By: Sims S.B. No. 1294 A BILL TO BE ENTITLED AN ACT 1-1 relating to the creation of a state trust fund and its operational 1-2 authority for providing financial assistance to political 1-3 subdivisions for environmental and natural resource public works 1-4 projects. 1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-6 SECTION 1. That a new chapter 466, Government Code, is 1-7 created to read as follows: 1-8 CHAPTER 466. TEXAS ENVIRONMENTAL AND NATURAL 1-9 RESOURCES TRUST FUND AUTHORITY 1-10 SUBCHAPTER A. GENERAL PROVISIONS 1-11 Sec. 466.001. LEGISLATIVE PURPOSE AND POLICY. (a) The 1-12 legislature declares that it is the policy of the state to: 1-13 (1) encourage and assist in the conservation and 1-14 development of the water resources of the state for the useful and 1-15 lawful purposes by the acquisition, improvement, extension, or 1-16 construction of water resource and water quality public works 1-17 projects; 1-18 (2) aid in the protection of the quality of the water 1-19 resources of the state by encouraging and assisting in the 1-20 financing of water quality enhancement projects; 1-21 (3) encourage the optimum development of feasible 1-22 sites available for the construction of or enlargement of dams and 1-23 reservoirs for the use and benefit of the public and development of 2-1 water storage facilities and systems or works necessary for 2-2 filtration, treatment, and transportation of water; 2-3 (4) aid in flood control, drainage, subsidence 2-4 control, recharge, chloride control, agriculture soil and water 2-5 conservation and desalinization. 2-6 (b) The legislature finds that existing mechanisms for 2-7 implementing the policies stated in Subsection (a) of this section 2-8 may be enhanced by financing as provided by this chapter. 2-9 (c) The legislature finds that to enhance the ability of the 2-10 state to aid in the accomplishment of the purposes stated in 2-11 Subsection (a) of this section, it is necessary to create an 2-12 environmental and natural resources trust fund authority for the 2-13 purpose of increasing the availability of financing by providing 2-14 loans and grants to political subdivisions and the legislature 2-15 declares that the creation of the authority for this purpose is a 2-16 public purpose and a use for which public money may be borrowed, 2-17 spent, advanced, loaned, granted, or appropriated, and that this 2-18 use serves a public purpose in improving or otherwise benefitting 2-19 the people of this state. Also, the legislature determines and 2-20 declares the necessity of enacting this chapter is in the public 2-21 interest. 2-22 Sec. 466.002. DEFINITIONS. In this chapter: 2-23 (1) "Authority" means the Texas Environmental and 2-24 Natural Resources Trust Fund Authority. 2-25 (2) "Bond" includes a note, draft, warrant, debenture, 3-1 certificate, bond anticipation note or other evidence of 3-2 indebtedness. 3-3 (3) "Board" means the governing board of the 3-4 authority. 3-5 (4) "Lender" means a lending institution, including a 3-6 bank, trust company, banking association, savings and loan 3-7 association, mortgage company, investment bank, credit union, life 3-8 insurance company, governmental agency that customarily provides 3-9 financing, bond insurance company, or an affiliate of any of those 3-10 entities. 3-11 (5) "Authorized investments" means loans, grants, 3-12 guarantees, or other financial assistance or transactions to 3-13 acquire, construct, reconstruct, enlarge, improve, furnish, equip, 3-14 maintain, repair, operate, lease or rent to, or contract for 3-15 operation by, a political subdivision of the state, including state 3-16 agencies, bureaus, divisions, or commissions, for projects for 3-17 water resource development and conservation, water quality 3-18 including municipal solid waste disposal, flood control, drainage, 3-19 subsidence control, recharge, chloride control, agricultural soil 3-20 and water conservation, desalinization, or any combination of these 3-21 purposes. 3-22 (6) "Equity" means cash or other assets that have no 3-23 liability or obligations attached thereto. 3-24 (7) "Federal agency" means the United States, the 3-25 president or a department of the United States, or a corporation, 4-1 agency, or instrumentality designated or established by the United 4-2 States. 4-3 (8) "Fund" means the Texas environmental and natural 4-4 resources trust fund. 4-5 (9) "Project" means any endeavor over which a state or 4-6 federal regulatory agency exerts its jurisdiction and for which a 4-7 permit is required before initiation of the endeavor. 4-8 (10) "Regulatory agency" means an agency, bureau, 4-9 department, division, or commission of the state or federal 4-10 government or other agency of a political subdivision that 4-11 processes and issues permits. 4-12 (11) "Permit" means a license, certificate, approval, 4-13 registration, consent, permit, or other form of authorization 4-14 required by law, rule, regulation, or ordinance that must be 4-15 obtained by a political subdivision in order to perform an action 4-16 or initiate a project for which a permit is sought. 