Enrolled Bill Summary

House Bill 621	House Author:  Elkins
Effective:  6-19-09	Senate Sponsor:  West

            Current law authorizes the governing body of a municipality or county to levy a special assessment on property in a public improvement district designated by the municipality or county and to provide that assessments be paid in periodic installments.  House Bill 621 amends the Local Government Code to specify that the periodic installments are at an interest rate and for a period approved by the governing body and that the provision for periodic installments may, but is not required to, result in level annual installment payments.  The bill establishes that an assessment bears interest at the rate specified by the governing body beginning on the occurrence of one or more events specified by the governing body, and it makes the cap on the interest rate apply if general obligation bonds, revenue bonds, time warrants, or temporary notes are issued to finance the improvement for which the assessment is assessed.  The bill establishes that a lien against the property assessed runs with the land and that neither the lien nor the outstanding principal balance of the assessment is not eliminated by foreclosure of a property tax lien. 

            House Bill 621 makes the requirement to create a separate public improvement district fund apply if bonds are issued.  The bill adds two methods of payment for a cost payable from a special assessment that is to be paid in installments and a cost payable by the municipality or county as a whole but not payable from available general funds or other available general improvement funds.  The bill caps the net effective interest rate on money owed or paid in connection with those costs.  It specifies that the authorization for the governing body of a municipality or county to issue temporary notes or time warrants while an improvement is in progress is for work performed in connection with the improvement, and it authorizes bond proceeds to be used to repay those obligations.  The bill also authorizes the cost of more than one improvement to be paid under an agreement with a person who contracts to install or construct the improvement and who sells the improvement to the municipality or county.

            The bill makes provisions relating to the pledge of income for the payment of bonds issued in connection with a public improvement district apply to the payment of an obligation, including bonds, temporary notes, or time warrants.  The bill authorizes the governing body of a municipality or county to enter into an agreement with a corporation created by the municipality or county to secure indebtedness issued by the corporation to finance an improvement project.  The agreement may also provide that the corporation is responsible for managing the district or that title to one or more improvements will be held by the corporation.  House Bill 621 validates all acts and proceedings related to the authorization of any taxes or bonds by a public improvement district before the effective date of the bill, and it validates an installment sales contract between a municipality or county and the party constructing an improvement if the contract was made or attempted to be made before the effective date of the bill and if the contract complies with provisions relating to payment of costs.