1-1        By:  Rosson                                     S.B. No. 1388
    1-2        (In the Senate - Filed March 13, 1995; March 20, 1995, read
    1-3  first time and referred to Committee on Intergovernmental
    1-4  Relations; April 19, 1995, reported favorably by the following
    1-5  vote:  Yeas 8, Nays 0; April 19, 1995, sent to printer.)
    1-6                         A BILL TO BE ENTITLED
    1-7                                AN ACT
    1-8  relating to the creation of a county mass transit authority.
    1-9        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
   1-10        SECTION 1.  Chapter 10, Title 28, Revised Statutes, is
   1-11  amended by adding Article 1118z-1 to read as follows:
   1-12        Art. 1118z-1.  COUNTY MASS TRANSIT AUTHORITY
   1-13        Sec. 1.  DEFINITIONS.  In this article:
   1-14              (1)  "Authority" means a mass transit authority created
   1-15  under this article.
   1-16              (2)  "Bond" includes a note.
   1-17              (3)  "Board" means the governing body of an authority.
   1-18              (4)  "Mass transit" means the transportation of
   1-19  passengers and hand-carried packages or baggage of a passenger by
   1-20  any means of surface, overhead, or underground transportation,
   1-21  other than an aircraft or taxicab.
   1-22              (5)  "Principal municipality" means the municipality of
   1-23  greatest population in a county to which this article applies.
   1-24              (6)  "Transit authority system" means:
   1-25                    (A)  property owned or held by an authority for
   1-26  mass transit purposes; and
   1-27                    (B)  facilities necessary or convenient for:
   1-28                          (i)  the use of or access to mass transit
   1-29  by persons or vehicles; or
   1-30                          (ii)  the protection or environmental
   1-31  enhancement of mass transit.
   1-32              (7)  "Unit of election" means a municipality, including
   1-33  the principal municipality, or the unincorporated area of a county.
   1-34        Sec. 2.  APPLICATION.  This article applies only to a county
   1-35  containing a municipality with a population of 500,000 or greater
   1-36  that has created a mass transit department under Article 1118z,
   1-37  Revised Statutes.
   1-38        Sec. 3.  CREATION OF AUTHORITY.  (a)  An authority is created
   1-39  under this article if a resolution finding that the creation of an
   1-40  authority would be in the public interest and a benefit to persons
   1-41  residing in the county is adopted by:
   1-42              (1)  the county commissioners court;
   1-43              (2)  the governing body of the principal municipality;
   1-44  and
   1-45              (3)  the governing body of at least one municipality
   1-46  other than the principal municipality.
   1-47        (b)  An authority may not be created if the rate of the sales
   1-48  and use tax charged by the city transit department of the principal
   1-49  municipality, when added to an existing sales and use tax collected
   1-50  in the county other than by the principal municipality, would
   1-51  exceed the limit imposed by Section 38 of this article.
   1-52        Sec. 4.  BOARD OF AUTHORITY.  (a) The board of an authority
   1-53  consists of seven members.  A member of the board serves without
   1-54  compensation but is entitled to reimbursement for expenses incurred
   1-55  in board service.  The board shall elect one of its members as
   1-56  presiding officer.  The members are appointed as follows:
   1-57              (1)  two members by the county commissioners court;
   1-58              (2)  four members by the governing body of the
   1-59  principal municipality; and
   1-60              (3)  one member by the governing bodies of all
   1-61  municipalities that adopt the resolution described by Section 3 of
   1-62  this article.
   1-63        (b)  A member of the board serves at the pleasure of the
   1-64  appointing entity.
   1-65        (c)  The board shall administer and operate the authority.
   1-66        (d)  The board shall hold at least one regular meeting each
   1-67  month for the purpose of transacting business of the authority.
   1-68        (e)  The presiding officer may call a special meeting of the
    2-1  board.
    2-2        Sec. 5.  CONFIRMATION ELECTION.  (a)  If an authority is
    2-3  created under Section 3 of this article, the board shall propose a
    2-4  service plan and an initial tax rate for the authority.  The
    2-5  initial tax rate must be the same rate as that collected by the
    2-6  city transit department created by the principal municipality.
    2-7        (b)  After proposing a service plan and an initial tax rate,
    2-8  the board shall call an election in the county to approve the
    2-9  creation of the authority and the tax rate.  The election must be
   2-10  held on a uniform election date but may not be held on the same day
   2-11  as an election held by the county under Section 323.101, Tax Code.
   2-12  The election is not held in the territory of the principal
   2-13  municipality.
   2-14        (c)  Notice of the election must include a description of the
   2-15  nature and rate of the proposed tax.  The board shall send a copy
   2-16  of the notice to the Texas Department of Transportation and the
   2-17  comptroller.
   2-18        (d)  At the election the ballots shall be printed to permit
   2-19  voting for or against the following proposition:  "The creation of
   2-20  the (name of county) Transit Authority and the imposition of a
   2-21  (rate of tax) percent sales and use tax in (name of county)
   2-22  County."
