BILL ANALYSIS


                                                        H.B. 2839
                                               By: Stiles (Lucio)
                                                Natural Resources
                                                         05-19-95
                              Senate Committee Report (Unamended)
BACKGROUND

Chapter 56 of the Water Code establishes provisions for the
creation of drainage districts and sets forth the powers and duties
of a district.  There are no provisions in this chapter allowing
districts to borrow money for any amount of time.  This has created
problems for districts that experience temporary funding shortfalls
because of low tax revenue income.

PURPOSE

As proposed, H.B. 2839 authorizes a drainage district to borrow
money by issuing negotiable tax or bond anticipation notes if the
governing board of the district finds that the district has an
insufficient amount of money to meet obligations or needs of the
district.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not grant any
additional rulemaking authority to a state officer, institution, or
agency.

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Chapter 56F, Water Code, as follows:

     SUBCHAPTER F.  New heading: ISSUANCE OF BONDS AND NOTES

SECTION 2. Amends Chapter 56F, Water Code, by adding Section
56.213, as follows:

          Sec.  56.213.  TAX ANTICIPATION NOTES; BOND ANTICIPATION
     NOTES.  (a) Authorizes a drainage district (district) to
     borrow money by issuing negotiable tax or bond anticipation
     notes (notes) if the governing board of the district finds
     that the district has an insufficient amount of money to meet
     obligations or needs of the district.
     
     (b) Authorizes the district to issue notes without giving
       notice or otherwise advertising the issuance of the notes.
       
       (c) Requires a note to mature by one year after the note is
       issued.
       
       (d) Authorizes the district to issue tax anticipation notes
       for any purpose for which the district is authorized to levy
       taxes.  Requires the tax anticipation notes to be secured
       with the proceeds of taxes to be levied by the district in
       the 12-month period following the issuance of the tax
       anticipation note.  Authorizes the district to covenant with
       purchasers of the tax anticipation notes that the district
       will levy a tax to pay the principal of and interest on the
       tax anticipation notes and to pay the cost of collecting the
       tax.
       
       (e) Authorizes the district to issue bond anticipation notes
       for any purpose for which the bonds of the district have
       been approved by voters or to refund previously issued bond
       anticipation notes.  Authorizes the district to covenant
       with purchasers of the bond anticipation notes that the
       district will use the proceeds of the sale of any district
       bonds in the process of issuance to refund the bond
       anticipation notes.  Requires a district that covenants
       under this subsection to use the bond proceeds to pay the
       principal, interest, or redemption price on the bond
       anticipation notes.
       
       (f) Requires a district required to seek the Texas Natural
       Resource Conservation Commission's (commission) approval of
       bonds to 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.
           Effective date: upon passage.