2013 TRWA Districts Conference: Districts - Back to Basics

DISTRICTS:
Back to Basics
2013 TRWA Districts Conference
October 2013
2705 Bee Cave Road, Suite 200
110
Austin, Texas 78746
(512) 614-0901
www.carltonlawaustin.com
©2011
©2013

Part 1
Overview of Operations
including district powers and duties, service
standards and responsibilities, board member
responsibilities and policies, conducting
meetings, adopting and enforcing service
policies, and the challenges of serving
urbanizing areas.
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Austin, Texas 78746
(512) 614-0901
©2011
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What is a Utility District?
• Utility Districts are local political
subdivisions that may provide water,
wastewater, drainage and other services
– Typically governed by board members
elected by qualified voters from within the
District
– Can be funded by utility revenues and
property taxes
Austin, Texas 78746
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Utility District Authority in
Texas

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Austin, Texas 78746
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Constitution
Article III, Section 52
– (b) Under Legislative provision, …any …defined
district now or hereafter to be described and
defined within the State of Texas, …may issue
bonds … in any amount not to exceed one-fourth
of the assessed valuation of the real property of
such district… and levy and collect taxes to pay
the interest thereon and provide a sinking fund
for the redemption thereof, as the Legislature
may authorize, and in such manner as it may
authorize the same, for the following purposes to
wit:
Austin, Texas 78746
(512) 614-0901
©2013

Constitution
Article III, Section 52 (cont.)
• Improvement of rivers, creeks, and streams to
prevent overflows, and to permit of navigation
thereof, or irrigation thereof, or in aid of such
purposes.
• Construction and maintenance of pools, lakes,
reservoirs, dams, canals and waterways for the
purposes of irrigation, drainage or navigation, or
in aid thereof.
• Construction, maintenance and operation of
macadamized, graveled or paved roads and
turnpikes, or in aid thereof.
Austin, Texas 78746
(512) 614-0901
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Constitution
Article XVI, Section 59
• The conservation and development of all of the natural
resources of this State… including
• the control, storing, preservation and distribution of its storm and flood
waters, the waters of its rivers and streams, for irrigation, power and
all other useful purposes,
• the reclamation and irrigation of its arid, semiarid and other lands
needing irrigation,
• the reclamation and drainage of its overflowed lands, and other lands
needing drainage,
• the conservation and development of its forests, water and hydroelectric power,
• the navigation of its inland and coastal waters, and
• the preservation and conservation of all such natural resources of the
State

are each and all hereby declared public rights and duties;
and the Legislature shall pass all such laws as may be
appropriate thereto.
Austin, Texas 78746
(512) 614-0901
©2013

Constitution
Article XVI, Section 59
• There may be created within the State of Texas,
or the State may be divided into, such number
of conservation and reclamation districts as may
be determined to be essential to the
accomplishment of the purposes of this
amendment to the constitution, which districts
shall be governmental agencies and bodies
politic and corporate with such powers of
government and with the authority to exercise
such rights, privileges and functions concerning
the subject matter of this amendment as may be
conferred by law.
Austin, Texas 78746
(512) 614-0901
©2013

The Statutes
• Chapter 49 – General Statute
• Chapter 65 – Special Utility Districts
• Chapters 51-67 – Other types of
special districts related to water

Austin, Texas 78746
(512) 614-0901
©2013

Utility Districts in Texas
• 1663 Active Utility Districts in Texas*
– 64 Special Utility Districts
– 879 Municipal Utility Districts

* Based upon TCEQ Water Utility Database Records 11/05/2013

Austin, Texas 78746
(512) 614-0901
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Austin, Texas 78746
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Creating a District

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Austin, Texas 78746
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Why create a Utility District?
• Utility Districts ensure adequate funding
of water supply and wastewater collection
systems for local communities
– Spread costs to all customers and
landowners through rates and taxes

• Utility Districts enjoy sovereign immunity
and limited tort liability.
Austin, Texas 78746
(512) 614-0901
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Creation
• Legislative Process
– Local Bills

• Administrative Process
– State
– County

• Creation Records are Important!