   2-23        (e)  If a majority of the votes cast at the election approve
   2-24  the proposition:
   2-25              (1)  the board shall record the result in its minutes
   2-26  and adopt an order implementing the service plan; and
   2-27              (2)  on the day the sales and use tax takes effect in
   2-28  the authority, the city transit department created by the principal
   2-29  municipality under Article 1118z, Revised Statutes, is dissolved,
   2-30  and its assets, personnel, and obligations are transferred to the
   2-31  authority.
   2-32        (f)  If less than a majority of the votes cast at the
   2-33  election approve the proposition, the board shall adopt an order
   2-34  dissolving  the authority, and the city transit department of the
   2-35  principal municipality is not affected.
   2-36        (g)  The jurisdiction of an authority is coextensive with the
   2-37  territory of the county.
   2-38        (h)  The board shall file a certified copy of an order
   2-39  adopted under Subsection (e)(1) or (f) of this section with the
   2-40  Texas Department of Transportation, with the comptroller, and in
   2-41  the deed records of the county.
   2-42        Sec. 6.  CONFLICTS OF INTEREST:  AUTHORITY EMPLOYEES.  An
   2-43  employee of an authority may not have a pecuniary interest in, or
   2-44  receive a benefit from, an agreement to which the authority is a
   2-45  party.
   2-46        Sec. 7.  TRANSFER OF RESOURCES BETWEEN MUNICIPALITY AND
   2-47  AUTHORITY.  (a)  The governing body of a municipality may transfer
   2-48  to an authority created under this article:
   2-49              (1)  property and employees of a division of the
   2-50  municipality that before the creation of the authority was
   2-51  responsible for municipal public transportation; and
   2-52              (2)  municipal funds that may be used for mass transit.
   2-53        (b)  The governing body may abolish or change the functions
   2-54  of the municipal division formerly responsible for municipal public
   2-55  transportation.
   2-56        (c)  If an authority is required to be dissolved under this
   2-57  article, the board, on dissolution of the authority, shall transfer
   2-58  to a municipality the funds, property, and employees that were
   2-59  transferred to the authority under this section.  The governing
   2-60  body of the municipality may then re-create or change the duties of
   2-61  any municipal division abolished or changed as a result of
   2-62  transfers made under this section.
   2-63        Sec. 8.  INVESTMENTS.  (a)  A board may invest authority
   2-64  funds in any obligation, security, or evidence of indebtedness in
   2-65  which the principal municipality may invest municipal funds.
   2-66        (b)  In making an investment of authority funds, a board
   2-67  shall exercise the judgment and care, under the circumstances
   2-68  prevailing at the time of making the investment, that persons of
   2-69  ordinary prudence, discretion, and intelligence exercise in the
   2-70  management of their own affairs in making a permanent and
    3-1  nonspeculative disposition of their funds, considering the probable
    3-2  income from the disposition and the probable safety of their
    3-3  capital.
    3-4        Sec. 9.  DEPOSIT OF MONEY.  (a)  The board shall designate
    3-5  one or more banks as depositories for authority funds.  All
    3-6  authority money, other than money invested as provided by Section 8
    3-7  of this article, shall be deposited in one or more of the
    3-8  authority's depository banks.
    3-9        (b)  Funds in a depository, to the extent that those funds
   3-10  are not insured by the Federal Deposit Insurance Corporation, shall
   3-11  be secured in the manner provided by law for the security of county
   3-12  funds.
   3-13        Sec. 10.  LIABILITY OF CREATING ENTITIES.  The political
   3-14  subdivisions that adopt a resolution under Subsection (a) of
   3-15  Section 3 of this article are liable for an expense the authority
   3-16  incurs before the date a sales and use tax is approved for the
   3-17  authority under this article, including the costs of holding the
   3-18  election.
   3-19        Sec. 11.  ACQUIRING AND DISPOSING OF PROPERTY.  (a)  An
   3-20  authority may acquire, hold, use, sell, lease, or dispose of
   3-21  property, including licenses, patents, rights, and other interests,
   3-22  necessary, convenient, or useful for the full exercise of any of
   3-23  its powers under this article.
   3-24        (b)  The authority may acquire property described in
   3-25  Subsection (a) in any manner, including by gift or devise.
   3-26        (c)  An authority may dispose of, by sale, lease, or other
   3-27  conveyance:
   3-28              (1)  any property of the authority not needed for the
   3-29  efficient operation and maintenance of the authority system; and
   3-30              (2)  any surplus property not needed for its
   3-31  requirements or for the purpose of carrying out its powers under
   3-32  this article.
   3-33        (d)  The lease of unneeded property under Subsection (c) must
   3-34  be consistent with the efficient operation and maintenance of the
   3-35  transit authority system.
   3-36        Sec. 12.  TRANSIT AUTHORITY SYSTEM.  (a)  An authority may:
   3-37              (1)  acquire, construct, own, operate, and maintain a
   3-38  transit authority system;
   3-39              (2)  use any public way; and
   3-40              (3)  construct, repair, and maintain a municipal
   3-41  street, as authorized by the governing body of a municipality in
   3-42  the authority.
