88R22823 DIO-F     By: Guillen H.B. No. 2701     Substitute the following for H.B. No. 2701:     By:  King of Uvalde C.S.H.B. No. 2701       A BILL TO BE ENTITLED   AN ACT   relating to public utility agencies; providing authority to issue   bonds; providing authority to impose assessments.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Section 572.001(3), Local Government Code, is   amended to read as follows:                (3)  "Public entity" means a political entity or   corporate body of this state, including a county, municipality, or   district or authority created under Section 52, Article III, or   Section 59, Article XVI, Texas Constitution, or a water supply or   sewer service corporation.          SECTION 2.  Section 572.012(a), Local Government Code, is   amended to read as follows:          (a)  Each participating public entity may:                (1)  use the entity's money to plan, acquire,   construct, own, operate, and maintain its interest in a facility;                (2)  share in the facility;                (3)  issue bonds and other securities to raise money   for a purpose described by Subdivision (1) in the same manner and to   the same extent and subject to the same conditions as would be   applicable if the public entity had sole ownership of the facility;                (4)  acquire, for the use and benefit of each   participating public entity, land, easements, and property for a   facility by purchase or by exercising the power of eminent domain;   [and]                (5)  transfer or otherwise convey the land, property,   or property interest or otherwise have the land, property, or   property interest become vested in other participating public   entities to the extent and in the manner agreed between the   entities;                 (6)  make an acquisition described by Subdivision (4)   through a purchase from a public or private entity; and                (7)  for the use and benefit of each participating   public entity, acquire by purchase a public utility, as defined by   Section 13.002, Water Code, other than an affected county.          SECTION 3.  Sections 572.051(2) and (3), Local Government   Code, are amended to read as follows:                (2)  "Obligation" means a [revenue] bond or note   secured by a revenue, fee, charge, assessment, or other revenue of   an agency available for that purpose.                (3)  "Public utility agency" means an agency created   under this subchapter by two or more public entities to acquire,   plan, finance, construct, own, operate, or maintain facilities.          SECTION 4.  Sections 572.052(c) and (d), Local Government   Code, are amended to read as follows:          (c)  A public utility agency is a:                (1)  separate agency;                (2)  political subdivision of this state; [and]                (3)  political entity and corporate body; and                (4)  retail public utility for the purposes of Chapter   13, Water Code.          (d)  A public utility agency may not impose a tax but has all   the other powers and obligations that are related to facilities and   that are provided by law to a municipality that owns a facility,   except as provided by Section 572.061.          SECTION 5.  Section 572.053, Local Government Code, is   amended to read as follows:          Sec. 572.053.  CHANGES IN PUBLIC ENTITIES PARTICIPATING IN   PUBLIC UTILITY AGENCY. (a) The public entities that participate in   a public utility agency may by concurrent ordinances add a public   entity to, or delete a public entity from, participation in the   public utility agency.          (b)  A participating public entity may withdraw from a public   utility agency by providing an ordinance or resolution of the   governing body of the participating public entity to the agency not   later than the 180th day before the proposed date of withdrawal. A   participating public entity may not withdraw from a public utility   agency under this subsection if bonds, notes, or other obligations   of the agency are secured by the revenues of the participating   public entity, unless the agency adopts a resolution approving the   withdrawal. Upon withdrawal, a participating public entity assumes   the outstanding debt attributable to that entity from the agency on   a prorated basis equal to that entity's benefit and has, without   compensation from the agency, no further rights, duties, or   obligations relating to the agency or ability to receive service   from the facilities of the agency.          SECTION 6.  Section 572.058, Local Government Code, is   amended by amending Subsection (b) and adding Subsection (c) to   read as follows:          (b)  A public utility agency may:                (1)  perform any act necessary to the full exercise of   the agency's powers, including acts necessary to acquire, finance,   own, operate, or manage a facility of the agency;                (2)  enter into a contract, lease, or agreement,   including an interlocal contract as authorized by Chapter 791,   Government Code, with or accept a grant or loan from any of the   following entities for the management and operation of an agency   facility or the acquisition, construction, financing, maintenance,   operation, provision, or receipt of a facility, service, or product   [a]:                      (A)  a department or agency of the United States;                      (B)  a department, agency, or municipality or   other political subdivision of this state; or                      (C)  a public or private corporation or person;                (3)  sell, lease, convey, or otherwise dispose of all   or a portion of any right, interest, or property the agency   considers to be unnecessary for the efficient operation or   maintenance of its facilities; and                (4)  adopt rules to govern the operation of the agency   and its employees, facilities, and service.          (c)  Except as limited by a concurrent ordinance under which   the public utility agency is created, an agency may exercise any   right or power granted by general law to a county or municipality or   a district or authority created under Section 59, Article XVI,   Texas Constitution, to accomplish the purposes of the agency,   including issuing bonds payable from special assessments in the   manner provided by Chapter 372. This subsection does not authorize   a public utility agency to impose a tax.          SECTION 7.  Sections 572.061(d) and (e), Local Government   Code, are amended to read as follows:          (d)  Notwithstanding Subsection (a), the Public Utility   Commission of Texas has appellate jurisdiction over [the state   reserves its power to regulate and control] the rates and charges of    [by] a public utility agency in the manner provided by Section   13.043, Water Code.          (e)  This [Until obligations issued under this subchapter   have been paid and discharged, this] state pledges to and agrees   with the purchasers and successive holders of [the] obligations   issued under this subchapter that in any appeal proceeding   regarding the public utility agency conducted under Section 13.043,   Water Code, the Public Utility Commission of Texas [it] will [not   limit or alter the powers of the agency to] establish [and collect]   rates and charges that will produce revenue sufficient to pay for   those items specified in Subsections (a) and (b) and any other   obligations of the agency in connection with those items.          SECTION 8.  