S.B. No. 63 AN ACT 1-1 relating to the issuance of anticipation notes by counties and 1-2 municipalities. 1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-4 SECTION 1. Chapter 1, Title 22, Revised Statutes, is amended 1-5 by adding Article 717w to read as follows: 1-6 Art. 717w. ANTICIPATION NOTES 1-7 Sec. 1. DEFINITIONS. In this article: 1-8 (1) "Amount available" includes cash, marketable 1-9 securities, or money in an account that, without legislative or 1-10 judicial action, may be used to pay an issuer's anticipated 1-11 expenditures. The term does not include: 1-12 (A) money in an account that is subject to a 1-13 legislative, judicial, or contractual requirement that the account 1-14 be reimbursed; or 1-15 (B) the proceeds of an anticipation note issued 1-16 under this article. 1-17 (2) "Anticipated expenditure" means an expenditure 1-18 that is payable from anticipated tax or other revenue. 1-19 (3) "Anticipation note" means a note issued under this 1-20 article. 1-21 (4) "Cash reserve" means an amount reasonably required 1-22 by an issuer for the payment of unanticipated expenditures. For 1-23 purposes of this article, an amount equal to one month's 2-1 anticipated expenditures is presumed to be reasonably required as a 2-2 cash reserve. 2-3 (5) "Cumulative cash flow deficit" means, for the 2-4 period for which the amount is determined, the amount by which the 2-5 sum of an issuer's anticipated expenditures plus the issuer's cash 2-6 reserve exceeds the amount available for payment of the anticipated 2-7 expenditures. 2-8 (6) "Governing body" means the board, council, 2-9 commission, court, or other body or group authorized to issue 2-10 anticipation notes for or on behalf of an issuer. 2-11 (7) "Issuer" means a municipality or county. 2-12 Sec. 2. CONFLICT WITH OTHER LAW. If there is a conflict 2-13 between this article and another statute, the issuer may use either 2-14 provision, and it is not necessary for the governing body to 2-15 designate the law under which the action is being taken. 2-16 Sec. 3. PURPOSES FOR WHICH ANTICIPATION NOTES MAY BE 2-17 AUTHORIZED. The commissioners court of a county, on recommendation 2-18 of the county auditor or budget officer if applicable, or the 2-19 governing body of a municipality may authorize anticipation notes 2-20 to: 2-21 (1) pay a contractual obligation incurred or to be 2-22 incurred for the construction of any public work; 2-23 (2) pay a contractual obligation incurred or to be 2-24 incurred for the purchase of materials, supplies, equipment, 2-25 machinery, buildings, lands, and rights-of-way for an issuer's 3-1 authorized needs and purposes; 3-2 (3) pay a contractual obligation incurred or to be 3-3 incurred for professional services, including services provided by 3-4 tax appraisal engineers, engineers, architects, attorneys, 3-5 mapmakers, auditors, financial advisors, and fiscal agents; 3-6 (4) pay operating expenses or current expenses; or 3-7 (5) fund the issuer's cumulative cash flow deficit. 3-8 Sec. 4. ADDITIONAL AUTHORITY FOR COUNTIES AND CERTAIN 3-9 MUNICIPALITIES. (a) This section applies only to: 3-10 (1) a county; or 3-11 (2) a municipality that has a population of 80,000 or 3-12 more, according to the most recent federal census. 3-13 (b) Notwithstanding anything in this article to the 3-14 contrary, the governing body of an issuer described by Subsection 3-15 (a) of this section may exercise the authority granted to the 3-16 governing body of an issuer with regard to issuance of obligations 3-17 under Chapter 656, Acts of the 68th Legislature, Regular Session, 3-18 1983 (Article 717q, Vernon's Texas Civil Statutes), except that the 3-19 prohibition in that Act on the repayment of an obligation with 3-20 funds derived from ad valorem taxation does not apply to an issuer 3-21 exercising the authority granted under this section. 3-22 Sec. 5. AUTHORIZATION OF ANTICIPATION NOTES BY ORDINANCE OR 3-23 ORDER. Anticipation notes may be authorized by an ordinance 3-24 adopted by the governing body of a municipality or by an order 3-25 adopted by the governing body of a county. 