AN ACT

 1-1     relating to the issuance of certificates of obligation for the

 1-2     payment of a municipality's contractual interests in certain

 1-3     utilities.

 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

 1-5           SECTION 1.  Section 271.045, Local Government Code, is

 1-6     amended by adding Subsections (c) and (d) to read as follows:

 1-7           (c)  The governing body of a municipality may issue

 1-8     certificates of obligation to pay all or part of a municipality's

 1-9     obligations incurred by contract for interests in and rights to

1-10     water or sewer treatment capacity in connection with a water supply

1-11     and transmission project or sewer treatment or collection project

1-12     to be constructed in whole or in part on behalf of the municipality

1-13     by another governmental entity or political subdivision pursuant to

1-14     a written agreement expressly authorized under Section 402.014 of

1-15     this code or Section 791.026, Government Code.

1-16           (d)  In exercising its authority to issue certificates of

1-17     obligation for the purposes specified in Subsection (c), the

1-18     municipality must limit the principal amount of certificates to be

1-19     issued for the purpose of funding its contractual obligations to an

1-20     amount equal to (i) the aggregate of the contractual payments or

1-21     the total costs allocated or attributed, under generally accepted

1-22     accounting principles, to the capital costs of the project, as

1-23     opposed to any maintenance or operating costs to be paid under the

 2-1     written agreement or (ii) the total cost of the project multiplied

 2-2     by the percentage of the nameplate capacity of the project acquired

 2-3     or conveyed by the written agreement to the municipality, whichever

 2-4     limitation is applicable to the contractual interests or rights

 2-5     being conveyed or identified in the written agreement.

 2-6           SECTION 2.  The importance of this legislation and the

 2-7     crowded condition of the calendars in both houses create an

 2-8     emergency and an imperative public necessity that the

 2-9     constitutional rule requiring bills to be read on three several

2-10     days in each house be suspended, and this rule is hereby suspended,

2-11     and that this Act take effect and be in force from and after its

2-12     passage, and it is so enacted.

         _______________________________     _______________________________

             President of the Senate              Speaker of the House

               I hereby certify that S.B. No. 721 passed the Senate on

         March 25, 1997, by the following vote:  Yeas 30, Nays 0.

                                             _______________________________

                                                 Secretary of the Senate

               I hereby certify that S.B. No. 721 passed the House on

         May 2, 1997, by the following vote:  Yeas 142, Nays 0, two present

         not voting.

                                             _______________________________

                                                 Chief Clerk of the House

         Approved:

         _______________________________

                     Date

         _______________________________

                   Governor