BILL ANALYSIS



C.S.H.B. 2839
By: Stiles
4-24-95
Committee Report (Substituted)


BACKGROUND
Chapter 56 of the Texas Water Code provides for the creation of
drainage districts and their powers and duties.  These districts
are under and subject to limitations of either Article III, Section
52 of the Texas Constitution, or Article XVI, Section 59 of the
Texas Constitution.

Chapter 56 does not include a provision allowing drainage districts
to borrow money, even for short term needs.  

Some drainage districts experience temporary shortfalls because
they depend upon the receipt of tax revenue.

PURPOSE
To allow drainage districts to borrow money by issuing negotiable
tax anticipation notes or bond anticipation notes if the district
has an insufficient amount of money to provide for its needs.

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 the heading in Subchapter F, Chapter 56, Water
Code.

SECTION 2. Amends Subchapter F, Chapter 56, Water Code, by adding
Section 56.213, Subsections (a)- (f).

     Section 56.213. (a) Provides for a drainage district to borrow
money by issuing negotiable tax anticipation notes or bond
anticipation notes if the district has insufficient amount of money
available to meet its needs.

     (b) Provides that the district may issue tax anticipation
notes or bond anticipation notes without providing notice or
advertisement of the notice.

     (c) Provides for the maturity of the notes not to exceed one
year from the date of issuance.

     (d) Provides that the district may issue tax anticipation
notes for any purpose for which the district is authorized to levy
taxes; provides that the notes must be secured with the proceeds of
taxes to be levied by the district in the 12-month period following
issuance of the note; additionally provides that the district may
covenant with purchasers of the notes that the district will levy
a tax sufficient to pay the principal of and interest on the notes
and to pay the costs of collecting the tax.

     (e) Provides that the district may issue tax anticipation
bonds for any purpose for which bonds of the district have been
approved by the voters or to refund previously issued bond
anticipation notes; provides that a district may covenant with
purchasers of the notes that the district will use the proceeds of
the sale of any district bonds in the process of issuance to refund
the notes, and after doing so, shall use the bond proceeds to pay
the principal, interest, or redemption price on the notes.

     (f) Provides that a district required to seek TNRCC approval
of bonds must have an application for approval of a bond on file
with the commission before issuing bond anticipation notes secured
by the bond.

SECTION 3. Emergency clause.

COMPARISON OF ORIGINAL TO SUBSTITUTE
The Original amends Subchapter D, Chapter 56, Water Code, and
broadly provides for a drainage district to borrow money, not in
excess of $250,000, to meet the temporary financial needs of the
district. The district is additionally granted the ability to issue
notes or other short-term obligations, other than bonds, that are
not to mature more than 10 years from the date of issuance. 

The Substitute, amends Subchapter F, Chapter 56, Water Code, to
provide for a drainage district to borrow money.  The Substitute
provides for a district to borrow money by issuing negotiable tax
anticipation notes or bond anticipation notes if the district has
an insufficient amount of money available to meet its needs;
provides that the tax anticipation note or bond anticipation note
must not mature beyond one year after the date of issuance;
delineates other procedural requirements of and purposes for which
a district may issue anticipated notes.

SUMMARY OF COMMITTEE ACTION
H.B.2839 was considered by the committee in a public hearing on
April 24, 1995.
No testimony was received.
The committee considered a complete substitute for the bill.  The
substitute was adopted without objection.
The bill was reported favorably as substituted, with the
recommendation that it do pass and be printed, by a record vote of
8 ayes, 0 nays, 0 pnv, 1 absent.