CHAPTER 572. PUBLIC UTILITY AGENCIES FOR PROVISION OF WATER OR SEWER SERVICE
LOCAL GOVERNMENT CODE
TITLE 13. WATER AND UTILITIES
SUBTITLE C. WATER PROVISIONS APPLYING TO MORE THAN ONE TYPE OF
LOCAL GOVERNMENT
CHAPTER 572. PUBLIC UTILITY AGENCIES FOR PROVISION OF WATER OR
SEWER SERVICE
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 572.001. DEFINITIONS. In this chapter:
(1) "Facility" means a facility necessary or incidental to the
collection, transportation, treatment, or disposal of sewage or
to the conservation, storage, transportation, treatment, or
distribution of water, including a plant site, right-of-way, and
property, equipment, or right of any kind useful in connection
with the collection, transportation, treatment, or disposal of
sewage or with the conservation, storage, transportation,
treatment, or distribution of water.
(2) "Private entity" means an entity, other than a public
entity, involved solely in financing, constructing, operating, or
maintaining water and sewer facilities.
(3) "Public entity" means a political entity or corporate body
of this state, including a county, municipality, or district or
authority created under Section 52, Article III, or Section 59,
Article XVI, Texas Constitution.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 19, eff. Sept. 1,
1999.
Renumbered from Local Government Code, Section 422.001 by Acts
2007, 80th Leg., R.S., Ch.
885, Sec. 3.76(c)(2), eff. April 1, 2009.
Sec. 572.002. EFFECT OF CHAPTER. This chapter does not affect:
(1) the statutory purposes relating to the establishment,
operation, or regulation under the Water Code or other applicable
law of a public entity that may become a co-owner of a public
utility agency under this chapter; or
(2) a public or private entity's rights or powers in effect on
August 27, 1979.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 19, eff. Sept. 1,
1999.
Renumbered from Local Government Code, Section 422.002 by Acts
2007, 80th Leg., R.S., Ch.
885, Sec. 3.76(c)(2), eff. April 1, 2009.
Sec. 572.003. CONSTRUCTION. This chapter shall be liberally
construed to carry out its purposes.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 19, eff. Sept. 1,
1999.
Renumbered from Local Government Code, Section 422.003 by Acts
2007, 80th Leg., R.S., Ch.
885, Sec. 3.76(c)(2), eff. April 1, 2009.
Sec. 572.004. CONFLICTS WITH OTHER LAW. This chapter prevails
to the extent of a conflict between this chapter and any other
law, including:
(1) a law regulating the affairs of a municipal corporation; or
(2) a home-rule charter provision.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 19, eff. Sept. 1,
1999.
Renumbered from Local Government Code, Section 422.004 by Acts
2007, 80th Leg., R.S., Ch.
885, Sec. 3.76(c)(2), eff. April 1, 2009.
SUBCHAPTER B. COOPERATION BY PUBLIC AND PRIVATE ENTITIES
Sec. 572.011. AUTHORITY TO JOINTLY OWN FACILITIES. Two or more
public entities that have the authority to engage in the
collection, transportation, treatment, or disposal of sewage or
the conservation, storage, transportation, treatment, or
distribution of water may join together as cotenants or co-owners
to plan, finance, acquire, construct, own, operate, or maintain
facilities to:
(1) achieve economies of scale in providing essential water and
sewage systems to the public;
(2) promote the orderly economic development of this state; and
(3) provide environmentally sound protection of this state's
future water and wastewater needs.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 19, eff. Sept. 1,
1999.
Renumbered from Local Government Code, Section 422.011 by Acts
2007, 80th Leg., R.S., Ch.
885, Sec. 3.76(c)(2), eff. April 1, 2009.
Sec. 572.012. GENERAL RIGHTS, POWERS, AND DUTIES OF PUBLIC
ENTITIES. (a) Each participating public entity may:
(1) use the entity's money to plan, acquire, construct, own,
operate, and maintain its interest in a facility;
(2) share in the facility;
(3) issue bonds and other securities to raise money for a
purpose described by Subdivision (1) in the same manner and to
the same extent and subject to the same conditions as would be
applicable if the public entity had sole ownership of the
facility;
(4) acquire, for the use and benefit of each participating
public entity, land, easements, and property for a facility by
purchase or by exercising the power of eminent domain; and
(5) transfer or otherwise convey the land, property, or property
interest or otherwise have the land, property, or property
interest become vested in other participating public entities to
the extent and in the manner agreed between the entities.
