BILL ANALYSIS C.S.H.B. 1441 By: Holzheauser 03-31-95 Committee Report (Substituted) BACKGROUND Last session the Legislature passed SB 737 which included a provision for a $50 million revenue bond package to finance conversion of vehicles to alternative fuels, including the construction of fueling stations. After the legislation passed, concerns were raised by the Attorney General's office regarding the legislation and, because of these concerns, no bonds have been issued under the program to date. Concerns were also raised about whether SB 737 clearly allows the direct participation of counties and cities in the program. It is also not entirely clear whether SB 737 grants certain local governments -- counties in particular -- the necessary authority to enter into debt under the legislation. This is important because counties typically can only borrow money through the issuance of bonds that have voter approval or through certificates of obligation. PURPOSE CSHB 1441 clearly authorizes counties, cities, and special districts to participate in the alternative fuels revenue bond program. In addition the bill clarifies that bond proceeds can be used to pay for the underwriting costs of issuing the bonds, and it creates clear statutory authority for local governments to borrow money from the Public Finance Authority through the sale of obligations. While these issues are also addressed in a concurrent resolution, HCR 145, the statutory changes in the committee substitute will strengthen and improve the original law. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 9C, Texas Public Finance Authority Act (Article 601d, Vernon's Texas Civil Statutes) by amending subsections (a) and (f) and adding subsections (g) and (h). (a) is amended to allow that the proceeds from the sale of bonds be used for the costs of issuance and administration of a project. A new part (7) gives authority to counties, cities, and special districts to convert motor vehicles and other governmental sources of substantial energy output to alternative fuels. A new part (8) gives authority to counties, cities, and special districts to supply the necessary resources to support alternative fuel motor vehicles and other governmental alternative fuel systems. Existing part (7) is renumbered as (9). (f) is amended by adding language to provide that the issuance of bonds may be funded with bond proceeds. (g) is added to allow the Public Finance Authority to determine a price and purchase at that price any obligation of an eligible entity. Also, the subsection provides that the authority can make such purchases in a private sale as provided for by resolution or order of the governing body, not contrary to any provision of law. (h) Gives local governments authority to borrow from the Public Finance Authority by selling its obligation to the authority. SECTION 2. Emergency clause and effective date: upon passage. COMPARISON OF ORIGINAL TO SUBSTITUTE The original version of HB 1441 repealed Section 9C of Article 601d (V.T.C.S.) and completely rewrote the statute addressing the provisions for a $50 million revenue bond package passed in the 73rd session in SB 737. The substitute for H.B. 1441 amends Section 9C, Subsections (a) and (f) and adds subsection (g) and (h), to accomplish the same objectives. SUMMARY OF COMMITTEE ACTION The committee considered HB 1441 in a public hearing on April 3, 1995. The committee considered a complete committee substitute for the bill. The following people testified in favor of the bill: Rep. Holzheauser; Randy Fritz representing Southern Union Gas; and Jody Richardson representing Mesa, Inc. The following people testified neutrally on the bill: Jim Thomasson representing the Office of the Attorney General; Soll Sussman representing the Texas General Land Office; Mike Hatchman representing Railroad Commission of Texas and the Alternative Fuels Council; and Anne L. Schwartz representing the Texas Public Finance Authority. The motion to adopt the committee substitute and report the bill favorably as substituted, with the recommendation that it do pass and be printed, prevailed by the following record vote: 9 Ayes, 0 Nays, 0 PNV, 0 Absent.