2023 Texas Statutes › Water Code › Title 4 - General Law Districts › Chapter 54 - Municipal Utility Districts › Subchapter B. Creation or Expansion of District; Conversion of District › Section 54.016. Consent of City

Sec. 54.016.  CONSENT OF CITY.  (a)  No land within the corporate limits of a city or within the extraterritorial jurisdiction of a city, shall be included in a district unless the city grants its written consent, by resolution or ordinance, to the inclusion of the land within the district in accordance with Section 42.042, Local Government Code, and this section.  The request to a city for its written consent to the creation of a district, shall be signed by a majority in value of the holders of title of the land within the proposed district as indicated by the county tax rolls.  A petition for the written consent of a city to the inclusion of land within a district shall describe the boundaries of the land to be included in the district by metes and bounds or by lot and block number, if there is a recorded map or plat and survey of the area, and state the general nature of the work proposed to be done, the necessity for the work, and the cost of the project as then estimated by those filing the petition.  If, at the time a petition is filed with a city for creation of a district, the district proposes to connect to a city's water or sewer system or proposes to contract with a regional water and wastewater provider which has been designated as such by the commission as of the date such petition is filed, to which the city has made a capital contribution for the water and wastewater facilities serving the area, the proposed district shall be designated as a "city service district."  If such proposed district does not meet the criteria for a city service district at the time the petition seeking creation is filed, such district shall be designated as a "noncity service district."  The city's consent shall not place any restrictions or conditions on the creation of a noncity service district as defined by this chapter other than those expressly provided in Subsection (e) of this section and shall specifically not limit the amounts of the district's bonds.  A city may not require annexation as a consent to creation of any district.  A city shall not refuse to approve a district bond issue for any reason except that the district is not in compliance with valid consent requirements applicable to the district.  If a city grants its written consent without the concurrence of the applicant to the creation of a noncity service district containing conditions or restrictions that the petitioning land owner or owners reasonably believe exceed the city's powers, such land owner or owners may petition the commission to create the district and to modify the conditions and restrictions of the city's consent.  The commission may declare any provision of the consent to be null and void.  The commission may approve the creation of a district that includes any portion of the land covered by the city's consent to creation of the district.  The legislature may create and may validate the creation of a district that includes any portion of the land covered by the city's consent to the creation of the district.
(b)  If the governing body of a city fails or refuses to grant permission for the inclusion of land within its extraterritorial jurisdiction in a district, including a district created by a special act of the legislature, within 90 days after receipt of a written request, a majority of the electors in the area proposed to be included in the district or the owner or owners of 50 percent or more of the land to be included may petition the governing body of the city and request the city to make available to the land the water or sanitary sewer service contemplated to be provided by the district.
(c)  If the governing body of the city and a majority of the electors or the owner or owners of 50 percent or more of the land to be included in the district fail to execute a mutually agreeable contract providing for the water or sanitary sewer service requested within 120 days after receipt of the petition, the failure shall constitute authorization for the inclusion of the land in the district under the provisions of this section.  Authorization for the inclusion of such land within the district under the provisions of this section shall mean only authorization to initiate proceedings to include the land within the district as otherwise provided by this Act.