Austin, Texas 78746
(512) 614-0901
©2013

Creation
• Voters must approve creation and
authorize any taxing and bonding
authority.
• Elections must comply with State and
Federal election laws.
• Creation and confirmation election
records are a District’s “incorporation”
documents.
Austin, Texas 78746
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©2013

District Governing Body

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Austin, Texas 78746
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Board of Directors
• Composition of board varies by type of Districts (most
5 members)
• Election to 4-year terms (3-year terms for SUDs)
• Qualification for Office
– at least 18 years of age; and
– a resident citizen of the state that is:
• a qualified voter within district (not WCIDs, WIDs, Irrig. Districts
or FWSDs);
• a user of the facilities of the district (SUDs only), or
• an owner of land subject to taxation in the district (not Drainage
District).

• Vacancies (most filled by Board appointment)
Austin, Texas 78746
(512) 614-0901
©2013

Board Member
Requirements
• Oaths of office and statements for public
officials.
• Post Bonds of $10,000 for each board
member
• Open Meetings and Open Records
Training to be completed by all Board
Members.
– Must be completed within 90 days of taking
office.

Austin, Texas 78746
(512) 614-0901
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Local Oversight
• County Attorney
– Can file suit in court to remove board
members for:
•
•
•
•

Misconduct
Official Misconduct
Incompetency
Intoxication

Austin, Texas 78746
(512) 614-0901
©2013

Meetings
• Required to hold regular and special
meetings as necessary to conduct
District’s business
• Required to keep complete account of all
meetings and proceedings.

Austin, Texas 78746
(512) 614-0901
©2013

Recordkeeping
• Approve a Records Management
Program, including:
– Order Establishing Records Management
Program, Appointing Records Management
Office, and Appointing Public Information
Coordinator; and
– Declaration of Compliance with Records
Scheduling Requirement of the Local
Government Act.
– File with State Library and Archives
Commission.

Austin, Texas 78746
(512) 614-0901
©2013

Offices and Meetings
• District must establish District
administrative office and publish notice of
location of meeting places outside the
District in newspapers.
• Election of President, Vice President,
Treasurer, and Secretary.

Austin, Texas 78746
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Accountability Issues

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Accountability Issues
•
•
•
•

State Laws
State Agencies
Voters
Customers, Residents and Property
Owners
Austin, Texas 78746
(512) 614-0901
©2013

State Agencies with Oversight
• Texas Commission on Environmental
Quality
– District Oversight
– Bond Approval
– Rate jurisdiction until September 1, 2014

• Public Utility Commission of Texas
– Rate jurisdiction as of September 1, 2014

• Texas Attorney General
– for Open Government and Records Issues

Austin, Texas 78746
(512) 614-0901
©2013

Open Meetings Act
• Chapter 551, Texas Government Code
• Attorney General Approved Training Required

• Open Meetings Made Easy
• Open Meetings Act Handbook

• Training Required Upon Assumption of Office
• https://www.oag.state.tx.us/open/publications_og.shtml
Austin, Texas 78746
(512) 614-0901
©2013

Open Meetings
• 72 Hours Notice of meeting (unless
emergency)
• Notice must state time, date and place of
meeting
• Notice must describe matters to be
discussed sufficiently
• Public has right to attend
Austin, Texas 78746
(512) 614-0901
©2013

Open Meetings
Closed Sessions
•
•
•
•
•

Consult with District’s attorney
Real Property Acquisition
Personnel Matters
Gifts to District
Other Exceptions
Austin, Texas 78746
(512) 614-0901
©2013

Public Information Act
• Chapter 552, Texas Government Code
– formerly the Open Records Act

• Attorney General Training Required
• Open Records Made Easy

• Public Information Act Handbook
• Training Required Upon Assumption of Office
•

https://www.oag.state.tx.us/open/publications_og.shtml
Austin, Texas 78746
(512) 614-0901
©2013

Public Information
• Districts and “the part, section, or portion of
an organization, corporation, commission,
committee, institution, or agency that spends
or that is supported in whole or in part by
public funds “ are subject to the act.
• Non-profit WSCs specifically subject to the
act.
• Unless excluded, all public information is
subject to disclosure under the act.
Austin, Texas 78746
(512) 614-0901
©2013

Public Information
• Making a Request
– A request for records or information triggers
the Act.