4-17 (12) "Trust fund revenues" means those funds 4-18 authorized by the legislature for use by the authority. 4-19 (13) "Political subdivision" means a city, county, or 4-20 other body politic or corporate of the state, including any 4-21 district or authority created under Article 3, Section 52, or 4-22 Article XVI, Section 59, of the Texas Constitution, a state agency, 4-23 an entity created by an interstate compact to which the state is a 4-24 party, any nonprofit water supply corporation created and operated 4-25 under Chapter 76, Acts of the 43rd Legislature, 1st Called Session, 5-1 1933 (Article 1434a, Vernon's Texas Civil Statutes) and including 5-2 the Texas Environmental and Natural Resources Trust Fund Authority. 5-3 SUBCHAPTER B. ADMINISTRATIVE PROVISIONS 5-4 Sec. 466.011. CREATION OF THE AUTHORITY. (a) The Texas 5-5 Environmental and Natural Resources Trust Fund Authority is created 5-6 as a governmental entity and a body politic and corporate. 5-7 (b) The exercise of the powers and duties by the authority 5-8 under this chapter constitutes an essential public purpose of the 5-9 state in promoting the general welfare of the state and its 5-10 citizens. 5-11 Sec. 466.012. BOARD OF DIRECTORS. (a) The authority is 5-12 governed by a board of directors composed of nine members appointed 5-13 by the governor with the advice and consent of the senate. 5-14 (b) A member must be a resident of the state at the time of 5-15 appointment. 5-16 (c) At least two members must be individuals who have 5-17 investment banking experience as either an underwriter or financial 5-18 advisor, at least two members who must be either elected or 5-19 employed by a city, county, district or authority, and at least two 5-20 members who have engineering experience. To the extent possible, 5-21 the members should represent all geographic areas of the state. 5-22 (d) Members serve staggered six-year terms with the terms of 5-23 three members expiring February 1 of each odd-numbered year. 5-24 (e) On the death, resignation, or other inability of a 5-25 member to serve, the governor shall appoint a successor to serve 6-1 the remainder of the unexpired term. 6-2 Sec. 466.013. COMPENSATION; REIMBURSEMENT. The directors 6-3 are not entitled to receive compensation for their service on the 6-4 board but are entitled to be reimbursed for their expenses in 6-5 performing their powers and duties under this chapter. 6-6 Sec. 466.014. ORGANIZATION OF THE BOARD. (a) Board shall 6-7 select from its membership a chairman and vice-chairman. 6-8 (b) The chairman shall preside at meetings of the board and 6-9 perform other duties directed by the board. The vice-chairman 6-10 shall preside at meetings of the board in the absence of the 6-11 chairman. 6-12 (c) The board shall select persons to serve as secretary and 6-13 treasurer for the authority. These persons selected are not 6-14 required to be members of the board and both positions may be held 6-15 by one person. The board may appoint assistant secretaries. 6-16 (d) The secretary is the custodian of the minutes, books, 6-17 records, and seal of the board, and the secretary and the treasurer 6-18 shall perform duties as directed by the board. 6-19 (e) The chairman, vice-chairman, secretary, and treasurer 6-20 shall be selected by the board at the first meeting of the board 6-21 following the second Tuesday of January of each odd-numbered year. 6-22 Sec. 466.015. BOARD MEETINGS. (a) The board shall hold 6-23 regular meetings at times provided by its rules and shall meet at 6-24 least once each calendar year. 6-25 (b) The board may hold special meetings at the call of the 7-1 chairman or on request of five or more board members. 7-2 Sec. 466.016. RULES AND RESOLUTIONS. The board may adopt 7-3 rules that are necessary to carry out this chapter and may take 7-4 official action by adoption of a resolution or order. 7-5 Sec. 466.017. LIABILITY. A director or officer of the 7-6 authority is not liable for any bonds issued or contracts executed 7-7 by the authority. 7-8 Sec. 466.018. GENERAL FISCAL AUTHORITY. The board may 7-9 acquire, hold, invest, and reinvest in authorized investments, 7-10 deposit, use, and dispose of the authority's revenues, income, 7-11 receipts, funds, and money from every source and may select its 7-12 depository or depositories, inside or outside the state, subject 7-13 only to this chapter and any covenants with respect to the 7-14 authority's bonds. 7-15 Sec. 466.019. PROPERTY TAX EXEMPT. (a) The property of the 7-16 authority, its income, and its operations are exempt from all taxes 7-17 and assessments imposed by the state and political subdivisions on 7-18 property acquired or used by the authority under this chapter. 7-19 (b) If the authority is dissolved, all of its rights and 7-20 properties vest in the state. 7-21 Sec. 466.020. FISCAL YEAR; ANNUAL AUDIT. (a) The authority 7-22 shall operate on a fiscal year beginning September 1. 