1-1 By: Goodman (Senate Sponsor - Harris of Dallas) H.B. No. 1273
1-2 (In the Senate - Received from the House April 20, 1993;
1-3 April 21, 1993, read first time and referred to Committee on
1-4 Finance; May 17, 1993, reported adversely, with favorable Committee
1-5 Substitute by the following vote: Yeas 12, Nays 0; May 17, 1993,
1-6 sent to printer.)
1-7 COMMITTEE VOTE
1-8 Yea Nay PNV Absent
1-9 Montford x
1-10 Turner x
1-11 Armbrister x
1-12 Barrientos x
1-13 Bivins x
1-14 Ellis x
1-15 Haley x
1-16 Moncrief x
1-17 Parker x
1-18 Ratliff x
1-19 Sims x
1-20 Truan x
1-21 Zaffirini x
1-22 COMMITTEE SUBSTITUTE FOR H.B. No. 1273 By: Montford
1-23 A BILL TO BE ENTITLED
1-24 AN ACT
1-25 relating to the issuance of obligations and the execution of credit
1-26 agreements by certain governmental entities.
1-27 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-28 SECTION 1. Sections 1(1), (3), (5), and (6), Chapter 656,
1-29 Acts of the 68th Legislature, Regular Session, 1983 (Article 717q,
1-30 Vernon's Texas Civil Statutes), are amended to read as follows:
1-31 (1) "Issuer" means (A) any incorporated city operating
1-32 under a home-rule charter adopted pursuant to Article XI, Section
1-33 5, of the Constitution of Texas having a population according to
1-34 the latest federal decennial census of 90,000 or more and having
1-35 outstanding long-term debt secured by the revenues of the public
1-36 utility for which the obligations are being issued which is rated
1-37 by a nationally recognized rating agency for municipal securities
1-38 in one of the four highest rating categories for long-term
1-39 obligations; (B) any conservation and reclamation district created
1-40 and organized as a river authority under and pursuant to Article
1-41 III, Section 52, or Article XVI, Section 59, of the Constitution of
1-42 Texas and by an act of the legislature of the State of Texas; (C)
1-43 any joint powers agency organized and operating pursuant to Chapter
1-44 166, Acts of the 63rd Legislature, Regular Session, 1973 (Article
1-45 1435a, Revised Statutes); (D) any metropolitan rapid transit
1-46 authority or regional transportation authority created, organized,
1-47 and operating pursuant to Chapter 141, Acts of the 63rd
1-48 Legislature, Regular Session, 1973 (Article 1118x, Revised
1-49 Statutes) or Chapter 683, Acts of the 66th Legislature, Regular
1-50 Session, 1979 (Article 1118y, Revised Statutes); (E) any
1-51 conservation and reclamation district organized or operating as a
1-52 navigation district under and pursuant to Article III, Section 52,
1-53 or Article XVI, Section 59, of the Constitution of Texas; (F) any
1-54 district organized or operating under and pursuant to Article XVI,
1-55 Section 59, of the Constitution of Texas which has all or part of
1-56 two or more incorporated cities within its boundaries; (G) agencies
1-57 of the State of Texas (including the governing boards of the state
1-58 institutions of higher education); <and> (H) any hospital authority
1-59 in a county with a population of more than 2 million, according to
1-60 the most recent federal census, that was created or is operating
1-61 under Chapter 262, Health and Safety Code or Chapter 264, Health
1-62 and Safety Code; and (I) any nonprofit corporation organized to
1-63 exercise the powers of a higher education authority under
1-64 Subsection (e), Section 53.47, Education Code.
