BILL ANALYSIS S.B. 1715 By: Sibley Economic Development 05-11-95 Committee Report (Unamended) BACKGROUND The Decatur Hospital Authority (authority) operates one of a few remaining municipally owned hospitals in rural Texas. Recently, the authority started an expansion program. During the process of establishing a line of credit to finance the construction costs, board members of the authority learned that the authority was not authorized to create debt other than revenue bonds. The authority has never borrowed money in the past. The proposed expansion will be paid for from internally generated cash flow but a line of credit is necessary to bridge the expansion project during critical construction timelines. PURPOSE As proposed, S.B. 1715 authorizes the board of directors of a municipal hospital authority to borrow money in a certain amount from a federally insured lending institution. 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 262C, Health and Safety Code, by adding Section 262.0225, as follows: Sec. 262.0225. AUTHORITY TO BORROW MONEY. (a) Provides that this section applies only to a municipal hospital authority (authority) created by a municipality with a population of less than 5,000. (b) Authorizes the board of directors of an authority (board), on behalf of the authority, to borrow money from a federally insured lending institution for any of the authority's purposes. (c) Authorizes the board to borrow money in the amount it considers advisable subject to a rate of interest and other terms and conditions it considers advisable. (d) Requires a loan for which bonds are pledged to mature no later than the first anniversary of the date on which the loan is made. SECTION 2. Emergency clause. Effective date: upon passage.