7-23 (b) The board shall have an audit made by a certified public 7-24 accountant or by the state auditor of all the authority's books and 7-25 accounts for each fiscal year. The cost of the audit shall be paid 8-1 by the authority. 8-2 (c) A copy of the audit shall be filed with the governor and 8-3 with both houses of the legislature on or before January 1 of each 8-4 year. 8-5 Sec. 466.021. AUTHORITY EXPENSES. (a) Expenses incurred by 8-6 the authority under this Act shall be paid solely from revenues or 8-7 funds provided or to be provided under this chapter. 8-8 (b) This chapter may not be construed to authorize the 8-9 authority to incur any indebtedness or liability on behalf of or 8-10 payable by the state. 8-11 (c) The board shall use all available sources of revenue and 8-12 income to pay expenses of operation and maintenance of the 8-13 authority, to pay the premium, principal of and interest on bonds, 8-14 to create and maintain any reserves or funds provided by 8-15 resolutions authorizing the issuance of bonds, and for any other 8-16 activities under this chapter. 8-17 Sec. 466.022. SUITS. The authority may sue and be sued in 8-18 the courts of this state in the name of the authority, and the 8-19 courts shall take judicial notice of the creation of the authority. 8-20 Sec. 466.023. SEAL. The board may adopt a seal for the 8-21 authority. 8-22 Sec. 466.024. GENERAL POWERS AND DUTIES. The authority may 8-23 exercise any authority necessary or appropriate to carry out the 8-24 purposes of this chapter including the power of eminent domain to 8-25 acquire real property, easements, or other property or interests in 9-1 real property, easements, or other property, including fee simple 9-2 interests with respect to the entirety of any real property, fee 9-3 simple interests with respect to specified subsurface portions of 9-4 any real property, and any lesser interests, as determined by the 9-5 authority to be necessary or convenient to further the purposes of 9-6 the authority in the manner described by Chapter 21, Property Code. 9-7 The authority and its agents, employees, contractors, 9-8 subcontractors, and designees may enter on any land to make 9-9 surveys, perform core drilling-operations, or conduct other tests 9-10 and evaluations with respect to the surface and subsurface of the 9-11 lands as the authority, its agents, employees, contractors, 9-12 subcontractors, or designees consider necessary or convenient to 9-13 further the purposes of the authority. 9-14 Sec. 466.025. GIFTS, GRANTS, ETC. The board may request and 9-15 accept for the authority grants, allocations, subsidies, 9-16 guarantees, aid, contributions, services, labor, materials, gifts, 9-17 and donations. 9-18 Sec. 466.026. CONTRACTS. The board on behalf of the 9-19 authority may enter into contracts with any person to carry out 9-20 this chapter. 9-21 Sec. 466.027. PURCHASE OF INSURANCE. The board may purchase 9-22 for the authority and pay premiums on insurance of any type, in any 9-23 amounts, and from any insurers the board considers advisable. 9-24 Sec. 466.028. FINANCIAL ASSISTANCE. The authority may use 9-25 trust fund revenues for all authorized investments of political 10-1 subdivisions. 10-2 SUBCHAPTER C. BONDS 10-3 Sec. 466.031. ISSUANCE OF BONDS. For the issuance of bonds 10-4 under this chapter, the board may exercise the authority granted to 10-5 the governing body of an issuer with regard to issuance of 10-6 obligations under Chapter 656, Acts of the 68th Legislature, 10-7 Regular Session, 1983 (Article 717q, Vernon's Texas Civil Statutes) 10-8 to the extent that it is not inconsistent with this chapter. 10-9 Sec. 466.032. CONDITIONS FOR ISSUANCE OF BONDS. (a) Bonds 10-10 may be issued as various series and issues. 10-11 (b) Bonds issued by the authority may mature serially or 10-12 otherwise not later than 50 years after the date on which they are 10-13 issued. 10-14 (c) The bonds may bear interest at a rate or rates 10-15 determined in accordance with the resolution or order authorizing 10-16 the issuance of the bonds but not to exceed the net effective 10-17 interest rate authorized by Chapter 3, Acts of the 61st 10-18 Legislature, Regular Session, 1969 (Article 717k-2, Vernon's Texas 10-19 Civil Statutes). 10-20 (d) Rates of interest on bonds may be fixed, variable, 10-21 floating, adjustable, or otherwise. 10-22 Sec. 466.033. SECURITY QUALIFICATIONS. The board may take 10-23 any action necessary to qualify the authority bonds for offer and 10-24 sale under the securities laws and regulations of the United 10-25 States, this state, and other states of the United States. 11-1 Sec. 466.034. INVESTMENT SECURITIES. The bonds and any 11-2 interest coupons are investment securities under Chapter 8, 11-3 Business & Commerce Code, and may be issued registrable as to 11-4 principal or as to both principal and interest or may be redeemable 11-5 before maturity at the option of the authority or may contain a 11-6 mandatory redemption provision. 