• Creating Records to Respond to Request
– The Act does not require a governmental
body to create new information, to do legal
research, or to answer questions.

Austin, Texas 78746
(512) 614-0901
©2013

Public Information
• Charges to the Requestor
– Generally no charges allowed to view or
inspect records and information. Charges
may be allowed for copies and certain staff
time.

• Amount of Charges
– All charges must comply with the Texas
Building and Procurement Commission’s
rules.
Austin, Texas 78746
(512) 614-0901
©2013

Public Information
• Exceptions to the Act
– the governmental body generally must,
refer the matter to the Office
of the Attorney General (the OAG) for a ruling.

• Questions or Complaints. (877) 673-6839
(877-OPEN TEX).
• Complaints Regarding Charges. Contact the
Texas Building and Procurement Commission
(512) 475-2497.
Austin, Texas 78746
(512) 614-0901
©2013

Ethical Issues
• Conflict of Interest
• Nepotism
• Dual Office Holding/Incompatibility

AG Handbook: Public Officers: Traps for the Unwary
https://www.oag.state.tx.us/open/publications_og.shtml
Austin, Texas 78746
(512) 614-0901
©2013

Conflict of Interest
• Common Law
If a public official directly or indirectly has a pecuniary
interest in a contract, no matter how honest he may be,
and although he may not be influenced by the interest,
such a contract so made is violative of the spirit and
letter of our law, and is against public policy. Meyers v.
Walker

Austin, Texas 78746
(512) 614-0901
©2013

• A local public official commits an offense if the
official knowingly:
– violates Local Government Code Section 171.004
(Next Slide)
– acts as surety for a business entity that has work,
business, or a contract with the governmental entity; or
– acts as surety on any official bond required of an
officer of the governmental entity.

• An offense under this section is a Class A
misdemeanor – punishable by up to 1 year in jail
and/or up to $4000 penalty.
Austin, Texas 78746
(512) 614-0901
©2013

• If a local public official has a substantial interest
in a business entity or in real property, the
official must:
– file an affidavit stating the nature and extent of the
interest before a vote or decision on any matter
involving the business entity or the real property, and
– abstain from further participation in the matter if:
• the action on the matter will have a special economic
effect on that business entity that is distinguishable from
the effect on the public; or
• it is reasonably foreseeable that an action on the matter
will have a special economic effect on the value of the
property that is distinguishable from its effect on the Road, Suite 200
2705 Bee Cave
Austin, Texas 78746
public.
(512) 614-0901
©2013

• A person has a substantial interest in a business
entity if:
– the person owns 10 percent or more of the voting stock or
shares of the business entity or owns either 10 percent or
more or $15,000 or more of the fair market value of the
business entity; or
– funds received by the person from the business entity
exceed 10 percent of the person's gross income for the
previous year.

• A person has a substantial interest in real property if
the interest is an equitable or legal ownership with a
fair market value of $2,500 or more.
• Applies to Spouse, Child and Parent Interests Too.
Austin, Texas 78746
(512) 614-0901
©2013

Nepotism
• A public official may not appoint, confirm the
appointment of, or vote for the appointment or
confirmation of the appointment of an individual
to a position that is to be directly or indirectly
compensated from public funds or fees of office
if:
– the individual is related to the public official within a
degree described by Texas Government Code,
Section 573.002; or
– the public official holds the appointment or
confirmation authority as a member of a state or local
board, the legislature, or a court and the individual is
related to another member of that board, legislature, or
court within a degree described by Section 573.002. Suite 200
2705 Bee Cave Road,

Austin, Texas 78746
(512) 614-0901
©2013

Nepotism
• Except as provided by Texas Government
Code, Section 573.043, this chapter
applies to relationships within the third
degree by consanguinity or within the
second degree by affinity.

