CHAPTER 8503. LOWER COLORADO RIVER AUTHORITY - Texas Statutes

SPECIAL DISTRICT LOCAL LAWS CODE

TITLE 6. WATER AND WASTEWATER

SUBTITLE G. RIVER AUTHORITIES

CHAPTER 8503. LOWER COLORADO RIVER AUTHORITY

Sec. 8503.001. CREATION. (a) A conservation and reclamation

district to be known as the "Lower Colorado River Authority" is

created. The authority is a governmental agency and a body

politic and corporate.

(b) The authority is created under and is essential to

accomplish the purposes of Section 59, Article XVI, Texas

Constitution, including the control, storing, preservation, and

distribution of the waters of the Colorado River and its

tributaries within the boundaries of the authority for

irrigation, generation of electric energy and power, and other

useful purposes; the reclamation and irrigation of arid,

semiarid, and other lands needing irrigation; the development of

parks on lands owned or acquired by the authority; and the

conservation and development of the forests, water, and electric

power in this state.

(c) Nothing in this chapter or in any other law shall be

construed as authorizing the authority to levy or collect taxes

or to create any indebtedness payable out of taxes or in any way

to pledge the credit of this state.

Added by Acts 2003, 78th Leg., ch. 996, Sec. 1, eff. Sept. 1,

2003.

Renumbered from Water Code, Section 222.001 by Acts 2007, 80th

Leg., R.S., Ch.

921, Sec. 13.006(b), eff. September 1, 2007.

Sec. 8503.002. DEFINITIONS. In this chapter:

(1) "Authority" means the Lower Colorado River Authority.

(2) "Board" means the board of directors of the authority.

(2-a) "Commission" means the Texas Commission on Environmental

Quality.

(3) "Director" means a member of the board.

Added by Acts 2003, 78th Leg., ch. 996, Sec. 1, eff. Sept. 1,

2003.

Renumbered from Water Code, Section 222.002 by Acts 2007, 80th

Leg., R.S., Ch.

921, Sec. 13.006(b), eff. September 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 13.006(f), eff. September 1, 2007.

Sec. 8503.003. TERRITORY. The authority consists of the

territory included within the boundaries of the counties of

Blanco, Burnet, Llano, Travis, Bastrop, Fayette, Colorado,

Wharton, San Saba, and Matagorda.

Added by Acts 2003, 78th Leg., ch. 996, Sec. 1, eff. Sept. 1,

2003.

Renumbered from Water Code, Section 222.003 by Acts 2007, 80th

Leg., R.S., Ch.

921, Sec. 13.006(b), eff. September 1, 2007.

Sec. 8503.004. POWERS AND DUTIES. (a) Except as expressly

limited by this chapter, the authority has all the powers,

rights, privileges, and functions conferred by general law on any

district or districts created under Section 59, Article XVI,

Texas Constitution.

(b) The authority may control, store, and preserve, within the

boundaries of the authority, the waters of the Colorado River and

its tributaries and the lands of the authority for any useful

purpose and may use, distribute, and sell those waters, within

the boundaries of the authority or within the boundaries of the

watershed that contributes inflow to the Colorado River below the

intersection of Coleman, Brown, and McCulloch counties, for any

such purpose.

(c) The authority may develop and generate water power and

electric energy within the boundaries of the authority and may

distribute and sell water power and electric energy, within or

outside the boundaries of the authority.

(d) Within the boundaries of the authority, the authority may

prevent or aid in the prevention of damage to person or property

from the waters of the Colorado River and its tributaries.

(e) Within the boundaries of the authority, the authority may

forest and reforest and aid in the foresting and reforesting of

the watershed area of the Colorado River and its tributaries, and

the authority may prevent and aid in the prevention of soil

erosion and floods within the watershed area.

(f) The authority may acquire by purchase, lease, or gift or in

any other manner provided by law and may maintain, use, and

operate property of any kind, real, personal, or mixed, or any

interest in property, within or outside the boundaries of the

authority that is necessary or convenient to the exercise of the

powers, rights, privileges, and functions conferred on the

authority by this chapter.

(g) The authority may acquire by condemnation property of any

kind, real, personal, or mixed, or any interest in property,

within or outside the boundaries of the authority, other than

property or an interest in property outside the boundaries of the

authority owned by a body politic, that is necessary or

convenient to the exercise of the powers, rights, privileges, and

functions conferred on the authority by this chapter. The

authority shall exercise the condemnation power in the manner

provided by general law with respect to condemnation or, at the

option of the authority, in the manner provided by state law

relating to condemnation by districts organized under general law

under Section 59, Article XVI, Texas Constitution.

(h) Subject to the provisions of this chapter, the authority may

sell or otherwise dispose of property of any kind, real,

personal, or mixed, or any interest in the property, that is not

necessary to the conduct of the business of the authority.

(i) The authority may overflow and inundate within the

boundaries of the authority any public lands and public property

and may require the relocation of roads, pipelines, transmission

lines, railroads, cemeteries, and highways in the manner and to

the extent permitted to districts organized under general law

under Section 59, Article XVI, Texas Constitution.

(j) The authority may construct, extend, improve, maintain, and

reconstruct, cause to be constructed, extended, improved,

maintained, and reconstructed, and use and operate facilities of

any kind necessary or convenient to the exercise of its powers,

rights, privileges, and functions.

(k) The authority may sue and be sued in its corporate name.

(l) The authority may adopt and use a corporate seal.

(m) The authority may make bylaws for the management and

regulation of its affairs.

(n) The authority may appoint officers, agents, and employees,

prescribe their duties, and set their compensation.

(o) The authority may make contracts and execute instruments

necessary or convenient to the exercise of the powers, rights,

privileges, and functions conferred on the authority by this

chapter or permitted by general law.

(p) The authority may borrow money for its corporate purposes on

notes or other written evidence of indebtedness for a period not

to exceed five years as may be authorized from time to time by an

affirmative vote of 12 members of the board and repay the loans

or indebtedness from the proceeds of bonds of the authority at

the next bond offering. The authority may borrow money and

accept grants from the United States, this state, or any

corporation or agency created or designated by the United States

or this state and, in connection with the loan or grant, may

enter into an agreement that the United States, this state, or

the corporation or agency requires. The authority may make and

issue negotiable bonds for money borrowed in the manner provided

by Sections 8503.013 and 8503.014 or other general law. This

chapter does not authorize the issuance of any bonds, notes, or

other evidences of indebtedness of the authority except as

specifically provided by this chapter or other general law.