1-65 (3) "Eligible project" means:
1-66 (A) the acquisition or construction of and
1-67 improvements, additions, or extensions to a public utility, one or
1-68 more, including capital assets and facilities incident and related
2-1 to the operation, maintenance, and administration thereof, and,
2-2 with respect to properties and facilities for (1) <(A)> the
2-3 generation of electric power and energy, fuel acquisition, or
2-4 development or facilities for the transportation thereof; (2)
2-5 <(B)> a public transportation system, buildings, structures,
2-6 terminals, rolling stock, garages, shops, equipment, and other
2-7 facilities (including vehicle parking areas and facilities
2-8 necessary or convenient for the beneficial use and access of
2-9 persons and vehicles to stations, terminals, yards, cars, and buses
2-10 or for the protection and environmental enhancement of such
2-11 facilities) for mass public transportation; (3) <and (C)> a port
2-12 facility, wharves, docks, warehouses, grain elevators, other
2-13 storage facilities, bunkering facilities, port-related railroads
2-14 and bridges, floating plants and facilities, lightering facilities,
2-15 cargo handling facilities, towing facilities, and all other
2-16 facilities or aids incident to or useful in the operation of a port
2-17 facility; and (4) a project for which there exist authorized but
2-18 unissued obligations approved by a majority of the voters of the
2-19 issuer, including obligations payable from ad valorem taxes; and
2-20 (B) a project for which an issuer is authorized
2-21 to issue revenue bonds secured, in whole or in part, by revenues
2-22 derived from or related to student loans.
2-23 (5) "Obligations" means notes, warrants, or other
2-24 special obligations authorized to be issued by an issuer under the
2-25 provisions of this Act and all "bonds" as defined in the Bond
2-26 Procedures Act of 1981 (Article 717k-6, Revised Statutes), which,
2-27 prior to the delivery thereof, have been rated by a nationally
2-28 recognized rating agency for municipal securities in either one of
2-29 the three highest rating categories for short term obligations or
2-30 one of the four highest rating categories for long term
2-31 obligations. It is provided, however, that the term "obligations"
2-32 does not mean or include any obligations payable from ad valorem
2-33 taxes, except as specifically permitted by this Act.
2-34 (6) "Credit agreement" means loan agreement, revolving
2-35 credit agreement, agreement establishing a line of credit, letter
2-36 of credit, reimbursement agreement, insurance contract, commitments
2-37 to purchase obligations, purchase or sale agreements, interest rate
2-38 swap agreement, or commitments or other contracts or agreements
2-39 authorized and approved by the governing body of an issuer either
2-40 in connection with the authorization, issuance, security, exchange,
2-41 payment, purchase, or redemption of obligations and/or interest
2-42 thereon, or as otherwise authorized by this Act.
2-43 SECTION 2. Section 2, Chapter 656, Acts of the 68th
2-44 Legislature, Regular Session, 1983 (Article 717q, Vernon's Texas
2-45 Civil Statutes), is amended by amending Subsection (a) and adding
2-46 Subsection (c) to read as follows:
2-47 (a) The governing body of an issuer is hereby authorized and
2-48 empowered to issue, sell, and deliver obligations and to execute
2-49 and deliver credit agreements <in relation thereto> to finance
2-50 project costs of an eligible project, or to refund obligations
2-51 issued in connection with an eligible project as may be authorized
2-52 and approved by the governing body, subject to the limitations
2-53 contained herein. Obligations shall be secured solely by (A) the
2-54 proceeds of sale of other obligations; (B) the proceeds of sale of
2-55 revenue bonds payable from the revenue to be received from a public
2-56 utility or a specified user of a public utility; (C) any revenues
2-57 which the issuer is authorized by any statute, city home-rule
2-58 charter, or constitutional provision to pledge to the payment of
2-59 any obligations; or (D) any one or more of such sources, including
2-60 credit agreements, all as the governing body of the issuer shall
2-61 provide in the resolution, order, or ordinance authorizing the
2-62 issuance of the obligations. Obligations shall be repaid from the
2-63 source or sources securing the payment thereof, funds received from
2-64 a credit agreement, or from any other revenues otherwise legally
2-65 available for the payment thereof, except funds derived from ad
2-66 valorem taxation unless the use of ad valorem taxes is in
2-67 accordance with Subsection (c) of this section. An issuer may
2-68 execute a credit agreement in relation to the issuance, payment,
2-69 sale, resale, or exchange of obligations at any time, without
2-70 regard to whether a credit agreement was contemplated, authorized,
3-1 or executed in relation to the initial issuance, sale, and delivery
3-2 of obligations.
3-3 (c) The governing body of an issuer may secure obligations
3-4 and pay the cost of credit agreements executed and delivered in
3-5 connection with financing the project costs of eligible projects
3-6 with ad valorem taxes or with other sources permitted by this Act.
