CHAPTER 65. SPECIAL UTILITY DISTRICTS

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WATER CODE

TITLE 4. GENERAL LAW DISTRICTS

CHAPTER 65. SPECIAL UTILITY DISTRICTS

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 65.001. DEFINITIONS. In this chapter:

(1) "District" means a special utility district operating under

this chapter.

(2) "Board" means the board of directors of a district.

(3) "Director" means a member of the board of directors of a

district.

(4) "Commission" means the Texas Natural Resource Conservation

Commission.

(5) "Executive director" means the executive director of the

Texas Natural Resource Conservation Commission.

(6) "Public agency" means any city, the United States and its

agencies, the State of Texas and its agencies, and any district

or authority created under Article XVI, Section 59, or Article

III, Sections 52(b)(1) and (2), of the Texas Constitution.

(7) "City" means any incorporated city or town.

(8) "Extraterritorial jurisdiction" means the extraterritorial

jurisdiction of a city as determined under Chapter 42, Local

Government Code.

(9) "Sole expense" means the actual cost of relocating, raising,

lowering, rerouting, changing grade, or altering the construction

to provide comparable replacement without enhancing the facility,

after deducting the net salvage value derived from the old

facility.

(10) "Water supply or sewer service corporation" means any

member-owned, member-controlled, nonprofit water supply or sewer

service corporation created and operating under Chapter 67, that:

(A) provides water supply services to noncontiguous subdivisions

in two or more counties, at least one of which counties has a

population greater than 3.3 million; or

(B) is providing the services of a water supply or sewer service

corporation under a certificate of convenience and necessity

issued by the commission or a predecessor agency.

Added by Acts 1983, 68th Leg., p. 2448, ch. 435, Sec. 4, eff.

Aug. 29, 1983. Amended by Acts 1985, 69th Leg., ch. 447, Sec. 1,

eff. Nov. 15, 1985; Acts 1985, 69th Leg., ch. 795, Sec. 1.153,

eff. Sept. 1, 1985; Acts 1987, 70th Leg., ch. 149, Sec. 47, eff.

Sept. 1, 1987; Acts 1991, 72nd Leg., 1st C.S., ch. 3, Sec. 1.082,

eff. Aug. 12, 1991; Acts 1997, 75th Leg., ch. 474, Sec. 1, eff.

Sept. 1, 1997; Acts 1999, 76th Leg., ch. 62, Sec. 18.67, eff.

Sept. 1, 1999; Acts 1999, 76th Leg., ch. 320, Sec. 1, eff. Aug.

30, 1999; Acts 2001, 77th Leg., ch. 669, Sec. 150, eff. Sept. 1,

2001.

SUBCHAPTER B. CREATION OF DISTRICT; CONVERSION OF DISTRICT

Sec. 65.011. CREATION OF DISTRICT. A special utility district

may be created under and subject to the authority, conditions,

and restrictions of, and is considered a conservation and

reclamation district under Article XVI, Section 59, of the Texas

Constitution.

Added by Acts 1983, 68th Leg., p. 2448, ch. 435, Sec. 4, eff.

Aug. 29, 1983. Amended by Acts 1985, 69th Leg., ch. 447, Sec. 1,

eff. Nov. 15, 1985.

Sec. 65.012. PURPOSES OF DISTRICT. A district may be created:

(1) to purchase, own, hold, lease, and otherwise acquire sources

of water supply; to build, operate, and maintain facilities for

the transportation of water; and to sell water to towns, cities,

and other political subdivisions of this state, to private

business entities, and to individuals;

(2) for the establishment, operation, and maintenance of

fire-fighting facilities to perform all fire-fighting activities

within the district; or

(3) for the protection, preservation, and restoration of the

purity and sanitary condition of water within the district.

Added by Acts 1983, 68th Leg., p. 2448, ch. 435, Sec. 4, eff.

Aug. 29, 1983. Amended by Acts 1985, 69th Leg., ch. 447, Sec. 1,

eff. Nov. 15, 1985; Acts 2003, 78th Leg., ch. 494, Sec. 1, eff.

June 20, 2003.

Sec. 65.013. COMPOSITION OF DISTRICT. (a) A district may

include the area in all or part of any one or more counties

including all or part of any cities and other public agencies.

(b) The land composing a district is not required to be

contiguous, but may consist of separate bodies of land separated

by land that is not included in the district.

Added by Acts 1983, 68th Leg., p. 2448, ch. 435, Sec. 4, eff.

Aug. 29, 1983. Amended by Acts 1985, 69th Leg., ch. 447, Sec. 1,

eff. Nov. 15, 1985.

