BILL ANALYSIS C.S.H.B. 2969 By: McCoulskey 04-21-95 Committee Report (Substituted) BACKGROUND Article 835s of Vernon's Texas Civil Statutes authorizes the issuance of bonds by a municipality to acquire land and construct or otherwise acquire buildings or other facilities for the purpose of leasing the land, building, or other facility. The Article provides for a bond election prior to issuance, the application of the Bond Procedures Act of 1981 to the issuance, approval by the Attorney General of the issuance, and other regulations. The campus of the Houston Community College System ("HCCS")located in the City of Stafford has experienced enormous growth since its inception in 1987, quadrupling in size to over 4,000 students. The campus has fostered economic development in the city by establishing a free enterprise center with a business incubator, the operation of a small business development center, and the development of numerous technical programs used to train workers for employers located in Stafford. These and other programs are provided by the Stafford campus of HCCS through a partnership with Stafford area high schools which has facilitated the movement of high school students from their high school training to the receipt of technical certificates or two year college degrees preparing them for direct entry into the work force. However, because of its fast growth, the campus presently faces severe restrictions on increased enrollment due to its limited and inadequate facilities. As a result, the City of Stafford and HCCS have entered into an agreement for the city to afford its credit to HCCS to build a 70,000 square foot facility on seventeen acres of land located in the city which will then be purchased by the city and leased back to HCCS at payments equal to or greater than the amount of principal, interest and costs necessary to finance the total cost of the municipal bonds utilized by the city for the purchase and construction of the facility. PURPOSE The bill would amend article 835s to clarify that an institution of higher education such as the Houston Community College System is an entity which may lease land or facilities from a municipality pursuant to the article and would also amend the article to permit municipalities the option of selling the land and facilities to their lessee pursuant to an installment sales agreement or other similar agreement. The bill, therefore, would confirm the validity of the agreement between the City of Stafford and the Houston Community College System and the results of a bond election held in Stafford on January 21, 1995 authorizing the issuance of bonds to finance the agreement. The bill would also give other Texas cities the clear authority to enter into agreements under article 835s with institutions of higher education. 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 2 of article 835s to permit a municipality to sell land, a building or other facility pursuant to an installment sale agreement or otherwise, clarifies that public notice and public bidding requirements do not apply to the sale or the lease contemplated by the Section, and clarifies that an "institution of higher education" as defined by Section 61.003 of the Education Code is a political subdivision or agency of the state which can purchase or lease the land, building or other facility from a political subdivision as authorized by the Section. SECTION 2. Makes a conforming amendment to Section 4 of article 835s that the revenues from the sale of the land, building or other facility may be pledged for the payment of the principal of and interest on the bonds authorized by the article. SECTION 3. Makes a conforming amendment to Section 7 of article 835s authorizing the sale of the land, building or other facility under Section 2 of the article. SECTION 4. Provides that the bill shall take effect immediately upon passage and an emergency clause. COMPARISON OF ORIGINAL TO SUBSTITUTE The substitute corrects a procedural error in the text of the original bill by underlining language that is to amend the current statute. SUMMARY OF COMMITTEE ACTION HB 2969 was considered in a public hearing on April 20, 1995. The committee considered a complete substitute for the bill. The substitute was adopted without objection. The following people testified in favor of the bill: Rep. McCoulskey; Mayor Leonard Scarcella, representing himself and the City of Stafford;and Dr. Robert Mulcahy, representing the Houston Community College System. The bill was reported favorably as substituted, with the recommendation that it do pass and be printed and be sent to the Committee on Local and Consent Calendars by a record vote of 8 ayes, 0 nays, 0 pnv, and 1 absent.