   3-43        (b)  In the exercise of a power under Subsection (a) of this
   3-44  section, an authority may relocate or reroute, or alter the
   3-45  construction of, any public or private property, including:
   3-46              (1)  an alley, road, street, or railroad;
   3-47              (2)  an electric line and facility;
   3-48              (3)  a telegraph and telephone property and facility;
   3-49              (4)  a pipeline and facility; and
   3-50              (5)  a conduit and facility.
   3-51        Sec. 13.  FARES AND OTHER CHARGES.  The board shall, after a
   3-52  public hearing, impose reasonable and nondiscriminatory fares,
   3-53  tolls, charges, rents, or other compensation for the use of the
   3-54  transit authority system sufficient to produce revenue, together
   3-55  with receipts from taxes imposed by the authority, in an amount
   3-56  adequate to:
   3-57              (1)  pay all the expenses necessary to operate and
   3-58  maintain the transit authority system;
   3-59              (2)  pay when due the principal of and interest on, and
   3-60  sinking fund and reserve fund payments agreed to be made with
   3-61  respect to, all bonds that are issued by the board and payable in
   3-62  whole or part from the revenue; and
   3-63              (3)  fulfill the terms of any other agreement with the
   3-64  holders of bonds described by Subdivision (2) of this section or
   3-65  with a person acting on behalf of the bondholders.
   3-66        Sec. 14.  AGREEMENT WITH UTILITIES, CARRIERS.  An authority
   3-67  may agree with a public or private utility, communication system,
   3-68  common carrier, or transportation system for:
   3-69              (1)  the joint use of the property of the agreeing
   3-70  entities in the authority; or
    4-1              (2)  the establishment of through routes, joint fares,
    4-2  or transfers of passengers.
    4-3        Sec. 15.  CONTRACTS; ACQUISITION OF PROPERTY BY AGREEMENT.
    4-4  (a)  An authority may contract with any person and may accept a
    4-5  grant or loan from any person.
    4-6        (b)  An authority may acquire rolling stock or other property
    4-7  under a contract or trust agreement, including a conditional sales
    4-8  contract, lease, and equipment trust certificate.
    4-9        Sec. 16.  USE AND ACQUISITION OF PROPERTY OF OTHERS.  (a)  An
   4-10  authority may not alter or damage any property of this state or a
   4-11  political subdivision of this state or owned by a person rendering
   4-12  public services and may not disrupt services being provided by
   4-13  others or inconvenience in any other manner an owner of property,
   4-14  without first having obtained:
   4-15              (1)  the written consent of the owner; or
   4-16              (2)  the right from the governing body of the
   4-17  municipality to take the action under the municipality's power of
   4-18  eminent domain.
   4-19        (b)  An authority may agree with an owner of property to
   4-20  provide for:
   4-21              (1)  a necessary relocation or alteration of property
   4-22  by the owner or a contractor chosen by the owner; and
   4-23              (2)  the reimbursement by the authority to the owner of
   4-24  the costs incurred by the owner in making the relocation or
   4-25  alteration.
   4-26        (c)  The authority shall pay the cost of any relocation,
   4-27  rerouting, or other alteration in the construction made under this
   4-28  chapter and is liable for any damage to property occurring because
   4-29  of the change.
   4-30        Sec. 17.  ROUTES.  An authority shall determine each route,
   4-31  including route changes, as the board considers advisable.
   4-32        Sec. 18.  TORT LIABILITY AND GOVERNMENTAL IMMUNITY.  (a)  An
   4-33  authority is a separate governmental unit for purposes of Chapter
   4-34  101, Civil Practice and Remedies Code, and operations of an
   4-35  authority are essential governmental functions and not proprietary
   4-36  functions for all purposes, including the purposes of that chapter.
   4-37        (b)  This chapter does not create or confer any governmental
   4-38  immunity or limitation of liability on any entity that is not a
   4-39  governmental unit, governmental entity or authority, or public
   4-40  agency or a subdivision of one of those persons.  In this
   4-41  subsection, "governmental unit" has the meaning assigned by Section
   4-42  101.001, Civil Practice and Remedies Code.
   4-43        Sec. 19.  TAX EXEMPTION.  The assets of an authority are
   4-44  exempt from any tax of the state or a state taxing authority.
   4-45        Sec. 20.  TRANSPORTATION FOR JOBS PROGRAM PARTICIPANTS.
   4-46  (a)  An authority shall contract with the Texas Department of Human
   4-47  Services to provide, in accordance with federal law, transportation
   4-48  services to a person who:
   4-49              (1)  resides in the area served by the authority;
   4-50              (2)  is receiving financial assistance under Chapter
   4-51  31, Human Resources Code; and
   4-52              (3)  is registered in the jobs opportunities and basic
   4-53  skills training program under Part F, Subchapter IV, Social
   4-54  Security Act, as amended (42 U.S.C. Section 682).
