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ABA REAL ESTATE SECTION MEETING WATER AND SEWER SERVICES: Update on Certificates of Convenience and Necessity (CCNs) Mary Sahs Sahs & Associates, P.C. February 14, 2006
Overview ¾ Water
and Sewer Service Providers
¾ Importance ¾ Developer
of CCNs
Issues
¾ Recent
Legislative/Regulatory Changes
Water and Sewer Service Providers ¾ Municipalities ¾ Special
Purpose Districts (MUDs, WCIDs, SUDs)
¾ Water
Supply Corporations (WSCs)
¾ Investor-Owned
Utilities
(IOUs)
1
What is a CCN? ¾A
certificate issued by the TCEQ that authorizes and obligates a retail public utility to provide water or sewer service to a defined geographic area
Purpose of CCN? ¾ To
establish and protect monopolies for providing retail water and sewer service
When Is a CCN Required? ¾ Water
Supply Corporations and Investor-Owned Utilities must have a CCN
¾ Municipalities
and Special Purpose Districts sometimes obtain a CCN although it is not required
2
Developer Issues Were Impetus For Recent Changes in Law ¾ Water
and sewer providers extend CCNs into undeveloped areas ¾ The provider may be ill-prepared to provide adequate and continuous service ¾ The provider may not be able to meet the timeline required for development
Developer Issues Were Impetus For Recent Changes in Law ¾ Some
providers have federal loans based on their service area ¾ Some providers demand exorbitant reimbursement to decertify ¾ No individual landowner notice of CCN applications ¾ Poor quality CCN service area records
HB 2876 and 30 TAC Chapter 291 ¾ Change
criteria for obtaining, amending, transferring, and decertifying CCNs
¾ Amend
mapping requirements and add deed record filing requirements
¾ Add
individual notice requirements
3
Key Concepts/Provisions ¾ Opt
out of inclusion in proposed CCN
¾ Expedited
decertification process
¾ Mapping,
deed recordation, individual
notice ¾ Greater
evidence of capability to serve
¾ Municipalities
and CCNs
Opt Out Provision (Future) ¾ Automatic: z z z
Landowner of > 25 acres File written “opt out” with TCEQ Within 30 days of notice of CCN application
Opt Out Provision (Future) ¾ Not z z z z
Automatic:
Service area is inside city/ETJ City has >500,000 population Applicant is the municipality TCEQ must approve
4
Getting Out of Existing CCN ¾ Contested z
z z
Case Hearing Process
Revocation or amendment of certificate = decertification TCEQ and petition process still available Has never, is no longer, failed, is incapable of providing service
Getting Out of Existing CCN ¾ Expedited z z z
z z z
Process
Alternative to decertification Owner of at least 50 acres Not in platted subdivision with service Alternate provider available No hearing Reasonable compensation for CCN holder
Notice to the Public ¾ Location z z z
Maps and detailed description Include in application File in county deed records
¾ Mailed z
of service area
notice of application
Owners of 25 acres or more
5
Application Requirements: Capable of Providing Continuous and Adequate Service ¾ Describe ¾ Capital
requests for service
improvements plan
¾ Construction z z z
budget and time line
All facilities Full service Entire proposed service area
Application Requirements: Capable of Providing Continuous and Adequate Service ¾ Sources
of funding for all facilities
¾ Current
and projected land uses, including densities
¾ Applicant’s
current financials
Municipalities and CCNs ¾ Future: z
z
z
City > 500,000 population - no CCN granted for a service area within city/ETJ without city consent City extending ETJ does not trump existing CCN area No municipal CCN beyond ETJ without landowner consent
6
Municipalities and CCNs ¾ Existing: z
z z
z
Municipal CCNs outside ETJ are void unless landowner consent No regulations; self-implementing TCEQ - no action on cities’ CCNs outside ETJs until Jan. 1, 2008 Pending applications require landowner consent
Suggested Reading ¾ House ¾ 30
Bill 2876 Enrolled Version
TAC Chap 291, amended 1/06
¾ “Facts
About Your Water Supply” - Lone Star Chapter Sierra Club (2005)
¾ “What
Kind of Entity is Your Service Provider and Why It Matters” – Anthony S. Corbett (2004)