(q) The authority may provide for the study, correcting, and

control of both artificial and natural pollution, including

organic, inorganic, and thermal, of all groundwater or surface

water of the Colorado River and its tributaries within the

boundaries of the authority. The authority may adopt by

ordinance rules with regard to the pollution, both artificial and

natural, and possesses police power to enforce its rules. The

authority may provide a reasonable penalty for the violation of

any rule. The penalty is cumulative of any penalties fixed by

the general law of this state. A penalty under this subsection

may not exceed the limit for penalties provided by Section

49.004, Water Code. An ordinance enacted under this section may

not be adopted in any county or counties outside the existing

boundaries of the authority.

(r) As a necessary aid to the conservation, control,

preservation, purification, and distribution of surface waters

and groundwater of the Colorado River and its tributaries within

the boundaries of the authority, the authority may construct,

own, operate, maintain, or otherwise provide sewage gathering,

treatment, and disposal services, including waste disposal

services, and may make contracts regarding those services with

the United States, this state, counties, municipalities, and

others. The authority shall charge the actual cost of those

services.

(s) The authority may develop and manage parks, recreational

facilities, and natural science laboratories and may promote the

preservation of fish and wildlife within the boundaries of the

authority. The authority may negotiate contracts with any county,

municipality, municipal corporation, person, firm, corporation,

nonprofit organization, or state or federal agency for the

operation and maintenance of any such park, recreational

facility, or natural science laboratory. The preservation of fish

and wildlife shall be in accordance with the rules of the Parks

and Wildlife Commission. Notwithstanding any other provisions of

this chapter, the board may charge and collect reasonable

entrance, gate, or use fees for the development, management, and

use of parks and recreational facilities developed in whole or in

part by the authority.

(t) The authority may enter into agreements authorized by

Chapter 163, Utilities Code, to acquire, install, construct,

operate, enlarge and make additions to, and own and operate

electric power and energy generating facilities as provided by

that chapter, in joint ownership with others, either as cotenants

or under any other arrangements that are approved by a

three-fourths vote of the statutory membership of the board. In

accordance with and subject to the terms of the agreements, if

any, the authority may sell or otherwise dispose of any or all of

its interest in the jointly owned electric power and generating

facilities. This subsection does not apply to generating

facilities or other property wholly owned by the authority.

(u) The authority may do any and all other acts or things

necessary or convenient, including controlling the use of the

surface of a lake or island located in the lake developed by the

authority and levying a charge for the commercial use of the lake

or island, to the exercise of all powers, rights, privileges,

authority, or functions conferred on the authority by the

constitution, this chapter, or any law.

(v) The authority may enter into contracts with this state

through the comptroller providing for direct sale by the

authority of electrical power to this state for use in buildings

or other facilities owned, leased, or rented by this state in

Travis County.

Added by Acts 2003, 78th Leg., ch. 996, Sec. 1, eff. Sept. 1,

2003.

Renumbered from Water Code, Section 222.004 by Acts 2007, 80th

Leg., R.S., Ch.

921, Sec. 13.006(b), eff. September 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 13.006(g), eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch.

937, Sec. 1.116, eff. September 1, 2007.

Sec. 8503.005. LIMITATIONS OF AUTHORITY. (a) The authority may

not use for irrigation purposes any water under any permit or

permits acquired from any other company or person unless the use

is expressly authorized and granted to the authority by the

commission or its predecessor agency under authority of law. In

considering subsequent applications by the authority, the

commission shall at all times consider the needs of the people

living within and on lands lying within the watershed of the

Colorado River and its tributaries above the authority.

(b) Notwithstanding any rights or permits issued by the

commission or its predecessor agency that are held or acquired by

the authority, the impounding and use of the floodwaters of the

Colorado River or its tributaries for the generation of

hydroelectric power by the authority or anyone who may succeed to

the rights and privileges conferred on the authority by this

chapter are subject to the rights of a person, municipal

corporation, or body politic that, under legal grant of

authority, is impounding and putting to beneficial use the waters

if the person, municipal corporation, or body politic:

(1) has received a permit for the use from the commission, or

its predecessor agency; or

(2) is permitted by law to impound water for the purposes

described by this subsection.

(c) Nothing in this chapter shall be construed to require a

municipal corporation or body politic to surrender to the

authority any rights described by this section to which it may be

legally entitled.

(d) This chapter may not be construed to subject to condemnation

by the authority or any successor, or by anyone who may succeed

to the rights and privileges conferred on the authority by this

chapter, any waters:

(1) impounded or to be impounded within or outside the authority

under any law authorizing water to be impounded or under any

permits granted to a municipal corporation or body politic; or

(2) impounded or permitted to be impounded or used outside the

authority under permits legally granted to any person.

(e) Nothing in this chapter shall be construed as depriving any

person or municipality of the right, legally granted, to impound

the waters of the Colorado River or its tributaries for

authorized beneficial uses or as repealing any law granting those

rights to persons and municipalities.

(f) The rights of the authority to impound or use or sell the

waters of the Colorado River and its tributaries for the

generation of hydroelectric power are subordinate and inferior to

the rights of:

(1) municipalities situated within the boundaries of the

authority to build dams and impound floodwaters solely for

municipal purposes;

(2) municipalities and bodies politic within the watershed of

the Colorado River outside the authority to build dams or impound

floodwaters for municipal purposes; and

(3) bodies politic within the watershed of the Colorado River to

build dams and impound the floodwaters within the watershed of

the Colorado River and its tributaries for domestic purposes

inside and outside the boundaries of the authority.

(g) The title to any rights, properties, licenses, franchises,

or permits acquired by the authority shall be subject to the

limitations imposed by Subsection (f).

Added by Acts 2003, 78th Leg., ch. 996, Sec. 1, eff. Sept. 1,

2003.

Renumbered from Water Code, Section 222.005 by Acts 2007, 80th

Leg., R.S., Ch.

921, Sec. 13.006(b), eff. September 1, 2007.