Sec. 65.014. CERTIFIED RESOLUTION SEEKING CREATION OF DISTRICT.

(a) If creation of a district is proposed by a water supply or

sewer service corporation, a certified copy of a resolution

requesting creation must be filed with the commission.

(b) The resolution shall be signed by the president and

secretary of the board of directors of a water supply or sewer

service corporation and shall state that the water supply or

sewer service corporation, acting through its board of directors,

has found that it is necessary and desirable for the water supply

or sewer service corporation to be converted into a district.

Added by Acts 1983, 68th Leg., p. 2448, ch. 435, Sec. 4, eff.

Aug. 29, 1983. Amended by Acts 1985, 69th Leg., ch. 447, Sec. 1,

eff. Nov. 15, 1985; Acts 1999, 76th Leg., ch. 320, Sec. 2, eff.

Aug. 30, 1999.

Sec. 65.015. CONTENTS OF RESOLUTION. In addition to the

requirements stated in Section 65.014, the resolution shall:

(1) describe the boundaries of the proposed district by metes

and bounds or by lot and block number, if there is a recorded map

or plat and survey of the area, or by any other commonly

recognized means in a certificate attached to the resolution

executed by a registered professional engineer;

(2) state the general nature of the services presently performed

by the water supply or sewer service corporation, the general

nature of the services proposed to be provided by the district,

and the necessity for the services provided by the district;

(3) include a name of the district that is generally descriptive

of the location of the district followed by the words special

utility district, but may not be the same name as any other

district in the same county;

(4) include the names of not less than five and not more than 11

qualified persons to serve as the initial board of directors of

the district; and

(5) specify each purpose for which the district is being

established.

Added by Acts 1983, 68th Leg., p. 2448, ch. 435, Sec. 4, eff.

Aug. 29, 1983. Amended by Acts 1985, 69th Leg., ch. 447, Sec. 1,

eff. Nov. 15, 1985; Acts 1999, 76th Leg., ch. 320, Sec. 2, eff.

Aug. 30, 1999; Acts 2003, 78th Leg., ch. 494, Sec. 2, eff. June

20, 2003.

Sec. 65.016. CONSENT OF CITY. A district may operate within the

corporate limits of a city or within the extraterritorial

jurisdiction of a city, provided that a city may require that the

district construct all facilities to serve the land in accordance

with plans and specifications that are approved by the city. The

city may also require that the city be entitled to inspect

facilities being constructed by a district within the corporate

limits or extraterritorial jurisdiction of the city.

Added by Acts 1983, 68th Leg., p. 2448, ch. 435, Sec. 4, eff.

Aug. 29, 1983. Amended by Acts 1985, 69th Leg., ch. 447, Sec. 1,

eff. Nov. 15, 1985.

Sec. 65.018. NOTICE AND HEARING ON DISTRICT CREATION. If a

resolution is filed under Section 65.014, the commission shall

give notice of an application as required by Section 49.011 and

may conduct a hearing on the application if the commission

determines that a hearing is necessary under Section 49.011.

Added by Acts 1983, 68th Leg., p. 2448, ch. 435, Sec. 4, eff.

Aug. 29, 1983. Amended by Acts 1985, 69th Leg., ch. 447, Sec. 1,

eff. Nov. 15, 1985; Acts 1997, 75th Leg., ch. 1070, Sec. 40, eff.

Sept. 1, 1997.

Sec. 65.020. HEARING. (a) If the commission determines that a

hearing is necessary under Section 49.011, the commission shall

conduct a hearing and accept evidence on the sufficiency of the

resolution and whether or not the request for conversion for each

purpose specified in the resolution, as required by Section

65.015, is feasible and practicable and is necessary and would be

a benefit to all or any part of the land proposed to be included

in the district. The commission may only consider a purpose for

which the district is being created that is specified in the

resolution.

(b) The commission has jurisdiction to determine all issues on

the sufficiency of the resolution and the creation of the

district.

commission may make all incidental orders necessary with respect

to the matters before it.

Added by Acts 1983, 68th Leg., p. 2448, ch. 435, Sec. 4, eff.

Aug. 29, 1983. Amended by Acts 1985, 69th Leg., ch. 447, Sec. 1,

eff. Nov. 15, 1985; Acts 1997, 75th Leg., ch. 1070, Sec. 41, eff.

Sept. 1, 1997.

Amended by:

Acts 2005, 79th Leg., Ch.

1244, Sec. 1, eff. September 1, 2005.

