Maple Run at Austin Municipal Utility District v. Monaghan

931 S.W.2d 941, 40 Tex. Sup. Ct. J. 54, 1996 Tex. LEXIS 153, 1996 WL 596805
CourtTexas Supreme Court
DecidedOctober 18, 1996
Docket96-0489
StatusPublished
Cited by65 cases

This text of 931 S.W.2d 941 (Maple Run at Austin Municipal Utility District v. Monaghan) is published on Counsel Stack Legal Research, covering Texas Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Maple Run at Austin Municipal Utility District v. Monaghan, 931 S.W.2d 941, 40 Tex. Sup. Ct. J. 54, 1996 Tex. LEXIS 153, 1996 WL 596805 (Tex. 1996).

Opinion

PHILLIPS, Chief Justice.

Section 43.082 of the Texas Local Government Code, enacted in 1995 and expiring on the last day of 1996, purportedly authorizes certain municipal utility districts lying within a municipality’s extraterritorial jurisdiction to dissolve, requiring the affected municipality to take ownership of the district’s assets and assume its debts. Because of extremely specific requirements about the amount and character of outstanding debt and other factors, Maple Run at Austin Municipal Utility District is the only district in the state qualifying for the special treatment under section 43.082. The parties stipulate to this fact, and they further stipulate that the Legislature intended for the statute to apply only to this district. In this direct appeal, we must decide whether section 43.082 violates the Texas Constitution. The trial court invalidated the statute and enjoined its enforcement. Because we hold that section 43.082 is an invalid local law under Article III, Section 56, we affirm the judgment of the trial court.

I

Maple Run at Austin Municipal Utility District (hereinafter “Maple Run” or “the District”) was formed in 1983 in an area south of the City of Austin to provide utility service to the area’s residents. The District, created under Chapter 54 of the Texas Water Code, is authorized to, among other things, construct and operate plants and facilities for supplying water and wastewater services. See Tex. WateR Code § 54.201. The District is a political subdivision of the state, with the power to incur bonded indebtedness and levy ad valorem taxes. See Tex. WateR Code §§ 54.501, 54.601.

Because Maple Run lies within the City of Austin’s extraterritorial jurisdiction, the Maple Rim landowners were required under section 54.016 of the Texas Water Code to obtain consent from the City to create the district. 1 In connection with the City’s grant of consent, the District and the City entered into a written agreement concerning the creation and operation of the District (the “Consent Agreement”). This agreement recognizes that the District lies within the City’s extraterritorial jurisdiction, and that its area “is scheduled for annexation by the City in accordance with the Annexation Plan of the City.” It further requires all parties to “use their best efforts to bring about the conclusion of [the annexation] process.... ”

The Consent Agreement also provides that, upon annexation, the District will dissolve and the City will immediately take title to the District’s assets and assume its liabilities. The District is required to obtain the City’s prior approval as to the amount, terms, and conditions of all bonds issued by the District, and the City has the right to approve all plans and specifications for construction of the District’s facilities. The agreement also mandates that real estate development in the District comply with the City’s land use ordinances.

The District subsequently issued $20,900,-000 in “contract revenue bonds”, repayable *944 out of revenues from the District’s utility operations. See Tex. WateR Code § 54.503(2). The District also issued $3,750,* 000 in “combination tax and revenue bonds”, repayable out of a combination of ad valorem taxes and revenues. Id. at § 54.503(8). All facilities for which the District issued its bonds have been constructed. Based on its projected use of the District facilities, the City agreed to bear 84.83 percent of the debt service for the contract revenue bonds. The City assumed no liability, prior to annexation, for the remaining part of the contract revenue bonds, or any part of the combination tax and revenue bonds.

Real estate development did not occur in Maple Run as expected. The District initially anticipated that as many as 2,000 single family and multi-family units would be developed, as well as a substantial number of commercial projects. Since 1983, however, only about 450 homes have been built, and there has been no multi-family or commercial development. Accordingly, revenues from water and wastewater services have been much lower than expected, forcing the District to assess relatively high taxes and monthly surcharges to homeowners. Despite these high rates, the District contends that it is still experiencing serious financial trouble.

In 1995, the Legislature passed Senate Bill 1261, which was codified as section 43.082 of the Texas Local Government Code. This act authorizes the municipal utility district that meets its specific requirements to dissolve upon resolution of the district’s board, without consent from the adjacent municipality, and upon dissolution requires the municipality to assume the assets and liabilities of the district.

When a district dissolves under section 43.082, the municipality is required to provide full municipal services to the area, and the municipality may annex the district by simple resolution, without following the normal notice and hearing procedures. See Tex. Local Gov’t Code § 43.082(b), (c). The municipality may assess a $25 monthly surcharge on utility customers in the former district and, importantly, may also assess a platting fee surcharge on developers desiring to subdivide land in the former district. The surcharge may be in an amount sufficient to offset the financial burden imposed on the municipality from assuming the district’s indebtedness. See id. at § 43.082(e).

The application of section 43.082 is restricted as follows:

(a) This section applies to any district created in or after 1983 within the extraterritorial jurisdiction of a municipality with written consent by ordinance or resolution as required by Section 42.042 if the district has:
(1) issued not less than $17 million nor more than $21 million in bonds, excluding refunding bonds, repayable in a manner authorized under Section 54.503(2), Water Code;
(2) issued at least $3.5 million of bonds repayable in a manner authorized under Section 54.503(3), Water Code, before June 1,1993; and
(3) constructed all of the facilities for which the bonds were issued prior to December 31,1991.

Tex. Local Gov’t Code § 43.082(a). The parties stipulate that Maple Run is the only district in the State meeting these criteria, that only Maple Run requested its enactment, and that the Legislature intended for section 43.082 to apply only to Maple Run. In other words; while Maple Run is not mentioned by name in the statute, the Legislature selected the criteria for the purpose of restricting the statute solely to that district. Moreover, because section 43.082 expires on December 31,1996, there is no chance that it will ever apply to any other districts. The legislative history accompanying Senate Bill 1261 confirms that the statute was enacted to relieve the financial problems of Maple Run. See Bill Analysis of S.B. 1261 (May 11, 1995).

In January 1996, the Maple Run board of directors adopted a resolution dissolving the District in accordance with section 43.082, *945 effective May 10, 1996. Prior to dissolution, Maple Run landowners James G. Monaghan, Maple Run Joint Venture and S.R.

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931 S.W.2d 941, 40 Tex. Sup. Ct. J. 54, 1996 Tex. LEXIS 153, 1996 WL 596805, Counsel Stack Legal Research, https://law.counselstack.com/opinion/maple-run-at-austin-municipal-utility-district-v-monaghan-tex-1996.