H.B. No. 1273
1-1 AN ACT
1-2 relating to the issuance of obligations and the execution of credit
1-3 agreements by certain governmental entities.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Sections 1(1), (3), (5), and (6), Chapter 656,
1-6 Acts of the 68th Legislature, Regular Session, 1983 (Article 717q,
1-7 Vernon's Texas Civil Statutes), are amended to read as follows:
1-8 (1) "Issuer" means (A) any incorporated city operating
1-9 under a home-rule charter adopted pursuant to Article XI, Section
1-10 5, of the Constitution of Texas having a population according to
1-11 the latest federal decennial census of 90,000 or more and having
1-12 outstanding long-term debt secured by the revenues of the public
1-13 utility for which the obligations are being issued which is rated
1-14 by a nationally recognized rating agency for municipal securities
1-15 in one of the four highest rating categories for long-term
1-16 obligations; (B) any conservation and reclamation district created
1-17 and organized as a river authority under and pursuant to Article
1-18 III, Section 52, or Article XVI, Section 59, of the Constitution of
1-19 Texas and by an act of the legislature of the State of Texas; (C)
1-20 any joint powers agency organized and operating pursuant to Chapter
1-21 166, Acts of the 63rd Legislature, Regular Session, 1973 (Article
1-22 1435a, Revised Statutes); (D) any metropolitan rapid transit
1-23 authority or regional transportation authority created, organized,
1-24 and operating pursuant to Chapter 141, Acts of the 63rd
2-1 Legislature, Regular Session, 1973 (Article 1118x, Revised
2-2 Statutes) or Chapter 683, Acts of the 66th Legislature, Regular
2-3 Session, 1979 (Article 1118y, Revised Statutes); (E) any
2-4 conservation and reclamation district organized or operating as a
2-5 navigation district under and pursuant to Article III, Section 52,
2-6 or Article XVI, Section 59, of the Constitution of Texas; (F) any
2-7 district organized or operating under and pursuant to Article XVI,
2-8 Section 59, of the Constitution of Texas which has all or part of
2-9 two or more incorporated cities within its boundaries; (G) agencies
2-10 of the State of Texas (including the governing boards of the state
2-11 institutions of higher education); <and> (H) any hospital authority
2-12 in a county with a population of more than 2 million, according to
2-13 the most recent federal census, that was created or is operating
2-14 under Chapter 262, Health and Safety Code or Chapter 264, Health
2-15 and Safety Code; and (I) any nonprofit corporation organized to
2-16 exercise the powers of a higher education authority under
2-17 Subsection (e), Section 53.47, Education Code.
2-18 (3) "Eligible project" means:
2-19 (A) the acquisition or construction of and
2-20 improvements, additions, or extensions to a public utility, one or
2-21 more, including capital assets and facilities incident and related
2-22 to the operation, maintenance, and administration thereof, and,
2-23 with respect to properties and facilities for (1) <(A)> the
2-24 generation of electric power and energy, fuel acquisition, or
2-25 development or facilities for the transportation thereof; (2)
2-26 <(B)> a public transportation system, buildings, structures,
2-27 terminals, rolling stock, garages, shops, equipment, and other
3-1 facilities (including vehicle parking areas and facilities
3-2 necessary or convenient for the beneficial use and access of
3-3 persons and vehicles to stations, terminals, yards, cars, and buses
3-4 or for the protection and environmental enhancement of such
3-5 facilities) for mass public transportation; (3) <and (C)> a port
3-6 facility, wharves, docks, warehouses, grain elevators, other
3-7 storage facilities, bunkering facilities, port-related railroads
3-8 and bridges, floating plants and facilities, lightering facilities,
3-9 cargo handling facilities, towing facilities, and all other
3-10 facilities or aids incident to or useful in the operation of a port
3-11 facility; and (4) a project for which there exist authorized but
3-12 unissued obligations approved by a majority of the voters of the
3-13 issuer, including obligations payable from ad valorem taxes; and
3-14 (B) a project for which an issuer is authorized
3-15 to issue revenue bonds secured, in whole or in part, by revenues
3-16 derived from or related to student loans.
3-17 (5) "Obligations" means notes, warrants, or other
3-18 special obligations authorized to be issued by an issuer under the
3-19 provisions of this Act and all "bonds" as defined in the Bond
3-20 Procedures Act of 1981 (Article 717k-6, Revised Statutes), which,
3-21 prior to the delivery thereof, have been rated by a nationally
3-22 recognized rating agency for municipal securities in either one of
3-23 the three highest rating categories for short term obligations or
3-24 one of the four highest rating categories for long term
3-25 obligations. It is provided, however, that the term "obligations"
3-26 does not mean or include any obligations payable from ad valorem
3-27 taxes, except as specifically permitted by this Act.
4-1 (6) "Credit agreement" means loan agreement, revolving
4-2 credit agreement, agreement establishing a line of credit, letter
4-3 of credit, reimbursement agreement, insurance contract, commitments
4-4 to purchase obligations, purchase or sale agreements, interest rate
4-5 swap agreement, or commitments or other contracts or agreements
4-6 authorized and approved by the governing body of an issuer either
4-7 in connection with the authorization, issuance, security, exchange,
4-8 payment, purchase, or redemption of obligations and/or interest
4-9 thereon, or as otherwise authorized by this Act.