Sec. 8503.006. BOARD OF DIRECTORS. (a) The powers, rights,

privileges, and functions of the authority shall be exercised by

the board. The board shall consist of 15 directors and shall

include at least one director from each of the counties named in

Section 8503.003 except Travis County, which shall have two

directors. Three directors shall be appointed at large from the

counties served with electric power, other than the counties

included in Section 8503.003.

(b) A director appointed at large may not serve for a period of

more than six consecutive years. A county other than a county

included in Section 8503.003 may not be represented on the board

for more than six consecutive years. A county other than Travis

County may not have two directors for a period greater than six

consecutive years.

(c) All directors shall be appointed by the governor with the

advice and consent of the senate for staggered terms of six

years, with five members' terms expiring on February 1 of each

odd-numbered year.

(d) Each director must be a resident and freehold property

taxpayer of the county from which the director is appointed and

must have been a resident and taxpayer of that county for not

less than the two years preceding the director's appointment. Not

more than two directors may be residents of the same county.

(e) A person is not eligible for appointment as a director if

the person has, during the three years preceding the person's

appointment, been employed by an electric power and light

company, a telephone company, or any other utility company.

(f) At the expiration of the term of a director, a successor

shall be appointed by the governor with the advice and consent of

the senate. Each director shall hold office until the expiration

of the term for which the director was appointed and until a

successor has been appointed and has qualified, unless removed

sooner as provided by this section.

(g) A director may be removed by the governor for inefficiency,

neglect of duty, or misconduct in office after at least 30 days'

written notice of the charges against the director and an

opportunity to be heard in person or by counsel at a public

hearing.

(h) The governor shall appoint a person to fill a vacancy on the

board for the unexpired term.

(i) Each director shall qualify by taking the official oath of

office prescribed by the constitution or general laws of the

state.

(j) Each director is entitled to receive fees of office of not

more than $150 per day and reimbursement of actual expenses

incurred in accordance with Chapter 49, Water Code. However, no

director may be paid per diem in excess of 150 days in any one

calendar year.

(k) Eight directors constitute a quorum at any meeting and,

except as otherwise provided by this chapter or in the bylaws,

all action may be taken by the affirmative vote of a majority of

the directors present at any meeting, except that bonds, notes,

or other evidence of indebtedness are subject to the requirements

of Sections 8503.004(p) and 8503.013(f), and no amendment of the

bylaws shall be valid unless authorized or ratified by the

affirmative vote of at least eight directors, unless otherwise

specifically provided by this chapter.

(l) The board is a state board as contemplated by Section 30a,

Article XVI, Texas Constitution.

Added by Acts 2003, 78th Leg., ch. 996, Sec. 1, eff. Sept. 1,

2003.

Renumbered from Water Code, Section 222.006 by Acts 2007, 80th

Leg., R.S., Ch.

921, Sec. 13.006(b), eff. September 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 13.006(h), eff. September 1, 2007.

Sec. 8503.007. OFFICERS; GENERAL MANAGER; EMPLOYEES. (a) The

governor shall designate a director as the presiding officer of

the board to serve in that capacity at the pleasure of the

governor. The board shall elect one of their number as an

assistant presiding officer.

(b) The board shall select a secretary, who shall keep true and

complete records of all proceedings of the board. Until the

appointment of a secretary or in the event of the secretary's

absence or inability to act, the board shall select a secretary

pro tempore.

(c) The board shall select a general manager. The general

manager is the chief executive officer of the authority.

(d) The board shall select a treasurer, who may also hold the

office of secretary.

(e) The officers described in Subsections (b)-(d) have the

powers and duties, hold office for the term, and are subject to

removal in the manner as may be provided in the bylaws.

(f) The board shall set the compensation of the officers. The

board may appoint the officers described in Subsections (b)-(d),

agents, and employees, may set their compensation and term of

office and the method by which they may be removed, and may

delegate to them the power and duties it determines proper.

Added by Acts 2003, 78th Leg., ch. 996, Sec. 1, eff. Sept. 1,

2003.

Renumbered from Water Code, Section 222.007 by Acts 2007, 80th

Leg., R.S., Ch.

921, Sec. 13.006(b), eff. September 1, 2007.

Sec. 8503.008. DISBURSEMENT OF FUNDS; SURETY BONDS. (a) The

money of the authority may be disbursed only by checks, drafts,

orders, or other instruments signed by the persons authorized by

the bylaws or a resolution concurred in by no fewer than a

majority of all the directors.

(b) The general manager, the treasurer, and all other officers,

agents, and employees of the authority charged with the

collection, custody, or payment of any funds of the authority

must give bond conditioned on the faithful performance of their

duties and an accounting for all funds and property of the

authority coming into their hands.

(c) The bonds must be in a form and amount, and with a surety

company authorized to do business in this state, approved by the

board.

(d) The premiums on the bonds shall be paid by the authority and

charged as an operating expense.

Added by Acts 2003, 78th Leg., ch. 996, Sec. 1, eff. Sept. 1,

2003.

Renumbered from Water Code, Section 222.008 by Acts 2007, 80th

Leg., R.S., Ch.

921, Sec. 13.006(b), eff. September 1, 2007.

Sec. 8503.009. OFFICE; RECORDS. (a) The domicile of the

authority is in the city of Austin, Travis County, where the

authority shall maintain its principal office in the charge of

the general manager.

(b) The authority shall keep complete and accurate accounts

conforming to approved methods of bookkeeping.

(c) The accounts and all contracts, documents, and records of

the authority shall be kept at the principal office. The accounts

and contracts shall be open to public inspection at all

reasonable times.

(d) The board shall cause to be made and completed, within 90

days after the end of each fiscal year, an audit of the books of

account and financial records of the authority for that fiscal

year. The audit shall be made by an independent certified public

accountant or firm of certified public accountants.

(e) Copies of a written report of the audit certified by the

accountant or accountants must be placed and kept on file with

the commission, with the comptroller, and at the principal office

of the authority, and be open to public inspection at all

reasonable times.

Added by Acts 2003, 78th Leg., ch. 996, Sec. 1, eff. Sept. 1,

2003.

Renumbered from Water Code, Section 222.009 by Acts 2007, 80th

Leg., R.S., Ch.

921, Sec. 13.006(b), eff. September 1, 2007.

Sec. 8503.010. CONFLICT OF INTEREST. The provisions of Chapter

171, Local Government Code, apply to conflicts of interest in the

award of authority contracts.

