Sec. 51A.005. EXCLUSION OF TERRITORY WITHIN SUBDISTRICT. (a) A subdistrict board shall call an election within the subdistrict to coincide with the confirmation election under Section 51A.003(e) at which a proposition shall be submitted to the voters to authorize the subdistrict to enter into a contract with the district under which the subdistrict would impose an unlimited ad valorem tax on all taxable property within the subdistrict to repay to the district a portion of the district's total outstanding indebtedness. That portion would be calculated by multiplying the total outstanding indebtedness of the district on the date of the first payment under the proposed contract by a percentage equal to the proportion of the total taxable property within the district borne by the total taxable property within the subdistrict, as of the date of the preceding tax roll.

(b) The ballots in the election under Subsection (a) shall be printed to provide for voting for or against the following proposition: "The execution of a contract and the imposition of taxes to pay for the contract." A copy of the proposed contract shall be available at the office of the district for inspection before the election. The election shall otherwise be conducted in conformity with the provisions of Chapter 51 relating to elections to approve a tax-supported contract with the United States.

(c) If the proposition is approved at the election under Subsection (a), the board of the district shall, on receipt of a petition that conforms substantially to Section 49.305 and describes the territory within the subdistrict, conduct a hearing not later than the 30th day after the date of receipt of the petition on the exclusion of the subdistrict from the boundaries of the district.

(d) If the subdistrict board establishes at the hearing that the subdistrict has been created, has authorized the issuance of bonds by the subdistrict or by the district on behalf of the subdistrict, has authorized the tax-supported contract payment, and has elected a permanent board of directors, the board of the district shall, at the conclusion of the hearing, enter an order approving the contract supported by a tax within the subdistrict and excluding all land within the subdistrict from the boundaries of the district contingent only on the completion of the refunding bond issue.

(e) Refunding bonds may be issued by a district to implement the exclusion of land within a subdistrict under any terms that are considered advisable by the board of the district and are only subject to the interest rate limitations imposed by the constitution and laws of this state. If refunding bonds are not issued by a district on or before the 30th day after the date of the hearing at which the subdistrict establishes all items in Subsection (d), all property within the subdistrict is considered excluded from the boundaries of the district on the expiration of the 30th day after the date of the hearing.

(f) Any subdistrict located within a service area as defined by a United States Environmental Protection Agency grant used by a district to expand its wastewater treatment plant shall obtain wastewater treatment services to the extent of capacity provided with the United States Environmental Protection Agency grant proceeds from the wastewater treatment plant constructed with the prior proceeds of the United States Environmental Protection Agency grant in accordance with the terms of a contract approved by the governing bodies of the subdistrict and the district.

(g) To reduce the cost of services to its residents and taxpayers, the subdistrict shall use the employees, consultants, staff, and services of the district and reimburse the district for all costs of furnishing those services. The services may be terminated for good cause. The subdistrict and the district shall submit to arbitration any dispute between the subdistrict and the district.

Added by Acts 2015, 84th Leg., R.S., Ch. 1236 (S.B. 1296), Sec. 19.004(a), eff. September 1, 2015.