Sec. 65.021. GRANTING OR REFUSING CREATION OF DISTRICT. (a) If

the commission finds that the resolution conforms to the

requirements of Section 65.015, the request for conversion is

feasible and practicable, and each purpose for which the district

is created is necessary and would be a benefit to the land

proposed to be included in the district, the commission shall

make these findings in an order and shall authorize the creation

of the district for the purpose or purposes specified in the

resolution, as required by Section 65.015, on approval at the

confirmation and directors' election called and held under this

subchapter.

(b) In determining if the request for conversion is feasible and

practicable and if each purpose for which the district is created

is necessary and would be a benefit to the land included in the

district, the commission shall consider:

(1) the availability of comparable service from other systems,

including water districts, municipalities, and regional

authorities;

(2) the reasonableness of projected construction costs, if any,

tax rates, and water and sewer rates; and

(3) whether or not the district and its system and subsequent

development within the district will have an unreasonable effect

on the following:

(A) land elevation;

(B) subsidence;

(D) recharge capability of a groundwater source;

(E) natural runoff rates and drainage; and

(F) water quality.

be included in the district will be benefited by the creation of

the district, the commission shall formally make this finding and

shall exclude all land that is not benefited from the proposed

district and shall redefine the proposed district's boundaries

accordingly.

(d) If the commission finds that the resolution does not conform

to the requirements of Section 65.015 of this code, the request

for conversion is not feasible or practicable, or a purpose for

which the district is created is not necessary or a benefit to

the land in the district, the commission shall make this finding

in its order and shall deny the creation of the district.

(e) A copy of the order of the commission granting or denying

the request for conversion stated in the resolution must be

mailed to each city that has extraterritorial jurisdiction in a

county in which the proposed district is located and that

requested notice of hearing as provided by Section 65.019 of this

code.

Added by Acts 1983, 68th Leg., p. 2448, ch. 435, Sec. 4, eff.

Aug. 29, 1983. Amended by Acts 1985, 69th Leg., ch. 447, Sec. 1,

eff. Nov. 15, 1985; Acts 1997, 75th Leg., ch. 1070, Sec. 42, eff.

Sept. 1, 1997.

Amended by:

Acts 2005, 79th Leg., Ch.

1244, Sec. 2, eff. September 1, 2005.

Sec. 65.022. TEMPORARY DIRECTORS. If the commission authorizes

the creation of the district, it shall appoint those persons

whose names are listed in the resolution filed with the

commission by the water supply or sewer service corporation to

serve as temporary directors until initial directors are elected

as provided by this subchapter.

Added by Acts 1983, 68th Leg., p. 2448, ch. 435, Sec. 4, eff.

Aug. 29, 1983. Amended by Acts 1985, 69th Leg., ch. 447, Sec. 1,

eff. Nov. 15, 1985; Acts 1999, 76th Leg., ch. 320, Sec. 2, eff.

Aug. 30, 1999.

Sec. 65.023. APPEAL FROM ORDER OF COMMISSION. A city or a

person who appeared in person or by attorney and offered

testimony for or against the creation of the district, may appeal

from the order of the commission authorizing or refusing the

creation of the district. The appeal must be made within 30 days

after the entry of the order.

Added by Acts 1983, 68th Leg., p. 2448, ch. 435, Sec. 4, eff.

Aug. 29, 1983. Amended by Acts 1985, 69th Leg., ch. 447, Sec. 1,

eff. Nov. 15, 1985.

SUBCHAPTER C. ADMINISTRATIVE PROVISIONS

Sec. 65.101. BOARD OF DIRECTORS. A district is governed by a

board of not less than five and not more than 11 directors.

Added by Acts 1983, 68th Leg., p. 2448, ch. 435, Sec. 4, eff.

Aug. 29, 1983. Amended by Acts 1985, 69th Leg., ch. 447, Sec. 1,

eff. Nov. 15, 1985.

Sec. 65.102. QUALIFICATIONS FOR DIRECTORS. To be qualified to

serve as a director, a person must be:

(1) at least 18 years old;

(2) a resident citizen of this state; and

(3) either own land subject to taxation in the district, be a

user of the facilities of the district, or be a qualified voter

of the district.

Added by Acts 1983, 68th Leg., p. 2448, ch. 435, Sec. 4, eff.

Aug. 29, 1983. Amended by Acts 1985, 69th Leg., ch. 447, Sec. 1,

eff. Nov. 15, 1985.

Sec. 65.103. ELECTION OF DIRECTORS; TERMS OF OFFICE. (a) The

persons receiving the highest number of votes at each election

shall serve as directors of the district.

