Authority" means the NORTHERN CAMERON AND WILLACY   COUNTY 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 initial sponsors of the Authority under   Section 11020.0105; and                      (B)  a local government or private entity added to   the Authority as a member under Section 11020.0106.                (8)  "Water" includes:                      (A)  groundwater, percolating or otherwise,   notwithstanding the quality of the groundwater;          Sec. 11020.0102.  NATURE OF AUTHORITY. The Authority is a   regional water authority created under and essential to accomplish   the purposes of Section 59, Article XVI, Texas Constitution.          Sec. 11020.0103.  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. 11020.0104.  AUTHORITY TERRITORY. The territory of 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)  if applicable, located in the service areas of the   sponsors, including the territory within the sponsors'   certificates of convenience and necessity; and                (3)  added to and not excluded from the Authority in   accordance with applicable law.          Sec. 11020.0105.  INITIAL SPONSORS. The initial sponsors of   the Authority are:                (1)  Cameron County;                (2)  Willacy County;                (3)  City of Primera;                (4)  City of La Feria;                (5)  City of San Benito;                (6)  City of Harlingen and Harlingen Water Works System                (7)  City of Rio Hondo                (8)  City of Santa Rosa                (9)  City of Port Isabel                (10)  City of Combes                (11)  City of Lyford          Sec. 11020.0106.  METHOD OF ADDING SPONSORS. (a) A local   government or a private entity 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 effective date of the order.          (f)  If the subject of the order is a local government, the   effective date of the order must allow enough time for the local   government to comply with Subsection (g).          (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 effective date of the order; and                (3)  state the effective date of the order.          Sec. 11020.0107.  METHOD OF REMOVING SPONSORS. (a) The   governing body of a sponsor may petition the board to remove the   entity from the Authority as a sponsor.          (b)  A petition must be submitted in the manner and form   required by board rule.          (c)  After receiving a petition under Subsection (a), the   board shall:                (1)  decide whether the petitioning sponsor should be   removed from the Authority as a sponsor; and                (2)  by order approve, conditionally approve, or   disapprove the petition.          (d)  The board may not approve a petition submitted 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, if applicable, 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 issued under Subsection (c)   conditionally approves a sponsor's petition, 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 sponsor from the Authority under this   section does not prohibit the former sponsor from contracting with   the Authority for the provision of water supply, wastewater   treatment, or other services provided by the Authority.          Sec. 11020.0108.  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 11020.0201(c)(2). The board   may increase or decrease the number of directors on the board in   accordance with Section 11020.0201(a).          Sec. 11020.0109.  LIBERAL CONSTRUCTION OF CHAPTER. This   chapter shall be liberally construed to effect its purposes.   SUBCHAPTER B. BOARD OF DIRECTORS          Sec. 11020.0201.  DIRECTORS. (a) Except for the initial   board of directors, the Authority is governed by a board of   directors consisting of at least 5 and not more than 18 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 11020.0203(a).          Sec. 11020.0202.  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. 11020.0203.  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   11020.0201 that govern the apportionment of directors among the   sponsors.          (c)  Each sponsor shall appoint the appropriate number of   directors not earlier than January 1 and not later than February 28   of each year.          Sec. 11020.0204.  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 February 28 of each   year.          (b)  A director's term begins on March 1 of the year the   director is appointed.          (c)  A director may not serve more than five consecutive   terms as a director.          Sec. 11020.0205.  REMOVAL OF DIRECTOR. A sponsor that   appoints a director may remove the director from office at any time,   with or without cause.          Sec. 11020.0206.  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. 11020.0207.  VOTING AUTHORITY. (a) Except as provided   by Subsection (b), each director is entitled to one vote on any   issue before the board.          (b)  The board may establish a graduated voting procedure   after each sponsor has appointed a director to the board.          Sec. 11020.0208.  OFFICERS. At the first meeting of the   board after March 1 of each year, the board shall elect officers for   the Authority, including a chair, vice chair, secretary, and   treasurer.          Sec. 11020.0209.  MEETINGS AND ACTIONS OF BOARD; QUORUM.   (a) The board may meet as many times each year as the board   considers appropriate.          (b)  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.          (c)  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. 11020.0301.  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, 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,   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. 11020.0302.  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. 11020.0303.  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. 11020.0304.  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. 11020.0305.  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. 11020.0306.  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. 11020.0307.  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. 11020.0308.  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. 11020.0401.  AD VALOREM TAXES PROHIBITED. The   Authority may not impose an ad valorem tax.          Sec. 11020.0402.  GIFTS, GRANTS, LOANS, AND OTHER MONEY.   The Authority may apply for, accept, receive, and administer gifts,   grants, loans, and other money available from any source.   SUBCHAPTER E. BONDS, NOTES, AND OTHER OBLIGATIONS          Sec. 11020.0501.  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; or                      (H)  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. 11020.0502.  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. 11020.0503.  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. 11020.0504.  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. 11020.0505.  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 2.  (a) The sponsors of the Authority shall appoint   the initial directors under Section 11020.0203, Special District   Local Laws Code, as added by this Act, not earlier than 30 days and   not later than 90 days after the effective date of this Act.          (b)  As soon as practicable after the initial directors have   been appointed under Section 11020.0203, 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   February 28, 2027, which directors serve a two-year term expiring   February 28, 2028, and which directors serve a three-year term   expiring February 28, 2029. The lots must be split into thirds or   as near to thirds as possible.          SECTION 3.  (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 4.  (a) If this Act does not receive a two-thirds   vote of all the members elected to each house, Subchapter C, Chapter   11020, Special District Local Laws Code, as added by Section 1 of   this Act, is amended by adding Section 11020.0309 to read as   follows:          Sec. 11020.0309.  NO EMINENT DOMAIN POWER. The district may   not exercise the power of eminent domain.          (b)  This section is not intended to be an expression of a   legislative interpretation of the requirements of Section 17(c),   Article I, Texas Constitution.          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, 2025.