BILL ANALYSIS



C.S.H.B. 2388
By: Brimer
03-23-95
Committee Report (Substituted)


BACKGROUND

Cities collect impact fees for utility system improvements, but
because state law does not recognize the collection of those fees
as specifically related to utility systems, as governed by Articles
1111 through 1118, Vernon's Texas Civil Statutes, cities are unable
to include those fees as part of revenues under the city's bond
ordinances.  The result of this is to cause total available
revenues to be reported at a level lower than actually available to
the city for utility system improvements.  This fact causes
artificial pressure on regularly-assessed water and sewer system
rates, in effect causing the rates to be subject to increases at a
higher level than that which otherwise would be the result if the
impact fees could be counted as a utility system review, the result
could be to strengthen revenues, and thereby help to sustain or
possibly lead to an increase in credit ratings on the city's
utility system revenue bonds.

PURPOSE

The purpose of this legislation is to amend Section 395.012, Local
Government Code, to allow a city to pledge as security and include
impact fees as part of revenues used or to be used for the payment
of principal and interest on bonds, notes, or other obligations
relating to capital improvements other than roadway facilities.

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 395.102, Local Government Code, by adding
a new subsection (d) that allows cities to pledge impact fees as
security against bonds, notes, and other obligations and to use
impact fees as payment of principal and interest bonds, notes, or
other obligations issued by a municipality to provide capital
improvements other than roadway facilities.  The impact fees can
only be pledged to be expended on capital improvements identified
in a capital improvement plan.

SECTION 2. Effective Date.

SECTION 3. Emergency Clause.


COMPARISON OF ORIGINAL TO SUBSTITUTE

The substitute removes the first sentence of section 1 to clarify
which other laws are being referred to in the bill and to clarify
the use of impact fees.  There are no other differences between the
two versions.

SUMMARY OF COMMITTEE ACTION

The committee convened in a public hearing on March 27, 1995 to
consider HB 2388.

The committee considered a complete committee substitute for the
bill which was adopted without objection.

The following people testified in favor of the bill:
Rep. Brimer; and
Joe Paniagua.

The motion to report the HB 2388 favorably as substituted, with the
recommendation that it do pass and be printed, prevailed by a
record vote of:  5 Ayes, 0 Nays, 0 PNV, 4 Absent.