(a) In addition to determining the engineering feasibility
of a project, the commission shall also determine the economic feasibility
of each proposed bond issue, bond amendment, and extension of time
application for a bond issue. The staff of the commission shall use
the following sections in making economic feasibility analysis. In
its written recommendations to the commission, which analyze the particular
application, the staff shall always address the economic feasibility.
(b) Economic feasibility is the determination of whether
the land values, existing improvements, and projected improvements
in the district will be sufficient to support a reasonable tax rate
for debt service payments for existing and proposed bond indebtedness
while maintaining competitive utility rates. Utility rates that do
not exceed the rates of the largest city in the geographic area in
which the district is located are conclusively deemed to be competitive.
Economic feasibility is influenced by many factors and varies widely
depending on economic conditions, the real estate market, the number
of competing projects, and geographic location.
(c) Projected debt service tax rate is the tax rate
required to meet the projected annual debt service requirement using
projected assessed valuations and an appropriate tax collection rate.
The projected annual debt service requirement shall include the previous
and proposed debt. The projected debt service tax rate for any bond
issue shall be shown in the cash flow table as a level or decreasing
tax rate.
(d) No-growth debt service tax rate is the tax rate
required to meet projected annual debt service requirements using
the current assessed value and a 100% tax collection rate. The current
value is determined by either:
(1) the most recent certificate of assessed valuation
from the central appraisal district; or
(2) a certificate of estimated assessed valuation from
the central appraisal district. Projected annual debt service requirements
shall include the previous and proposed debt. The no-growth debt service
tax rate for any bond issue shall be shown on the cash flow table
as a level or decreasing tax rate.
(e) Combined no-growth tax rate is the sum of the following:
(1) no-growth debt service tax rate of the district;
(2) projected no-growth debt service tax rate of all
overlapping entities specifically attributable to water, wastewater,
drainage, or recreational facilities that are smaller in size than
a county, and for roads if the entity is a road district or road utility
district smaller in size than a county commissioner's precinct. (In
other words, for road districts or road utility districts that are
as large as one county commissioner's precinct, the road district
tax is not counted.);
(3) an equivalent surcharge tax rate for water and
wastewater surcharge, if any;
(4) city tax rate specifically attributable to water,
sewage, drainage, and recreational facilities if the district is located
within a city;
(5) current or proposed district or overlapping maintenance
tax levy, if any;
(6) contract tax, if any; and
(7) less any equivalent tax rebate or other payments.
(f) Combined projected tax rate is the sum of the following:
(1) projected debt service tax rate of the district;
(2) projected debt service tax rate of all overlapping
entities specifically attributable to water, wastewater, drainage,
recreational facilities, and for roads if the entity is a road district
or road utility district smaller in size than a county commissioner's
precinct;
(3) an equivalent surcharge tax rate for water and
wastewater surcharge, if any;
(4) city tax rate specifically attributable to water,
sewage, drainage, and recreational facilities if the district is located
within a city;
(5) current or proposed district or overlapping maintenance
tax levy, if any;
(6) contract tax, if any; and
(7) less any equivalent tax rebate or other payment.
(g) A surcharge is a flat charge in addition to rates
imposed on residents receiving water and/or wastewater service from
resources of a city or other entity and supplied through district
facilities. Surcharge revenues are placed in the district's debt service
fund and are intended to be used to meet the debt service requirement
on the district's bonds.
(h) For districts collecting surcharge revenues, the
equivalent surcharge tax rate shall be calculated as follows.
(1) For residential development with similar house
prices:
Attached Graphic
(2) For mixed-use development and diverse house prices:
Attached Graphic
(3) For purposes of this calculation, no adjustments
shall be made for projected collection rate of the surcharge, interest
earnings on the surcharge account, or other factors.
(i) For districts receiving a rebate for taxes paid
to a city or other entity for water, wastewater, drainage, recreational,
or road service, the equivalent tax rebate shall be calculated as
follows:
Attached Graphic
(j) The assessed value is the appraised value after
considering exemptions and special valuations and is the amount to
which the tax rate is applied to determine the total tax levy.
(k) For a district's first bond issue, the following
paragraphs apply except that paragraphs (5), (6), (8), and (10) of
this subsection are only applicable to a district that has a developer
as defined by Texas Water Code (TWC), §49.052(d).
(1) The district shall provide the current and projected
tax rates of all entities levying or proposing to levy taxes on land
within the district and a comparison of such taxes with the total
tax levy on all competing projects in the same market area, as defined
in the market study, if applicable, shall be provided.
(2) A cash flow analysis to determine the projected
debt service revenue and projected tax rate shall be provided. It
should include the following assumptions.
(A) Each ending debt service balance in the cash flow
analysis will be not less than 25% of the following year's debt service
requirement.
(B) Interest income will only be shown on the ending
debt service balance for the first two years.
(C) A 90% tax collection rate shall be used in all
the projected tax rate calculations and a 100% tax collection rate
shall be used in the no-growth tax rate calculations.
(D) The projected tax rate shall be level or decreasing
for the life of the bonds.
(3) The combined projected tax rate must not exceed
the following:
(A) $1.50 in Chambers, Harris, Galveston, Montgomery,
Fort Bend, Waller, and Brazoria Counties;
(B) $1.20 in Dallas, Denton, Collin, Tarrant, Travis,
Hays, Williamson, Comal, and Guadalupe Counties; or
(C) $1.00 in all other counties.
(4) The combined no-growth tax rate must not exceed
the following:
(A) $2.50 in Chambers, Harris, Galveston, Montgomery,
Fort Bend, Waller, and Brazoria Counties;
(B) $2.20 in Dallas, Denton, Collin, Tarrant, Travis,
Hays, Williamson, Comal, and Guadalupe Counties; or
(C) $2.00 for all other counties.
(5) The following apply to the central appraisal district
certificate.
(A) If the valuations contained in the certificate
of certified assessed valuation are at least 25% higher than those
contained in the previous year's certified valuation, a written explanation
from the district of such increase and a detailed calculation demonstrating
how the value was derived shall be provided.
(B) In determining the projected or no-growth tax rates,
a certificate of estimated assessed valuation may be used under the
following conditions:
(i) the developer or landowner to receive bond proceeds
shall certify, represent, and agree that it will not challenge and
attempt to reduce its valuations below the values shown on the certificate
for the life of the bonds;
(ii) if the valuation contained in the certificate
of estimated taxable valuation is at least 25% higher than that contained
in the most recent certified valuation, a written explanation from
the district of such increase shall be provided;
(iii) if the estimated taxable valuation results in
an exemption from §293.47 of this title (relating to Thirty Percent
of District Construction Costs To Be Paid by Developer) and the final
certificate of taxable value is not sufficient for an exemption from
that section, the developer will be obligated to refund to the district
the difference in the bond issue requirement without developer contribution
and with developer contribution plus interest at the bond interest
rate to the Cont'd... |