Added by Acts 2003, 78th Leg., ch. 996, Sec. 1, eff. Sept. 1,

2003.

Renumbered from Water Code, Section 222.010 by Acts 2007, 80th

Leg., R.S., Ch.

921, Sec. 13.006(b), eff. September 1, 2007.

Sec. 8503.011. RATES AND CHARGES. (a) The board shall

establish and collect rates and other charges for the sale or use

of water, water connections, power, electric energy, or other

services sold, furnished, or supplied by the authority. The fees

and charges must be reasonable and nondiscriminatory and

sufficient to produce revenues adequate to:

(1) pay all expenses necessary to the operation and maintenance

of the properties and facilities of the authority;

(2) pay the interest on and principal of all bonds issued under

this chapter as the interest and principal become due and

payable;

(3) pay the principal and interest on any legal debt created by

the authority;

(4) pay all sinking fund and reserve fund payments agreed to be

made with respect to bonds and payable out of those revenues, as

the payments become due and payable; and

(5) fulfill the terms of any agreements made with the

bondholders or with any person on their behalf.

(b) Out of the revenues that may be received in excess of those

required for the purposes specified in Subsection (a), the board

may:

(1) establish a reasonable depreciation and emergency fund;

(2) retire, by purchase and cancellation or redemption, bonds

issued under this chapter; or

(3) apply the excess revenues to any corporate purpose.

(c) The rates and charges of the authority may not be in excess

of what is necessary to fulfill the obligations imposed on the

authority by this chapter or other law. Nothing in this chapter

shall be construed as depriving this state of its power to

regulate and control fees or charges to be collected for the use

of water, water connections, power, electric energy, or other

service; provided, however, that this state pledges to and agrees

with the purchasers and successive holders of the bonds and other

written evidence of indebtedness issued under this chapter that

this state will not limit or alter the power vested in the

authority to establish and collect fees and charges that will

produce revenues sufficient to pay the items specified in

Subsection (a), or in any way impair the rights or remedies of

creditors or bondholders, or of any person on their behalf, until

the bonds and other written evidence of indebtedness, together

with the interest on the bonds or indebtedness and the interest

on unpaid installments of interest and all costs and expenses in

connection with any action or proceedings by or on behalf of the

bondholders and all other obligations of the authority in

connection with the bonds are fully met and discharged.

Added by Acts 2003, 78th Leg., ch. 996, Sec. 1, eff. Sept. 1,

2003.

Renumbered from Water Code, Section 222.011 by Acts 2007, 80th

Leg., R.S., Ch.

921, Sec. 13.006(b), eff. September 1, 2007.

Sec. 8503.012. PAYMENT OF DEBTS. Any indebtedness, liability,

or obligation of the authority for the payment of money, however

entered into or incurred and whether arising from contract,

implied contract, or otherwise, is payable solely:

(1) out of revenues received by the authority with respect to

its properties, subject to any prior lien on the revenues

conferred by any resolution or resolutions adopted as provided by

this chapter authorizing the issuance of bonds; or

(2) if the board so determines, out of the proceeds of sale by

the authority of bonds payable solely from those revenues.

Added by Acts 2003, 78th Leg., ch. 996, Sec. 1, eff. Sept. 1,

2003.

Renumbered from Water Code, Section 222.012 by Acts 2007, 80th

Leg., R.S., Ch.

921, Sec. 13.006(b), eff. September 1, 2007.

Sec. 8503.013. ISSUANCE OF BONDS. (a) The authority may issue

bonds from time to time and for any purpose authorized by this

chapter or other general law. If bonds of the authority are

issued, except as otherwise provided under general law, the

bonds:

(1) when sold, shall be sold for cash at public sale to the

highest and best bidder, as determined by the board, and the

interest cost of the money received for the bonds shall be

computed to maturity in accordance with the method prescribed by

the board in connection with the sale of the bonds;

(2) may be issued, on terms determined by the board in exchange

for property of any kind, real, personal, or mixed, or any

interest in property that the board determines necessary or

convenient for any corporate purposes, provided that any property

acquired through the exchange of bonds is certified in writing

before the exchange as being of a value equal to or in excess of

the par value of the bonds by an independent appraisal that is to

be kept on file by the authority as a public record, with a copy

filed with the state auditor;

(3) may be issued in exchange for like principal amounts of

other obligations of the authority, matured or unmatured; or

(4) may be sold to this state or any agency of this state, the

United States, or any agency or corporation created or designated

by this state or the United States in exchange for cash equal in

amount to the principal amount of the bonds sold and the interest

cost of the money received for the bonds, computed to maturity in

accordance with standard bond tables in general use by banks and

insurance companies, as determined by the board.

(b) The proceeds from the sale of the bonds shall be deposited

in one or more banks or trust companies and shall be paid out

under terms and conditions not in conflict with the provisions of

this chapter or other general law that are agreed on between the

authority and the purchasers of the bonds.

(c) The proceeds of the bonds and any net operating revenues

derived from the sale of electric power or water that may be

available after paying the interest on outstanding bonds and the

principal amount of the bonds and after setting aside sufficient

funds for working capital, including a reasonable amount for

contingencies, and setting aside funds for reserves to secure

payment of principal of and interest on outstanding bonds, shall

be used:

(1) to build and construct dams or other structures within the

authority, on the Colorado River and its tributaries, for the

impounding and storage of floodwater and surface water;

(2) to purchase and install in the dams on the Colorado River

hydroelectric generators and other related facilities for the

generation of hydroelectric power;

(3) for the construction of additional lines and the purchase

and installation of additional equipment the board considers

necessary or expedient to enable the authority to continue to

meet the demand for electric power in the areas within the

authority directly served by its transmission lines and

distribution systems on January 1, 1975, and other areas within

the service area served by the authority on January 1, 1975, that

cannot receive comparable service from any other power source and

to provide electric power to this state as provided by Section

8503.004; provided, however, that no steam generating capacity

shall be installed by the authority, except that the authority

may acquire, install, construct, enlarge and make additions to,

and operate one or more steam generating plants, the sum of whose

aggregate capacity may not be more than 5,000 megawatts, to be

located within the boundaries of either one or more of Colorado,

Fayette, Bastrop, Travis, Blanco, Burnet, Llano, or San Saba

counties and to be utilized for the purpose of serving the area

directly served by the authority's transmission lines and

distribution systems on January 1, 1975, and to provide electric

power to this state as provided by Section 8503.004;

(4) to own or acquire an interest in one or more steam

generating plants at any location within or outside the

authority, if the plant or plants are owned in conjunction with

one or more other utilities, public, private, or municipal,

provided that an interest owned or acquired by the authority

shall be utilized for the sole purpose of providing electric

power and energy only in the areas within the authority directly

served by its transmission lines and distribution systems as they

existed on January 1, 1975;

(5) for the purpose of building dams, levees, or other flood

control structures between the city of Austin and the mouth of

the Colorado River that are considered necessary and desirable by

the board and for acquiring or installing facilities necessary to

supply water for irrigation and other useful purposes within the

counties composing the authority; and

(6) in aid of any soil conservation or soil reclamation projects

within the authority that the board determines to be in the

public interest.