(b) In relation to a participating public entity's undivided
interest in a facility, the entity has each right, privilege,
exemption, power, duty, and liability the entity would have if
the entity had sole ownership.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 19, eff. Sept. 1,
1999.
Renumbered from Local Government Code, Section 422.012 by Acts
2007, 80th Leg., R.S., Ch.
885, Sec. 3.76(c)(2), eff. April 1, 2009.
Sec. 572.013. USE OF EMINENT DOMAIN. (a) A participating
public entity has the power of eminent domain to be exercised as
provided by this section.
(b) The use of eminent domain authority by a participating
public entity is governed by the law relating to an eminent
domain proceeding involving a municipality in this state.
(c) A participating public entity may acquire a fee title to the
condemned real property, excluding mineral interests.
(d) A participating public entity may not use eminent domain
authority to acquire an interest in a facility that belongs to
another public entity or a private entity.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 19, eff. Sept. 1,
1999.
Renumbered from Local Government Code, Section 422.013 by Acts
2007, 80th Leg., R.S., Ch.
885, Sec. 3.76(c)(2), eff. April 1, 2009.
Sec. 572.014. EXEMPTION FROM TAXATION. A participating public
entity is entitled to each constitutional or statutory ad valorem
or other tax exemption attributable to the jointly owned facility
or to a property or service bought, sold, leased, or used to
construct, maintain, repair, or operate the facility to the
extent that the entity would have been exempt from the tax if the
entity's undivided interest were an entire interest in the
facility or in the property or service. The entity is entitled to
any applicable exemption certificate or statement provided by law
to claim or prove the exemption.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 19, eff. Sept. 1,
1999.
Renumbered from Local Government Code, Section 422.014 by Acts
2007, 80th Leg., R.S., Ch.
885, Sec. 3.76(c)(2), eff. April 1, 2009.
SUBCHAPTER C. PUBLIC UTILITY AGENCIES
Sec. 572.051. DEFINITIONS. In this subchapter:
(1) "Concurrent ordinance" means an ordinance or resolution
adopted under this subchapter by two or more public entities that
relates to the creation or re-creation of a public utility
agency.
(2) "Obligation" means a revenue bond or note.
(3) "Public utility agency" means an agency created under this
subchapter by two or more public entities to plan, finance,
construct, own, operate, or maintain facilities.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 19, eff. Sept. 1,
1999.
Renumbered from Local Government Code, Section 422.051 by Acts
2007, 80th Leg., R.S., Ch.
885, Sec. 3.76(c)(2), eff. April 1, 2009.
Sec. 572.052. CREATION OF PUBLIC UTILITY AGENCY. (a) Public
entities may create a public utility agency by concurrent
ordinances.
(b) A public entity may join in the creation of a public utility
agency under this subchapter only if, at the time the concurrent
ordinance is adopted, the entity has the authority to engage in
the collection, transportation, treatment, or disposal of sewage
or the conservation, storage, transportation, treatment, or
distribution of water. This subsection does not prohibit a public
entity from disposing of a facility after creation of the agency.
(c) A public utility agency is a:
(1) separate agency;
(2) political subdivision of this state; and
(3) political entity and corporate body.
(d) A public utility agency may not impose a tax but has all the
other powers that are related to facilities and that are provided
by law to a municipality that owns a facility.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 19, eff. Sept. 1,
1999.
Renumbered from Local Government Code, Section 422.052 by Acts
2007, 80th Leg., R.S., Ch.
885, Sec. 3.76(c)(2), eff. April 1, 2009.
Sec. 572.053. RE-CREATION OF PUBLIC UTILITY AGENCY. The public
entities that create a public utility agency may by concurrent
ordinances re-create the agency by adding or deleting, or both, a
public entity.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 19, eff. Sept. 1,
1999.
Renumbered from Local Government Code, Section 422.053 by Acts
2007, 80th Leg., R.S., Ch.
885, Sec. 3.76(c)(2), eff. April 1, 2009.
Sec. 572.054. NOTICE. (a) The governing body of each public
entity shall publish notice of its intention to create a public
utility agency in a newspaper of general circulation in the
county in which the entity is domiciled.
(b) A notice under this section must be published once a week
for two consecutive weeks. The first publication must appear at
least 14 days before the date set for passage of the concurrent
ordinance.
