By:  Duncan                                   S.B. No. 721

         97S0424/1                           

                                A BILL TO BE ENTITLED

                                       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 or electrical generation capacity

1-11     in connection with a water supply and transmission project,

1-12     electrical power or transmission project, or sewer treatment or

1-13     collection project to be constructed in whole or in part on behalf

1-14     of the municipality by another governmental entity or political

1-15     subdivision pursuant to a written agreement expressly authorized

1-16     under Section 402.014 of this code or Section 791.026, Government

1-17     Code, or other similar statute now or hereafter enacted by the

1-18     legislature.

1-19           (d)  In exercising its authority to issue certificates of

1-20     obligation for the purposes specified in Subsection (c), the

1-21     municipality must limit the principal amount of certificates to be

1-22     issued for the purpose of funding its contractual obligations to an

1-23     amount equal to (i) the aggregate of the contractual payments or

 2-1     the total costs allocated or attributed, under generally accepted

 2-2     accounting principles, to the capital costs of the project, as

 2-3     opposed to any maintenance or operating costs to be paid under the

 2-4     written agreement or (ii) the total cost of the project multiplied

 2-5     by the percentage of the nameplate capacity of the project acquired

 2-6     or conveyed by the written agreement to the municipality, whichever

 2-7     limitation is applicable to the contractual interests or rights

 2-8     being conveyed or identified in the written agreement.

 2-9           SECTION 2.  The importance of this legislation and the

2-10     crowded condition of the calendars in both houses create an

2-11     emergency and an imperative public necessity that the

2-12     constitutional rule requiring bills to be read on three several

2-13     days in each house be suspended, and this rule is hereby suspended,

2-14     and that this Act take effect and be in force from and after its

2-15     passage, and it is so enacted.