(d) Nothing in this section shall be construed as establishing

priorities as to uses of water that are contrary to the general

laws of this state with reference to the water uses.

(e) Except as otherwise provided by general law, proceeds of

bonds sold by the authority, and any net operating revenues that

the board determines are not needed to carry out the projects set

out in Subsections (c)(1), (2), and (3), to the extent not

required by an outstanding trust indenture to be used to redeem

outstanding bonds, shall be placed in a general revenue fund of

the authority. Dams built on the Colorado River or on its

tributaries shall be used for the purpose of impounding and

storing floodwaters and surface waters.

(f) Bonds shall be authorized by resolution of the board

concurred in by at least 12 of the members.

(g) Bonds shall bear the date or dates, mature at the time or

times, bear interest at the rates, payable annually or

semiannually, be in the denominations, be in the form, either

coupon or registered, carry the registration privileges as to

principal only or as to both principal and interest and as to

exchange of coupon bonds for registered bonds or vice versa and

exchange of bonds of one denomination for bonds of other

denominations, be executed in the manner, and be payable at the

place or places within or outside this state that the resolution

may provide.

(h) A resolution authorizing bonds may contain provisions that

are part of the contract between the authority and the holder of

the bonds from time to time:

(1) reserving the right to redeem the bonds at the time or

times, in the amounts, and at the prices, not exceeding 105

percent of the principal amount of the bonds, plus accrued

interest, as may be provided;

(2) providing for the setting aside of interest and sinking

funds or reserve funds and the regulation and disposition of

those funds;

(3) pledging, to secure the payment of the principal of and

interest on the bonds and of the sinking fund or reserve fund

payments agreed to be made with respect to the bonds, all or any

part of the gross or net revenues received by the authority with

respect to the property, real, personal, or mixed, acquired or

constructed or to be acquired or constructed with the bonds or

the proceeds of the bonds, or all or any part of the gross or net

revenues previously or thereafter received by the authority from

any source;

(4) prescribing the purposes to which the bonds or any bonds

issued later are to be applied;

(5) agreeing to set and collect rates and charges sufficient to

produce revenues adequate to pay the items specified in Section

8503.011(a) and prescribing the use and disposition of all

revenues;

(6) prescribing limitations on the issuance of additional bonds

and on the agreements that may be made with the purchasers and

successive holders of the bonds;

(7) relating to the construction, extension, improvement,

reconstruction, operation, maintenance, and repair of the

properties of the authority and the carrying of insurance on all

or any part of the properties covering loss or damage or loss of

use and occupancy resulting from specified risks;

(8) setting the procedure, if any, by which, if the authority so

desires, the terms of a contract with the bondholders may be

amended or abrogated, the amount of bonds whose holders must

consent to that amendment or abrogation, and the manner in which

the consent may be given;

(9) providing for the execution and delivery by the authority,

to a bank or trust company authorized by law to accept trusts, of

indentures and agreements for the benefit of the bondholders

setting forth all of the agreements authorized by this chapter to

be made with or for the benefit of the bondholders and other

provisions that are customary in those kinds of indentures or

agreements; and

(10) making other provisions, not inconsistent with this chapter

or other general law, that the board approves, provided that an

agreement, contract, or commitment may not be made that, under

any contingency, could or would result in the United States

government or any of its agencies or bureaus claiming the right

or privilege of controlling or managing the properties and

facilities of the authority or the control or disposition of the

water of the Colorado River or its tributaries; provided,

however, that nothing in this chapter shall be construed as

limiting or restricting the rights or powers as set out in

Section 8503.014 in the event of a default on the part of the

authority; and provided further that nothing in this chapter is

intended to prohibit compliance with existing federal

regulations, if compliance with those regulations is done on the

advice and approval of the attorney general.

Added by Acts 2003, 78th Leg., ch. 996, Sec. 1, eff. Sept. 1,

2003.

Renumbered from Water Code, Section 222.013 by Acts 2007, 80th

Leg., R.S., Ch.

921, Sec. 13.006(b), eff. September 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 13.006(i), eff. September 1, 2007.

Sec. 8503.014. DEFAULT PROCEDURES. (a) A resolution

authorizing the issuance of bonds and any indenture or agreement

entered into under the resolution may include provisions

regarding a default on:

(1) the payment of the interest on the bonds as the interest

becomes due and payable;

(2) the payment of the principal of the bonds as they become due

and payable, whether at maturity, by call for redemption, or

otherwise; or

(3) the performance of an agreement made with the purchasers or

successive holders of any bonds.

(b) If a default described by Subsection (a) has occurred and

has continued for a period, if any, prescribed by the resolution

authorizing the issuance of the bonds, the trustee under an

indenture entered into with respect to the bonds authorized by

the resolution, or, if there is no indenture, a trustee appointed

in the manner provided in the resolution by the holders of 25

percent in aggregate principal amount of the bonds authorized by

the resolution and then outstanding, shall, in the trustee's own

name but for the equal and proportionate benefit of all of the

bondholders, and with or without having possession of the bonds:

(1) by mandamus or other suit, action, or proceeding at law or

in equity, enforce all rights of the bondholders, including the

requirements of Section 8503.011;

(2) bring suit on the bonds or the appurtenant coupons;

(3) by action or suit in equity, require the authority to act as

if it were the trustee of an express trust for the bondholders;

(4) by action or suit in equity, enjoin any acts or things that

may be unlawful or in violation of the rights of the bondholders;

or

(5) after such notice to the authority as the resolution may

provide, declare the principal of all of the bonds due and

payable, and if all defaults have been made good, then with the

written consent of the holders of 25 percent in aggregate

principal amount of the bonds then outstanding, annul the

declaration and its consequences; provided, however, that the

holders of more than a majority in principal amount of the bonds

authorized by the resolution and then outstanding shall, by

written instrument delivered to the trustee, have the right to

direct and control any and all action taken or to be taken by the

trustee under this section.

