ESD Legislative Update

82nd Legislature & ESDs

SAFE-D 11th Annual Conference
February 23, 2012

2705 Bee Cave Road, Suite 110
Austin, Texas 78746
(512) 614-0901
www.carltonlawaustin.com
©2011
©2012

Bills of Interest
• SB 917 – ESD Omnibus Bill
• SB 100 – MOVE Act Implementation
• SB 326 – Goods-In-Transit
• HB 628 – Local Government Contracts
• SB 1477 – Benefits for ESD Military
• HB 2690 – Real Property Conveyance

Austin, Texas 78746
(512) 614-0901
©2012

SB 917

• Author: Senator Jeff Wentworth
• House Sponsor: Representative Doug
Miller
• Effective Date: June 17, 2011.

Austin, Texas 78746
(512) 614-0901
©2012

SB 917
• Overlapping Districts
• Consolidation of Districts
• Fireworks Regulation
• Commissioner Training
• Removal of Commissioners
• Budget and Tax Rate Process
• Audit Filing
• 775.085 Loans
• Chapter 776 ESDs Converted to 775

Austin, Texas 78746
(512) 614-0901
©2012

Overlapping Districts (SB 917)
• Adds requirements for proposed districts
whose territories overlap existing
districts (excluding districts in counties
of >3M people)
– County Commissioners Court(s) in the
proposed district required to send a petition
copy to the existing district.
– before the election, existing district board
must adopt a statement detailing the types
of services it will provide in the overlapping
territory if the proposed district is created.
Austin, Texas 78746
(512) 614-0901
©2012


• Amends Chapter 775.0205, which
prohibited the most recently created
district from providing duplicative
services in territory overlapping
another district effective the date the
most recent district was created:

Austin, Texas 78746
(512) 614-0901
©2012


– Eliminates the prohibition
– adds a reference to the statement of
services that the existing district is
required to adopt
– effectively allowing the existing district to
continue providing any services until the
newly created district assumes its
obligations

Austin, Texas 78746
(512) 614-0901
©2012


– Authorizes a person to serve as commissioner of
two districts with overlapping territory, and
specifies that the person:
• may be compensated for serving on only one of
the boards; and
• may be reimbursed for reasonable and necessary
expenses incurred in performing duties for both
boards.

Austin, Texas 78746
(512) 614-0901
©2012

Service Contracts (SB 917)

• Authorizes board to contract with local governments,
including other districts, to provide necessary staff,
facilities, equipment, programs, or services
• Provides that a person acting under a contract under
this authorization is not holding more than one office
of emolument, honor, trust or profit.
• Addresses liability issues and mechanisms for
transferring liability between contracting entities.

Austin, Texas 78746
(512) 614-0901
©2012

Consolidation (SB 917)
• The voters in every district included
in a proposed merger were required to
approve the merger in order for any
merger to take place and the tax rates
of merging districts were reduced to
the lowest level authorized in a
district that was merged.

Austin, Texas 78746
(512) 614-0901
©2012

• The amendment provides the following:
– Every district whose voters approve the
consolidation will be consolidated,
notwithstanding that voters in one or more
of the other districts proposed to be
consolidated decline to approve the
consolidation.
– Those districts whose voters do not approve
the consolidation will not be included in the
consolidated district.

Austin, Texas 78746
(512) 614-0901
©2012

– Before consolidation, participating districts
must:
• determine that the consolidation will provide
for the more efficient and economical
provision of services by the districts
• adopt a joint order

Austin, Texas 78746
(512) 614-0901
©2012

• The joint order must include:
– the new name and territory included in the
consolidated district; the date of consolidation
– if the maximum ad valorem tax rate differs among
the districts, a statement that consolidation will
only take place if voters approve an equalized tax
rate
– a statement that consolidation will only take place
if the residents in the district and at least one
other district approve

Austin, Texas 78746
(512) 614-0901
©2012


– Commissioners are will be appointed (or
designated by statute in cases where existing
commissioners had been elected) if the boards
of the consolidated districts do not appoint five
commissioners by the 31st day after the
adoption of the joint order
– The required ballot language was amended to
incorporate the changes to the requirements set
forth above as well as specifying the terms to be
served by the commissioners

Austin, Texas 78746
(512) 614-0901
©2012

Consolidations (SB 917)
– If the districts have different
maximum ad valorem tax rates:
• The district with the lowest maximum
ad valorem tax rate must order an
election to authorize the imposition of a
tax at the maximum rate authorized in
the district with the higher maximum
rate.
• If a majority of the voters do not favor
the increase, consolidation does not
take place.
Austin, Texas 78746
(512) 614-0901
©2012

Consolidations (SB 917)
– If the districts have differing sales and
use tax rates:
• The consolidated district must designate the
territory of the former districts as sub-districts.
• The board must continue to impose the existing
sales and use taxes.
• The board must send to the comptroller a copy of
the joint order and a map of the consolidated
district that shows the territories of the sub-
districts.
• The sub-districts or consolidated district are not
prohibited from holding a sales and use tax
election to alter the sales and use tax rate.

Austin, Texas 78746
(512) 614-0901
©2012

Fireworks (SB 917)
• A district may not regulate the sale, use or
transportation of fireworks, except as provided
in Section 775.0363.
• That Section provides that a district may adopt
rules that are the same as or less stringent than
those adopted or enforced by the commissioner
of insurance and the state fire marshal relating
to retail fireworks stands, fireworks bulk
manufacturing and storage facilities, fireworks
sales buildings, or any other structure used in
public pyrotechnic displays.

