2012 Safe D 11th Annual Conference Esd 101

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Presentation regarding general issues related to operation of Emergency Services Districts in Texas presented at SAFE-D Annual Conference in February 2012

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2012 Safe D 11th Annual Conference Esd 101

  1. 1. ESD 101SAFE-D 11th Annual Conference February 22, 2012 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  2. 2. What is an ESD? 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  3. 3. What is an ESD?• ESDs are local political subdivisions that may provide fire, rescue, EMS and other emergency services – Governed by 5 commissioners appointed by County Commissioners Court - except in Harris County and multi-county ESDs, where they are elected – Primarily funded by property taxes not to exceed $0.10 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  4. 4. Why create an ESD?• ESDs Ensure adequate funding of local fire, EMS, rescue and other emergency services• ESDs spread funding for emergency services among everyone that might receive those services 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  5. 5. ESD Statistics• Over 300 known ESDs in Texas• Approximately 1/3 are SAFE-D members• 100 ESDs with Tax Rates >$0.09/$100• Approx. 50 ESDs collecting Sales Tax• Median Assessed Value Approx. $700,000,000(as of December 2010) 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  6. 6. Most Current Map ofESDs in TexasTexas Department of RuralAffairsPrepared February 2010Website:http://www.tdra.state.tx.us/TxDRA/Libraries/sorhDocs/Emergency_Service_Districts.sflb.ashx 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  7. 7. History• Rural Fire Prevention Districts Amendment to Constitution Approved November 1949 – Tax Cap of $0.03 – Enabling Statute Adopted in 1957• According to the Interpretive Commentary, the Texas farm bloc supported the creation of a special district to purchase modern fire-fighting equipment and reduce insurance rates by decreasing response times in rural areas – even envisioning fire fighting via helicopter response to rural 2705 Bee Cave Road, Suite 110 areas Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  8. 8. History• Emergency Services Districts Amendment to Constitution Approved November 1987 – Tax Cap of $0.10 – Enabling Statutes Adopted same year 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  9. 9. Constitution• Article 3, Section 48-e – Laws may be enacted to provide for the establishment and creation of special districts to provide emergency services and to authorize the commissioners courts of participating counties to levy a tax on the ad valorem property situated in said districts not to exceed Ten Cents (10¢) on the One Hundred Dollars ($100.00) valuation for the support thereof; provided that no tax shall be levied in support of said districts until approved by a vote of the qualified voters Cave Road, Suite 110 2705 Bee Austin, Texas 78746 residing therein. (512) 614-0901 www.carltonlawaustin.com ©2012
  10. 10. Constitution• Article 3, Section 48-e (cont.) – Such a district may provide emergency medical services, emergency ambulance services, rural fire prevention and control services, or other emergency services authorized by the Legislature. 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  11. 11. The Statutes• Chapter 775 – ESDs• Chapter 776 – ESDs in Counties with less than 125,000 population – repealed in 2011 (all ESDs operate under 775)• Chapter 794 – Rural Fire Prevention Districts – repealed in 2003 (all RFPDs converted to 775 ESDs) 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  12. 12. Creating an ESD 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  13. 13. Basic Creation Process• Petition by Qualified Voters – Consent of City Required if Area includes ETJ or City Limits• Acceptance by County Commissioners Court• Order for Election• Conducting the Election• Canvassing the Election• Order Creating the District 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  14. 14. Canvassing Election• District Created if Majority of Votes In Favor• Must be Majority of Voters within City Limits or ETJ in favor of creation to include those areas in District• If election fails, must wait one year to try again 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  15. 15. ESD Commissioners• Board of five commissioners.• Appointed by Commissioners Court for 2 years – at least 18 years of age; and – a resident citizen of the state that is: • a qualified voter within district; or • owner of land subject to taxation in the district.• Commissioners of Multi-County and Harris County ESDs are elected at-large for 4 years 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  16. 16. Commissioner Appointment• The commissioners court shall consider relevant factors in determining the individuals to appoint as emergency services commissioners, including whether the individuals have knowledge that relates to fire prevention or emergency medical services and that is relevant to the common policies and practices of the board. • Health & Safety Code §775.034(g) or2705 Bee Cave Road, Suite 110 776.033(g) Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  17. 17. Elected Commissioners• In Harris County (31 ESDs), you are not eligible to be an ESD commissioner if : – you are related within the third degree to: • someone providing professional services to the district; • a commissioner of the district; or • someone who is an employee or volunteer of an organization providing emergency services to the district; 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  18. 18. Elected Commissioners• In Harris County (31 ESDs), you are not eligible to be an ESD commissioner if : – you are employed by a district commissioner, or an attorney or other person providing professional services to the district; – your serve in a professional capacity for the district or an organization providing emergency services to the district; or – you fail to maintain the qualifications required by law to serve. 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  19. 19. Training• Must obtain at least six hours of certified continuing education at least once in a two-year period and may carry forward not more than three hours from one period to the next.• For purposes of removal of a commissioner, “incompetency” includes failure to comply with training requirements. 