Chapter 49 of the Texas Water Code is the default operating manual for nearly every special-purpose water district in the state. It sets uniform rules on who can serve on a district board, how the district sets rates and awards contracts, how it issues bonds, how its books get audited, and how residents can see its records. When a district’s own enabling law is silent on a procedure, Chapter 49 fills the gap.
Which Districts Chapter 49 Covers
Section 49.001 defines “district” broadly as any district or authority created under Article III, Section 52(b)(1) and (2) or Article XVI, Section 59 of the Texas Constitution. That sweeps in Municipal Utility Districts, Water Control and Improvement Districts, Special Utility Districts, Fresh Water Supply Districts, Levee Improvement Districts, Irrigation Districts, and many others. Navigation districts, port authorities, and groundwater conservation districts governed by Chapter 36 are excluded unless a special law specifically pulls them in.1Texas Public Law. Texas Water Code 49.001 – Definitions
Section 49.002 explains how the chapter interacts with other law. It applies to all general-law and special-law districts unless a specific provision in another chapter or in the district’s creating act directly conflicts. When there is a conflict, the more specific law wins.2Texas Public Law. Texas Water Code 49.002 – Applicability A Municipal Utility District, for example, draws its unique powers from Chapter 54 but falls back on Chapter 49 for board procedures, auditing, and financial oversight.
Who Can Sit on the Board
Every district is run by a board of directors, and qualifications depend on the district type. A Municipal Utility District director must reside in Texas and either own taxable land in the district or be a qualified voter in it. A Water Control and Improvement District director must own taxable land inside the district and live in the state. A Special Utility District director must live in Texas and either own taxable land in the district, use its facilities, or be a qualified voter. Where an enabling chapter is silent on minimum age or residency, the Texas Election Code supplies the defaults: 18 years old, 12 months in the state, and six months in the district.3Texas Commission on Environmental Quality. District Director Qualifications
Section 49.052 disqualifies directors who are related within three degrees to a developer in the district, to another board member, or to the district’s professional service providers. Working for a developer, serving as the district’s attorney or engineer, or holding a contract with the district beyond buying public services are also grounds for removal. Once a conflict is identified, the board has 60 days to replace the director. Anyone who knowingly keeps serving while disqualified commits a misdemeanor punishable by a fine of $100 to $1,000.4Texas Public Law. Texas Water Code 49.052 – Disqualification of Directors
Director Pay
Directors earn a per-day fee for each day actually spent on district business. The board sets the rate by resolution, but it cannot exceed the legislative per diem established by the Texas Ethics Commission, currently $221 per day.5Texas Ethics Commission. Commission Rules Chapter 50 Annual fees are capped at $7,200 per director, with an exception for special water authorities that distribute and sell electricity to the public.6State of Texas. Texas Water Code 49.060 – Fees of Office Reimbursement
A majority of the seated board makes a quorum. Boards operate under the Texas Open Meetings Act, so meetings must be posted in advance and open to the public. When a seat opens mid-term, the remaining directors may appoint a qualified replacement.
Rates, Service Shutoffs, and Eminent Domain
Section 49.211 gives every district broad authority to buy, build, own, operate, and maintain the land, facilities, and equipment it needs for its purposes, including water treatment plants, sewer lines, drainage infrastructure, parks, and recreational facilities, inside or outside the district’s boundaries.7Texas Public Law. Texas Water Code 49.211 – Powers
Rates are set by the board. Section 49.212 lets a district adopt charges, mandatory fees, deposits, and rental payments for any facility or service, on top of any taxes it collects. If a customer falls behind, the district can shut off service to force collection, including for taxes delinquent at least six months.8Texas Public Law. Texas Water Code 49.212 – Fees and Charges This is the power residents feel most directly: an unpaid bill can cost you water service, and the statute expressly backs that remedy.
Section 49.222 authorizes condemnation for water supply, sanitary sewer, storm drainage, flood control, or any other authorized purpose. A district can take full ownership or a lesser interest like an easement, but it cannot condemn underground water or water rights. The procedure follows Chapter 21 of the Texas Property Code: a bona fide initial offer, then a final offer backed by an independent appraisal, and if no agreement is reached, a petition in court where three appointed commissioners set the compensation.9Texas Public Law. Texas Water Code 49.222 – Eminent Domain
How Contracts Get Awarded
Construction contracts fall into three tiers under the Texas Administrative Code:
- Over $75,000: the board must advertise the project once a week for two consecutive weeks before accepting sealed bids.
- $25,001 to $75,000: the board must solicit written competitive bids from at least three bidders.
- $25,000 or less: no advertising or competitive bidding is required.
These thresholds apply to construction contracts for district infrastructure.10Legal Information Institute. 30 Texas Admin Code 293.63 – Contract Documents for Water Districts Professional service contracts for engineers, attorneys, and similar consultants follow separate procurement rules and are generally exempt from competitive bidding.