   4-55        (b)  The contract must include provisions to ensure that:
   4-56              (1)  the authority is required to provide
   4-57  transportation services only to a location:
   4-58                    (A)  to which the person travels in connection
   4-59  with participation in the jobs opportunities and basic skills
   4-60  training program; and
   4-61                    (B)  that the authority serves under the
   4-62  authority's authorized rate structure and existing services;
   4-63              (2)  the authority is to provide directly to the Texas
   4-64  Department of Human Services trip vouchers for distribution by the
   4-65  Texas Department of Human Services to a person who is eligible
   4-66  under this section to receive transportation services;
   4-67              (3)  the Texas Department of Human Services reimburses
   4-68  the authority for allowable costs, at the applicable federal
   4-69  matching rate; and
   4-70              (4)  the Texas Department of Human Services may return
    5-1  undistributed trip vouchers to the authority.
    5-2        (c)  An authority shall certify the amount of public funds
    5-3  spent by the authority under this section for the purpose of
    5-4  obtaining federal funds under the jobs opportunities and basic
    5-5  skills training program.
    5-6        Sec. 21.  WAIVER OF FEDERAL REQUIREMENTS.  If, before
    5-7  implementing Section 20 of this article, the Texas Department of
    5-8  Human Services determines that a waiver or authorization from a
    5-9  federal agency is necessary for implementation, the Texas
   5-10  Department of Human Services shall request the waiver or
   5-11  authorization, and the Texas Department of Human Services and an
   5-12  authority may delay implementing Section 20 until the waiver or
   5-13  authorization is granted.
   5-14        Sec. 22.  PURCHASE AND PERCENT OF VEHICLES USING ALTERNATIVE
   5-15  FUELS.  (a)  An authority may not purchase or lease a motor vehicle
   5-16  that is not capable of using compressed natural gas or another
   5-17  alternative fuel the use of which results in comparably lower
   5-18  emissions of oxides of nitrogen, volatile organic compounds, carbon
   5-19  monoxide, or particulates or combinations of those materials.
   5-20        (b)  After August 31, 1996, at least 50 percent of the fleet
   5-21  vehicles operated by an authority must be capable of using
   5-22  compressed natural gas or another alternative fuel.
   5-23        (b-1)  At least 30 percent of the fleet vehicles operated by
   5-24  an authority must be capable of using compressed natural gas or
   5-25  another alternative fuel.  This subsection expires September 1,
   5-26  1996.
   5-27        (c)  The Texas Natural Resource Conservation Commission,
   5-28  before 1997, shall review the alternative fuels use program under
   5-29  this section.  If the commission determines that the program has
   5-30  been effective in reducing total annual emissions from motor
   5-31  vehicles in the area, the authority shall achieve a percentage of
   5-32  fleet vehicles capable of using compressed natural gas or other
   5-33  alternative fuels of at least 90 percent of the number of fleet
   5-34  vehicles operated after August 31, 1998.
   5-35        Sec. 23.  ALTERNATIVE FUELS USE PROGRAM:  EXCEPTIONS.
   5-36  (a)  An authority may make exceptions to the requirements of
   5-37  Section 22 of this article if the authority certifies the facts
   5-38  described by Subsection (b) of this section.
   5-39        (b)  A certification under this section must state that:
   5-40              (1)  the authority's vehicles will be operating
   5-41  primarily in an area in which neither the authority nor a supplier
   5-42  has or can reasonably be expected to establish a central refueling
   5-43  station for compressed natural gas or other alternative fuels; or
   5-44              (2)  the authority is unable to acquire or be provided
   5-45  equipment or refueling facilities necessary to operate vehicles
   5-46  using compressed natural gas or other alternative fuels at a
   5-47  project cost that is reasonably expected to result in no greater
   5-48  net cost than the continued use of traditional gasoline or diesel
   5-49  fuel measured over the expected useful life of the equipment or
   5-50  facilities supplied.
   5-51        Sec. 24.  ALTERNATIVE FUELS EQUIPMENT AND FACILITIES.
   5-52  (a)  In addition to other methods authorized by law, an authority
   5-53  may acquire or be provided equipment or refueling facilities by an
   5-54  arrangement, including a gift or a loan, under a service contract
   5-55  for the supply of compressed natural gas or other alternative
   5-56  fuels.
   5-57        (b)  If an authority acquires or is provided equipment or
   5-58  facilities as authorized by Subsection (a) of this section, the
   5-59  supplier is entitled, under the supply contract, to recover the
   5-60  cost of giving, loaning, or providing the equipment or facilities
   5-61  through the fuel charges.
   5-62        Sec. 25.  ALTERNATIVE FUELS USE PROGRAM:  VEHICLES COVERED
   5-63  AND SAFETY.  (a)  In developing a compressed natural gas or other
   5-64  alternative fuels use program, an authority should work with
   5-65  vehicle manufacturers and converters, fuel distributors, and others
   5-66  to specify the vehicles to be covered considering relevant factors,
   5-67  including vehicle range, specialty vehicle uses, fuel availability,
   5-68  vehicle manufacturing and conversion capability, safety, and resale
   5-69  value.