(c) The notice must state:
(1) the date, time, and location at which the governing body
proposes to adopt the concurrent ordinance; and
(2) that a public utility agency will be created on the date on
which the concurrent ordinances take effect.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 19, eff. Sept. 1,
1999.
Renumbered from Local Government Code, Section 422.054 by Acts
2007, 80th Leg., R.S., Ch.
885, Sec. 3.76(c)(2), eff. April 1, 2009.
Sec. 572.055. CONTENTS OF CONCURRENT ORDINANCE. A concurrent
ordinance creating a public utility agency under Section 572.052
or re-creating an agency under Section 572.053 must, as adopted
by each public entity:
(1) contain identical provisions;
(2) define the boundaries of the agency to include the territory
within the boundaries of each participating public entity as the
boundaries are changed periodically;
(3) designate the name of the agency; and
(4) designate the number, place, initial term, and manner of
appointment of directors in accordance with Section 572.057.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 19, eff. Sept. 1,
1999.
Renumbered from Local Government Code, Section 422.055 by Acts
2007, 80th Leg., R.S., Ch.
885, Sec. 3.76(c)(2), eff. April 1, 2009.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
885, Sec. 3.77(20), eff. April 1, 2009.
Sec. 572.056. PETITION AND REFERENDUM. (a) If, before the date
set for the adoption of a concurrent ordinance, 10 percent of the
registered voters of a public entity present a petition to the
governing body of the entity requesting that a referendum be
called, the ordinance may not take effect unless a majority of
the qualified voters of the entity voting in the election have
approved the ordinance.
(b) The public entity must hold the election in conformity with:
(1) the Election Code;
(2) Chapter 1251, Government Code; and
(3) this subchapter.
(c) Except as provided by Subsection (a), a concurrent ordinance
is not subject to a referendum.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 19, eff. Sept. 1,
1999.
Renumbered from Local Government Code, Section 422.056 by Acts
2007, 80th Leg., R.S., Ch.
885, Sec. 3.76(c)(2), eff. April 1, 2009.
Sec. 572.057. BOARD OF DIRECTORS. (a) A public utility agency
shall be governed by a board of directors. The board is
responsible for the management, operation, and control of the
property belonging to the agency.
(b) Each director must be appointed by place by the governing
bodies of the participating public entities. Each participating
public entity is entitled to appoint at least one director.
(c) An employee, officer, or member of the governing body of a
public entity may serve as a director but may not have a personal
interest in a contract executed by the public utility agency
other than as an employee, officer, or member of the governing
body of the public entity.
(d) A director of a public utility agency is entitled to $50 for
each day spent in attending meetings of the board and a per diem
of $50 if authorized by resolution of the board, plus actual
expenses incurred in attending the meetings.
(e) Except as provided by Subsection (d), a director of a public
utility agency serves without compensation.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 19, eff. Sept. 1,
1999.
Renumbered from Local Government Code, Section 422.057 by Acts
2007, 80th Leg., R.S., Ch.
885, Sec. 3.76(c)(2), eff. April 1, 2009.
Sec. 572.058. POWERS. (a) A public utility agency may not
engage in any utility business other than the collection,
transportation, treatment, or disposal of sewage or the
conservation, storage, transportation, treatment, or distribution
of water for a participating public entity that owns jointly with
the agency a facility in this state.
(b) A public utility agency may:
(1) perform any act necessary to the full exercise of the
agency's powers;
(2) enter into a contract, lease, or agreement with or accept a
grant or loan from a:
(A) department or agency of the United States;
(B) department, agency, or municipality or other political
subdivision of this state; or
(C) public or private corporation or person;
(3) sell, lease, convey, or otherwise dispose of any right,
interest, or property the agency considers to be unnecessary for
the efficient operation or maintenance of its facilities; and
(4) adopt rules to govern the operation of the agency and its
employees, facilities, and service.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 19, eff. Sept. 1,
1999.
Renumbered from Local Government Code, Section 422.058 by Acts
2007, 80th Leg., R.S., Ch.
885, Sec. 3.76(c)(2), eff. April 1, 2009.
Sec. 572.059. CONSTRUCTION CONTRACTS. (a) A public utility
agency may award a contract for construction of an improvement
that involves the expenditure of more than $20,000 only on the
basis of competitive bids.
(b) The agency shall publish notice of intent to receive bids
once a week for two consecutive weeks in a newspaper of general
circulation in the county in which the agency is domiciled. The
first publication must appear at least 14 days before the date
bids are to be received.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 19, eff. Sept. 1,
1999.
