| (4) The application shall be denied if the municipality
fails to demonstrate compliance with the TCEQ's minimum requirements
for public drinking water systems. This paragraph does not apply to
a municipality that does not own a public drinking water system.
(i) Hearing at SOAH.
(1) The hearing at SOAH shall be limited to determining
what property, if any, is useless or valueless property, impaired
property, or transferred property.
(2) The current CCN holder bears the burden to prove
what property is useless or valueless property or impaired property.
(3) The transferred property shall be limited to the
specific property identified in the application.
(4) The SOAH administrative law judge shall issue a
proposal for decision for the commission's consideration.
(j) Interim order. The commission shall issue an interim
order identifying what property, if any, is useless or valueless property,
impaired property, or transferred property.
(k) Administrative Completeness. Section 24.8 of this
title relating to Administrative Completeness does not apply to the
determination of administrative completeness under this section. After
the commission has issued its interim order under subsection (j) of
this section, a presiding officer shall determine that the application
for single certification is administratively complete and shall establish
a procedural schedule that will allow total compensation for any property
identified in the interim order to be determined not later than 90
calendar days after the application is determined to be administratively
complete.
(l) Valuation of real property. The value of real property
that the commission identified in the interim order issued under subsection
(j) of this section shall be determined according to the standards
set forth in Texas Property Code, chapter 21, governing actions in
eminent domain.
(m) Valuation of personal property. The value of personal
property that the commission identified in the interim order issued
under subsection (j) of this section shall be determined according
to this subsection.
(1) This subsection is intended to ensure that the
compensation to a current CCN holder is just and adequate as provided
by these rules.
(2) The following factors shall be used to value personal
property that the commission identified in the interim order issued
under subsection (j) of this section:
(A) the impact on the current CCN holder's existing
indebtedness and the current CCN holder's ability to repay that debt;
(B) the value of the current CCN holder's service facilities
located within the municipality's requested area;
(C) the amount of any expenditures for planning, design,
or construction of service facilities outside the incorporated or
annexed area that are allocable to service to the municipality's requested
area;
(D) the amount of the current CCN holder's contractual
obligations allocable to the municipality's requested area;
(E) any demonstrated impairment of service or increase
of cost to the current CCN holder's customers that remain after the
single certification;
(F) the impact on future revenues lost from existing
customers;
(G) necessary and reasonable legal expenses and professional
fees;
(H) factors relevant to maintaining the current financial
integrity of the current CCN holder; and
(I) other relevant factors as determined by the commission.
(n) Valuation Process.
(1) For an area incorporated by a municipality, the
valuation of property that the commission identified in the interim
order issued under subsection (j) of this section shall be determined
by a qualified individual or firm serving as an independent appraiser.
The independent appraiser shall be limited to appraising the property
that the commission identified in the interim order issued under subsection
(j) of this section. The current CCN holder shall select the independent
appraiser by the 21st calendar day after the date of the order determining
that the application is administratively complete. The municipality
shall pay the independent appraiser's costs. The independent appraiser
shall file its appraisal with the commission by the 70th calendar
day after the date of the order determining that the application is
administratively complete. The valuation of property under this paragraph
is binding on the commission.
(2) For an area annexed by a municipality, the valuation
of property that the commission identified in the interim order issued
under subsection (j) of this section shall be determined by one or
more independent appraisers under the process set forth in this paragraph.
All independent appraisers shall be limited to appraising the property
that the commission identified in the interim order issued under subsection
(j) of this section. All independent appraisers shall be qualified
individuals or firms.
(A) If the current CCN holder and the municipality
can agree on an independent appraiser within ten calendar days after
the application is found administratively complete, the agreed-upon
independent appraiser shall make a valuation of the property that
the commission identified in the interim order issued under subsection
(j) of this section.
(i) The agreed-upon independent appraiser shall file
its appraisal with the commission by the 70th calendar day after the
date of the order determining that the application is administratively
complete.
(ii) A valuation of property under this subparagraph
is binding on the commission.
(B) If the current CCN holder and the municipality
cannot agree on an independent appraiser within ten calendar days
after the application is found administratively complete, the municipality
shall notify the serving CCN holder in writing of the failure to agree.
(i) If the parties still cannot agree within 11 calendar
days of the written notification, on the 11th day, the current CCN
holder and the municipality shall each file with the commission a
letter appointing a qualified individual or firm to serve as an independent
appraiser.
(I) Within 10 business days of their appointment, the
independent appraisers shall meet to reach an agreed valuation of
property that the commission identified in the interim order issued
under subsection (j) of this section.
(II) If the independent appraisers reach an agreed
valuation of property, the agreed valuation under this subclause is
binding on the commission.
(ii) If the appraisers cannot agree on a valuation
before the 16th business day after the date of their first meeting
under this subsection, then both parties shall file separate appraisals
by that date, and either the current CCN holder or the municipality
shall petition the commission to appoint a third appraiser to reconcile
the two appraisals.
(I) The commission may delegate authority to appoint
the third appraiser.
(II) The third appraiser shall file an appraisal that
reconciles the two other appraisals by the 80th calendar day after
the application is found administratively complete.
(III) The third appraiser's valuation may not be less
than the lower or more than the higher of the two original appraisals
filed under subparagraph (B)(ii) of this paragraph.
(IV) A valuation of property under this clause is binding
on the commission.
(C) The current CCN holder and the municipality shall
each pay one-half of the costs of all of the appraisers appointed
under this paragraph. Payment shall be made directly to the appraisers,
and proofs of payment shall be separately filed by the current CCN
holder and the prospective retail public utility within 30 calendar
days of the date of the invoice.
(o) Action after receipt of appraisals.
(1) An order incorporating the valuation determined
under subsection (n) of this section shall be issued by the 90th calendar
day after the application is found administratively complete.
(2) The commission shall deny the application if the
municipality fails to demonstrate compliance with the TCEQ's minimum
requirements for public drinking water systems. This paragraph does
not apply to a municipality that does not own a public drinking water
system.
(3) If the commission does not deny the application,
the commission shall do the following:
(A) determine what property, if any, is useless or
valueless property, impaired property, or transferred property;
(B) determine the monetary amount that is adequate
and just to compensate the current CCN holder for any such useless
or valueless property, impaired property, and transferred property;
and
(C) grant single certification to the municipality
or franchised utility.
(4) The granting of single certification shall be effective
on the date that
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