(b) The terms of the directors may run concurrently, or may be

staggered, but in any event, the term of office of a director may

not exceed three years.

directors constituting the initial board shall be determined by

the temporary directors, and the terms must be clearly stated on

the ballot for the confirmation and directors' election.

(d) Notwithstanding Sections 41.001 and 41.003, Election Code,

the board may hold an election to elect directors on any date

determined by the board. The terms of directors must be stated on

the ballot.

Added by Acts 1983, 68th Leg., p. 2448, ch. 435, Sec. 4, eff.

Aug. 29, 1983. Amended by Acts 1985, 69th Leg., ch. 447, Sec. 1,

eff. Nov. 15, 1985; Acts 1995, 74th Leg., ch. 715, Sec. 35, eff.

Sept. 1, 1995; Acts 1997, 75th Leg., ch. 1070, Sec. 43, eff.

Sept. 1, 1997.

SUBCHAPTER D. GENERAL POWERS AND DUTIES

Sec. 65.201. POWERS. (a) A district has the functions, powers,

authority, and rights that will permit accomplishment of the

purposes for which it is created.

(b) A district may purchase, construct, acquire, own, operate,

maintain, repair, improve, or extend inside and outside its

boundaries any works, improvements, facilities, plants,

equipment, and appliances necessary to accomplish the purposes

for which it was created, including works, improvements,

facilities, plants, equipment, and appliances incident, helpful,

or necessary to:

(1) supply water for municipal uses, domestic uses, power and

commercial purposes, and other beneficial uses or controls;

(2) collect, transport, process, dispose of, store, and control

domestic, industrial, or communal wastes whether in fluid, solid,

or composite state;

(3) gather, conduct, divert, and control local storm water or

other local harmful excesses of water in the district;

(4) irrigate the land in a district;

(5) alter land elevation in a district where it is needed; and

(6) provide fire-fighting services for the inhabitants of the

district.

Added by Acts 1983, 68th Leg., p. 2448, ch. 435, Sec. 4, eff.

Aug. 29, 1983. Amended by Acts 1985, 69th Leg., ch. 447, Sec. 1,

eff. Nov. 15, 1985.

Sec. 65.203. SOLID WASTE. A district may collect solid waste

and may purchase, construct, acquire, own, operate, maintain,

repair, improve, and extend a solid waste collection and disposal

system inside and outside the district and may make proper

charges for its facilities or services provided by the system.

Added by Acts 1983, 68th Leg., p. 2448, ch. 435, Sec. 4, eff.

Aug. 29, 1983. Amended by Acts 1985, 69th Leg., ch. 447, Sec. 1,

eff. Nov. 15, 1985.

Sec. 65.205. ADOPTING RULES. A district may adopt and enforce

reasonable rules to:

(1) secure and maintain safe, sanitary, and adequate plumbing

installations, connections, and appurtenances as subsidiary parts

of its sanitary sewer system;

(2) preserve the purity and the sanitary condition of all water

controlled by the district;

(3) prevent waste or the unauthorized use of water controlled by

the district;

(4) regulate privileges on any land or easement owned or

controlled by the district;

(5) provide and regulate a safe and adequate freshwater

distribution system; and

(6) ensure adequate safeguards in the performance of the

district's fire-fighting activities.

Added by Acts 1983, 68th Leg., p. 2448, ch. 435, Sec. 4, eff.

Aug. 29, 1983. Amended by Acts 1985, 69th Leg., ch. 447, Sec. 1,

eff. Nov. 15, 1985.

Sec. 65.206. EFFECT OF RULES. After the required publication,

rules adopted by the district under Section 65.205 of this code

shall be recognized by the courts as if they were penal

ordinances of a city.

Added by Acts 1983, 68th Leg., p. 2448, ch. 435, Sec. 4, eff.

Aug. 29, 1983. Amended by Acts 1985, 69th Leg., ch. 447, Sec. 1,

eff. Nov. 15, 1985.

Sec. 65.207. PUBLICATION OF RULES. (a) The board shall publish

a substantive statement of each rule and the penalty for its

violation once a week for two consecutive weeks in one or more

newspapers with general circulation in the area in which the

district is located.

(b) The substantive statement shall be condensed as far as

possible to intelligently explain the purpose to be accomplished

or the act forbidden by each rule.

the violator to a penalty and that the full text of each rule is

on file in the principal office of the district at which it may

be read by any interested person.

(d) Any number of rules may be included in one notice.

Added by Acts 1983, 68th Leg., p. 2448, ch. 435, Sec. 4, eff.