Austin, Texas 78746
(512) 614-0901
©2013

Nepotism

Austin, Texas 78746
(512) 614-0901
©2013

Nepotism
Consanguinity
Civil Law Degrees Of Relationship
1st
Officer

2nd

3rd

4th

Child

Grandchild

Great
Grandchild

Great Great
Grandchild

Parent

Sibling

Niece/Nephe
w

Grand
Niece/Nephe
w

Grandparent

Great
Grandparent

Great Great
Grandparent

Aunt/Uncle

Great
Aunt/Uncle
1st Cousin
Austin, Texas 78746
(512) 614-0901
©2013

Nepotism
Affinity
Civil Law Degrees Of Relationship

1st
Officer

2nd

3rd

Spouse

Spouse’s Sibling

Child of Spouse’s
Sibling

Spouse’s Parent

Spouse’s
Grandparent

Spouse’s Great
Grandparent

Child’s Spouse

Parent of Child’s
Spouse

Grandparent of Child’s
Spouse

Sibling’s Spouse

Parent of Sibling’s
Spouse
Spouse’s Aunt/Uncle
Austin, Texas 78746
(512) 614-0901
©2013

Dual Office Holding
• Article XVI, Section 40, of the Texas
Constitution prohibits a person from
holding or exercising more than one civil
office of emolument at a time.

Austin, Texas 78746
(512) 614-0901
©2013

Incompatibility
• Self Appointment
• Self Employment
• Conflicting Loyalties

Austin, Texas 78746
(512) 614-0901
©2013

Incompatibility
• Self Appointment
– “It is because of the obvious incompatibility of
being both a member of a body making the
appointment and an appointee of that body
that the courts have with great unanimity
throughout the country declared that all
officers who have the appointing power are
disqualified for appointment to the offices to
which they may appoint.”
• Ehlinger v Clark, 8 S.W.2d 666 (Tex. 1928).
Austin, Texas 78746
(512) 614-0901
©2013

Incompatibility
• Self Employment
– Ordinarily, self-employment incompatibility will
arise only where one position is an office and
the other an employment.
– But, can arise when position is subordinate to
the governing body in some of its principal
duties.

Austin, Texas 78746
(512) 614-0901
©2013

Incompatibility
• Conflicting Loyalties
– both positions must be “offices”
– the relationship between the positions creates
conflict
• if authorized to contract with each other
• if both have the power of taxation
– even if one district imposes an ad valorem property tax and the
other imposes a sales tax that must be approved by the voters.

• if boundaries overlap
• whenever one governmental body has authority to
impose its will on the other in any matter whatsoever.
Austin, Texas 78746
(512) 614-0901
©2013

Laws Governing District
Operations
The “Bylaws”

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Revenue
• Ad Valorem Taxes
• Utility Rates
• Fees and Charges

Austin, Texas 78746
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©2013

Ad Valorem Taxes
• Property Tax (Ad Valorem) Limits
– Voter Approved Autority
– Not for SUDs (65.235)

• Truth-in-Taxation Process
– Notice and Hearings if exceed Effective Rate

• Rollback Elections
– 108% of Previous Effective O&M Rate
• http://www.window.state.tx.us/taxinfo/proptax/tnt/
Austin, Texas 78746
(512) 614-0901
©2013

District Utility Rates
• Governed by Chapter 13 of Texas Water
Code
• Subject to Appellate Jurisdiction of TCEQ

Austin, Texas 78746
(512) 614-0901
©2013

Fees and Charges
• May adopt and enforce all necessary
,
in addition to taxes, for providing or
making available any district facility or
service.
• May require a
for any services or
facilities furnished and the district may or
may not provide that the deposit will bear
interest.
Austin, Texas 78746
(512) 614-0901
©2013

Fees and Charges
• Impact Fees
– Charge against new development for capital
improvements
– More than 3X the actual and reasonable cost
to tap or connect

• Local Government Code, Chap. 395,
process or TCEQ Approved
Austin, Texas 78746
(512) 614-0901
©2013