(c) A resolution, indenture, or agreement relating to bonds may

provide that in a suit, action, or proceeding under this section,

the trustee, whether or not all of the bonds have been declared

due and payable and with or without possession of any of the

bonds, is entitled as of right to the appointment of a receiver

who may enter and take possession of all or any part of the

properties of the authority, operate and maintain the properties,

and set, collect, and receive rates and charges sufficient to

provide revenues adequate to pay the items set forth in Section

8503.011(a) and the costs and disbursements of the suit, action,

or proceeding and apply the revenues in conformity with this

chapter and the resolution authorizing the bonds.

(d) In a suit, action, or proceeding by a trustee under this

section, the reasonable fees, counsel fees, and expenses of the

trustee or the receiver, if any, constitute taxable

disbursements, and all costs and disbursements allowed by the

court shall be a first charge on any revenues pledged to secure

the payment of the bonds.

(e) Subject to the provisions of the constitution, the courts of

Travis County have jurisdiction of a suit, action, or proceeding

under this section by a trustee on behalf of the bondholders and

of all property involved in the suit, action, or proceeding.

(f) In addition to the powers specifically provided by this

section, the trustee has all powers necessary or appropriate for

the exercise of the powers specifically provided or incident to

the general representation of the bondholders in the enforcement

of their rights.

Added by Acts 2003, 78th Leg., ch. 996, Sec. 1, eff. Sept. 1,

2003.

Renumbered from Water Code, Section 222.014 by Acts 2007, 80th

Leg., R.S., Ch.

921, Sec. 13.006(b), eff. September 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 13.006(j), eff. September 1, 2007.

Sec. 8503.015. AUDIT. The authority is subject to the audit

provisions of Subchapter G, Chapter 49, Water Code.

Added by Acts 2003, 78th Leg., ch. 996, Sec. 1, eff. Sept. 1,

2003.

Renumbered from Water Code, Section 222.015 by Acts 2007, 80th

Leg., R.S., Ch.

921, Sec. 13.006(b), eff. September 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 13.006(k), eff. September 1, 2007.

Sec. 8503.016. AUTHORITY AS CONSERVATION AND RECLAMATION

DISTRICT. (a) The authority shall manage and use its

facilities, the water impounded by its dams on the Colorado River

or its tributaries, and any available net operating revenues to

accomplish, to the extent possible, the purposes included in

Section 59(a), Article XVI, Texas Constitution, that are

enumerated in the provisions of this chapter or other general

law, and the authority shall market electric power that, in the

opinion of the board, will not be immediately needed by the

authority, under contracts and on conditions that will best

enable the authority to pay its operating expenses, meet its

outstanding financial obligations as they mature, supply the

increasing demand for electric power in the area dependent on its

systems for electric service on April 28, 1975, and assure, to

the extent possible, an adequate supply of water for irrigation

and other useful purposes, as it is needed in the various

counties comprising the authority.

(b) When bonds are to be issued to finance in whole or in part

water-impounding facilities, before approving the bonds the

attorney general shall be furnished a resolution from the

commission or its successor agency certifying that the authority

possesses the necessary water right authorizing it to impound or

otherwise appropriate the waters to be utilized by the project.

Added by Acts 2003, 78th Leg., ch. 996, Sec. 1, eff. Sept. 1,

2003.

Renumbered from Water Code, Section 222.016 by Acts 2007, 80th

Leg., R.S., Ch.

921, Sec. 13.006(b), eff. September 1, 2007.

Sec. 8503.017. BONDS AS NEGOTIABLE INSTRUMENTS. Bonds issued by

the authority under this chapter or other general law are

negotiable instruments under the laws of this state.

Added by Acts 2003, 78th Leg., ch. 996, Sec. 1, eff. Sept. 1,

2003.

Renumbered from Water Code, Section 222.017 by Acts 2007, 80th

Leg., R.S., Ch.

921, Sec. 13.006(b), eff. September 1, 2007.

Sec. 8503.018. ADDITIONAL POWERS RELATING TO CONTRACTS, RULES,

AND REGULATIONS. The authority may, but without intending by

this provision to limit any powers of the authority as granted to

it by this chapter or other general law, enter into and carry out

contracts or establish or comply with rules and regulations

concerning labor and materials and other related matters in

connection with any project or projects as the authority

considers desirable or as requested by the United States, this

state, or any corporation or agency created, designated, or

established by the United States or this state that may assist in

the financing of the project or projects.

Added by Acts 2003, 78th Leg., ch. 996, Sec. 1, eff. Sept. 1,

2003.

Renumbered from Water Code, Section 222.018 by Acts 2007, 80th

Leg., R.S., Ch.

921, Sec. 13.006(b), eff. September 1, 2007.

Sec. 8503.019. PURCHASE OF BONDS. The authority may, out of any

funds available for the purpose, purchase bonds issued by it at a

price not exceeding the redemption price applicable at the time

of the purchase, or if the bonds are not redeemable, at a price

not exceeding the principal amount of the bonds plus accrued

interest. All bonds purchased in this manner shall be canceled.

Added by Acts 2003, 78th Leg., ch. 996, Sec. 1, eff. Sept. 1,

2003.

Renumbered from Water Code, Section 222.019 by Acts 2007, 80th

Leg., R.S., Ch.

921, Sec. 13.006(b), eff. September 1, 2007.

Sec. 8503.020. DISPOSITION OF PROPERTY. (a) Nothing in this

chapter shall be construed as authorizing the authority, and the

authority is not authorized, to mortgage or otherwise encumber

any of its property of any kind, real, personal, or mixed, or any

interest in such property, or to acquire any property or interest

subject to a mortgage or conditional sale, provided that this

section may not be construed as preventing the pledging of the

revenues of the authority as authorized by this chapter.