(d)  The provisions of this section relating to the method of including land in a district without securing the written consent of a city applies only to land within the extraterritorial jurisdiction of a city and does not apply to land within the corporate limits of a city.  If the city fails or refuses to grant permission for the inclusion of land in a district or to execute a mutually agreeable contract providing for the water or sanitary sewer service requested within the time limits contained within Subsection (b) or (c) of this section, the applicant may petition the commission for creation of the district or inclusion of the land in a district.  The commission shall allow creation or inclusion of the land in a proposed district upon a finding that the city either does not have the reasonable ability to serve or has failed to make a legally binding commitment with sufficient funds available to provide water and wastewater service adequate to serve the proposed development at a reasonable cost to the landowner.  The commitment shall provide that construction of the facilities necessary to serve the land shall be commenced within two years, and shall be substantially complete within four and one-half years from the date the petition was filed with the city.  Upon any appeal taken to the district court from the commission ruling, all parties to the commission hearing shall be made parties to the appeal.  The court shall hear the case within 120 days from the date the appeal is filed.  If the case is continued or appealed to a higher court beyond such 120-day period, the court shall require the appealing party in the case of appeal to a higher court or party requesting such continuance to post a bond or other adequate security in the amount of damages that may be incurred by any party as a result of such appeal or delay from the commission action.  The amount of the bond or other security shall be determined by the court after notice and hearing.  Upon final disposition, a court may award damages, including any damages for delays, attorney's fees, and costs of court to the prevailing party.  Under no circumstances shall land within the corporate limits of a city be included in a district without the written consent, by ordinance or resolution, of the city.  The provisions of this section shall apply whether the land is proposed to be included in the district at the time of creation of a district or to be included by annexation to a district.  A district shall not allow the owner of a tract to connect to the district's water or wastewater system unless such tract is a legally subdivided lot which is part of a recorded subdivision plat or is otherwise legally exempt from the subdivision requirements of the applicable governmental authority.
(e)  A city may provide in its written consent to the inclusion of land in a district, that the district construct all facilities to serve the land in accordance with plans and specifications which have been approved by the city.  The city may also provide in its written consent that the city shall have the right to inspect all facilities being constructed by a district.  The city's consent to the inclusion of land in the district may also contain restrictions on the terms and provisions of the district's bonds and notes issued to provide service to the land and conditions on the sale of the district's bonds and notes if the restrictions and conditions do not generally render the bonds and notes of districts in the city's extraterritorial jurisdiction unmarketable.  The city's consent to the inclusion of land in a district may restrict the purposes for which a district may issue bonds to purposes authorized by law for the district.
(f)  A city may provide in its written consent for the inclusion of land in a district that is initially located wholly or partly outside the corporate limits of the city that a contract ("allocation agreement") between the district and the city be entered into prior to the first issue of bonds, notes, warrants, or other obligations of the district.  The allocation agreement shall contain the following provisions:
(1)  a method by which the district shall continue to exist following the annexation of all territory within the district by the city, if the district is located outside the corporate limits of the city at the time the creation of the district is approved by the district's voters;
(2)  an allocation of the taxes or revenues of the district or the city which will assure that, following the date of the inclusion of all the district's territory within the corporate limits of the city, the total annual ad valorem taxes collected by the city and the district from taxable property within the district does not exceed an amount greater than the city's ad valorem tax upon such property;
(3)  an allocation of governmental services to be provided by the city or the district following the date of the inclusion of all of the district's territory within the corporate limits of the city; and
(4)  such other terms and conditions as may be deemed appropriate by the city.
(f-1)  An agreement between a municipality and a municipal utility district is an allocation agreement only if:
(1)  the agreement strictly complies with the requirements of Subsection (f); and
(2)  the agreement is specifically designated by the parties to the agreement as an "allocation agreement" under Subsection (f).
(g)  In addition to all the rights and remedies provided by the laws of the state in the event a district violates the terms and provisions of a city's written consent, the city shall be entitled to injunctive relief or a writ of mandamus issued by a court of competent jurisdiction restraining, compelling or requiring the district and its officials to observe and comply with the terms and provisions prescribed in the city's written consent to the inclusion of land within the district.
