2012 Safe D 11th Annual Conference Esd 101

ESD 101

SAFE-D 11th Annual Conference
February 22, 2012

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

What is an ESD?

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

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

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

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

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)

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

Most Current Map of
ESDs in Texas

Texas Department of Rural
Affairs
Prepared February 2010

Website:
http://www.tdra.state.tx.us/TxDR
A/Libraries/sorhDocs/Emergency
_Service_Districts.sflb.ashx

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

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

History

• Emergency Services Districts
Amendment to Constitution Approved
November 1987
– Tax Cap of $0.10
– Enabling Statutes Adopted same year

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

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
©2012

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.

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

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

Creating an ESD

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

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
©2012

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

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

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
©2012

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

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

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.

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

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

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

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 officer's election.
Austin, Texas 78746
(512) 614-0901
©2012

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.”

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

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
director's office.

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

Removal

• 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

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

Laws Governing ESDs

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

Financial Issues
• Ad Valorem Taxes
• Sales Tax
• Fees

• Purchases/Leases/Sale
• Bonds
• Loans
• Bidding
Austin, Texas 78746
(512) 614-0901
©2012

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
©2012

Sales Tax
• Maximum 2% Local Sales Tax
• Increments of 1/8%
• Sales Tax Election
• Exclusion of area at 2% cap –
the “Carve Out”

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

Fees
• A district, or a person authorized by
contract on the district's 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
©2012

Acquiring Property
• A district may acquire, purchase, hold,
lease, manage, occupy, and sell real and
personal property or an interest in
property.

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

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

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

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

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

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

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
©2012

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

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

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

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 owner's foreseeable needs,
and that possesses some usefulness for the
purpose for which it was intended or for some
other purpose.
Austin, Texas 78746
(512) 614-0901
©2012

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

• 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

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

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

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 .

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

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

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

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.

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

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.

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

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.

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

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

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

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

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.

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

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
©2012

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

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

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 2705 Bee Cave Road, Suite 110
Austin, Texas 78746
(512) 614-0901
©2012

Bidding - Prohibitions

• Professional Services Procurement Act
prohibits bidding the following professional
services:
– Accounting
– Architecture
– Landscape architecture
– Land surveying

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

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

• Government Code Chapter 2254

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

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
©2012

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 2705 Bee Cave Road, Suite 110
Austin, Texas 78746
(512) 614-0901
©2012

• 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
©2012

• 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
©2012

Miscellaneous Issues

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

Miscellaneous Issues
• Audits
• Payment of District Funds
• Annual Reports
• Depositories
• Public Funds Investment Act
• Public Funds Collateral Act

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

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 district's 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.
Austin, Texas 78746
(512) 614-0901
©2012

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.

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

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
©2012

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 district's name
– the name of each county in which the district is
located
– the district's business address

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

Annual Report (cont.)
– the name, mailing address, and term of
office of each commissioner
– the name, mailing address, and term of
office of the district's general manager,
executive director, and fire chief
– the name of each legal counsel or other
consultant for the district; and
– the district's annual budget and tax rate for
the preceding fiscal year.
Austin, Texas 78746
(512) 614-0901
©2012

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
©2012

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
©2012

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

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

• 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.

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

• 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.

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

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

• 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.

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

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
©2012

Accountability Issues

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

Accountability Issues

• State Laws
• State Agencies
• County Commissioners/Voters
• Residents

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

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

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

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

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
©2012

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
©2012

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

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

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

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
©2012

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
©2012

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

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
©2012

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
©2012

• 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
©2012

• 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
©2012

• 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
©2012

• 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)

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

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
©2012

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
©2012

Nepotism
Consanguinity
Civil Law Degrees Of Relationship
1st 2nd 3rd 4th
Officer 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

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

Nepotism
Affinity
Civil Law Degrees Of Relationship
1st 2nd 3rd
Officer 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

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

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

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
©2012

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
©2012

Incompatibility
– 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
©2012

Incompatibility
– SB 917 specifically states that holding
positions on two ESD boards is not
incompatible

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

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

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

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
ESD can be difficult Austin, Texas 78746
(512) 614-0901
©2012

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

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

Service Providers
• Contract Negotiations
– Other Provisions
• Audit requirements
• Purchasing limitations/requirements
• Insurance
• Budgeting
• Term of Contract
• Payments
• Termination
• Assignment

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

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
Austin, Texas 78746
Services in counties without a County (512) 614-0901
©2012
Fire Marshal.

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
and First Response agencies. Austin, Texas 78746
(512) 614-0901
©2012

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

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

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.

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

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

Other Training
• NIMS 100
• NIMS 200
• NIMS 700
• NIMS 800
– All needed to comply with terms of federal
grants

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

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.

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

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.

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

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

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

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

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

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

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
• Local Government Code, Title 8, Subtitle C, Chapter 271
• 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
• Government Code, Title 10, Subtitle F, Chapter 2256

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

ESD 101
John J. Carlton
The Carlton Law Firm, PLLC
Austin, Texas 78746
(512) 614-0901
john@carltonlawaustin.com

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

2012 Safe D 11th Annual Conference Esd 101

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