   5-70        (b)  The authority may meet the percentage requirements of
    6-1  Section 22 of this article by:
    6-2              (1)  purchasing new vehicles; or
    6-3              (2)  converting existing vehicles, in conformity with
    6-4  federal and state requirements and applicable safety laws, to
    6-5  alternative fuels use.
    6-6        (c)  In purchasing, leasing, maintaining, or converting a
    6-7  vehicle for alternative fuels use, the authority shall comply with
    6-8  all applicable safety standards adopted by the United States
    6-9  Department of Transportation or the Railroad Commission of Texas or
   6-10  their successor agencies.
   6-11        Sec. 26.  ALTERNATIVE FUELS USE PROGRAM:  REPORTS.  (a)  Not
   6-12  later than December 31 of each year, an authority shall file an
   6-13  annual report with the Texas Natural Resource Conservation
   6-14  Commission showing:
   6-15              (1)  purchases, leases, and conversions of motor
   6-16  vehicles;
   6-17              (2)  the amount of compressed natural gas and other
   6-18  alternative fuels used; and
   6-19              (3)  any other information required by the commission
   6-20  relevant to the alternative fuels use program.
   6-21        (b)  The commission may require reporting from an authority
   6-22  to document air quality benefits from an alternative fuels use
   6-23  program.
   6-24        Sec. 27.  POWER TO ISSUE BONDS.  (a)  An authority may issue
   6-25  revenue bonds at any time and for any amounts it considers
   6-26  necessary or appropriate for:
   6-27              (1)  the acquisition, construction, repair, equipping,
   6-28  improvement, or extension of its transit system; or
   6-29              (2)  the construction or general maintenance of streets
   6-30  of the creating municipality.
   6-31        (b)  Bonds payable solely from revenues may be issued by
   6-32  resolution of the board.
   6-33        (c)  Bonds, other than refunding bonds, any portion of which
   6-34  is payable from tax revenue may not be issued until authorized by a
   6-35  majority vote of the voters of the authority voting in an election.
   6-36        Sec. 28.  BOND TERMS.  (a)  An authority's bonds are fully
   6-37  negotiable.
   6-38        (b)  The authority may make the bonds redeemable before
   6-39  maturity at the price and subject to the terms and conditions that
   6-40  are provided in the resolution authorizing the bonds.
   6-41        (c)  A revenue bond indenture may limit a power of the
   6-42  authority provided by this article as long as the bond containing
   6-43  the indenture is outstanding and unpaid.
   6-44        Sec. 29.  SALE.  Bonds may be sold at a public or private
   6-45  sale as determined by the board.
   6-46        Sec. 30.  APPROVAL; REGISTRATION.  (a)  An authority's bonds
   6-47  and the records relating to their issuance shall be submitted to
   6-48  the attorney general for examination before the bonds may be
   6-49  delivered.
   6-50        (b)  If the attorney general finds that the bonds have been
   6-51  issued in conformity with the constitution and this article and
   6-52  that the bonds will be a binding obligation of the issuing
   6-53  authority, the attorney general shall approve the bonds.
   6-54        (c)  After the bonds are approved by the attorney general,
   6-55  the comptroller shall register the bonds.
   6-56        Sec. 31.  INCONTESTABILITY.  Bonds are incontestable after
   6-57  they are:
   6-58              (1)  approved by the attorney general;
   6-59              (2)  registered by the comptroller; and
   6-60              (3)  sold and delivered to the purchaser.
   6-61        Sec. 32.  SECURITY PLEDGED.  (a)  To secure the payment of an
   6-62  authority's bonds, the authority may:
   6-63              (1)  pledge all or part of revenue received from any
   6-64  tax that the authority may impose;
   6-65              (2)  pledge all or part of the revenue of the transit
   6-66  authority system; and
   6-67              (3)  mortgage all or part of the transit authority
   6-68  system, including any part of the system subsequently acquired.
   6-69        (b)  Under Subsection (a)(3) of this section, the authority
   6-70  may, subject to the terms of the bond indenture or resolution
    7-1  authorizing the issuance of the bonds, encumber a separate item of
    7-2  the transit authority system and acquire, use, hold, or contract
    7-3  for any property by lease, chattel mortgage, or other conditional
    7-4  sale, including an equipment trust transaction.
    7-5        Sec. 33.  PLEDGE OF REVENUE LIMITED.  The expenses of
    7-6  operation and maintenance of a transit authority system, including
    7-7  salaries, labor, materials, and repairs necessary to provide
    7-8  efficient service and every other proper item of expense, are a
    7-9  first lien and charge against any revenue of an authority that is
   7-10  encumbered under this article.
   7-11        Sec. 34.  REFUNDING BONDS.  An authority may issue refunding
   7-12  bonds for the purposes and in the manner authorized by Chapter 503,
   7-13  Acts of the 54th Legislature, 1955 (Article 717k, Vernon's Texas
   7-14  Civil Statutes), Chapter 784, Acts of the 61st Legislature, Regular
   7-15  Session, 1969 (Article 717k-3, Vernon's Texas Civil Statutes), or
   7-16  other law.