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  20. 20. What Kind of Training?• Training topics under HB 1619 as originally filed: – district responsibilities; – board responsibilities; – government administration; – ethics laws relating to public officers; and – the governance and management of emergency services.• HB 1619 did not pass and these requirements are not in current law, but serve 2705 Bee Cave Road, Suite 110 as guidance Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  21. 21. Removal Appointed Commissioners• Section does not apply unless adopted by the county commissioners court by resolution.• Adds as grounds for removal of an appointed board member: – incompetency – official misconduct – misconduct• Removal deliberation subject to 551.0745, Government Code (providing for closed meeting to discuss certain personnel matters).• Opportunity is provided for the board member to show cause why the board member should not be removed. 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  22. 22. Grounds for Removal• Incompetency – No training as required – Definition in Chapter 87 of Local Gov’t Code: • gross ignorance of official duties; • gross carelessness in the discharge of those duties; or • unfitness or inability to promptly and properly discharge official duties because of a serious physical or mental defect that did not exist at the time of the officers election. 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  23. 23. Grounds for Removal• Official misconduct – “intentional, unlawful behavior relating to official duties by an officer entrusted with the administration of justice or the execution of the law”, including “an intentional or corrupt failure, refusal, or neglect of an officer to perform a duty imposed on the officer by law.” 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  24. 24. Grounds for Removal• Misconduct – violating a law relating to the office of director; or – misapplying any thing of value belonging to a special district that has come into the custody or possession of a director by virtue of the directors office. 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  25. 25. Removal Elected Commissioners• Section requires use of the procedures set forth in the Local Government Code for removing county officers (Chapter 87 of Local Government Code).• Provides the grounds for removal: – incompetency – official misconduct – intoxication – misconduct• Removal process initiated by filing of petition in court 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  26. 26. Laws Governing ESDs 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  27. 27. Financial Issues• Ad Valorem Taxes• Sales Tax• Fees• Purchases/Leases/Sale• Bonds• Loans• Bidding 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  28. 28. Ad Valorem Taxes• Constitutional Cap of 10 Cents for each ESD – Harris County/Former RFPD/Former 776 ESD Specific Issues• 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/tnt1 1/ 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  29. 29. Sales Tax• Maximum 2% Local Sales Tax• Increments of 1/8%• Sales Tax Election• Exclusion of area at 2% cap – the “Carve Out” 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  30. 30. Fees• A district, or a person authorized by contract on the districts behalf, may charge a reasonable fee for emergency services performed for or on behalf of a person or entity, including a fee for responding to a false alarm or for a fire code inspection.• Provide notice and conduct public hearing to adopt false alarm fees (penal in nature). 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  31. 31. Financial Issues• Ad Valorem Taxes• Sales Tax• Fees• Purchases/Leases/Sale• Bonds• Loans• Bidding 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  32. 32. Acquiring Property• A district may acquire, purchase, hold, lease, manage, occupy, and sell real and personal property or an interest in property. 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  33. 33. Acquiring Equipment• A district may lease, own, maintain, operate, and provide emergency services vehicles and other necessary or proper apparatus, instrumentalities, equipment, and machinery to provide emergency services 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  34. 34. Sale of Real Property• Must seeks bids to sell real property with certain exceptions – Before land may be sold or exchanged for other land, notice of the offer must be published in either the county in which the land is located or, if there is no such newspaper, in an adjoining county – Statute prescribes conditions for sale below fair market value too 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  35. 35. Sale of Real Property Exceptions• Narrow strips of land, or land that because of its shape, lack of access to public roads, or small area cannot be used independently under its current zoning or under applicable subdivision or other development control ordinances• Streets or alleys, owned in fee or used by easement 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  36. 36. Sale of Real Property Exceptions• Land or a real property interest originally acquired for … easements that the political subdivision chooses to exchange for other land to be used for … easements, or other public purposes, including transactions partly for cash• Land that the political subdivision wants to have developed by contract with an independent foundation• A real property interest conveyed to a governmental entity that has the power of eminent domain 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  37. 37. Real Property Option• A political subdivision may donate or sell for less than fair market value land or an interest in real property to another political subdivision if: – the land will be used for a purpose that benefits the public interest of the donating or selling political subdivision; – the donation or sale of the land is made under terms that maintain the public purpose for which the donation or sale is made; and – the title and right to possession of the land revert to the donating or selling political subdivision if the acquiring political subdivision ceases to use the land for the public purpose. 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  38. 38. Sale of Personal Property• Recommend sale by public auction or bidding unless specific statutory authority for alternative method – County process provides good guidance• Cannot give away property acquired with public funds 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  39. 