3-7 SECTION 3. Section 4, Chapter 656, Acts of the 68th
3-8 Legislature, Regular Session, 1983 (Article 717q, Vernon's Texas
3-9 Civil Statutes), is amended to read as follows:
3-10 Sec. 4. The governing body of an issuer may enter into
3-11 credit agreements in conjunction with the issuance, payment, sale,
3-12 resale, or exchange of obligations to enhance the security for or
3-13 provide for the payment, redemption, or remarketing of the
3-14 obligations and interest on the obligations <or> to reduce the
3-15 interest payable on the obligations or in conjunction with the
3-16 interim financing of eligible projects of the issuer. A credit
3-17 agreement is an agreement for professional services and shall
3-18 contain the terms and conditions and be for the period that the
3-19 governing body of the issuer approves. The cost to the issuer of
3-20 the credit agreement may be paid from the proceeds of the sale of
3-21 the obligations to which the credit agreement relates or from any
3-22 other source, including:
3-23 (1) revenues of the issuer that are available for the
3-24 purpose of paying the obligations;
3-25 (2) <and> the interest on the obligations or that may
3-26 otherwise be legally available to make those payments; and
3-27 (3) ad valorem taxes to the extent permitted by this
3-28 Act.
3-29 SECTION 4. Section 5, Chapter 656, Acts of the 68th
3-30 Legislature, Regular Session, 1983 (Article 717q, Vernon's Texas
3-31 Civil Statutes), is amended to read as follows:
3-32 Sec. 5. Obligations (including accrued interest) and credit
3-33 agreements may from time to time be refinanced, renewed, or
3-34 refunded by the issuance of other obligations or credit agreements.
3-35 SECTION 5. Section 6, Chapter 656, Acts of the 68th
3-36 Legislature, Regular Session, 1983 (Article 717q, Vernon's Texas
3-37 Civil Statutes), is amended to read as follows:
3-38 Sec. 6. Preliminary to the issuance and delivery of
3-39 obligations or a credit agreement executed under this Act, the
3-40 proceedings of the issuer<, the resolution, order, or ordinance>
3-41 authorizing the issuance, execution, and delivery of any
3-42 obligations, any <thereof, together with any> credit agreements,
3-43 and any contracts providing revenues or security to pay the
3-44 obligations or credit agreements<,> shall be submitted to the
3-45 attorney general for his review. If the attorney general shall
3-46 find that such credit agreement or agreements, if any, contracts,
3-47 if any, and other authorizing proceedings conform to the
3-48 requirements of the Texas Constitution and this Act, the attorney
3-49 general shall approve them. Thereafter, the obligations and the
3-50 credit agreements authorized therein may be executed and delivered,
3-51 exchanged, or refinanced from time to time in accordance with the
3-52 authorizing proceedings. Upon such approval by the attorney
3-53 general and initial delivery of any obligations so authorized, any
3-54 such credit agreements, any such contracts providing revenues or
3-55 security, such initial obligations and all other obligations
3-56 thereafter issued pursuant to the authorizing proceedings, shall be
3-57 incontestable for any cause in any court or other forum and shall
3-58 be valid and binding obligations enforceable in accordance with
3-59 their respective terms and provisions.
3-60 SECTION 6. The importance of this legislation and the
3-61 crowded condition of the calendars in both houses create an
3-62 emergency and an imperative public necessity that the
3-63 constitutional rule requiring bills to be read on three several
3-64 days in each house be suspended, and this rule is hereby suspended,
3-65 and that this Act take effect and be in force from and after its
3-66 passage, and it is so enacted.
3-67 * * * * *
3-68 Austin,
3-69 Texas
3-70 May 17, 1993
4-1 Hon. Bob Bullock
4-2 President of the Senate
4-3 Sir:
4-4 We, your Committee on Finance to which was referred H.B. No. 1273,
4-5 have had the same under consideration, and I am instructed to
4-6 report it back to the Senate with the recommendation that it do not
4-7 pass, but that the Committee Substitute adopted in lieu thereof do
4-8 pass and be printed.
4-9 Montford,
4-10 Chairman
4-11 * * * * *
4-12 WITNESSES
4-13 FOR AGAINST ON
4-14 ___________________________________________________________________
4-15 Name: Robert D. Dransfield x
4-16 Representing: City of Grand Prairie
4-17 City: Dallas
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4-19 Name: Wayne Usry, Finance Director x
4-20 Representing: City of Grand Prairie
4-21 City: Grand Prairie
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