   7-17        Sec. 35.  BONDS AS AUTHORIZED INVESTMENTS.  (a)  An
   7-18  authority's bonds are authorized investments for:
   7-19              (1)  a bank;
   7-20              (2)  a trust company;
   7-21              (3)  a savings and loan association; and
   7-22              (4)  an insurance company.
   7-23        (b)  The bonds, when accompanied by all appurtenant,
   7-24  unmatured coupons and to the extent of the lesser of their face
   7-25  value or market value, are eligible to secure the deposit of public
   7-26  funds of this state, a political subdivision of this state, and any
   7-27  other political corporation of this state.
   7-28        Sec. 36.  INTEREST EXEMPTION.  Interest on bonds issued by an
   7-29  authority is exempt from any tax of the state or a state taxing
   7-30  authority.
   7-31        Sec. 37.  SALES AND USE TAX.  (a)  The board may impose for
   7-32  the authority a sales and use tax at a permissible rate that does
   7-33  not exceed the rate approved by the voters at an election under
   7-34  this article.
   7-35        (b)  The board by order may:
   7-36              (1)  decrease the rate of the sales and use tax for the
   7-37  authority to a permissible rate; or
   7-38              (2)  call an election for the increase or decrease of
   7-39  the sales and use tax to a permissible rate.
   7-40        (c)  The permissible rates for a sales and use tax imposed
   7-41  under this article are:
   7-42              (1)  one-quarter of one percent; and
   7-43              (2)  one-half of one percent.
   7-44        (d)  Chapter 322, Tax Code, applies to an authority's sales
   7-45  and use tax.
   7-46        Sec. 38.  MAXIMUM TAX RATE.  (a)  A board may not adopt a
   7-47  sales and use tax rate, including a rate increase, that when
   7-48  combined with the rates of all sales and use taxes imposed by all
   7-49  political subdivisions of this state having territory in the county
   7-50  exceeds two percent in any location in the county.
   7-51        (b)  An election by an authority to approve a sales and use
   7-52  tax or increase the rate of the authority's sales and use tax has
   7-53  no effect if:
   7-54              (1)  the voters of the authority approve the
   7-55  authority's sales and use tax rate or rate increase at an election
   7-56  held on the same day on which the municipality or county having
   7-57  territory in the jurisdiction of the authority adopts a sales and
   7-58  use tax or an additional sales and use tax; and
   7-59              (2)  the combined rates of all sales and use taxes
   7-60  imposed by the authority and all political subdivisions of this
   7-61  state would exceed two percent in any part of the territory in the
   7-62  jurisdiction of the authority.
   7-63        Sec. 39.  ELECTION TO CHANGE TAX RATE.  (a)  At an election
   7-64  ordered under Subsection (b)(2) of Section 37 of this article, the
   7-65  ballots shall be printed to permit voting for or against the
   7-66  proposition:  "The increase (decrease) of the local sales and use
   7-67  tax rate of (name of authority) to (percentage)."
   7-68        (b)  The increase or decrease in the tax rate becomes
   7-69  effective only if it is approved by a majority of the votes cast.
   7-70        (c)  A notice of the election and a certified copy of the
    8-1  order canvassing the election results shall be:
    8-2              (1)  sent to the Texas Department of Transportation and
    8-3  the comptroller; and
    8-4              (2)  filed in the deed records of the county.
    8-5        Sec. 40.  SALES TAX:  EFFECTIVE DATES.  (a)  An authority's
    8-6  sales and use tax takes effect on the first day of the second
    8-7  calendar quarter that begins after the date the comptroller
    8-8  receives a copy of the order required to be sent under Subsection
    8-9  (h) of Section 5 of this article.
   8-10        (b)  An increase or decrease in the rate of an authority's
   8-11  sales and use tax takes effect on:
   8-12              (1)  the first day of the first calendar quarter that
   8-13  begins after the date the comptroller receives the notice provided
   8-14  under Subsection (c) of Section 39 of this article; or
   8-15              (2)  the first day of the second calendar quarter that
   8-16  begins after the date the comptroller receives the notice, if
   8-17  within 10 days after the date of receipt of the notice the
   8-18  comptroller gives written notice to the presiding officer of the
   8-19  board that the comptroller requires more time to implement tax
   8-20  collection and reporting procedures.
   8-21        Sec. 41.  ELECTION TO DISSOLVE AUTHORITY.  (a)  A board may
   8-22  order an election on the question of dissolving the authority.
   8-23        (b)  The board shall dissolve the authority if the
   8-24  dissolution is approved by a majority of the votes cast.
   8-25        (c)  The provisions of Section 5 of this article that relate
   8-26  to the notice and conduct of an election under that section apply
   8-27  to an election to dissolve an authority unless a different
   8-28  requirement is specified in this section.
   8-29        (d)  The board shall send a notice of the election to the
   8-30  Texas Department of Transportation and the comptroller.