Renumbered from Local Government Code, Section 422.059 by Acts
2007, 80th Leg., R.S., Ch.
885, Sec. 3.76(c)(2), eff. April 1, 2009.
Sec. 572.060. CONTRACTS FOR SEWER OR WATER SERVICES. A public
utility agency may:
(1) contract with the public entities creating the agency for
the collection, transportation, treatment, or disposal of sewage
or the conservation, storage, transportation, treatment, or
distribution of water; and
(2) under terms the agency's board of directors considers
appropriate, contract with private entities for services
described by Subdivision (1).
Added by Acts 1999, 76th Leg., ch. 227, Sec. 19, eff. Sept. 1,
1999.
Renumbered from Local Government Code, Section 422.060 by Acts
2007, 80th Leg., R.S., Ch.
885, Sec. 3.76(c)(2), eff. April 1, 2009.
Sec. 572.061. RATES AND CHARGES. (a) In contracting with a
public or private entity for wastewater collection, transmission,
treatment, or disposal services or for water conservation,
storage, transportation, treatment, or distribution, a public
utility agency must charge rates sufficient to produce revenue
adequate to:
(1) pay all expenses of operation and maintenance;
(2) pay when due the principal of and interest on obligations
issued under this subchapter;
(3) pay the principal of and interest on any legal debt of the
agency;
(4) pay when due all sinking and reserve fund payments; and
(5) fulfill any agreements made with the holders of any
obligations.
(b) A public utility agency may also establish a reasonable
depreciation and emergency fund.
(c) Payments made under a contract with a public utility agency
constitute an operating expense of the public or private entity
served under the contract, unless otherwise prohibited by a
previously outstanding obligation of the purchasing entity.
(d) Notwithstanding Subsection (a), the state reserves its power
to regulate and control the rates and charges by a public utility
agency.
(e) Until obligations issued under this subchapter have been
paid and discharged, this state pledges to and agrees with the
purchasers and successive holders of the obligations that it will
not limit or alter the powers of the agency to establish and
collect rates and charges that will produce revenue sufficient to
pay for those items specified in Subsections (a) and (b) and any
other obligations of the agency in connection with those items.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 19, eff. Sept. 1,
1999.
Renumbered from Local Government Code, Section 422.061 by Acts
2007, 80th Leg., R.S., Ch.
885, Sec. 3.76(c)(2), eff. April 1, 2009.
Sec. 572.062. OBLIGATIONS. (a) A public utility agency may
issue obligations to accomplish the purposes of the agency.
(b) The public utility agency may pledge to the payment of the
obligations the revenue of all or part of its facilities,
including facilities acquired after the obligations are issued.
However, operation and maintenance expenses, including salaries
and labor, materials, and repairs of facilities necessary to
render efficient service, are a first lien on and charge against
the pledged revenue.
(c) The public utility agency may set aside from the proceeds of
the sale of the obligations amounts for payment into the interest
and sinking fund and reserve fund, and for interest and operating
expenses during construction and development, as specified in the
proceedings authorizing the obligations.
(d) Obligation proceeds may be invested, pending their use, in
securities, interest-bearing certificates, or time deposits as
specified in the proceedings authorizing the obligations.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 19, eff. Sept. 1,
1999.
Renumbered from Local Government Code, Section 422.062 by Acts
2007, 80th Leg., R.S., Ch.
885, Sec. 3.76(c)(2), eff. April 1, 2009.
Sec. 572.063. REFUNDING NOTES. A public utility agency may
issue refunding notes for the purpose and in the manner provided
by general law, including Chapter 1207, Government Code.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 19, eff. Sept. 1,
1999.
Renumbered from Local Government Code, Section 422.063 by Acts
2007, 80th Leg., R.S., Ch.
885, Sec. 3.76(c)(2), eff. April 1, 2009.
Sec. 572.064. FORM AND PROVISIONS OF OBLIGATIONS. (a) An
obligation issued under this subchapter must mature not later
than 40 years after its date of issuance.
(b) The obligations must be signed by the presiding officer or
assistant presiding officer of the public utility agency and be
attested by the secretary.
(c) A public utility agency may sell obligations issued under
this subchapter at public or private sale at a price or under the
terms the agency determines to be in the best interest of the
agency.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 19, eff. Sept. 1,
1999.
Renumbered from Local Government Code, Section 422.064 by Acts
2007, 80th Leg., R.S., Ch.
885, Sec. 3.76(c)(2), eff. April 1, 2009.