(b) Nothing in this chapter shall be construed as authorizing

the sale of any property or interest by the authority or by any

receiver of any of its properties or through any court proceeding

or otherwise, unless, by the affirmative vote of three-fourths of

its statutory membership, the board has determined that the

property or interest is not necessary or convenient or of

beneficial use to the business of the authority and has approved

the terms of the sale. Except by sale as expressly authorized in

this section, authority property or interest may not come into

the ownership or control, directly or indirectly, of any person,

firm, or corporation other than a public authority created under

the laws of this state or a nonprofit corporation created by the

authority under Chapter 152, Water Code.

(c) The limitations on the sale of property of the authority in

this section do not and are not intended to preclude the

authority from selling any interest owned or held by the

authority in any jointly owned electric power and generating

facilities constructed, or to be constructed, under Section

8503.004(t), provided that the sale of an ownership interest in a

joint project is provided for and in conformance with any

contract with other owners regarding the electric power and

energy generating facilities.

(d) All authority property is exempt from forced sale, and

nothing in this chapter shall be construed to authorize the sale

of any of the property of the authority under a judgment rendered

in a suit, and a sale of that kind is prohibited.

Added by Acts 2003, 78th Leg., ch. 996, Sec. 1, eff. Sept. 1,

2003.

Renumbered from Water Code, Section 222.020 by Acts 2007, 80th

Leg., R.S., Ch.

921, Sec. 13.006(b), eff. September 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 13.006(l), eff. September 1, 2007.

Sec. 8503.021. PROPERTY AGREEMENTS WITH CITY OF AUSTIN. Nothing

in this chapter prohibits the authority from owning property in

conjunction with, acquiring property from, or selling property to

the City of Austin, on terms and conditions to which the

authority and the city agree. The authority may acquire property

from the City of Austin subject to repurchase agreements, or

other terms and conditions as are agreed on between the authority

and the city, and may enter into any contractual relations with

the city respecting property that the parties agree on.

Added by Acts 2003, 78th Leg., ch. 996, Sec. 1, eff. Sept. 1,

2003.

Renumbered from Water Code, Section 222.021 by Acts 2007, 80th

Leg., R.S., Ch.

921, Sec. 13.006(b), eff. September 1, 2007.

Sec. 8503.022. PROPERTY USEFUL IN THE PRODUCTION OR UTILIZATION

OF ELECTRIC ENERGY. This chapter does not prohibit or restrict

the sale, lease, or other disposition, to an electric

cooperative, municipality, nonprofit corporation created by the

authority under Chapter 152, Water Code, or other governmental

agency or body politic and corporate of this state, of any

property acquired or constructed by the authority and incidental

to or used or useful in the generation, production, transmission,

distribution, or sale of electric energy. The authority may

pledge the proceeds of a sale under this section to the same

extent and in the same manner in which it is authorized to pledge

its revenues.

Added by Acts 2003, 78th Leg., ch. 996, Sec. 1, eff. Sept. 1,

2003.

Renumbered from Water Code, Section 222.022 by Acts 2007, 80th

Leg., R.S., Ch.

921, Sec. 13.006(b), eff. September 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 13.006(m), eff. September 1, 2007.

Sec. 8503.023. PUBLIC ACCESS. (a) The authority may not

prevent the public use of its lands for recreational purposes and

fishing except at such points where, in the opinion of the board,

the use would interfere with the proper conduct of the business

of the authority or would interfere with the lawful use of the

property. A lease of authority lands, except one expressly

permitted by Section 8503.022, is not lawful unless it provides

for free public use of the lands for recreational purposes and

fishing.

(b) All public rights-of-way traversing the areas flooded or to

be flooded by the impounded waters shall remain open as a way of

free public passage to and from the lakes created, and a charge

may not be made to the public for the right to engage in fishing

or boating on or swimming in those lakes.

(c) If any citizen of this state or of the United States advises

the attorney general that this section has not been complied

with, the attorney general may, after investigation of the

complaint and notice to the authority, institute the proper legal

proceedings, if any are required, to require the authority or its

successor to comply with this section.

(d) If any of the authority's land bordering the lakes to be

created under this chapter is sold by the authority, the

authority shall retain in each tract a strip 20 feet wide

abutting the high-water line of the lake for the purpose of

passage and use by the public for public sports and amusements;

provided, however, that this subsection does not apply to any

sales of land by the authority to any state or federal agency to

be used for game or fish sanctuaries or preserves or for game or

fish propagation purposes.

Added by Acts 2003, 78th Leg., ch. 996, Sec. 1, eff. Sept. 1,

2003.

Renumbered from Water Code, Section 222.023 by Acts 2007, 80th

Leg., R.S., Ch.

921, Sec. 13.006(b), eff. September 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 13.006(n), eff. September 1, 2007.

Sec. 8503.024. BONDS EXEMPT FROM TAXATION. All bonds and

interest on the bonds issued under the provisions of this chapter

are exempt from taxation, except inheritance taxes, by this state

or by any municipal corporation, county, or other political

subdivision or taxing district of this state.

Added by Acts 2003, 78th Leg., ch. 996, Sec. 1, eff. Sept. 1,

2003.

Renumbered from Water Code, Section 222.024 by Acts 2007, 80th

Leg., R.S., Ch.

921, Sec. 13.006(b), eff. September 1, 2007.

Sec. 8503.025. SOURCE OF AUTHORITY. (a) This chapter, without

reference to other statutory provisions, constitutes full

authority for the authorization and issuance of bonds under this

chapter, and no other act or law regarding the authorization or

issuance of obligations or the deposit of the proceeds of

obligations, or in any way impeding or restricting the carrying

out of the acts authorized by this chapter shall be construed as

applying a limitation to any proceedings taken under or acts done

under this chapter.

(b) Nothing in this chapter shall prevent the authority from

issuing bonds under any applicable general law of this state,

provided, however, that no bonds are issued that would be in

conflict with Section 8503.024.

Added by Acts 2003, 78th Leg., ch. 996, Sec. 1, eff. Sept. 1,

2003.

Renumbered from Water Code, Section 222.025 by Acts 2007, 80th

Leg., R.S., Ch.

921, Sec. 13.006(b), eff. September 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 13.006(o), eff. September 1, 2007.

Sec. 8503.026. BONDS AS INVESTMENTS AND SECURITY FOR DEPOSITS.