39. Personal Property Option• "Salvage property" is personal property … that because of use, time, or accident is so damaged, used, or consumed that it has no value for the purpose for which it was originally intended.• "Surplus property" is personal property that is in excess of the needs of its owner, that is not required for the owners foreseeable needs, and that possesses some usefulness for the purpose for which it was intended or for some other purpose. 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  40. 40. Personal Property Option• May sell surplus firefighting equipment to any VFD or district in this state for fair market value if the equipment: – met the National Fire Protection Association Standards at the original time of purchase; and – at the time of the sale meets NFPA Standards in effect at the original time of purchase; or meets the NFPA Standards in effect. 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  41. 41. Personal Property Option• May contract to supply surplus property to any VFD or district in this state at fair market value• May sell salvage property to any person in this state for fair market value. If unable to sell the property… , the district may destroy or otherwise dispose of the property as worthless 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  42. 42. Leasing to Political Subdivisions• To promote a public purpose of the political subdivision, a political subdivision may – lease property owned by the political subdivision to another political subdivision or an agency of the state or federal government; or – make an agreement to provide office space in property owned by the political subdivision to the other political subdivision or agency.• Can be for less than Fair Market Value 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  43. 43. Stations and Buildings• A district may construct, lease, own, and maintain real property, improvements, and fixtures necessary to house, repair, and maintain emergency services vehicles and equipment . 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  44. 44. Contracting for Stations• A district may contract with other entities, including other districts or municipalities, to make emergency services facilities and emergency services available to the district 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  45. 45. Limitation on Indebtedness• A district may not contract for an amount of indebtedness in any one year that is in excess of the funds then on hand and anticipated revenues for the year except through bonds or authorized loan. 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  46. 46. Bonds• A district may issues bonds or notes secured by a pledge of ad valorem taxes, other revenues or both for up to 40 years. – 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. 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  47. 47. Loans• The district may borrow money and make other financial arrangements to purchase real property or emergency services equipment or construct emergency services facilities in the amount and subject to a rate of interest or other conditions the board considers advisable.• Loans are different from bonds. 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  48. 48. Loans• A loan may be secured by tax revenues or funds on hand that are not otherwise pledged to pay a debt of the district or the real property acquired or improved or equipment acquired with the borrowed money.• Recent changes to the law clarify that loans do not require voter approval 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  49. 49. Loans• Limits – 20 years for real estate – 10 years for personal property• Subject to Appropriations Issues – Any “pledge” of future ad valorem tax revenues must be subject to appropriations – Loan section allows pledge of “tax revenues or funds on hand” 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  50. 50. Bidding• A district must submit to competitive bids an expenditure of more than $50,000 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 may solicit bids for lesser amounts as well. 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  51. 51. Bidding - Exceptions• the purchase or lease of real property• an item or service that the board determines can be obtained from only one source• a contract for fire extinguishment and suppression services, emergency rescue services, or ambulance services• purchase of vehicle fuel• the purchase of insurance 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  52. 52. Bidding - Exceptions• purchase of bunker gear• an emergency expenditure• contract with state to participate in general services commission state purchasing program• purchases made pursuant to local government co-op purchasing program• purchases made under federal supply schedules of the United States General Services Administration 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  53. 53. Bidding - Options• Solicit at least three bids• Advertise for Bids – Local Government Code Chapter 262 or Government Code, Chapter 2267• Public Works (ie Buildings) – Must Use Government Code, Chapter 2267, Contracting and Delivery Procedures for Construction Projects 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  54. 54. Bidding – Chapter 2267• Competitive Bidding• Competitive Sealed Proposals• Construction Manager-Agent Method (“CMA”)• Construction Manager-At-Risk Method (“CMAR”)• Design-Build Contracts• Job Order MethodGovernment Code Chapter 2267 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  55. 55. Bidding - Prohibitions• Professional Services Procurement Act prohibits bidding the following professional services: – Accounting – Architecture – Landscape architecture – Land surveying 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  56. 56. Bidding - Prohibitions• Additional Prohibitions – Medicine – Optometry – Professional engineering – Real estate appraising – Professional nursing• Government Code Chapter 2254 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  57. 57. Bidding – Professional ServicesHow 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 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  58. 58. Bidding – Professional ServicesHow 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 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  59. 