4-1 Sec. 6. RESTRICTIONS ON ANTICIPATION NOTES. (a) Except as 4-2 provided by Subsection (b) of this section, anticipation notes 4-3 issued under this article are subject to: 4-4 (1) Chapter 503, Acts of the 54th Legislature, 1955 4-5 (Article 717k, Vernon's Texas Civil Statutes); 4-6 (2) Chapter 3, Acts of the 61st Legislature, Regular 4-7 Session, 1969 (Article 717k-2, Vernon's Texas Civil Statutes); 4-8 (3) Chapter 784, Acts of the 61st Legislature, Regular 4-9 Session, 1969 (Article 717k-3, Vernon's Texas Civil Statutes); 4-10 (4) the Bond Procedures Act of 1981 (Article 717k-6, 4-11 Vernon's Texas Civil Statutes); 4-12 (5) Sections 3.001 through 3.003, Chapter 53, Acts of 4-13 the 70th Legislature, 2nd Called Session, 1987 (Article 717k-8, 4-14 Vernon's Texas Civil Statutes); and 4-15 (6) Chapter 400, Acts of the 66th Legislature, 1979 4-16 (Article 717m-1, Vernon's Texas Civil Statutes). 4-17 (b) Chapter 656, Acts of the 68th Legislature, Regular 4-18 Session, 1983 (Article 717q, Vernon's Texas Civil Statutes), 4-19 governs approval by the attorney general of anticipation notes 4-20 issued under Section 4 of this article. 4-21 (c) A governing body may not issue anticipation notes that 4-22 are to be payable from bonds secured by ad valorem taxes unless the 4-23 proposition authorizing the issuance of the bonds has been approved 4-24 by a majority of the voters in an election held by the issuer and 4-25 the proposition states that anticipation notes may be issued. 5-1 (d) A governing body may not use proceeds from the sale of 5-2 anticipation notes to repay interfund or other borrowing that 5-3 occurred more than 24 months before the date of the ordinance or 5-4 order authorizing the issuance of the notes. 5-5 (e) Anticipation notes issued for a purpose described by 5-6 Subdivision (1), (2), or (3) of Section 3 of this article must 5-7 mature before the seventh anniversary of the date that the attorney 5-8 general approves the notes. 5-9 (f) Anticipation notes issued for a purpose described in 5-10 Subdivision (4) or (5) of Section 3 of this article must mature 5-11 before the first anniversary of the date that the attorney general 5-12 approves the notes. 5-13 (g) Anticipation notes issued by a municipality under 5-14 Subdivision (4) of Section 3 of this article may not exceed 75 5-15 percent of the revenues or taxes anticipated to be collected in the 5-16 fiscal year in which the attorney general approves the notes. 5-17 Anticipation notes issued by a county under Subdivision (4) of 5-18 Section 3 of this article may not exceed 50 percent of the revenues 5-19 or taxes anticipated to be collected in the fiscal year in which 5-20 the attorney general approves the notes. 5-21 Sec. 7. PROVISIONS IN ANTICIPATION NOTES. The governing 5-22 body may: 5-23 (1) make the notes payable at the times and places 5-24 determined by the governing body; 5-25 (2) issue the notes in forms and one or more 6-1 denominations, either in coupon form or registered as to principal 6-2 and interest, or both; 6-3 (3) make the notes contain options for redemption 6-4 before the scheduled maturity; and 6-5 (4) make the notes contain other provisions the 6-6 governing body desires. 6-7 Sec. 8. SALE OF ANTICIPATION NOTES. The governing body may 6-8 sell anticipation notes at public or private sale for cash. 6-9 Sec. 9. SOURCE OF PAYMENT. (a) The governing body may 6-10 provide that anticipation notes will be paid from and secured by 6-11 revenues, taxes, or the proceeds of bonds to be issued by the 6-12 issuer. 6-13 (b) The governing body may pledge to the payment of 6-14 anticipation notes revenues, taxes, or the proceeds of bonds to be 6-15 issued by the issuer. If an ad valorem tax to be assessed and 6-16 collected in a subsequent fiscal year is pledged to the payment of 6-17 anticipation notes, the governing body of the issuer shall levy the 6-18 tax in the ordinance or order that authorizes the issuance of the 6-19 notes. 6-20 SECTION 2. This Act takes effect September 1, 1993. 6-21 Subsection (c) of Section 6 of this article shall not apply to 6-22 anticipation notes that are to be payable from bonds secured by ad 6-23 valorem taxes for projects which have been approved by a majority 6-24 of the voters of the issuer voting at an election held prior to 6-25 September 1, 1993. 7-1 SECTION 3. The importance of this legislation and the 7-2 crowded condition of the calendars in both houses create an 7-3 emergency and an imperative public necessity that the 7-4 constitutional rule requiring bills to be read on three several 7-5 days in each house be suspended, and this rule is hereby suspended.