4-10 SECTION 2. Section 2, Chapter 656, Acts of the 68th
4-11 Legislature, Regular Session, 1983 (Article 717q, Vernon's Texas
4-12 Civil Statutes), is amended by amending Subsection (a) and adding
4-13 Subsection (c) to read as follows:
4-14 (a) The governing body of an issuer is hereby authorized and
4-15 empowered to issue, sell, and deliver obligations and to execute
4-16 and deliver credit agreements <in relation thereto> to finance
4-17 project costs of an eligible project, or to refund obligations
4-18 issued in connection with an eligible project as may be authorized
4-19 and approved by the governing body, subject to the limitations
4-20 contained herein. Obligations shall be secured solely by (A) the
4-21 proceeds of sale of other obligations; (B) the proceeds of sale of
4-22 revenue bonds payable from the revenue to be received from a public
4-23 utility or a specified user of a public utility; (C) any revenues
4-24 which the issuer is authorized by any statute, city home-rule
4-25 charter, or constitutional provision to pledge to the payment of
4-26 any obligations; or (D) any one or more of such sources, including
4-27 credit agreements, all as the governing body of the issuer shall
5-1 provide in the resolution, order, or ordinance authorizing the
5-2 issuance of the obligations. Obligations shall be repaid from the
5-3 source or sources securing the payment thereof, funds received from
5-4 a credit agreement, or from any other revenues otherwise legally
5-5 available for the payment thereof, except funds derived from ad
5-6 valorem taxation unless the use of ad valorem taxes is in
5-7 accordance with Subsection (c) of this section. An issuer may
5-8 execute a credit agreement in relation to the issuance, payment,
5-9 sale, resale, or exchange of obligations at any time, without
5-10 regard to whether a credit agreement was contemplated, authorized,
5-11 or executed in relation to the initial issuance, sale, and delivery
5-12 of obligations.
5-13 (c) The governing body of an issuer may secure obligations
5-14 and pay the cost of credit agreements executed and delivered in
5-15 connection with financing the project costs of eligible projects
5-16 with ad valorem taxes or with other sources permitted by this Act.
5-17 SECTION 3. Section 4, Chapter 656, Acts of the 68th
5-18 Legislature, Regular Session, 1983 (Article 717q, Vernon's Texas
5-19 Civil Statutes), is amended to read as follows:
5-20 Sec. 4. The governing body of an issuer may enter into
5-21 credit agreements in conjunction with the issuance, payment, sale,
5-22 resale, or exchange of obligations to enhance the security for or
5-23 provide for the payment, redemption, or remarketing of the
5-24 obligations and interest on the obligations <or> to reduce the
5-25 interest payable on the obligations or in conjunction with the
5-26 interim financing of eligible projects of the issuer. A credit
5-27 agreement is an agreement for professional services and shall
6-1 contain the terms and conditions and be for the period that the
6-2 governing body of the issuer approves. The cost to the issuer of
6-3 the credit agreement may be paid from the proceeds of the sale of
6-4 the obligations to which the credit agreement relates or from any
6-5 other source, including:
6-6 (1) revenues of the issuer that are available for the
6-7 purpose of paying the obligations;
6-8 (2) <and> the interest on the obligations or that may
6-9 otherwise be legally available to make those payments; and
6-10 (3) ad valorem taxes to the extent permitted by this
6-11 Act.
6-12 SECTION 4. Section 5, Chapter 656, Acts of the 68th
6-13 Legislature, Regular Session, 1983 (Article 717q, Vernon's Texas
6-14 Civil Statutes), is amended to read as follows:
6-15 Sec. 5. Obligations (including accrued interest) and credit
6-16 agreements may from time to time be refinanced, renewed, or
6-17 refunded by the issuance of other obligations or credit agreements.
6-18 SECTION 5. Section 6, Chapter 656, Acts of the 68th
6-19 Legislature, Regular Session, 1983 (Article 717q, Vernon's Texas
6-20 Civil Statutes), is amended to read as follows:
6-21 Sec. 6. Preliminary to the issuance and delivery of
6-22 obligations or a credit agreement executed under this Act, the
6-23 proceedings of the issuer<, the resolution, order, or ordinance>
6-24 authorizing the issuance, execution, and delivery of any
6-25 obligations, any <thereof, together with any> credit agreements,
6-26 and any contracts providing revenues or security to pay the
6-27 obligations or credit agreements<,> shall be submitted to the
7-1 attorney general for his review. If the attorney general shall
7-2 find that such credit agreement or agreements, if any, contracts,
7-3 if any, and other authorizing proceedings conform to the
7-4 requirements of the Texas Constitution and this Act, the attorney
7-5 general shall approve them. Thereafter, the obligations and the
7-6 credit agreements authorized therein may be executed and delivered,
7-7 exchanged, or refinanced from time to time in accordance with the
7-8 authorizing proceedings. Upon such approval by the attorney
7-9 general and initial delivery of any obligations so authorized, any
7-10 such credit agreements, any such contracts providing revenues or
7-11 security, such initial obligations and all other obligations
7-12 thereafter issued pursuant to the authorizing proceedings, shall be
7-13 incontestable for any cause in any court or other forum and shall
7-14 be valid and binding obligations enforceable in accordance with
7-15 their respective terms and provisions.
7-16 SECTION 6. The importance of this legislation and the
7-17 crowded condition of the calendars in both houses create an
7-18 emergency and an imperative public necessity that the
7-19 constitutional rule requiring bills to be read on three several
7-20 days in each house be suspended, and this rule is hereby suspended,
7-21 and that this Act take effect and be in force from and after its
7-22 passage, and it is so enacted.