By: Leedom S.B. No. 63 A BILL TO BE ENTITLED 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 717v to read as follows: 1-6 Art. 717v. 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 governing body of an issuer may authorize 2-18 anticipation notes: 2-19 (1) pay a contractual obligation incurred or to be 2-20 incurred for the construction of any public work; 2-21 (2) pay a contractual obligation incurred or to be 2-22 incurred for the purchase of materials, supplies, equipment, 2-23 machinery, buildings, lands, and rights-of-way for authorized needs 2-24 and purposes; 2-25 (3) pay a contractual obligation incurred or to be 3-1 incurred for professional services, including services provided by 3-2 tax appraisal engineers, engineers, architects, attorneys, 3-3 mapmakers, auditors, financial advisors, and fiscal agents; 3-4 (4) pay operating expenses or current expenses or 3-5 (5) fund the issuer's cumulative cash flow deficit. 3-6 Sec. 4. ADDITIONAL AUTHORITY FOR COUNTIES AND CERTAIN 3-7 MUNICIPALITIES. (a) This section applies only to: 3-8 (1) a county; or 3-9 (2) a home-rule municipality that has a population of 3-10 90,000 or more, according to the most recent federal census. 3-11 (b) Notwithstanding anything in this article to the 3-12 contrary, the governing body of an issuer described by Subsection 3-13 (a) of this section may exercise the authority granted to the 3-14 governing body of an issuer with regard to issuance of obligations 3-15 under Chapter 656, Acts of the 68th Legislature, Regular Session, 3-16 1983 (Article 717q, Vernon's Texas Civil Statutes), except that the 3-17 prohibition in that Act on the repayment of an obligation with 3-18 funds derived from ad valorem taxation does not apply to an issuer 3-19 exercising the authority granted under this section. 3-20 Sec. 5. AUTHORIZATION OF ANTICIPATION NOTES BY ORDINANCE OR 3-21 ORDER. Anticipation notes may be authorized by an ordinance 3-22 adopted by the governing body of a municipality or by an order 3-23 adopted by the governing body of a county. 3-24 Sec. 6. RESTRICTIONS ON ANTICIPATION NOTES. (a) Except as 3-25 provided by Subsection (b) of this section, anticipation notes 4-1 issued under this article are subject to: 4-2 (1) Chapter 503, Acts of the 54th Legislature, 1955 4-3 (Article 717k, Vernon's Texas Civil Statutes); 4-4 (2) Chapter 3, Acts of the 61st Legislature, Regular 4-5 Session, 1969 (Article 717k-2, Vernon's Texas Civil Statutes); 4-6 (3) Chapter 784, Acts of the 61st Legislature, Regular 4-7 Session, 1969 (Article 717k-3, Vernon's Texas Civil Statutes); 4-8 (4) the Bond Procedures Act of 1981 (Article 717k-6, 4-9 Vernon's Texas Civil Statutes); 4-10 (5) Section 3.001 through 3.003, Chapter 53, Acts of 4-11 the 70th Legislature, 2nd Called Session, 1987, (Article 717k-8, 4-12 Vernon's Texas Civil Statutes); 4-13 (6) Chapter 400, Acts of the 66th Legislature, 1979 4-14 (Article 717m-1, Vernon's Texas Civil Statutes). 4-15 (b) Chapter 656, Acts of the 68th Legislature, Regular 4-16 Session, 1983 (Article 717q, Vernon's Texas Civil Statutes), 4-17 governs approval by the attorney general of anticipation notes 4-18 issued under Section 4 of this article. 4-19 (c) A governing body may not issued anticipation notes that 4-20 are to be payable from bonds to be issued in the future unless the 4-21 bonds have been approved by the voters in an election held by the 4-22 issuer. 4-23 (d) A governing body may not use proceeds from the sale of 4-24 anticipation notes to repay interfund or other borrowing that 4-25 occurred more than 12 months before the date of the ordinance or 5-1 order authorizing the issuance of the notes. 5-2 (e) Anticipation notes issued for a purpose described by 5-3 Subdivision (1), (2), or (3) of Section 3 of this article must 5-4 mature before the seventh anniversary of the date that the attorney 5-5 general approves the notes. 5-6 (f) Anticipation notes issued for a purpose described in 5-7 Subdivision (4) or (5) of Section 3 of this article must mature 5-8 before the first anniversary of the date that the attorney general 5-9 approves the notes. 5-10 (g) Anticipation notes issued under Subdivision (4) of 5-11 Section 3 of this article may not exceed 75 percent of the revenues 5-12 or taxes anticipated to be collected in the fiscal year in which 5-13 the attorney general approves the notes. 5-14 Sec. 7. PROVISIONS IN ANTICIPATION NOTES. The governing 5-15 body may: 5-16 (1) make the notes payable at the times and places 5-17 determined by the governing body; 5-18 (2) issue the notes in forms and one or more 5-19 denominations, either in coupon form or registered as to principal 5-20 and interest, or both; 5-21 (3) make the notes contain options for redemption 5-22 before the scheduled maturity; and 5-23 (4) make the notes contain other provisions the 5-24 governing body desires. 5-25 Sec. 8. SALE OF ANTICIPATION NOTES. The governing body may 6-1 sell anticipation notes at public or private sale for cash. 6-2 Sec. 9. SOURCE OF PAYMENT. (a) The governing body may 6-3 provide that anticipation notes will be paid from and secured by 6-4 revenues, taxes, or the proceeds of bonds to be issued by the 6-5 issuer. 6-6 (b) The governing body may pledge to the payment of 6-7 anticipation notes revenues, taxes, or the proceeds of bonds to be 6-8 issued by the issuer. If an ad valorem tax to be assessed and 6-9 collected in a subsequent fiscal year is pledged to the payment of 6-10 anticipation notes, the governing body of the issuer shall levy the 6-11 tax in the ordinance or order that authorizes the issuance of the 6-12 notes. 6-13 SECTION 2. This Act takes effect September 1, 1993. 6-14 SECTION 3. The importance of this legislation and the 6-15 crowded condition of the calendars in both houses create an 6-16 emergency and an imperative public necessity that the 6-17 constitutional rule requiring bills to be read on three several 6-18 days in each house be suspended, and this rule is hereby suspended.