   8-31        (e)  At the election, the ballots shall be printed to permit
   8-32  voting for or against the proposition:  "Dissolution of (name of
   8-33  authority)."
   8-34        (f)  The board shall send a certified copy of the order
   8-35  canvassing the election results to the Texas Department of
   8-36  Transportation and the comptroller and file a copy in the deed
   8-37  records of the county.
   8-38        (g)  The repeal of an authority's sales and use tax under
   8-39  this subchapter takes effect on:
   8-40              (1)  the first day of the first calendar quarter that
   8-41  begins after the date the comptroller receives the notice of the
   8-42  dissolution of the authority; or
   8-43              (2)  the first day of the second calendar quarter that
   8-44  begins after the date the comptroller receives the notice, if
   8-45  within 10 days after the date of receipt of the notice the
   8-46  comptroller gives written notice to the presiding officer of the
   8-47  board that the comptroller requires more time to implement the
   8-48  repeal of the tax.
   8-49        Sec. 42.  WITHDRAWAL FROM AUTHORITY.  (a)  The governing body
   8-50  of a unit of election may order an election to withdraw the unit
   8-51  from an authority.
   8-52        (b)  On the determination by a governing body of a unit of
   8-53  election that a petition for withdrawal under this chapter is
   8-54  valid, the governing body shall order an election to withdraw the
   8-55  unit of election from the authority.
   8-56        (c)  An election to withdraw may not be ordered, and a
   8-57  petition for an election to withdraw may not be accepted for
   8-58  filing, more frequently than once during each period of 12 months
   8-59  preceding the anniversary of the date of the election confirming
   8-60  the authority.
   8-61        Sec. 43. PETITION FOR WITHDRAWAL.  (a)  At the request of a
   8-62  qualified voter of a unit of election in an authority, the
   8-63  municipal secretary or other clerk or administrator of the unit of
   8-64  election shall deliver to the voter, in the number requested,
   8-65  petition signature sheets for a petition to withdraw from the
   8-66  authority prepared, numbered, and authenticated by the municipal
   8-67  secretary or other official.  During the period that signatures on
   8-68  the petition may be obtained, the official shall authenticate and
   8-69  deliver additional petition signature sheets as requested by the
   8-70  voter.  Only one petition for withdrawal may be in circulation at a
    9-1  time.
    9-2        (b)  Each sheet of a petition must have a heading in capital
    9-3  letters as follows:
    9-4  "THIS PETITION IS TO REQUIRE AN ELECTION TO BE HELD IN (name of the
    9-5  unit of election) TO DISSOLVE (name of authority) IN (name of the
    9-6  unit of election) SUBJECT TO THE CONTINUED COLLECTION OF SALES
    9-7  TAXES FOR THE PERIOD REQUIRED BY LAW."
    9-8        (c)  In addition to the requirements of Section 277.002,
    9-9  Election Code, to be valid a petition must:
   9-10              (1)  be signed on authenticated petition sheets by not
   9-11  less than 10 percent of the number of registered voters of the unit
   9-12  of election as shown on the voter registration list of the county;
   9-13              (2)  be filed with the secretary, clerk, or
   9-14  administrator of the unit of election not later than the 60th day
   9-15  after the date that the first sheet of the petition was received
   9-16  under Subsection (a) of this section;
   9-17              (3)  contain signatures that are signed in ink or
   9-18  indelible pencil by the voter; and
   9-19              (4)  have affixed or printed on each sheet an affidavit
   9-20  that is executed before a notary public by the person who
   9-21  circulated the sheet and that is in the following form and
   9-22  substance:
   9-23  "STATE OF TEXAS
   9-24  "COUNTY OF _______________
   9-25        "I, ____________________, affirm that I personally witnessed
   9-26  each signer affix his or her signature to this page of this
   9-27  petition for the dissolution of (name of authority) in (name of
   9-28  unit of election).  I affirm to the best of my knowledge and belief
   9-29  that each signature is the genuine signature of the person whose
   9-30  name is signed and that the date entered next to each signature is
   9-31  the date the signature was affixed to this page.
   9-32                                               ______________________
   9-33        "Sworn to and subscribed before me this the ____ day of ___,
   9-34  ____.
   9-35  (SEAL)                               ______________________________
   9-36                                       Notary Public, State of Texas"
   9-37        (d)  Each sheet of the petition must be filed under
   9-38  Subsection (c)(2) of this section at the same time as a single
   9-39  filing.
   9-40        (e)  The secretary, clerk, or administrator of a unit of
   9-41  election in which a petition for withdrawal from an authority is
   9-42  filed shall examine the petition and file with the governing body
   9-43  of the unit a report stating whether the petition, in the opinion
   9-44  of the secretary, clerk, or administrator, is valid.
   9-45        (f)  On receipt of a petition and a report under Subsection
   9-46  (e) of this section, the governing body shall examine the petition
   9-47  to determine whether the petition is valid.  The governing body may
   9-48  hold public hearings and conduct or order investigations as
   9-49  appropriate to make the determination.  The governing body's
   9-50  determination is conclusive of the issues.