59. Construction Projects• 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 $100,000Government Code Chapter 2253 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  60. 60. Construction Projects• 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 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  61. 61. Miscellaneous Issues 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  62. 62. Miscellaneous Issues• Audits• Payment of District Funds• Annual Reports• Depositories• Public Funds Investment Act• Public Funds Collateral Act 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  63. 63. Audit• A district located wholly in one county shall prepare and file with the commissioners court of the county on or before June 1 of each year an audit report of the districts fiscal accounts and records. *• The person who performs the audit and issues the report must be an independent certified public accountant or firm of certified public accountants licensed in this state.*except Harris County - 30 days after receipt. 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  64. 64. Audits• If a district fails to complete and file the required audit report by September 1 and a county auditor is not ordered to prepare the report, the board president and treasurer are automatically removed and the commissioners’ court is required to fill the vacancies.• Only applies to district in a single county, and not in Harris County. 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  65. 65. Payment of District Funds• District funds may be disbursed only by check signed by the treasurer and countersigned by the president.• If the treasurer is absent or unavailable, the assistant treasurer may sign for the treasurer. If the president is absent or unavailable, the vice president may sign for the president.• An expenditure of more than $2,000 may not be paid from tax money unless a sworn itemized account covering the expenditure is presented to the board and the board approves the2705 Bee Cave Road, Suite 110 expenditure. Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  66. 66. Annual Report• Uncertainty surrounding transfer of TDRA to Department of Agriculture• On or before January 1 of each year, a district shall file with the Texas Department of Rural Affairs an annual report that includes the following: – the districts name – the name of each county in which the district is located – the districts business address 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  67. 67. Annual Report (cont.)– the name, mailing address, and term of office of each commissioner– the name, mailing address, and term of office of the districts general manager, executive director, and fire chief– the name of each legal counsel or other consultant for the district; and– the districts annual budget and tax rate for the preceding fiscal year. 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  68. 68. 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. 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  69. 69. 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. 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  70. 70. Public Funds Investment Act• Government Code, Chapter 2256• A district may invest funds only in: – obligations of, or guaranteed by, governmental entities, – certificates of deposit and share certificates – or investment pools 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  71. 71. Public Funds Investment Act • unless the treasurer, chief financial officer (if not the treasurer), and the investment officer of the district attend and successfully complete the training requirements under the Act. 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  72. 72. Public Funds Investment Act• A district must adopt by rule, order, ordinance, or resolution, as appropriate, a written investment policy regarding the investment of its funds and funds under its control.• A district must review its investment policy and investment strategies not less than annually. 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  73. 73. Public Funds Investment Act • A district must designate, by rule, order, ordinance, or resolution, as appropriate, one or more officers or employees of the district as investment officer to be responsible for the investment of its funds consistent with the investment policy adopted by the entity. 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  74. 74. Public Funds Investment Act• Not less than quarterly, the investment officer shall prepare and submit to the district a written report of investment transactions for all funds covered by this chapter for the preceding reporting period. 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  75. 75. 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. 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  76. 76. Accountability Issues 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  77. 77. Accountability Issues• State Laws• State Agencies• County Commissioners/Voters• Residents 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  78. 78. State Agencies with Oversight• Texas Commission on Fire Protection – for entities with paid fire fighting staff• Texas Department of State Health Services – for entities providing EMS services• Texas Attorney General – for Open Government and Records Issues 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  79. 79. Open Meetings Act• Chapter 551, Texas Government Code• Attorney General Approved Training Required – Training Sessions Friday Morning!• Open Meetings Made Easy• Open Meetings Handbook• https://www.oag.state.tx.us/open/publications_og.shtml 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  80. 80. 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 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  81. 81. Open Meetings Closed Sessions• Consult with District’s attorney• Real Property Acquisition• Personnel Matters• Gifts to District• Other Exceptions 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  82. 82. Public Information Act• Chapter 552, Texas Government Code – formerly the Open Records Act• Attorney General Training Required – Training Sessions Friday morning!• Public Information Act Made Easy• Public Information Handbook• https://www.oag.state.tx.us/open/publications_og.shtml 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  83. 83. 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.