By: Bettencourt, Birdwell S.B. No. 604

(In the Senate - Filed February 5, 2021; March 11, 2021, read first time and referred to Committee on Local Government; April 12, 2021, reported adversely, with favorable Committee Substitute by the following vote: Yeas 9, Nays 0; April 12, 2021, sent to printer.) Click here to see the committee vote

COMMITTEE SUBSTITUTE FOR S.B. No. 604 By: Nichols

A BILL TO BE ENTITLED

AN ACT

relating to bonds issued by and the dissolution of municipal management districts.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Subchapter M, Chapter 375, Local Government Code, is amended by adding Section 375.2621 to read as follows:

Sec. 375.2621. PROHIBITION ON ISSUANCE OF BONDS AFTER PETITION. If a petition for dissolution under Section 375.262 is filed with the board, the board must consider the petition not later than the 60th day after the date the petition is filed. The district may not issue bonds secured by assessments after the date the board confirms that the petition is valid and complete under Section 375.262.

SECTION 2. Section 375.264, Local Government Code, is amended to read as follows:

Sec. 375.264. LIMITATIONS [LIMITATION] ON DISSOLUTION BY BOARD OF DISTRICT WITH DEBT. (a) A district may not be dissolved by its board under Section 375.261 or after a petition is filed under Section 375.262 if the district has [any] outstanding bonded indebtedness until that bonded indebtedness has been repaid or defeased in accordance with the order or resolution authorizing the issuance of the bonds.

(b) If a petition for dissolution is filed under Section 375.262 with the board of a district and the district has outstanding bonded indebtedness secured by assessments:

(1) the district shall remain in existence solely for the purpose of discharging its bonded indebtedness; and

(2) the board shall use all district money that is available for the purpose to repay or defease the bonded indebtedness as soon as practicable in accordance with the order or resolution authorizing the issuance of the bonds.

(c) Subsection (b) does not apply to a district that has outstanding bonded indebtedness secured by a source other than assessments on the date the petition is filed with the board.

SECTION 3. The changes in law made by this Act apply only to a municipal management district that is the subject of a petition described by Section 375.262, Local Government Code, filed with the board on or after the effective date of this Act. A district that is the subject of such a petition filed with the board before the effective date of this Act is governed by the law in effect on the date the petition was filed, and the former law is continued in effect for that purpose.

SECTION 4. The changes in law made by this Act may not be construed to impair an obligation under a contract entered into before the effective date of this Act. A political subdivision may fulfill the subdivision's obligations under a contract entered into before that date but may not extend such a contract beyond the contract's original term.

SECTION 5. This Act takes effect September 1, 2021.

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