Sec. 552.014. CONTRACTS WITH WATER DISTRICTS OR NONPROFIT CORPORATIONS

(a) In this section, "water district" means a district created under Article XVI, Section 59, of the Texas Constitution.

(b) A municipality may enter into a contract with a water district or with a corporation organized to be operated without profit under which the district or corporation will acquire for the benefit of and convey to the municipality, either separately or together, a water supply or treatment system, a water distribution system, a sanitary sewage collection or treatment system, or works or improvements necessary for drainage of land in the municipality. In connection with the acquisition, the district or corporation shall improve, enlarge, or extend the existing municipal facilities as provided by the contract.

(c) If the contract provides that the municipality assumes ownership of the water, sewer, or drainage system on completion of construction or at the time that all debt incurred by the district or corporation in the acquisition, construction, improvement, or extension of the system is paid in full, the municipality may make payments to the district or corporation for water, sewer, or drainage services to part or all of the residents of the municipality. The contract may provide for purchase of the system by the municipality through periodic payments to the district or corporation in amounts that, together with the net income of the district or corporation, are sufficient to pay the principal of and interest on the bonds of the district or corporation as they become due. The contract may provide:

(1) that any payments due under this section are payable from and are secured by a pledge of a specified part of the revenues of the municipal water system, sewer system, or drainage system;

(2) for the levying of a tax to make payments due under this section; or

(3) that the payments due under this section be made from a combination of revenues from the system and taxes.

(d) The contract may provide that the district or corporation may use the streets, alleys, and other public ways and places of the municipality for water, sewer, or drainage purposes for a period that ends at the time the indebtedness of the district or corporation is paid in full and the municipality acquires title to the system in accordance with this section.

(e) The contract may provide for the operation of the system by the municipality, and, if so authorized, the municipality may operate the system.

(f) A contract under this section must be authorized by a majority vote of the governing body of the municipality.

Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987. Renumbered from Local Government Code, Section 402.014 by Acts 2007, 80th Leg., R.S., Ch. 885 , Sec. 3.76(a)(2), eff. April 1, 2009.