• Unless excluded, all public information is subject to disclosure under the act.• VFD records that involve expenditures of public funds are subject to the Act. However, the portion of the entity that is not supported by public funds is not necessarily subject to the Act. 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  84. 84. 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. 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  85. 85. 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. 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  86. 86. Public Information• Exceptions to the Act – the governmental body generally must, within ten business days of receiving the open records request, 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. 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  87. 87. Ethical Issues • Conflict of Interest • Nepotism • Dual Office Holding/IncompatibilityAG Handbook: Public Officers: Traps for the Unwaryhttps://www.oag.state.tx.us/open/publications_og.shtml 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  88. 88. 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 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  89. 89. Conflict of Interest• 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. 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  90. 90. Conflict of Interest• 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 110 2705 Bee Cave public. Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  91. 91. Conflict of Interest• 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 persons 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. 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  92. 92. Conflict of Interest• In Harris County, person is ineligible for ESD board if person or spouse, child, parent, etc. is member of service provider (could have state-wide implications) 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  93. 93. 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 110 2705 Bee Cave Road, Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  94. 94. 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. 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  95. 95. Nepotism 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  96. 96. Nepotism Consanguinity Civil Law Degrees Of Relationship 1st 2nd 3rd 4thOfficer Child Grandchild Great Great Great Grandchild Grandchild Parent Sibling Niece/Nephe Grand w Niece/Nephe w Grandparent Great Great Great Grandparent Grandparent Aunt/Uncle Great Aunt/Uncle 1st Cousin 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  97. 97. Nepotism Affinity Civil Law Degrees Of Relationship 1st 2nd 3rdOfficer Spouse Spouse’s Sibling Child of Spouse’s Sibling Spouse’s Parent Spouse’s Spouse’s Great Grandparent Grandparent Child’s Spouse Parent of Child’s Grandparent of Child’s Spouse Spouse Sibling’s Spouse Parent of Sibling’s Spouse Spouse’s Aunt/Uncle 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  98. 98. 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.• SB 917 specifically prohibits fees of office for office held on second ESD board, making emolument prohibition not applicable 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  99. 99. Incompatibility• Self Appointment• Self Employment• Conflicting Loyalties 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  100. 100. 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). 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  101. 101. 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. 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  102. 102. 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. 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  103. 103. Incompatibility• Conflicting Loyalties – SB 917 specifically states that holding positions on two ESD boards is not incompatible 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  104. 104. Service Provider Relationships 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  105. 105. Types of ESD Operations“If you have seen one ESD, you have seen one ESD”• Volunteer Departments – Volunteers have other jobs in local community• Combined Departments – Paid staff to cover shifts when volunteers are out of community at work• Employee Departments – Insufficient volunteer manpower to meet call volume demands of service area 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  106. 106. Organization Structure• Contracted Service Providers – ESD serves as financing and contract manager for 3rd party service providers, which can be: • Volunteer Fire Departments; • Volunteer EMS Organizations; • For Profit EMS Organizations; and • Other Local Government Entities.• District Personnel – ESD employees its own personnel to provide services to the community 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  107. 107. Service Providers• Volunteer Departments/Organizations – Usually helped create the ESD – Generally have long history of serving the Community – Many volunteers who invest time and energy in service – Have had to rely upon donations and County handouts – Historically make decisions without oversight – Sometimes conflicts between multiple service providers• Transitioning to a Contract Relationship with 2705 Bee Cave Road, Suite 110 ESD can be difficult Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  108. 108. Service Providers• Contract Negotiations – Service Standards • service area • services provided • regulatory compliance/operations standards • response time (how to measure, etc.) • personnel (training, number of people, etc.) • compliance with ESD policies/laws • ownership and maintenance of assets • records and reporting to ESD and others 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  109. 109. Service Providers• Contract Negotiations – Other Provisions • Audit requirements • Purchasing limitations/requirements • Insurance • Budgeting • Term of Contract • Payments • Termination • Assignment 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  110. 110. Contracts for Other Services• Secure contract for bookkeeping services.• Secure contract for general legal services.• Secure contract for audit services.• Secure contract for Tax Assessment and Collection services.• Consider contract for Fire Marshal 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 Services in counties without a County (512) 614-0901 www.carltonlawaustin.com ©2012 Fire Marshal.