Expenditures
•
•
•
•

Purchases
Bonds
Loans
Bidding

Austin, Texas 78746
(512) 614-0901
©2013

Expenditures
Generally
• District's money may be disbursed only by
check, draft, order, or other instrument that is
signed by at least a majority of the directors.
• Board may adopt resolution allowing the general
manager, treasurer, bookkeeper, or other
employee of the district to sign disbursements.
• Board may allow disbursements of district
money to be transferred by federal reserve wire
system. The board by resolution may allow the
wire transfers to accounts in the name of the
district or accounts not in the name of the
district.
Austin, Texas 78746
(512) 614-0901
©2013

Acquiring Property
• A District is authorized to purchase,
construct, acquire, own, operate,
maintain, repair, improve, or extend
inside and outside its boundaries any and
all land, works, improvements, facilities,
plants, equipment, and appliances
necessary to accomplish the purposes of
its creation or the purposes authorized by
this code or any other law.

Austin, Texas 78746
(512) 614-0901
©2013

Bonds
• A district may issues bonds or notes
secured by a pledge of ad valorem taxes
– The “Pledge” allows a bond holder to force
District to levy tax to make debt payments

• A district must hold an election to
authorize the issuance of bonds or notes.
• Bonds generally approved by TCEQ and
Texas Attorney General
Austin, Texas 78746
(512) 614-0901
©2013

Notes
• Revenue Notes
– Do not require election
– Pledged solely by revenues of system after
costs to maintain and operate
– Not longer than 3 years unless to:
•
•
•
•

Farmers Home Administration;
United States Department of Agriculture;
Texas Water Development Board; or
North American Development Bank.
Austin, Texas 78746
(512) 614-0901
©2013

Questions?

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Austin, Texas 78746
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©2013

Break!

But be back at 3:30!
Austin, Texas 78746
(512) 614-0901
©2013

Part 2
Contractual Relationships
including wholesale and emergency service
contracts and interlocal agreements, as well as
professional service contracts, including how to
manage those relationships. This session will also
discuss potential pitfalls regarding these
relationships, liability and waivers, and how to
protect the district before signing on the dotted line.
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Contracting
• Districts may enter into contracts for all
types of services.
• Proper procedures must be followed
before entering into contracts.

Austin, Texas 78746
(512) 614-0901
©2013

Governmental Immunity
• Utility Districts enjoy certain immunity from suit
under Texas law that private entities do not.
– Can be liable for property damage, personal injury,
and death caused an employee acting within his scope
of employment while operating a motor-driven vehicle
or equipment and if the employee would be personally
liable according to Texas law; and
– Can be liable for personal injury and death so caused
by a condition or use of tangible personal or real
property if the governmental unit would, were it a
private person, be liable to the claimant according to
Texas law.
Austin, Texas 78746
(512) 614-0901
©2013

Tort Liability
• Utility Districts otherwise immune from
liability for torts.
• Utility District tort claims limited to
$100,000 to single person and $300,000
per occurrence for personal injury or
death and $10,000 per occurrence for
property damage.
Austin, Texas 78746
(512) 614-0901
©2013

Bidding
• A district must publish notice of and
submit to competitive bids an expenditure
of more than $75,000 for one item or
service or more than one of the same or
a similar type of item or service in a fiscal
year.
• A district must solicit bids for contracts
between $25,000 and 75,000 from at
least three bidders.
Austin, Texas 78746
(512) 614-0901
©2013

Bidding - Options
• For Public Works (ie Buildings) – Must
Use Government Code, Chapter 2267,
Contracting and Delivery Procedures for
Construction Projects

Austin, Texas 78746
(512) 614-0901
©2013

Bidding – Chapter 2267
• Competitive Bidding
• Competitive Sealed Proposals
• Construction Manager-Agent Method
(“CMA”)
• Construction Manager-At-Risk Method
(“CMAR”)
• Design-Build Contracts
• Job Order Method
Government Code Chapter 2267
Austin, Texas 78746
(512) 614-0901
©2013

