City of Katy, TX Municipal Utility Districts Within Corporate Limits

The following conditions shall apply to every MUD within the city:

The MUD may acquire property outside its boundaries only for purposes of providing stormwater drainage or detention, potable water distribution, or sanitary sewer collection;

(2)

The MUD shall not provide services for any property outside its boundaries without the consent of the city;

(3)

The MUD shall not allow use of easements or stormwater drainage facilities owned or controlled by the MUD for any property or development outside its boundaries;

(4)

The MUD shall pay the actual costs incurred by the city for legal, engineering and financial advisory services in connection with the consent agreement (hereinafter defined) and the adoption of an ordinance consenting to creation of the MUD as set forth in the consent agreement. Should consider increasing the fee to cover the actual costs;

(5)

The facilities to be constructed by the MUD shall be designed and constructed in compliance with all applicable requirements and criteria of the applicable regulatory agencies and subject to the applicable provisions of the city's ordinance granting a petition for inclusion of certain territory in the MUD (the “consent ordinance”);

(6)

The city shall not allow any connection to be made to the MUD's water supply or sanitary sewer system until with respect to such connections:

(A)

The MUD has issued an assignment of capacity specifying the number of gallons per day of water supply and wastewater treatment allocated for such connection, as has provided a copy thereof to the city administrator;

(B)

The city has inspected the connection and premises and has issued a building permit for that connection;

(C)

All buildings or structures served by the connections shall be located entirely within the boundaries of a lot or parcel shown in a plan, plat or replat filed with and finally approved by the city planning and zoning commission and duly recorded in the official records of the county where the property is located (provided this limitation shall not apply if no plan, plat or replat is required by applicable state statutes, city ordinances or city planning and zoning commission regulations);

(D)

The MUD has paid to the city a capital recovery fee for water supply and wastewater treatment plant capacity. Such fee shall be based on the amount of potable water supply capacity and wastewater treatment capacity as determined by the city engineer and utilized by the city from time to time;

(7)

Unless and until the city shall dissolve the MUD and assume the properties, assets, obligations and liabilities of the MUD, the bonds of the MUD, as to both principal and interest, shall be and remain obligations solely of the MUD and shall never be deemed or construed to be obligations or indebtedness of the city;

(8)

All contracts with third parties for construction of water, sewer and stormwater facilities to serve the proposed MUD will contain the following provisions:

(A)

A requirement that all plans and specifications for construction of improvements or modification of improvements which are to be built to serve the MUD and/or require approval of the state commission on environmental quality be prepared in accordance with the then-adopted city specifications and requirements for such facilities and delivered to the city engineer for approval prior to submission to the state commission on environmental quality. All plans and specifications presented to the bidders shall be approved by the city prior to advertising for bids;

(B)

An agreement that all construction or modification of improvements to serve the MUD will be inspected by the city engineer and that no underground improvements will be backfilled prior to inspection and approval by the city engineer;

(C)

All contracts for construction of improvements will be awarded in compliance with the public bidding statutes contained within the Local Government Code, and the lowest responsible bid will be awarded regardless of percentage of developer participation in the cost of such contracts;

(9)

As the MUD's facilities are acquired and constructed, the MUD shall convey the same to the city, including all warranties relating to the facilities; provided, however, that the MUD shall not convey, and the city shall not accept, stormwater detention systems;

(10)

As acquisition and/or construction of each phase of the facilities is completed, representatives of the city shall inspect the same, and if the city finds that the same has been completed in accordance with the final plans and specifications the city will accept the same, whereupon such portion of the facilities shall be operated and maintained by the city at its sole expense; provided, however, that the city shall not accept, or operate and maintain, stormwater detention systems; and further provided, however, that in the event that the facilities have not been completed in accordance with the final plans and specifications, the city will immediately advise the MUD in what manner said facilities do not comply, and the MUD shall immediately correct the same, whereupon the city shall again inspect the facilities and accept the same if the defects have been corrected;

(11)

The city shall bill and collect from customers of the facilities and shall from time to time fix such rates and charges for such customers of the facilities as the city, in its sole discretion, determines are necessary, provided that the rates and charges for services afforded by the facilities will be equal and uniform to those charged other similar classifications of users in non-MUD areas of the city, and all revenues from the facilities shall belong exclusively to the city;

(12)

The city may impose a charge for connection to the facilities at a rate to be determined from time to time by the city, provided the charge is equal to the sums charged other city users for comparable connections, and the connection charge shall belong exclusively to the city;

(13)

The MUD is authorized to assess, levy and collect ad valorem taxes upon all taxable properties within the MUD to provide for:

(A)

The payment in full of the MUD's obligations, including principal, redemption premium, if any, and interest on the bonds to be issued by the MUD and to establish and maintain any interest and sinking fund, debt service fund or reserve fund; and

(B)

Administration, operation and maintenance purposes, all in accordance with applicable law;

(14)