Section 572.062, Local Government Code, is   amended by amending Subsections (a) and (b) and adding Subsections   (b-1) and (b-2) to read as follows:          (a)  A public utility agency may:                (1)  issue obligations, including anticipation notes,   to accomplish the purposes of the agency; and                 (2)  finance or refund the acquisition, construction,   expansion, and improvement of all or a portion of a facility   relating to an agency purpose.          (b)  Except as provided by Subsection (b-1), the [The] public   utility agency may pledge to the payment of the obligations the   revenue of all or part of its facilities, including facilities   acquired after the obligations are issued:                (1)  revenues received from a public entity by contract   as authorized by a concurrent ordinance;                (2)  special assessments:                       (A)  imposed by the agency in the manner provided   by Chapter 372; or                       (B)  imposed by a public entity and provided by   contract to the agency; or                 (3)  any other funds of the agency.          (b-1)  Operation [However, operation] and maintenance   expenses, including salaries and labor, materials, and repairs of   facilities necessary to render efficient service, are a first lien   on and charge against the pledged revenue.          (b-2)  A public utility agency may not use a facility owned   by the agency to secure or collateralize a new facility without the   approval by resolution of each participating public entity   participating in the joint financing of the new facility. This   subsection does not apply to the use of revenue from a facility   owned by the agency to secure or collateralize a new facility.          SECTION 9.  Subchapter C, Chapter 572, Local Government   Code, is amended by adding Section 572.065 to read as follows:          Sec. 572.065.  LIABILITY. Liability for the facilities and   management of the agency must be transferred to the agency on   ownership of the facilities by the agency.          SECTION 10.  Section 13.002, Water Code, is amended by   adding Subdivision (16-a) and amending Subdivisions (19) and (23)   to read as follows:                (16-a)  "Public utility agency" means a public utility   agency created under Chapter 572, Local Government Code.                (19)  "Retail public utility" means any person,   corporation, public utility, water supply or sewer service   corporation, municipality, public utility agency, political   subdivision or agency operating, maintaining, or controlling in   this state facilities for providing potable water service or sewer   service, or both, for compensation.                (23)  "Water and sewer utility," "public utility," or   "utility" means any person, corporation, cooperative corporation,   affected county, or any combination of these persons or entities,   other than a municipal corporation, public utility agency, water   supply or sewer service corporation, or [a] political subdivision   of the state, except an affected county, or their lessees,   trustees, and receivers, owning or operating for compensation in   this state equipment or facilities for the transmission, storage,   distribution, sale, or provision of potable water to the public or   for the resale of potable water to the public for any use or for the   collection, transportation, treatment, or disposal of sewage or   other operation of a sewage disposal service for the public, other   than equipment or facilities owned and operated for either purpose   by a municipality or other political subdivision of this state or a   water supply or sewer service corporation, but does not include any   person or corporation not otherwise a public utility that furnishes   the services or commodity only to itself or its employees or tenants   as an incident of that employee service or tenancy when that service   or commodity is not resold to or used by others.          SECTION 11.  Section 13.043, Water Code, is amended by   amending Subsections (b), (c), and (i) and adding Subsections (i-1)   and (j-1) to read as follows:          (b)  Ratepayers of the following entities may appeal the   decision of the governing body of the entity affecting their water,   drainage, or sewer rates to the utility commission:                (1)  a nonprofit water supply or sewer service   corporation created and operating under Chapter 67;                (2)  a utility under the jurisdiction of a municipality   inside the corporate limits of the municipality;                (3)  a municipally owned utility, if the ratepayers   reside outside the corporate limits of the municipality, including   a decision of a governing body that results in an increase in rates   when the municipally owned utility takes over the provision of   service to ratepayers previously served by another retail public   utility;                (4)  a district or authority created under Article III,   Section 52, or Article XVI, Section 59, of the Texas Constitution   that provides water or sewer service to household users;                (5)  a public utility agency; and                (6) [(5)]  a utility owned by an affected county, if the   ratepayer's rates are actually or may be adversely affected. For   the purposes of this section ratepayers who reside outside the   boundaries of the district or authority shall be considered a   separate class from ratepayers who reside inside those boundaries.          (c)  An appeal under Subsection (b) must be initiated by   filing a petition for review with the utility commission and the   entity providing service within 90 days after the effective day of   the rate change or, if appealing under Subdivision (b)(2) or (6)    [(5)], within 90 days after the date on which the governing body of   the municipality or affected county makes a final decision. The   petition must be signed by the lesser of 10,000 or 10 percent of   those ratepayers whose rates have been changed and who are eligible   to appeal under Subsection (b).          (i)  The governing body of a municipally owned utility or a   political subdivision, other than a public utility agency, within   60 days after the date of a final decision on a rate change, shall   provide individual written notice to each ratepayer eligible to   appeal who resides outside the boundaries of the municipality or   the political subdivision. The notice must include, at a minimum,   the effective date of the new rates, the new rates, and the location   where additional information on rates can be obtained. The   governing body of a municipally owned utility or a political   subdivision may provide the notice electronically if the utility or   political subdivision has access to a ratepayer's e-mail address.          (i-1)  The board of directors of a public utility agency,   within 60 days after the date of a final decision on a rate change,   shall provide individual written notice to each ratepayer eligible   to appeal the rates. The notice must include, at a minimum, the   effective date of the new rates, the new rates, and the location   where additional information on rates can be obtained.  The board of   directors of the public utility agency may provide the notice   electronically if the agency has access to a ratepayer's e-mail   address.          (j-1)  Notwithstanding Subsection (j), in an appeal under   this section of a rate charged by a public utility agency, the   utility commission shall ensure that the rate complies with Section   572.061(e), Local Government Code.          SECTION 12.  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, 2023.