Bidding - Prohibitions
• Professional Services Procurement Act
prohibits bidding the following
professional services:
– Accounting
– Architecture
– Landscape architecture
– Land surveying
Austin, Texas 78746
(512) 614-0901
©2013

Bidding - Prohibitions
• Additional Prohibitions
– Medicine
– Optometry
– Professional engineering
– Real estate appraising
– Professional nursing

• Government Code Chapter 2254
Austin, Texas 78746
(512) 614-0901
©2013

Bidding – Professional Services
How to secure contracts for architectural,
engineering, and surveying services:
• Select most qualified provider on basis of
demonstrated competence and
qualifications
• Attempt to negotiate contract at fair and
reasonable price
Austin, Texas 78746
(512) 614-0901
©2013

Bidding – Professional Services
How to secure contracts for architectural,
engineering, and surveying services:
• If negotiations fail:
1) formally end negotiations
2) select next most highly qualified
provider
3) attempt to negotiate contract at fair
and reasonable price
4) continue process until contract is
entered

Austin, Texas 78746
(512) 614-0901
©2013

• Payment and Performance Bonds
– A governmental entity making a public work
contract must require the contractor, before
beginning the work, to execute to the
governmental entity:
– a payment bond, if the contract is in excess
of $25,000
– a performance bond where contract is in
excess of $100,000
Government Code Chapter 2253
Austin, Texas 78746
(512) 614-0901
©2013

• Prevailing Wage Rates
– District must pay prevailing wage rates for
public work construction contract (not
maintenance)
– Must either:
• Survey wage rates prevailing in the area; or
• Use wage rates determined by US Department of
Labor under Davis-Bacon Act

– Must specify wage rates in bid solicitation and
contract documents
Austin, Texas 78746
(512) 614-0901
©2013

Miscellaneous Issues
•
•
•
•
•

Audits
Annual Reports
Depositories
Public Funds Investment Act
Public Funds Collateral Act

Austin, Texas 78746
(512) 614-0901
©2013

Audit
• Annual Audit is required within 120 days of fiscal
year end
• Audit must be completed by certified public
accountant (CPA)
• Audit must comply with TCEQ rules
• Exemptions and alternative requirements for
dormant and low revenue districts

Austin, Texas 78746
(512) 614-0901
©2013

Depositories
• The board shall designate one or more banks
to serve as depositories for district funds.
• The board shall deposit all district funds in a
depository bank, except that the board: (1)
may deposit funds pledged to pay bonds or
notes with banks named in the trust indenture
or in the bond or note resolution; and (2) shall
remit funds for the payment of the principal of
and interest on bonds and notes to the bank
of payment.
Austin, Texas 78746
(512) 614-0901
©2013

Depositories
• The district may not deposit funds in a
depository or trustee bank in an amount that
exceeds the maximum amount secured by the
Federal Deposit Insurance Corporation unless
the excess funds are secured in the manner
provided by law for the security of county
funds. (Currently $250,000)
• The resolution or trust indenture securing the
bonds or notes may require that any or all of
the funds must be secured by obligations of or
unconditionally guaranteed by the federal
government.
Austin, Texas 78746
(512) 614-0901
©2013

• Government Code, Chapter 2256
• A District must designate an Investment
Officer
– Training required for Investment Officer
– Six initial hours within a year, then four hours
every two years

Austin, Texas 78746
(512) 614-0901
©2013

• A district must adopt by rule, order,
ordinance, or resolution, as appropriate, a
regarding
the investment of its funds and funds
under its control.
• A district must review its investment
policy and investment strategies not less
than
.
Austin, Texas 78746
(512) 614-0901
©2013

• A district must
, by rule,
order, ordinance, or resolution, as
appropriate, one or more officers or
employees of the district as
to be responsible
for the investment of its funds
consistent with the investment policy
adopted by the entity.
Austin, Texas 78746
(512) 614-0901
©2013

• Not less than quarterly, the investment
officer shall prepare and submit to the
district a written
for all funds covered by
this chapter for the preceding reporting
period.