(h)  A city, other than a city with a population of more than one million that is located primarily in a county with a population of 2.5 million or more, may provide in its written consent for the inclusion of land in a district that after annexation the city may set rates for water and/or sewer services for property that was within the territorial boundary of such district at the time of annexation, which rates may vary from those for other properties within the city for the purpose of wholly or partially compensating the city for the assumption of obligation under this code providing that:
(1)  such written consent contains a contract entered into by the city and the persons petitioning for creation of the district setting forth the time and/or the conditions of annexation by the city which annexation shall not occur prior to the installation of 90 percent of the facilities for which district bonds were authorized in the written consent; and that
(2)  the contract sets forth the basis on which rates are to be charged for water and/or sewer services following annexation and the length of time they may vary from those rates charged elsewhere in the city; and that
(3)  the contract may set forth the time, conditions, or lands to be annexed by the district; and that
(4)(A)  Each purchaser of land within a district which has entered into a contract with a city concerning water and/or sewer rates as set forth herein shall be furnished by the seller at or prior to the final closing of the sale and purchase with a separate written notice, executed and acknowledged by the seller, which shall contain the following information:
(i)  the basis on which the monthly water and/or sewer rate is to be charged under the contract stated as a percentage of the water and/or sewer rates of the city;
(ii)  the length of time such rates will be in effect;
(iii)  the time and/or conditions of annexation by the city implementing such rates.
The provisions of Sections 49.452(g)-(p) and (s), Water Code, are herein incorporated by reference thereto, and are applicable to the separate written notice required by Section 54.016(h)(4).
A suit for damages under the provisions of these referenced sections must be brought within 90 days after the purchaser receives his or her first water and/or sewer service charge following annexation, or the purchaser loses his or her right to seek damages under this referenced section.
(B)  The governing board of any district covered by the provisions of this subsection shall file with the county clerk in each of the counties in which all or part of the district is located a duly affirmed and acknowledged statement which includes the information required in Section 54.016(h)(4)(A) and a complete and accurate map or plat showing the boundaries of the district.
The provisions of Sections 49.455(c)-(j), Water Code, are herein incorporated by reference thereto.
(i)  This subsection applies only to a city with a population of 500,000 or more located in a county with a population of 1.4 million or more in which two or more cities or towns with a population of 300,000 or more are predominately located.  A city may provide in its written consent to the inclusion of land in a district that a district water facility that serves land developed and subdivided into lots of less than one acre must meet the fire flow requirements to which the city is subject.
(j)  A city may supplement its written consent in settlement of a water rate dispute with a district, and the terms of the supplement remain in effect after expiration of the written consent unless the city and the district agree otherwise.
Added by Acts 1971, 62nd Leg., p. 775, ch. 84, Sec. 1.  Amended by Acts 1975, 64th Leg., p. 247, ch. 98, Sec. 1, eff. Sept. 1, 1975;  Acts 1979, 66th Leg., p. 2026, ch. 796, Sec. 1, 4, eff. Aug. 27, 1979;  Acts 1987, 70th Leg., ch. 1077, Sec. 9, eff. Sept. 1, 1987;  Acts 1989, 71st Leg., ch. 1, Sec. 3(m), eff. Aug. 28, 1989;  Acts 1995, 74th Leg., ch. 76, Sec. 11.326, eff. Sept. 1, 1995;  Acts 2001, 77th Leg., ch. 669, Sec. 147, eff. Sept. 1, 2001.
Amended by:
Acts 2007, 80th Leg., R.S., Ch. 1098 (H.B. 3378), Sec. 2, eff. June 15, 2007.
Acts 2011, 82nd Leg., R.S., Ch. 1163 (H.B. 2702), Sec. 183, eff. September 1, 2011.
Acts 2013, 83rd Leg., R.S., Ch. 105 (S.B. 902), Sec. 28, eff. September 1, 2013.
Acts 2017, 85th Leg., R.S., Ch. 761 (S.B. 1987), Sec. 6, eff. June 12, 2017.
Acts 2017, 85th Leg., R.S., Ch. 965 (S.B. 2014), Sec. 5, eff. September 1, 2017.
Acts 2019, 86th Leg., R.S., Ch. 467 (H.B. 4170), Sec. 17.002, eff. September 1, 2019.
Acts 2021, 87th Leg., R.S., Ch. 463 (H.B. 1410), Sec. 2, eff. June 14, 2021.
Acts 2023, 88th Leg., R.S., Ch. 644 (H.B. 4559), Sec. 282, eff. September 1, 2023.
Acts 2023, 88th Leg., R.S., Ch. 1009 (H.B. 2815), Sec. 27, eff. June 18, 2023.