The city shall not dissolve the MUD until the water, sewer and drainage utilities required to serve the MUD have been completed and bonds issued by the MUD to finance same, and the city shall afford the MUD the opportunity to discharge any obligations of the MUD pursuant to any existing agreements of the MUD with third parties for construction of facilities, by either:

(A)

Authorizing the MUD to sell its bonds before or during a transition period prior to the effective date of dissolution, as established by the city;

(B)

Issuing bonds and selling bonds of the city pursuant to Vernon's Texas Codes Annotated, Local Government Code section 43.080, as amended, in at least the amount necessary to discharge the MUD's obligations, including those under any such agreements; or

(C)

Providing written notice to the MUD that the city has sufficient funds available from other sources to discharge the MUD's obligations, including those under any such existing agreements with third parties;

(15)

All city ordinances and codes, including applicable permits, fees and inspections, shall be of full force and effect within the boundaries of the MUD in the same manner as with respect to other areas within the city's corporate limits, except as specifically herein provided otherwise;

(16)

No bonds or notes of the MUD shall be issued or sold unless, not less than twenty (20) days prior to publication of notice of sale, the MUD provides the city with a copy of its proposed bond order, preliminary official statement, bid form and notice of sale and the following criteria are met. The MUD shall not issue bonds unless the following conditions have been satisfied:

(A)

The MUD shall not issue any bonds unless the purpose for which the proceeds of such bonds may be used is limited to one or more of the following and no others:

(i)

Designing, purchasing and/or constructing or otherwise acquiring:

Waterworks facilities;

Wastewater facilities;

Stormwater drainage facilities;

Roads; or

Parks and recreation facilities;

(ii)

Purchasing or constructing or otherwise acquiring interests in real property, equipment, buildings, plants or structures necessary or incidental to the operation of waterworks facilities, wastewater facilities, or stormwater drainage facilities;

(iii)

Costs of issuance of the bonds (including but not limited to legal fees, financial advisory fees, administrative and organizational fees and expenses and costs of operations during construction, bond discount, capitalized interest, developer interest, creation costs, and contingencies relative to facilities not yet under contract);

(iv)

Any other purpose authorized by law and approved by the city council.

(B)

The MUD shall not sell or issue any bonds unless:

(i)

The terms of such bonds expressly provide that the MUD reserves and shall have the right to redeem the bonds not later than on any interest payment date subsequent to the 15th anniversary of the date of issuance, without premium;

(ii)

The bonds, other than refunding bonds, are sold after the taking of public bids thereof;

(iii)

None of such bonds, other than refunding bonds, are sold for less than 95% of par; and

(iv)

The net effective interest rate on bonds so sold, taking into account any discount or premium as well as the interest rate borne by such bonds, does not exceed two percent above the highest average interest rate reported by the Daily Bond Buyer in its weekly “20 Bond Index” during the one-month period next preceding the date notice of the sale of such bonds is given, and bids for the bonds will be received not more than forty-five days after notice of sale of the bonds is given.

The city shall review the documents required to be provided hereunder and the evidence of compliance with the foregoing criteria within ten (10) business days following receipt of same. If no written objections are provided to the MUD by the city within said period, issuance and sale of the bonds shall be deemed to be approved by the city and the criteria set forth above shall be deemed to be complied with. Any objections by the city shall be in writing and shall set forth the reasons therefor, which must be based on one or more of the matters described in subsections (A) and (B) above. Any costs incurred by the city in connection with review of the issuance of bonds shall be paid by the MUD, in an amount not to exceed $2,500.00;

(17)

The city acknowledges that a MUD has authority to assess an unlimited tax for payment of debt service. However, prior to implementation of any increase in tax rate following the setting of its initial rate, the MUD shall make a formal presentation to the council explaining the need for the increase, at which time residents of the MUD shall be given an opportunity to be heard. Notice of such presentation shall be sent to each owner of taxable property within the MUD as reflected on its most recent certified tax roll. This provision shall be in addition to any requirements of notice and hearing which may be contained in the Texas Water Code and in the Texas Tax Code which apply to the MUD;

(18)

In addition to the information the MUD is required to file of record as required by the Texas Water Code, the MUD shall annually deliver to each property owner within the MUD, as reflected on its most recent certified tax roll, written notice of the existence of the MUD and its right to assess taxes in addition to those assessed by the city. Such notice shall also contain a reference to the consent agreement, the consent ordinance and this division. Such notice shall advise the property owner that such documents are available for inspection during regular business hours in the MUD's office;

(19)

The proponent shall enter into a utility functions and services allocation agreement (“consent agreement”) with the city, which shall contain the terms and conditions set forth in this section, as well as other terms and conditions which may be agreed to by the city or imposed pursuant to section 13.07.035. The consent agreement shall be assigned by the proponent to the MUD upon its creation; and

(20)

The consent agreement shall be entered into simultaneously with the adoption of the consent ordinance.

(1999 Code, sec. 11.1003; Ordinance 2599, sec. II, adopted 11/11/13)