   9-51        (g)  The governing body of a unit of election that receives
   9-52  an invalid petition shall reject the petition.
   9-53        (h)  A petition that is rejected is void, and the petition
   9-54  and each sheet of the rejected petition may not be used in
   9-55  connection with a subsequent petition.
   9-56        Sec. 44.  WITHDRAWAL ELECTION.  (a)  An election to withdraw
   9-57  from an authority must be held on the first applicable uniform
   9-58  election date occurring after the expiration of 12 calendar months
   9-59  after the date on which the governing body orders the election.
   9-60        (b)  The governing body shall give notice of the election to
   9-61  the board, the Texas Department of Transportation, and the
   9-62  comptroller immediately on calling the election.
   9-63        (c)  At the election the ballot shall be printed to permit
   9-64  voting for or against the proposition:  "Shall the (name of
   9-65  authority) be continued in (name of unit of election)?"
   9-66        (d)  If a majority of the votes received on the measure in an
   9-67  election favor the proposition, the authority continues in the unit
   9-68  of election.
   9-69        (e)  If less than a majority of the votes received on the
   9-70  measure in the election favor the proposition, the authority ceases
   10-1  in the unit of election on the day after the date of the canvass of
   10-2  the election.
   10-3        (f)  On the effective date of a withdrawal from an authority:
   10-4              (1)  the authority shall cease providing transportation
   10-5  services in the withdrawn unit of election; and
   10-6              (2)  the financial obligations of the authority
   10-7  attributable to the withdrawn unit of election cease to accrue.
   10-8        (g)  Withdrawal from an authority does not affect the right
   10-9  of the authority to travel through the territory of the unit of
  10-10  election to provide service to a unit of election that is a part of
  10-11  the authority.
  10-12        Sec. 45.  PROCEDURE AFTER WITHDRAWAL ELECTION.  (a)  Until
  10-13  the amount of revenue from an authority's sales and use tax
  10-14  collected in a withdrawn unit of election after the effective date
  10-15  of withdrawal and paid to the authority equals the total financial
  10-16  obligation of the unit, the sales and use tax continues to be
  10-17  collected in the territory of the election unit.
  10-18        (b)  After the amount described by Subsection (a) of this
  10-19  section has been collected, the comptroller shall discontinue
  10-20  collecting the tax in the territory of the unit of election.
  10-21        (c)  The total financial obligation of a withdrawn unit of
  10-22  election to the authority is an amount equal to:
  10-23              (1)  the unit's apportioned share of the authority's
  10-24  outstanding obligations; and
  10-25              (2)  the amount, not computed under Subdivision (1) of
  10-26  this subsection, that is necessary and appropriate to allocate to
  10-27  the unit because of financial obligations of the authority that
  10-28  specifically relate to the unit.
  10-29        (d)  An authority's outstanding obligations under Subsection
  10-30  (c)(1) of this section is the sum of:
  10-31              (1)  the obligations of the authority authorized in the
  10-32  budget of, and contracted for by, the authority;
  10-33              (2)  outstanding contractual obligations for capital or
  10-34  other expenditures, including expenditures for a subsequent year,
  10-35  the payment of which is not made or provided for from the proceeds
  10-36  of notes, bonds, or other obligations;
  10-37              (3)  payments due or to become due in a subsequent year
  10-38  on notes, bonds, or other securities or obligations for debt issued
  10-39  by the authority;
  10-40              (4)  the amount required by the authority to be
  10-41  reserved for all years to comply with financial covenants made with
  10-42  lenders, note or bond holders, or other creditors or contractors;
  10-43  and
  10-44              (5)  the amount necessary for the full and timely
  10-45  payment of the obligations of the authority, to avoid a default or
  10-46  impairment of those obligations, including contingent liabilities.
  10-47        (e)  The apportioned share of a unit's obligation is the
  10-48  amount of the obligation times a fraction, the numerator of which
  10-49  is the number of inhabitants of the withdrawing unit of election
  10-50  and the denominator of which is the number of inhabitants of the
  10-51  authority, including the number of inhabitants of the unit.
  10-52        (f)  The board shall determine the amount of each component
  10-53  of the computations required under this section, including the
  10-54  components of the unit's apportioned share, as of the effective
  10-55  date of withdrawal.  The number of inhabitants shall be determined
  10-56  according to the most recent and available applicable data of an
  10-57  agency of the United States.
  10-58        (g)  The board shall certify to a withdrawn unit of election
  10-59  and to the comptroller the total financial obligation of the unit
  10-60  to the authority as determined under this section.
  10-61        SECTION 2.  This Act takes effect September 1, 1995.
  10-62        SECTION 3.  The importance of this legislation and the
  10-63  crowded condition of the calendars in both houses create an
  10-64  emergency and an imperative public necessity that the
  10-65  constitutional rule requiring bills to be read on three several
  10-66  days in each house be suspended, and this rule is hereby suspended.
  10-67                               * * * * *