Aug. 29, 1983. Amended by Acts 1985, 69th Leg., ch. 447, Sec. 1,

eff. Nov. 15, 1985.

Sec. 65.208. EFFECTIVE DATE OF RULES. The penalty for violation

of a rule is not effective and enforceable until five days after

the last publication of the notice. Five days after the last

publication, the published rule takes effect and ignorance of the

rule is not a defense to a prosecution for the enforcement of the

penalty.

Added by Acts 1983, 68th Leg., p. 2448, ch. 435, Sec. 4, eff.

Aug. 29, 1983. Amended by Acts 1985, 69th Leg., ch. 447, Sec. 1,

eff. Nov. 15, 1985.

Sec. 65.235. PROHIBITION ON ASSESSMENT OR COLLECTION OF TAXES.

Section 49.107 does not apply to a district created under this

chapter.

Added by Acts 1995, 74th Leg., ch. 715, Sec. 36, eff. Sept. 1,

1995.

SUBCHAPTER G. ISSUANCE OF BONDS AND NOTES

Sec. 65.501. ISSUANCE OF BONDS AND NOTES. The district may

issue its bonds or notes for the purpose of purchasing,

constructing, acquiring, owning, operating, repairing, improving,

or extending any district works, improvements, facilities,

plants, equipment, and appliances needed to accomplish the

purposes listed in Section 65.012 of this code, including works,

improvements, facilities, plants, equipment, and appliances

needed to provide a waterworks system, sanitary sewer system,

storm sewer system, solid waste disposal system, or to provide

for solid waste collection or fire-fighting services and

facilities.

Added by Acts 1983, 68th Leg., p. 2448, ch. 435, Sec. 4, eff.

Aug. 29, 1983. Amended by Acts 1985, 69th Leg., ch. 447, Sec. 1,

eff. Nov. 15, 1985.

Sec. 65.502. FORM OF BONDS AND NOTES. (a) A district may issue

its bonds or notes in various series or issues.

(b) Bonds or notes shall mature serially or otherwise not more

than 40 years from their date and shall bear interest at any rate

permitted by the constitution and laws of this state. The board

shall determine the maturity and the interest rate of the bonds

and notes.

investment securities under Chapter 8, Business & Commerce

Code, and may be issued registrable as to principal or as to both

principal and interest. The board may make the bonds redeemable

before maturity, at the option of the district, or may include in

the bonds a mandatory redemption provision.

(d) A district's bonds or notes may be issued in the form,

denominations, and manner and under the terms, conditions, and

details, and must be signed and executed, as provided by the

board in the resolution or order authorizing the issuance of the

bonds or notes.

Added by Acts 1983, 68th Leg., p. 2448, ch. 435, Sec. 4, eff.

Aug. 29, 1983. Amended by Acts 1985, 69th Leg., ch. 447, Sec. 1,

eff. Nov. 15, 1985.

Sec. 65.503. MANNER OF REPAYMENT OF BONDS OR NOTES. The board

may provide for the payment of principal of and interest and

redemption price, if any, on the bonds or notes by pledging all

or any part of the designated revenues to result from the

ownership or operation of the district's works, improvements,

facilities, plants, equipment, and appliances or under specific

contracts for the period of time the board determines.

Added by Acts 1983, 68th Leg., p. 2448, ch. 435, Sec. 4, eff.

Aug. 29, 1983. Amended by Acts 1985, 69th Leg., ch. 447, Sec. 1,

eff. Nov. 15, 1985.

Sec. 65.504. ADDITIONAL SECURITY FOR BONDS OR NOTES. (a) The

bonds or notes, within the discretion of the board, may be

additionally secured by a deed of trust or mortgage lien on all

or part of the physical properties of the district, and

franchises, easements, water rights, and appropriation permits,

leases, and contracts and all rights appurtenant to those

properties, vesting in the trustee power to sell the property for

payment of the indebtedness, power to operate the property, and

all other authority necessary for the further security of the

bonds or notes.

(b) The trust indenture, regardless of the existence of the deed

of trust or mortgage lien on any property, may:

(1) include provisions prescribed by the board for the security

of the bonds or notes and the preservation of the trust estate;

(2) make provision for amendment or modification;

(3) condition the right to spend district money or sell district

property on approval of a registered professional engineer

selected as provided in the trust indenture; and

(4) make provision for investment of funds of the district.

mortgage lien, if one is given, is absolute owner of the

property, facilities, and rights purchased and is entitled to

maintain and operate them.

Added by Acts 1983, 68th Leg., p. 2448, ch. 435, Sec. 4, eff.

