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What
Exactly Is A Water District?
The simple answer to that question is that it is a local political
subdivision of the State, governed
by a board of directors. Also known as MUDs -- Municipal Utility
Districts -- they are authorized under the Texas Constitution,
Article III, Section 52, or Article XVI, Section 59.
ENABLING LAWS With the passage of the municipal bond law
in 1895, cities were given the authority to issue tax-supported
bonds to acquire a water supply. This financing had to be within the
tax limits prescribed by the Constitution.
In 1904, Section 52 of Article III authorized the
Legislature to pass laws permitting counties, districts and all
other political subdivisions of the state to issue bonds in an
amount not to exceed one-fourth of the total assessed value of real
property for the "improvement of rivers, creeks, and streams to
prevent overflows and to permit the navigation thereof or irrigation
thereof...." This amendment also authorized the Legislature to
permit any county, district or political subdivision to levy a tax
at a rate sufficient to pay the principal of and interest on such
bonds.
After the terrible floods in Texas during 1912-14,
people across the state realized there was a real need to confirm
the State's duty to not only prevent floods but, also through the
storage of flood waters, to conserve the water for beneficial
usages. This was the genesis for the passage of Section 59 of
Article XVI in 1917, which allowed water districts to operate with
unlimited bonded indebtedness.
In 1925, legislation was passed which authorized the
creation of Water Control and Improvement Districts -- WCIDs -- with
the same bonded indebtedness and taxing authority.
HOW WATER DISTRICTS ARE CREATED
To create a new water district, a developer files an
application through the Office of the State Attorney General to the
Texas Commission on Environmental Quality (TCEQ). The application
outlines the developer's plans for providing various services such
as water, sewer and drainage to areas where municipal services are
not already in place. A Board of Directors is established, which is
assisted by qualified professionals who provide services on a fee
basis.
One of the most important features about water
districts is that they are governed by a board of directors elected
by the voters in the district. This board is responsible for
conducting all the business of the district, including services or
functions contracted to other parties.
Water districts must comply with the Texas Open
Meetings Act and the Texas Open Records Act and have an annual audit
performed by an independent auditing firm. The best way to learn
about the function and responsibilities of your water district is to
attend a meeting.
Not all water districts are created equal. Some are
established under General Law by the Texas Commission on
Environmental Quality (TCEQ); some by Commissioners Court; and
others are created by the governing board of a city. Special law
districts are created by an act of the State Legislature. All water
districts, however, must comply with the laws contained in the Texas
Water Code.
MUD RIGHTS AND RESPONSIBILITIES
While the powers and responsibilities of a specific
water district are determined when it is created, water districts
are generally empowered to:
1. Incur Debt: Most districts can issue bonds and other forms
of debt. If that debt is to be secured by tax revenues, voters in
the district must approve the plan. In most cases, bonds secured in
this manner must also be approved by the TNRCC.
2. Levy Taxes: If voters approve unlimited tax bonds, a debt
service tax to pay the bonds is also approved. Each year, the water
district board is obligated to levy a property tax adequate to cover
the debt. This tax is levied on all property in the district based
on appraised value, regardless of services received, and must comply
with the Property Tax Code. The tax rate must be published each year
and public hearings held if the effective tax rate increases more
than three percent over the previous year. District voters may also
approve a maintenance tax.
3. Adopt Rules and Charge for Services: The district adopts
rules which specify the method, terms and conditions of water supply
and sewage treatment service.
4. Expend Public Funds: Districts can spend public funds for
authorized district activities.
5. Contract for Goods and Services: For contracts more than
$15,000, the district must obtain three competitive bids. For those
more than $25,000, the district must advertise for competitive bids.
6. Obtain Easements: In order to install, inspect, repair and
maintain water distribution and collection lines, a district may
obtain and use easements to access land owned by another person; and
to
7. Right of Eminent Domain: Purchase property for district
purposes under this legal provision if deemed necessary and approved
by the board.
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