Taxes and Bonds
Water districts fund big infrastructure through taxes and bonds, and voters hold the key to both. A district can levy an operation and maintenance tax only after a majority of district voters approve it at an election. Once authorized, the board sets the annual rate and has it assessed and collected with other district taxes.
Bonds also require an election inside the district. After voters approve, the district submits a bond application to the Texas Commission on Environmental Quality that includes the engineering report for the proposed facilities, a financial feasibility study, the projected tax rate needed to service the debt, and proof that underground infrastructure to be financed is at least 95% complete at the time of TCEQ approval.11Texas Commission on Environmental Quality. Developers Bond Application Report Format RG-178
The TCEQ reviews these applications to confirm the district is not taking on more debt than its tax base can carry. The district must also keep a year-end debt-service balance of at least 25% of the next year’s debt-service requirement. A 0.25% TCEQ fee applies to the bond issuance, with a separate Attorney General review fee calculated at 0.10% of the issue, between $750 and $9,500.11Texas Commission on Environmental Quality. Developers Bond Application Report Format RG-178
Most district bonds are issued tax-exempt, and keeping that status requires ongoing IRS compliance for the full life of the bonds, including restrictions on how proceeds are invested and whether bond-financed property is used for private business purposes.12Internal Revenue Service. Tax-Exempt Private Activity Bonds
Audits and Filing Deadlines
Every district must have its fiscal accounts and records audited each year, at the district’s own expense. Section 49.191 requires the audit to be completed within 120 days after the close of the district’s fiscal year.13State of Texas. Texas Water Code 49.191 – Duty to Audit Section 49.194 then gives the district a separate deadline: the report must be filed with the TCEQ’s executive director within 135 days of the fiscal year’s close. If the board refuses to approve the audit, it still files the report inside that 135-day window along with a written explanation. Special water authorities get an extra 25 days, pushing their filing deadline to 160 days.14State of Texas. Texas Water Code 49.194 – Filing of Audits, Affidavits, and Financial Reports
Missing the filing deadline matters. The TCEQ’s executive director reports noncompliant districts to the Texas Attorney General, which opens the door to enforcement rather than a flat daily fine. Residents can review audit reports through the TCEQ or at the district’s office during business hours.
Dormant Districts
Not every district is actively running services. Section 49.197 lets a financially dormant district skip the full audit. A district qualifies if during the calendar year it had $500 or less in total receipts, $500 or less in disbursements, no long-term liabilities, and no more than $5,000 in cash or investments at any point.15Texas Public Law. Texas Water Code 49.197 – Financially Dormant Districts A qualifying district files a short financial dormancy affidavit by January 31 each year instead. That stays in effect until the district either dissolves or becomes financially active again, and the TCEQ keeps the authority to audit dormant districts to verify the status.
Getting Records from the District
Water districts are governmental bodies under the Texas Public Information Act. When you submit a written request, the district must produce the records promptly. If it cannot gather them within 10 business days, it must send written notice of when they will be available.16Office of the Attorney General of Texas. Public Information Act Handbook
If the district wants to withhold anything, it must ask the Attorney General for a decision within 10 business days of your request and submit supporting documentation within 15 business days. A district that misses either deadline is presumed to owe you the records.16Office of the Attorney General of Texas. Public Information Act Handbook That gives you a real path to contracts, financial statements, engineering reports, and board communications.
Dissolving an Inactive District
The TCEQ can dissolve a water district that has been completely inactive for five consecutive years and carries no outstanding bonded debt. The process starts with a published notice of the dissolution hearing, run once a week for two consecutive weeks in a newspaper serving the district’s area, with the first publication at least 30 days before the hearing. The TCEQ also mails notice directly to the directors.
The executive director investigates the district’s history and presents a written report at the hearing. If the commission finds the district has performed none of its functions for five straight years and has no bonded debt, it can enter a dissolution order. That order is recorded in the county deed records and, for districts created by special act of the legislature, filed with the Secretary of State.
Federal Rules That Sit on Top of Chapter 49
Chapter 49 governs district operations under state law, but federal mandates apply alongside it. Community water systems serving more than 3,300 people must prepare risk and resilience assessments and emergency response plans addressing cybersecurity threats under the Safe Drinking Water Act as revised by the America’s Water Infrastructure Act of 2018, with recertification to the EPA every five years.17US EPA. Addressing Cybersecurity in Risk and Resilience Assessments and Emergency Response Construction projects that affect wetlands, streams, or other protected waters need a Section 404 permit from the U.S. Army Corps of Engineers before any discharge of dredged or fill material. And any district with tax-exempt bonds outstanding carries IRS compliance obligations for the full term of the debt.