Aug. 29, 1983. Amended by Acts 1985, 69th Leg., ch. 447, Sec. 1,

eff. Nov. 15, 1985.

Sec. 65.505. METHOD FOR ISSUANCE OF BONDS AND NOTES. Bonds or

notes may be issued by resolution or order of the board.

Added by Acts 1983, 68th Leg., p. 2448, ch. 435, Sec. 4, eff.

Aug. 29, 1983. Amended by Acts 1985, 69th Leg., ch. 447, Sec. 1,

eff. Nov. 15, 1985.

Sec. 65.506. PROVISIONS OF BONDS OR NOTES. (a) In an order or

resolution authorizing the issuance of bonds or notes, including

refunding bonds, the board may provide for the flow of funds, the

establishment and maintenance of the interest and sinking fund,

the reserve fund, and other funds, and may enter into additional

covenants relating to the bonds or notes and the pledged revenues

and to the operation and maintenance of those works,

improvements, facilities, plants, equipment, and appliances the

revenues of which are pledged, including provision for the

operation or for the leasing of all or any part of the

improvements and the use or pledge of money derived from the

operation contracts and leases, as the board considers

appropriate.

(b) An order or resolution of the board authorizing the issuance

of bonds or notes also may prohibit the further issuance of

bonds, notes, or other obligations payable from the pledged

revenue or may reserve the right to issue additional bonds to be

secured by a pledge of and payable from the revenue on a parity

with or subordinate to the lien and pledge in support of the

bonds being issued, subject to the conditions that may be set

forth in the order or resolution.

may include other provisions and covenants determined by the

board that are not prohibited by the constitution or by this

chapter.

(d) The board may adopt and have executed any other proceedings

or instruments necessary and convenient in the issuance of bonds

or notes.

Added by Acts 1983, 68th Leg., p. 2448, ch. 435, Sec. 4, eff.

Aug. 29, 1983. Amended by Acts 1985, 69th Leg., ch. 447, Sec. 1,

eff. Nov. 15, 1985.

Sec. 65.507. USE OF BOND OR NOTE PROCEEDS. The district may use

bond or note proceeds to pay interest, administrative, and

operating expenses expected to accrue during the period of

construction. The period of construction under this section may

not exceed three years as provided by the bond order or

resolution. The district also may use bond or note proceeds to

pay expenses incurred and to be incurred in the issuance, sale,

and delivery of the bonds or notes.

Added by Acts 1983, 68th Leg., p. 2448, ch. 435, Sec. 4, eff.

Aug. 29, 1983. Amended by Acts 1985, 69th Leg., ch. 447, Sec. 1,

eff. Nov. 15, 1985.

Sec. 65.508. SALE OR EXCHANGE OF BONDS. (a) The board shall

sell the bonds on the best terms and for the best possible price,

but the bonds may not be sold for less than 95 percent of their

face value.

(b) The district may exchange bonds for property acquired by

purchase or in payment of the contract price of work done or

services performed for the use and benefit of the district.

Added by Acts 1983, 68th Leg., p. 2448, ch. 435, Sec. 4, eff.

Aug. 29, 1983. Amended by Acts 1985, 69th Leg., ch. 447, Sec. 1,

eff. Nov. 15, 1985.

Sec. 65.510. REFUNDING BONDS. (a) A district may issue bonds

to refund all or any part of its outstanding bonds, notes, or

other obligations, including matured but unpaid interest coupons.

(b) Refunding bonds shall mature serially or otherwise not more

than 40 years from their date and shall bear interest at any rate

or rates permitted by the constitution and laws of this state.

bonds, notes, or other obligations being refunded or from other

additional sources.

(d) The refunding bonds shall be approved by the attorney

general and shall be registered by the comptroller on the

surrender and cancellation of the bonds being refunded as

provided by Section 65.509 of this code.

(e) An order or resolution authorizing the issuance of refunding

bonds may provide that the refunding bonds will be sold and the

proceeds deposited in the place or places at which the bonds

being refunded are payable, and the refunding bonds may be issued

before the cancellation of the bonds being refunded provided an

amount sufficient to pay the principal of and interest on the

bonds being refunded to their maturity dates, or to their option

dates if the bonds have been duly called for payment prior to

maturity according to their terms, is deposited in the place or

places at which the bonds being refunded are payable. The

comptroller shall register the refunding bonds without the

surrender and cancellation of bonds being refunded.

(f) A refunding may be accomplished in one or in several

installment deliveries. Refunding bonds and their interest

coupons are investment securities under Chapter 8, Business &

Commerce Code.