  111. 111. Other Agreements• Consider Automatic and Mutual Aid Agreements with surrounding departments and jurisdictions.• Consider Agreement for Dispatch Services.• Consider Purchasing Agreements with Cooperatives. (i.e. HGAC, Buy Board, State)• HIPPA Association Agreement for EMS 2705 Bee Cave Road, Suite 110 and First Response agencies. Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  112. 112. Insurance and Bonds• Obtain District insurance – General liability insurance – Directors and Officers liability• Post Bond for District Treasurer with County. – Amount determined by County Judge 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  113. 113. Things ESDCommissioners Must Do 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  114. 114. Board of Commissioners Requirements• Oaths of office and statements for Commissioners.• Open Meetings and Open Records Training to be completed by all Commissioners. – Must be completed within 90 days of taking office. 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  115. 115. Training• Obtain six hours of training every two years – Three hours may be carried from one 2-year period to the next• Training must be certified by an institution of higher education• Failure to get training constitutes incompetency and make individual subject to removal 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  116. 116. Other Training• NIMS 100• NIMS 200• NIMS 700• NIMS 800 – All needed to comply with terms of federal grants 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  117. 117. Offices and Meetings• Establish District Administrative Office and publish notice of location in newspapers within 60 days of Commissioner qualification.• Election of President, Vice President, Treasurer, Secretary and Assistant Treasurer. 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  118. 118. Budget and Tax Rate• Schedule meetings and public hearings on Budget and Tax Rate to comply with Truth-in-Taxation requirements.• Adopt Budget by September 30th and before adopting a Tax Rate.• Adopt Tax Rate by September 30th or within 60 days after tax roll certification. 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  119. 119. Miscellaneous Financial Issues• Adopt Resolution Establishing District Fiscal Year• Establish District Depository• Open District bank account(s), and investment account(s)• File Audit with County• Adopt Investment Policy 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  120. 120. Reporting and Registrations• Register/File Report with Texas Department of Rural Affairs (now TDA)• Obtain a federal tax identification number for the District• Obtain a taxing unit identification number from the Texas Comptroller 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  121. 121. 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 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 Commission. (512) 614-0901 www.carltonlawaustin.com ©2012
  122. 122. Organizations/Agencies for Assistance• SFFMA (Volunteer Departments)• Texas Forest Service• Texas Department of Rural Affairs (Now a Division of the Texas Department of Agriculture)• State Library and Archives Commission (Records)• Texas Comptroller (Sales Tax)• Texas Secretary of State (Elections) 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  123. 123. Helpful Websites• TX State Assoc. of Fire & Emergency Districts – www.safe-d.org• Texas Attorney General – www.oag.state.tx.us• Texas Comptroller of Public Accounts – www.window.state.tx.us• Texas Secretary of State – www.sos.state.tx.us• Texas Department Agriculture – www.texasagriculture.gov 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  124. 124. Laws that Apply to ESDs• The Texas Constitution, Art. 3, Section 48-e – http://www.statutes.legis.state.tx.us/Docs/CN/htm/CN.3.htm#3.48-e• Health and Safety Code, Title 9, Subtitle B, Chapter 775 – http://www.statutes.legis.state.tx.us/Docs/HS/htm/HS.775.htm• Local Government Code, Title 5, Subtitle C, Chapter 171 – http://www.statutes.legis.state.tx.us/Docs/LG/htm/LG.171.htm• Local Government Code, Title 8, Subtitle B, Chapter 262 – http://www.statutes.legis.state.tx.us/Docs/LG/htm/LG.262.htm• Local Government Code, Title 8, Subtitle C, Chapter 271 – http://www.statutes.legis.state.tx.us/Docs/LG/htm/LG.271.htm• Government Code, Title 5, Subtitle A, Chapter 551 – http://www.statutes.legis.state.tx.us/Docs/GV/htm/GV.551.htm• Government Code, Title 5, Subtitle A, Chapter 552 – http://www.statutes.legis.state.tx.us/Docs/GV/htm/GV.552.htm• Government Code, Title 10, Subtitle F, Chapter 2256 – http://www.statutes.legis.state.tx.us/Docs/GV/htm/GV.2256.htm 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  125. 125. Questions? 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012
  126. 126. ESD 101 John J. Carlton The Carlton Law Firm, PLLC2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 john@carltonlawaustin.com 2705 Bee Cave Road, Suite 110 Austin, Texas 78746 (512) 614-0901 www.carltonlawaustin.com ©2012

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