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.