(a) All authority bonds are legal and authorized investments for

individuals, partnerships, profit and nonprofit corporations,

banks, savings banks, trust companies, building and loan

associations, savings and loan associations, insurance companies,

fiduciaries, trustees, and guardians and for the sinking funds of

municipalities, counties, school districts, or other political

corporations or subdivisions of this state.

(b) The bonds are eligible to secure the deposit of all public

funds of this state and any public funds of municipalities,

counties, school districts, or other political corporations or

subdivisions of this state and are lawful and sufficient security

for those deposits to the extent of their par value when

accompanied by all unmatured coupons.

Added by Acts 2003, 78th Leg., ch. 996, Sec. 1, eff. Sept. 1,

2003.

Renumbered from Water Code, Section 222.026 by Acts 2007, 80th

Leg., R.S., Ch.

921, Sec. 13.006(b), eff. September 1, 2007.

Sec. 8503.027. CONSTRUCTION. (a) This chapter and all of its

terms and provisions shall be liberally construed to carry out

the purposes set forth in this chapter.

(b) Nothing in this chapter affects the meaning of Section

8503.011, formerly Section 222.011, Water Code, and Section 9,

Chapter 74, Acts of the 64th Legislature, Regular Session, 1975,

as it existed prior to the adoption of the former Chapter 222,

Water Code, except where specifically amended.

Added by Acts 2003, 78th Leg., ch. 996, Sec. 1, eff. Sept. 1,

2003.

Renumbered from Water Code, Section 222.027 by Acts 2007, 80th

Leg., R.S., Ch.

921, Sec. 13.006(b), eff. September 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 13.006(p), eff. September 1, 2007.

Sec. 8503.028. AUTHORITY POWERS IN LAMPASAS COUNTY.

Notwithstanding any other provision of this chapter, the

authority may exercise all powers within Lampasas County that it

may otherwise exercise within the 10 counties specified in

Section 8503.003, except that the authority may not provide water

or wastewater services in the portion of Lampasas County outside

the Colorado River watershed without the consent of the Brazos

River Authority.

Added by Acts 2003, 78th Leg., ch. 996, Sec. 1, eff. Sept. 1,

2003.

Renumbered from Water Code, Section 222.028 by Acts 2007, 80th

Leg., R.S., Ch.

921, Sec. 13.006(b), eff. September 1, 2007.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

921, Sec. 13.006(q), eff. September 1, 2007.

Sec. 8503.029. ADDITIONAL SPECIFIC POWERS. (a) Notwithstanding

any other provision of this chapter, the authority:

(1) may purchase, construct, acquire, own, operate, repair,

improve, or extend any facility necessary or convenient to

provide water services in Williamson County in cooperation with

another special district, a municipality, or another governmental

entity;

(2) may not provide water services in the watershed of the

Brazos River unless the authority obtains in writing the consent

of the Brazos River Authority before the services are provided;

and

(3) may transfer surface water from the authority to a place in

Williamson County that is outside the watershed of the Colorado

River only if the transfer is made to:

(A) a municipality that was a water customer of the authority on

May 20, 1997, and located in the watersheds of both the Colorado

River and the Brazos River; or

(B) a person or entity that pays for the surface water in an

amount sufficient to pay both the authority's applicable water

rate and an additional charge to pay the costs of mitigating any

adverse effects of the transfer of surface water to Williamson

County from the Colorado River watershed, and provided the

transfer results in no net loss of water to the Colorado River

watershed as determined by the board.

(b) Notwithstanding the amounts of surface water transferred by

the authority to municipalities in accordance with Subsection

(a)(3)(A), the volume of surface water authorized for transfer by

the authority in accordance with Subsection (a)(3)(B) may not

exceed 25,000 acre-feet per year, it being the intent of the

legislature that the authority not be the sole provider of

surface water to Williamson County.

(c) The authority shall determine the amount of the additional

charge under Subsection (a)(3)(B). The additional charge may not

be less than 10 percent of the authority's applicable rate for

surface water to be transferred. The authority shall deposit any

money the authority receives from the additional charge, and may

deposit any other money as the board determines, into a separate

fund designated as the agricultural water conservation fund. The

authority may use money from the agricultural water conservation

fund only for the development of water resources or other water

use strategies to replace or offset the amount of surface water

to be transferred to Williamson County, including the development

and implementation of methods, programs, and strategies relating

to groundwater resources, reuse, conservation, and other

opportunities to reduce the reliance on surface water for

agricultural irrigation, provided that the methods, programs, and

strategies take into consideration the surface water and

groundwater needs of the affected Colorado River basin users.

(d) Before its determination of the use of money from the

agricultural water conservation fund, the authority shall consult

with an advisory committee representing agricultural irrigation

interests that is appointed by the county judges of Matagorda,

Wharton, and Colorado counties. The board's determination of the

additional charge is not subject to review or modification by any

regulatory agency or independent reviewing authority. Water

resources developed or conserved through the additional charge

may be acquired from any source inside or outside the boundaries

of the authority and shall be used to benefit the water service

areas of the authority's irrigation operations.

Added by Acts 2003, 78th Leg., ch. 996, Sec. 1, eff. Sept. 1,

2003.

Renumbered from Water Code, Section 222.029 by Acts 2007, 80th

Leg., R.S., Ch.

921, Sec. 13.006(b), eff. September 1, 2007.

Sec. 8503.030. PROVISION OF WATER TO MUNICIPALITY OUTSIDE

COLORADO RIVER BASIN. (a) This section applies notwithstanding

any other provision of this chapter or other law.

(b) In this section and Section 8503.031:

(1) "Municipality" includes a municipally owned utility.

(2) "Water service area" means the area in which the authority

is authorized to use, distribute, and sell water on January 1,

2001.

(c) Subject to the limitations and restrictions in this section,

the authority may enter into a written contract with a

municipality located outside the water service area to distribute

and sell water to the municipality.

(d) In addition to the authority's applicable water rate, the

authority shall charge a municipality a surcharge determined by

the board according to the terms of the contract to enable the

authority to develop and manage water resources sufficient to

address the projected needs of the authority's water service area

and the needs of the municipality to the extent agreed in the

contract. The contract must provide that the surcharge be

sufficient to allow the authority to recover all capital

construction costs incurred by the authority