BILL ANALYSIS H.B. 3109 By: Romo (Lucio) Finance 05-16-95 Senate Committee Report (Unamended) BACKGROUND Currently, the bond review board collects data from all state agencies that issue state bonds for its yearly report as required by law. One of the concerns with the current format of the report is its lack of cost breakdown in its bond negotiation fees, such as financial advisory fees, bond counsel fees, rating agency fees, known as cost of issuance fees. Additionally, the annual report does not require issuers to report the underwriting spread and syndicate profit/loss for negotiated and competitive bond transactions. Another concern is the lack of breakdown fees received by professional consultants, such as spreads earned on the purchase and sale of securities in escrow restructuring, etc. Many of theses transactions are lumped together and made part of the price of the securities and not reported as an expense to the comptroller's office. PURPOSE As proposed, H.B. 3109 requires the bond review board to submit biennial reports and an annual report to the legislature on underwriting spreads of state bond transactions that itemize management fees, expenses, and takedown, both priority and member order, by transaction and by firm. 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 1078, Article 717k-7, V.T.C.S., by adding Section 7C, as follows: Sec. 7C. BOND TRANSACTION REPORT. (a) Requires each entity, including the Texas Public Finance Authority, that issues state bonds to report to the bond review board (board) its bond transactions. (b) Requires the entity to report under this section in accordance with board rules. (c) Requires the report to be itemized and to state in dollar amounts the information required by Subsections (d)-(h) paid to business, classifying the businesses based on the race, ethnicity, and gender of the controlling ownership of each business and as to whether the business is domestic or foreign. (d) Requires the report to state for all transactions the issuance costs, including certain other costs. (e) Requires the report to state certain information for bonds sold competitively. (f) Requires the report to state certain information for bonds sold through negotiation. (g) Requires the report to state certain information for bonds sold through private placement. (h) Requires the report to state for refundings and escrow-related transactions the spread paid on the purchase or sale of escrow securities. (i) Requires the board to send a report, on May 15 of each year, based on the information received under this section for the preceding six-month period ending March 1 to the joint committee charged with monitoring the implementation of the historically underutilized business goals. (j) Require the board to send a report, on November 15 of each year, based on the information received under this section for the fiscal year ending the preceding August 31 to the presiding officer of each house of the legislature, the members of the legislature, and the joint committee. SECTION 2. Effective date: September 1, 1995. SECTION 3. Emergency clause.