Tex. Local Gov't Code Section 552.003
Acquisition of Existing Public Utility; Payment in Lieu of School Taxes


(a)

If, after May 8, 1943, a municipality acquires an existing public utility, the property of which is subject to taxation by a school district, and the municipality finances the purchase of the utility by issuing revenue bonds, the governing body of the municipality may expressly provide, in an indenture of trust, mortgage, or other lien instrument that evidences the obligation of the municipality for the purchase price, for an annual payment from the income of the utility of an amount equal to the average annual taxes assessed by the school district on the properties of the utility for the five years preceding the year in which the utility is acquired.

(b)

The school board trustees and the governing body of the municipality may agree on an annual payment of a sum in lieu of school taxes. The sum must be adequate and just under the circumstances of the case considering the school district’s needs.

(c)

The obligation of the municipality to make the payment in lieu of taxes is a proper item of municipal operating expenses that, with other operating expenses, is a first lien and charge against the income of the encumbered utility.

(d)

The obligation of the municipality to make the payment in lieu of taxes as provided in the encumbrance agreement is an “expense or obligation” of the utility system as that term is used in statutes authorizing the acquisition of a public utility and the issuance of revenue bonds for the purchase of the utility. The obligation extends to and binds any municipality that purchases or otherwise acquires an existing public utility in accordance with the terms of the encumbrance agreement or mutual agreements as authorized under Subsections (a) and (b).

(e)

The obligation of the municipality as fixed in the indenture or encumbrance is not impaired, affected, modified, or released by the release or discharge of the encumbrance, and, as long as the municipality owns and operates the public utility, it shall continue to pay to the school district on an annual basis from the revenues of the utility an amount equal to the average annual taxes assessed in behalf of the school district on the properties of the utility for the five years preceding the year in which the utility is acquired by the municipality. Alternatively, after the release or discharge of the encumbrance, the school board trustees and the governing body of the municipality may agree to provide for a payment in lieu of school taxes as provided by Subsection (b).
Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987.
Renumbered from Local Government Code, Section 402.003 by Acts 2007, 80th Leg., R.S., Ch. 885 (H.B. 2278), Sec. 3.76(a)(2), eff. April 1, 2009.

Source: Section 552.003 — Acquisition of Existing Public Utility; Payment in Lieu of School Taxes, https://statutes.­capitol.­texas.­gov/Docs/LG/htm/LG.­552.­htm#552.­003 (accessed Jun. 5, 2024).

552.001
Municipal Utility Systems
552.002
Certain Public Services and Utility Systems in Home-rule Municipality
552.003
Acquisition of Existing Public Utility
552.011
Use of Eminent Domain Power
552.012
Municipalities in or Contracting with a Water District
552.014
Contracts with Water Districts or Nonprofit Corporations
552.015
Water Supply in Type a General-law Municipality
552.016
Sale or Lease of Water System by Type a General-law Municipality
552.017
Water Systems in Home-rule Municipalities
552.018
Municipal Contract with Private Entity
552.019
Contract with Water Improvement District or Water Control and Improvement District
552.020
Contract with Water District
552.022
Contracts with Certain Special Districts
552.023
Contract Between Municipality and Trinity River Authority
552.024
Municipal Contract for Reclaimed Water Facility in Certain Municipalities
552.0025
Connection, Disconnection, and Liability for Municipal Utility Services
552.041
Short Title
552.042
Legislative Finding
552.043
Application of Subchapter to Municipalities
552.044
Definitions
552.045
Adoption of System
552.046
Incorporation of Existing Facilities
552.047
Drainage Charges
552.048
Billings
552.049
Segregation of Income
552.050
Delinquent Charges
552.051
Drainage Revenue Bonds
552.052
Discontinuation of Drainage System
552.053
Exemptions
552.054
Effect of Subchapter
552.061
Application of Subchapter to Certain Municipalities
552.062
Definitions
552.063
Municipal Authority
552.064
Declaration
552.065
Assessment Provisions
552.066
Apportionment of Assessments
552.067
Notice of Proposed Improvements
552.068
Exemptions
552.069
Notice and Hearing Requirements
552.070
Change
552.071
Corrections
552.072
Joint Proceedings
552.073
Restrictions in Certain Counties
552.074
Authorized Investment
552.075
Home-rule Municipality
552.091
Application of Subchapter to Certain Municipalities
552.092
Construction of Sanitary Sewers
552.101
Municipal Water Contracts
552.102
Eminent Domain by Municipal Sewer Providers
552.103
Rights of Water Corporation Providing Service to Municipality
552.104
Location of Water Lines Outside Municipal Boundaries
552.105
Relocation of Water Line to Allow Change to Traffic Lane
552.121
Applicability of Subchapter
552.122
Transfer of Management and Control of Electric Utility System
552.123
Authority of Board of Trustees
552.124
Effect of Previously Issued Bonds
552.141
Applicability of Subchapter
552.142
Transfer of Management and Control of Utility System
552.0205
Revenue Bonds to Pay for District Services Under Contract
552.0451
Extension of Service Area by Certain Municipalities
552.901
Relocation or Replacement of Water or Sewer Laterals
552.902
Operation of Certain Electric Light and Power Systems by Home-rule Municipalities
552.903
Agreement with Conservation and Reclamation District
552.904
Lease of Natural Gas Distribution System by Certain Municipalities
552.905
Operation of Cable Tv Systems by General-law Municipalities
552.906
Municipal Utility Plants
552.907
Construction of Water or Wastewater Improvements to Preserve Water Quality Aquifer
552.909
Prohibited Employment of or Contracting with Former Trustee or Board Member
552.910
Agreements with Other Political Subdivisions for Collection of Past Due Utility or Solid Waste Disposal Service Fees
552.911
Duties of Water Service Provider to an Area Served by Sewer Service of Certain Political Subdivisions
552.912
Certain Damages Caused by Sewage Backup
552.913
Combined Heating and Power Systems in Certain Municipalities
552.914
Utility Contracts for Certain Municipalities
552.915
Records of Municipally Owned Electric Utility Providing Broadband Services

Accessed:
Jun. 5, 2024

§ 552.003’s source at texas​.gov