Austin, Texas 78746
(512) 614-0901
©2012

Training (SB 917)
• Requires at least six hours of certified
continuing education at least once in a two-
year period and carry forward not more than
three hours from one period to the next.
• Provides that, for purposes of removal of a
commissioner, “incompetency” includes
failure to comply with training requirements.

Austin, Texas 78746
(512) 614-0901
©2012

Removal (SB 917)
Appointed Commissioners

• Language specifies that the section does not
apply unless adopted by the county
commissioners court of the county by
resolution.
• Adds as grounds for removal of an appointed
board member:
– Incompetency
– official misconduct
– misconduct
Austin, Texas 78746
(512) 614-0901
©2012

Removal (SB 917)
Appointed Commissioners

• Removal deliberation is made 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.
Austin, Texas 78746
(512) 614-0901
©2012

Removal (SB 917)
Elected Commissioners

• Section requires use of the procedures set forth
in the Local Government Code for removing
county officers.
• Provides the grounds for removal:
– incompetency
– official misconduct
– intoxication
– misconduct
Austin, Texas 78746
(512) 614-0901
©2012

Budget and Tax Rate (SB 917)

• Prohibits the board from setting the tax rate
for a fiscal year before adopting the budget.

Austin, Texas 78746
(512) 614-0901
©2012

Audits (SB 917)
• 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.

Austin, Texas 78746
(512) 614-0901
©2012

775.085 Loans (SB 917)

• Clarifies that loans under 775.085 are
not subject to the requirement to hold
an election to approve bonds and
notes.

Austin, Texas 78746
(512) 614-0901
©2012

776 ESDs Conversion (SB 917)

• Repealed Chapter 776 of the Texas
Health & Safety Code and converted
all of the districts operating under
that chapter to districts operating
under Chapter 775 of the same code.

Austin, Texas 78746
(512) 614-0901
©2012

Other Legislation

Austin, Texas 78746
(512) 614-0901
©2011
©2012

SB 100
• Implements Federal MOVE Act
– Military and Overseas Voter
Empowerment Act
• Electronic Ballot Transmission and
Ballot Tracking for Military and
Overseas Voters

Austin, Texas 78746
(512) 614-0901
©2012

SB 100
• Applies to:
– Elections with Federal Office
– Elections to fill vacancy in State
Legislature
– Any election held jointly with above

Austin, Texas 78746
(512) 614-0901
©2012

SB 100
• Affects:
– Runoff Election Timing
– Deadline for Ordering Elections
– May Uniform Election Date

Austin, Texas 78746
(512) 614-0901
©2012

SB 100
• Prior to SB 100, primary elections and
any related runoff would have been
concluded by the time the May uniform
election date arrived.
• Moving the primary runoff to the fourth
Tuesday in May causes the May uniform
election date to fall between the primary
and the primary runoff.
Austin, Texas 78746
(512) 614-0901
©2012

SB 100
• This creates logistical problems with
regard to reprogramming electronic
voting systems between elections, among
other things.
• Counties are not required to contract
with political subdivisions for election
services during May of even numbered
years.
• BUT…
Austin, Texas 78746
(512) 614-0901
©2012

SB 100
• County Election Administrator initially
opposed continuing to provide election
services
• Recently, many have decided to
provide those service anyway
• Some costs will increase for more
equipment and personnel
Austin, Texas 78746
(512) 614-0901
©2012

SB 326
(passed as part of SB 1)
• Goods-In-Transit
– Must Hold Public Hearing regarding
taxation of Goods-In-Transit
– No notice requirements specified
– Can take official action after hearing and
before end of tax year
– After 10/1/11 and before 12/31 of tax
year
Austin, Texas 78746
(512) 614-0901
©2012

SB 326
(passed as part of SB 1)
• “Goods-in-transit”
– Tangible personal property
– Stored (pursuant to a contract for delivery) at
public warehouse facilities
– Warehouse not owned or controlled by the
owner of the personal property
– Transferred to another location within 175 days
– Excludes oil, natural gas, petroleum products,
aircraft, dealer’s inventory (motor vehicle, vessel,
outboard motor, and heavy equipment), and
retail manufactured housing inventory.

Austin, Texas 78746
(512) 614-0901
©2012

HB 628
• Creates Government Code Chapter
2267 related to government contracts
for public works
• Repeals alternative bidding
procedures in Subchapter H, Chapter
271, Local Government Code

Austin, Texas 78746
(512) 614-0901
©2012

HB 628
• Public works include buildings and
other public facilities
• Prevails over any other laws related to
public works contracts

Austin, Texas 78746
(512) 614-0901
©2012

HB 628
• 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
©2012

SB 1477
• Allows differential pay and extension of
insurance benefits to person called to active
duty
– Members of State Military Forces
– Reserve in US Armed forces
• Board must adopt uniform policy
• Military Pay must be less than District pay
• Differential pay plus military pay may not
exceed District pay

Austin, Texas 78746
(512) 614-0901
©2012

HB 2690
• 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.

Austin, Texas 78746
(512) 614-0901
©2012

Issues of Concern
• Election of ESD Commissioners
• Competing Demands for Tax Revenues
– Sales Tax
– Property Tax
• Economic Development Tools
• Funding Limitations
• Access to Grants and Loans
Austin, Texas 78746
(512) 614-0901
©2012

82nd Texas Legislative Session

John J. Carlton
The Carlton Law Firm, P.L.L.C.
2705 Bee Cave Road Suite 110
Austin, Texas 78746
(512) 614-0901
john@carltonlawaustin.com

Austin, Texas 78746
(512) 614-0901
©2012

ESD Legislative Update

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