Mary K. Sahs Sahs & Associates, P.C. 512-326-2556 512-326-2586 (fax) [email protected]
7
Overview ¾ Water
and Sewer Service Providers
¾ Importance ¾ Developer
of CCNs
Issues
¾ Recent
Legislative/Regulatory Changes
Water and Sewer Service Providers ¾ Municipalities ¾ Special
Purpose Districts (MUDs, WCIDs, SUDs)
¾ Water
Supply Corporations (WSCs)
¾ Investor-Owned
Utilities
(IOUs)
1
What is a CCN? ¾A
certificate issued by the TCEQ that authorizes and obligates a retail public utility to provide water or sewer service to a defined geographic area
Purpose of CCN? ¾ To
establish and protect monopolies for providing retail water and sewer service
When Is a CCN Required? ¾ Water
Supply Corporations and Investor-Owned Utilities must have a CCN
¾ Municipalities
and Special Purpose Districts sometimes obtain a CCN although it is not required
2
Developer Issues Were Impetus For Recent Changes in Law ¾ Water
and sewer providers extend CCNs into undeveloped areas ¾ The provider may be ill-prepared to provide adequate and continuous service ¾ The provider may not be able to meet the timeline required for development
Developer Issues Were Impetus For Recent Changes in Law ¾ Some
providers have federal loans based on their service area ¾ Some providers demand exorbitant reimbursement to decertify ¾ No individual landowner notice of CCN applications ¾ Poor quality CCN service area records
HB 2876 and 30 TAC Chapter 291 ¾ Change
criteria for obtaining, amending, transferring, and decertifying CCNs
¾ Amend
mapping requirements and add deed record filing requirements
¾ Add
individual notice requirements
3
Key Concepts/Provisions ¾ Opt
out of inclusion in proposed CCN
¾ Expedited
decertification process
¾ Mapping,
deed recordation, individual
notice ¾ Greater
evidence of capability to serve
¾ Municipalities
and CCNs
Opt Out Provision (Future) ¾ Automatic: z z z
Landowner of > 25 acres File written “opt out” with TCEQ Within 30 days of notice of CCN application
Opt Out Provision (Future) ¾ Not z z z z
Automatic:
Service area is inside city/ETJ City has >500,000 population Applicant is the municipality TCEQ must approve
4
Getting Out of Existing CCN ¾ Contested z
z z
Case Hearing Process
Revocation or amendment of certificate = decertification TCEQ and petition process still available Has never, is no longer, failed, is incapable of providing service
Getting Out of Existing CCN ¾ Expedited z z z
z z z
Process
Alternative to decertification Owner of at least 50 acres Not in platted subdivision with service Alternate provider available No hearing Reasonable compensation for CCN holder
Notice to the Public ¾ Location z z z
Maps and detailed description Include in application File in county deed records
¾ Mailed z
of service area
notice of application
Owners of 25 acres or more
5
Application Requirements: Capable of Providing Continuous and Adequate Service ¾ Describe ¾ Capital
requests for service
improvements plan
¾ Construction z z z
budget and time line
All facilities Full service Entire proposed service area
Application Requirements: Capable of Providing Continuous and Adequate Service ¾ Sources
of funding for all facilities
¾ Current
and projected land uses, including densities
¾ Applicant’s
current financials
Municipalities and CCNs ¾ Future: z
z
z
City > 500,000 population - no CCN granted for a service area within city/ETJ without city consent City extending ETJ does not trump existing CCN area No municipal CCN beyond ETJ without landowner consent
6
Municipalities and CCNs ¾ Existing: z
z z
z
Municipal CCNs outside ETJ are void unless landowner consent No regulations; self-implementing TCEQ - no action on cities’ CCNs outside ETJs until Jan. 1, 2008 Pending applications require landowner consent
Suggested Reading ¾ House ¾ 30
Bill 2876 Enrolled Version
TAC Chap 291, amended 1/06
¾ “Facts
About Your Water Supply” - Lone Star Chapter Sierra Club (2005)
¾ “What
Kind of Entity is Your Service Provider and Why It Matters” – Anthony S. Corbett (2004)
Mary K. Sahs Sahs & Associates, P.C. 512-326-2556 512-326-2586 (fax) [email protected]
7
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