(g) In lieu of the method set forth in this section, a district

may refund bonds, notes, or other obligations as provided by the

general laws of this state.

Added by Acts 1983, 68th Leg., p. 2448, ch. 435, Sec. 4, eff.

Aug. 29, 1983. Amended by Acts 1985, 69th Leg., ch. 447, Sec. 1,

eff. Nov. 15, 1985.

Sec. 65.511. OBLIGATIONS; LEGAL INVESTMENT; SECURITY FOR FUNDS.

(a) Bonds, notes, and other obligations issued by a district are

legal and authorized investments for all banks, savings banks,

trust companies, savings and loan associations, insurance

companies, fiduciaries, and trustees, guardians, and for interest

and sinking funds and other public funds of the state and its

agencies, including the permanent school fund, and counties,

cities, school districts, and other political subdivisions of the

state.

(b) A district's bonds, notes, and other obligations are

eligible to secure deposits of public funds of the state and its

agencies and counties, cities, school districts, and other

political subdivisions of the state. The bonds, notes, and other

obligations are lawful and sufficient security to the extent of

their market value if accompanied by all unmatured interest

coupons attached to them.

Added by Acts 1983, 68th Leg., p. 2448, ch. 435, Sec. 4, eff.

Aug. 29, 1983. Amended by Acts 1985, 69th Leg., ch. 447, Sec. 1,

eff. Nov. 15, 1985.

Sec. 65.513. MANDAMUS BY BONDHOLDERS. In addition to other

rights and remedies provided by the law of this state, if a

district defaults in the payment of principal of, interest on, or

redemption price on its bonds when due, or if the district fails

to make payments into any fund created in the order or resolution

authorizing the issuance of the bonds, or defaults in the

observation or performance of any other covenants, conditions, or

obligations stated in the resolution or order authorizing the

issuance of its bonds, the owners of any of the bonds are

entitled to a writ of mandamus issued by a court of competent

jurisdiction compelling the district and its officials to observe

and perform the covenants, the obligations, or conditions

prescribed in the order or resolution authorizing the issuance of

the district's bonds.

Added by Acts 1983, 68th Leg., p. 2448, ch. 435, Sec. 4, eff.

Aug. 29, 1983. Amended by Acts 1985, 69th Leg., ch. 447, Sec. 1,

eff. Nov. 15, 1985.

Sec. 65.515. CANCELLATION OF UNSOLD BONDS. (a) The board, by

order or resolution, may provide for the cancellation of all or

any part of any bonds that have been submitted to and approved by

the attorney general and registered by the comptroller, but not

yet sold, and may provide for the issuance of new bonds in lieu

of the old bonds in the manner provided by this chapter for the

issuance of the original bonds including their approval by the

attorney general and their registration by the comptroller.

(b) The order or resolution of the board shall describe the

bonds to be canceled, and also shall describe the new bonds to be

issued in lieu of the old bonds.

providing for the cancellation of the old bonds, together with

the old bonds, shall be delivered to the comptroller, who shall

cancel and destroy the old bonds and make a record of the

cancellation.

Added by Acts 1983, 68th Leg., p. 2448, ch. 435, Sec. 4, eff.

Aug. 29, 1983. Amended by Acts 1985, 69th Leg., ch. 447, Sec. 1,

eff. Nov. 15, 1985.

SUBCHAPTER H. ADDING AND EXCLUDING TERRITORY; CONSOLIDATING AND

DISSOLVING DISTRICTS

Sec. 65.723. CONSOLIDATION OF DISTRICTS. Two or more districts

governed by this chapter may consolidate into one district as

provided by this subchapter.

Added by Acts 1983, 68th Leg., p. 2448, ch. 435, Sec. 4, eff.

Aug. 29, 1983. Amended by Acts 1985, 69th Leg., ch. 447, Sec. 1,

eff. Nov. 15, 1985.

Sec. 65.724. ELECTIONS TO APPROVE CONSOLIDATION. (a) After the

board of each district has agreed on the terms and conditions of

consolidation, which may include the assumption by each district

of the other district's bonds, notes, or other obligations and

adoption of a name for the consolidated district, the board of

each district shall order an election in each of their respective

districts to determine whether the districts should be

consolidated.

(b) The board of each district shall order the election to be

held on the same day in each district and shall give notice of

the election for the time and in the manner provided by law for

bond elections under this chapter.

voters in each district voting at the election vote in favor of

the consolidation.

Added by Acts 1983, 68th Leg., p. 2448, ch. 435, Sec. 4, eff.

Aug. 29, 1983. Amended by Acts 1985, 69th Leg., ch. 447, Sec. 1,

eff. Nov. 15, 1985.