11-7 Sec. 466.035. FORM OF BONDS. (a) The authority's bonds may 11-8 be issued in the form, denominations, and manner and under the 11-9 terms, conditions, and details as provided by the board in the 11-10 resolution or order authorizing their issuance. 11-11 (b) The bonds shall be signed and executed as provided by 11-12 the board's resolution or order authorizing the issuance of the 11-13 bonds. 11-14 Sec. 466.036. FUNDS. (a) In the resolution or order 11-15 authorizing issuance of bonds, the board may make additional 11-16 covenants with respect to the bonds and the pledged revenues and 11-17 may provide for the flow of funds and the establishment, 11-18 maintenance, and investment of funds. 11-19 (b) The funds established may include an interest and 11-20 sinking fund, a reserve fund, and other funds that will be kept and 11-21 maintained by or under the direction of the board. 11-22 (c) Any funds established by the board are not to be a part 11-23 of the state treasury but, at the direction of the board, may be 11-24 kept and held in escrow and in trust by the state treasury on 11-25 behalf of the authority and the owners of the bonds and used only 12-1 as provided by this chapter. 12-2 (d) Money and funds shall be invested in authorized 12-3 investments as provided by any bond resolutions and orders of the 12-4 authority. 12-5 (e) Legal title in any fund is in the authority unless or 12-6 until paid from the fund as provided for by this chapter or the 12-7 resolutions or orders authorizing the bonds. 12-8 Sec. 466.037. RESOLUTIONS AND ORDERS. (a) The orders or 12-9 resolutions of the board issuing bonds may include those provisions 12-10 and covenants that the board deems necessary. 12-11 (b) In a resolution or order authorizing the issuance of the 12-12 authority's bonds, the board may prescribe systems, methods, 12-13 routines, and procedures under which the authority will function. 12-14 (c) The board may adopt and have executed any other 12-15 proceedings or instruments necessary and convenient in the issuance 12-16 of bonds. 12-17 Sec. 466.038. REFUNDING BONDS. (a) The board may issue 12-18 refunding bonds to refund all or part of its outstanding bonds 12-19 issued under this chapter, including matured but unpaid interest. 12-20 (b) The board may refund bonds in the manner provided by 12-21 general law for revenue bonds. 12-22 Sec. 466.039. LEGAL INVESTMENT. The bonds are legal and 12-23 authorized investments for banks, savings banks, trust companies, 12-24 savings and loan associations, insurance companies, fiduciaries, 12-25 trustees, guardians, and sinking funds of cities, counties, school 13-1 districts, and other political subdivisions of the state and other 13-2 public funds of the state and its agencies, including the permanent 13-3 school fund. 13-4 Sec. 466.040. TAX EXEMPT. The bonds issued under this Act, 13-5 and the interest and income from the bonds, and all fees, charges, 13-6 gifts, grants, revenues, receipts, and other money received or 13-7 pledged to pay or secure the payment of bonds are free from 13-8 taxation and assessments of every kind by this state and any city, 13-9 county, district, authority, or other political subdivision of this 13-10 state. 13-11 Sec. 466.041. PLEDGE OF STATE FAITH AND CREDIT; COVENANT 13-12 WITH OWNERS OF BONDS. (a) The authority's bonds are obligations 13-13 solely of the authority and are payable solely from funds of the 13-14 authority, and this chapter and the authority's bonds are not and 13-15 do not create or constitute a pledge, giving, or lending of the 13-16 faith or credit or taxing authority of the state. 13-17 (b) Each bond of the authority must include a statement that 13-18 the state is not obligated to pay the premium, the principal of, or 13-19 interest on the authority's bonds and that the faith or credit and 13-20 the taxing authority of the state is not pledged, given, or loaned 13-21 to those payments. 13-22 (c) The state pledges to and agrees with the owners of any 13-23 bonds issued in accordance with this chapter that the state will 13-24 not limit or alter the rights vested in the authority to fulfill 13-25 the terms of any agreements made with the owners of the bonds or in 14-1 any way impair the rights and remedies of those owners until the 14-2 bonds, together with any premium and interest, interest on any 14-3 unpaid premium or installments of interest, and all costs and 14-4 expenses in connection with any action or proceeding by or on 14-5 behalf of those owners, are fully met and discharged. The 14-6 authority may include this pledge and agreement of the state in any 14-7 agreement with the owners of the bonds. 14-8 SECTION 2. The importance of this legislation and the 14-9 crowded condition of the calendars in both houses create an 14-10 emergency and an imperative public necessity that the 14-11 constitutional rule requiring bills to be read on three several 14-12 days in each house be suspended, and this rule is hereby suspended, 14-13 and that this Act take effect and be in force from and after its 14-14 passage, and it is so enacted.