Austin, Texas 78746
(512) 614-0901
©2013

Public Funds Collateral Act
• Government Code, Chapter 2257
• A deposit of public funds shall be secured
by eligible security to the extent and in
the manner required by Chapter 2257.
• A public entity may contract with a bank
that has its main office or a branch office
in Texas to secure a deposit of public
funds.
Austin, Texas 78746
(512) 614-0901
©2013

Contracts for Other Services
•
•
•
•
•

Contract for Insurance and Director Bonds
Contract for bookkeeping services.
Contract for general legal services.
Contract for audit services.
Contract for Tax Assessment and Collection
services.
• Purchasing Agreements with Cooperatives.
(i.e. HGAC, Buy Board, State)
Austin, Texas 78746
(512) 614-0901
©2013

Miscellaneous Financial Issues
• Adopt Resolution Establishing District
Fiscal Year
• Establish District Depository
• Open District bank account(s), and
investment account(s)
• Adopt Investment Policy
Austin, Texas 78746
(512) 614-0901
©2013

Reporting and Registrations
• Register/File Report with TCEQ annually
• Obtain a federal tax identification number
for the District
• Obtain a taxing unit identification number
from the Texas Comptroller
Austin, Texas 78746
(512) 614-0901
©2013

Service Area
• Districts NOT required to have CCN
– May consider obtaining CCN to proactively
secure/defend service area

• CCN obligates the District to serve area
and gives TCEQ oversight of how service
is provided

Austin, Texas 78746
(512) 614-0901
©2013

CCN Issues
• Expedited Release
– 50 acres or more and no service

• Streamlined Expedited Release
– 25 acres or more in 33 counties and no service

• Decertification
– Refusal to provide service

• What is “service” and how can you provide it?
– Contracts with landowners are key
Austin, Texas 78746
(512) 614-0901
©2013

Rates
• Districts may set rates and fees to recover costs
of providing services
• Changes in rates subject to appeal to TCEQ
– Lesser of 10% or 10,000 of affected ratepayers file
petition within 90 days of final decision
– Wholesale customers may appeal within 90 days as
well.
– Rates must be just and reasonable and sufficient,
equitable, and consistent in application to each class
of customers.
– Rates may not be unreasonably preferential,
prejudicial, or discriminatory.
Austin, Texas 78746
(512) 614-0901
©2013

Wholesale Contracts
• Contracts for wholesale water supply
from another entity
• Limited appellate right to TCEQ regarding
rates
– Public Interest Test Barrier
– Some options for Districts contracting with
Cities
Austin, Texas 78746
(512) 614-0901
©2013

Wholesale Contracts
• Important to protect District through contract
language (whether supplier or recipient of water)
– Clearly identify method for calculating rates, both
calculation and process
– Clarify whether supplier may unilaterally increase rates
– Clarify options for other sources of water supply

• TCEQ will not decide disputes about contract
language
• Contract enforcement will be in District Court,
not TCEQ
Austin, Texas 78746
(512) 614-0901
©2013

Organizations/Agencies for
Assistance
• Texas Attorney General (Open
Government)
• Texas Commission on Environmental
Quality (Rate, Fees and Bonds)
• State Library and Archives Commission
(Records)
• Texas Comptroller (Sales Tax)
• Texas Secretary of State (Elections)

Austin, Texas 78746
(512) 614-0901
©2013

Helpful Websites
• TX Rural Water Association
– www.trwa.org

• TCEQ
– www.tceq.texas.gov

• PUC
– www.puc.texas.gov

• Texas Attorney General
– www.oag.state.tx.us

• Texas Comptroller of Public Accounts
– www.window.state.tx.us

• Texas Secretary of State
– www.soc.state.tx.us
Austin, Texas 78746
(512) 614-0901
©2013

Districts: Back to Basics
John J. Carlton
The Carlton Law Firm, PLLC
Austin, Texas 78746
(512) 614-0901
john@carltonlawaustin.com

Austin, Texas 78746
(512) 614-0901
©2013

2013 TRWA Districts Conference: Districts - Back to Basics

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