Sec. 65.725. GOVERNING CONSOLIDATED DISTRICTS. (a) After two

or more districts are consolidated, they become one district and

are governed as one district.

(b) During a period of 90 days after the date of the election to

approve consolidation, the officers of each district shall

continue to act jointly as officers of the original districts to

settle the affairs of their respective districts.

the original districts shall continue to act jointly as officers

of the consolidated district or name persons to serve as officers

of the consolidated district until their successors assume office

under Subsection (e) of this section.

(d) On the next available uniform election date, an election

shall be called and held, and directors will be elected for the

consolidated district in the same manner and for the same term as

directors elected under Section 65.103 of this code.

(e) New officers of the consolidated district must qualify as

officers of the district within the period of 90 days after the

election and shall assume their offices at the expiration of the

90-day period.

(f) The current board shall approve the bond of each new

officer.

Added by Acts 1983, 68th Leg., p. 2448, ch. 435, Sec. 4, eff.

Aug. 29, 1983. Amended by Acts 1985, 69th Leg., ch. 447, Sec. 1,

eff. Nov. 15, 1985.

Sec. 65.726. DEBTS OF ORIGINAL DISTRICTS. After two or more

districts are consolidated, the debts of the original districts

shall be protected and may not be impaired.

Added by Acts 1983, 68th Leg., p. 2448, ch. 435, Sec. 4, eff.

Aug. 29, 1983. Amended by Acts 1985, 69th Leg., ch. 447, Sec. 1,

eff. Nov. 15, 1985.

Sec. 65.727. DISSOLUTION OF DISTRICT PRIOR TO ISSUANCE OF BONDS.

(a) If the board considers it advisable before the issuance of

any bonds, notes, or other indebtedness, the board may dissolve a

district and liquidate the affairs of the district as provided by

this subchapter.

(b) If a majority of the board finds at any time before the

issuance of bonds, notes, or other obligations or the final

lending of its credit in another form that the proposed

undertaking for any reason is impracticable or apparently cannot

be successfully and beneficially accomplished, the board may

issue notice of a hearing on a proposal to dissolve the district.

Added by Acts 1983, 68th Leg., p. 2448, ch. 435, Sec. 4, eff.

Aug. 29, 1983. Amended by Acts 1985, 69th Leg., ch. 447, Sec. 1,

eff. Nov. 15, 1985.

Sec. 65.728. NOTICE OF HEARING. The board shall post notice of

the hearing on the bulletin board at the courthouse door of each

county in which the district is located and at three or more

other public places within the boundaries of the district and

shall publish notice of the hearing two times in a newspaper with

general circulation in the district. The notice must be posted

and published at least one time no later than the 14th day before

the date set for the hearing on the proposed dissolution of the

district.

Added by Acts 1983, 68th Leg., p. 2448, ch. 435, Sec. 4, eff.

Aug. 29, 1983. Amended by Acts 1985, 69th Leg., ch. 447, Sec. 1,

eff. Nov. 15, 1985.

Sec. 65.729. HEARING. The board shall hear all interested

persons and shall consider their evidence at the time and place

stated in the notice.

Added by Acts 1983, 68th Leg., p. 2448, ch. 435, Sec. 4, eff.

Aug. 29, 1983. Amended by Acts 1985, 69th Leg., ch. 447, Sec. 1,

eff. Nov. 15, 1985.

Sec. 65.730. BOARD'S ORDER TO DISSOLVE DISTRICT. If the board

unanimously determines from the evidence that the best interests

of the persons and property in the district will be served by

dissolving the district, the board shall enter the appropriate

findings and order in its records dissolving the district.

Otherwise the board shall enter its order providing that the

district has not been dissolved.

Added by Acts 1983, 68th Leg., p. 2448, ch. 435, Sec. 4, eff.

Aug. 29, 1983. Amended by Acts 1985, 69th Leg., ch. 447, Sec. 1,

eff. Nov. 15, 1985.

Sec. 65.731. JUDICIAL REVIEW OF BOARD'S ORDER. The board's

decree to dissolve the district may be appealed in the manner

provided by Sections 65.708-65.710 of this code for the review of

an order excluding land from the district.

Added by Acts 1983, 68th Leg., p. 2448, ch. 435, Sec. 4, eff.

Aug. 29, 1983. Amended by Acts 1985, 69th Leg., ch. 447, Sec. 1,

eff. Nov. 15, 1985.

State Codes and Statutes

State Codes and Statutes

State Codes and Statutes

State Codes and Statutes

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