(a) In calculating standby fees to be used to supplement the operation and maintenance fund, the following definitions apply.
  (1) Connection, as used in this section, means a standardized measure of consumption, use, generation, or discharge attributable to an individual unit of development calculated in accordance with generally accepted engineering, or planning standards. Connections shall be used to calculate the standby fee. Connections may be described in terms of single family equivalent connections, living unit of equivalents, or any other generally accepted unit of consumption typically attributable to a single family household. The assumed population equivalent per connection should be indicated.
  (2) Active connection, as used in this section, means a lot or tract with vertical improvements and a meter in service for which water and/or wastewater usage is billed.
  (3) Inactive connection, as used in this section, means a lot or tract with existing vertical improvements, and where water and/or wastewater connections were made but such service is not being provided nor billed.
  (4) Undeveloped property (expressed in terms of connections), as used in this section, means a tract, lot or reserve in the district to which no water or wastewater connections or drainage services exist and for which:
    (A) water, wastewater, or drainage facilities and services are available;
    (B) water supply, wastewater treatment plant capacity, or drainage capacity sufficient to serve any portion of the property is available; or
    (C) major water supply lines, wastewater collection lines, or drainage facilities with capacity sufficient to serve any portion of the property are available.
(b) Only those districts which meet the following criteria may seek approval from the commission to use standby fee revenue to supplement the operation and maintenance fund:
  (1) all capitalized funds or reserves for operating purposes which were derived from all prior bond issues (except an amount not to exceed a three-month reserve) have been depleted or are projected to be depleted within the three years in which the standby fees are to be levied; and
  (2) the operation and maintenance fund is operating at a deficit or is projected to operate at a deficit within the three years in which the standby fees are to be levied with:
    (A) rates for the first 10,000 gallons of water and wastewater usage for residential users (or equal or greater amounts for other users) which exceed $40; or
    (B) rates for the first 10,000 gallons of usage for residential users (or equal or greater amounts for other users) which exceed $27 if the district is a provider of only water or wastewater service.
(c) In determining the revenue to be generated from water and wastewater rates if such rates do not equal or exceed the rates stated in subsection (b)(2) of this section, an amount will be added to the minimum charge such that the total bill for 10,000 gallons of usage will equal the rates stated in subsection (b)(2) of this section.
(d) Standby fee amounts shall be determined so that all of the following are true:
  (1) The total revenue projected to be generated from the fee is not more than that necessary to balance the projected operation and maintenance budget assuming:
    (A) a 90% collection rate of the proposed fee;
    (B) maintenance tax revenue based on a 90% collection rate is applied toward the budget;
    (C) all of the water, wastewater, or drainage revenue projected for the coming year is applied toward the budget, with rates or revenues established or assumed at an amount equal to or higher than those in the preceding subsection (b)(2) of this section; and
    (D) an operating reserve not to exceed three months included in the first year's budget if that reserve is not already existing.
  (2) The fee amount shall not exceed the rate charged to active connections for 10,000 gallons actual water and wastewater usage;
  (3) The fee amount equitably distributes the fixed costs of operating and maintaining the district's water, wastewater, or drainage facilities among active connections, inactive connections, and undeveloped property owners. In the absence of an allocation of a district's budget to fixed and variable expenses in an application, the staff shall make its own determination based on a predetermined fixed and variable allocation, a copy of which shall be made available from the executive director. A district may submit, with supporting and substantiating documentation, an allocation specific to that district.
(e) In determining whether a district which meets the foregoing requirements be allowed to impose standby fees for operation and maintenance revenue and the amount of the standby fee levy against the various categories of development authorized to be imposed, the following factors may be considered:
  (1) the amount of the operating deficit;
  (2) the amounts charged or proposed to be charged for water and/or wastewater services usage;
  (3) the efficiency and prudence of utilization of operating funds;
  (4) the capacity of the various components of the system;
  (5) the projected buildout compared to actual buildout;
  (6) the amounts charged by districts with comparable land uses; and
  (7) maintenance tax levy, if any.
(f) Applications shall include the following:
  (1) an application fee of $100;
  (2) a certified copy of a board resolution which shall contain a request for commission approval of the fee and shall state the designated fund to which standby fee revenues will be applied, the amount of the fee and the intervals or periods of billing for such standby fees (either monthly, quarterly or annually);
  (3) a proposal for the standby fee amount including substantiating calculations to show how the standby fee was derived;
  (4) a map of the district (not larger than 24 inches by 36 inches) which shall clearly designate the properties against which the proposed standby fee will be levied. If such information is not available within agency files, the executive director may require that water, wastewater, or drainage facilities serving those properties be identified. An accounting of water supply, wastewater treatment facilities, or drainage facilities and capacity available in those facilities may also be required.
  (5) a table indicating the ultimate number of connections according to section for which the district has water, wastewater, or drainage facilities. Indicate active connections, inactive connections, and the number of connections attributable to undeveloped property;
  (6) a copy of the district's operating budget for the past two years and the proposed budget for the coming year. Indicate those fixed costs required to operate and maintain the water, wastewater, or drainage facilities, including a proportionate share of consultant and organizational fees attributable to operating and maintaining the water, wastewater, or drainage facilities and those expenses not related to operating and maintaining the district's water, wastewater, or drainage facilities, such as operating a recreational facility;
  (7) an indication of revenues available for operation and maintenance costs and the sources of those revenues. Include water consumption records, wastewater flow records, or drainage maintenance records (if used in determining charge for service) for the previous two years and projected for the coming year as reflected in the proposed budget;
  (8) a certified copy of the district's most current order establishing the water and/or wastewater rates or drainage charges, as applicable;
  (9) any other information as the executive director may require to assure that the fees are consistent with the criteria contained herein;
  (10) in the event that a district provides the executive director with written consent of all landowners of undeveloped property in the district identified on the district's tax rolls and of all mortgagees of undeveloped property who have submitted a written request to be informed of any hearing pursuant to §293.145 of this title (relating to Public Hearing and Notice Requirements), to the proposed levy of standby fees, the district shall be exempted from the requirements of paragraphs (3), (5) and (6) of this subsection except that the district shall provide a copy of the district's operating budget for the past two years and the coming year.

Source Note: The provisions of this §293.143 adopted to be effective December 17, 1990, 15 TexReg 6849; amended to be effective October 22, 1996, 21 TexReg 9905; amended to be effective September 14, 2000, 25 TexReg 8955