1-1           By:  Duncan                                      S.B. No. 721

 1-2           (In the Senate - Filed February 24, 1997; February 26, 1997,

 1-3     read first time and referred to Committee on State Affairs;

 1-4     March 18, 1997, reported adversely, with favorable Committee

 1-5     Substitute by the following vote:  Yeas 13, Nays 0; March 18, 1997,

 1-6     sent to printer.)

 1-7     COMMITTEE SUBSTITUTE FOR S.B. No. 721                   By:  Carona

 1-8                            A BILL TO BE ENTITLED

 1-9                                   AN ACT

1-10     relating to the issuance of certificates of obligation for the

1-11     payment of a municipality's contractual interests in certain

1-12     utilities.

1-13           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

1-14           SECTION 1.  Section 271.045, Local Government Code, is

1-15     amended by adding Subsections (c) and (d) to read as follows:

1-16           (c)  The governing body of a municipality may issue

1-17     certificates of obligation to pay all or part of a municipality's

1-18     obligations incurred by contract for interests in and rights to

1-19     water or sewer treatment capacity in connection with a water supply

1-20     and transmission project or sewer treatment or collection project

1-21     to be constructed in whole or in part on behalf of the municipality

1-22     by another governmental entity or political subdivision pursuant to

1-23     a written agreement expressly authorized under Section 402.014 of

1-24     this code or Section 791.026, Government Code.

1-25           (d)  In exercising its authority to issue certificates of

1-26     obligation for the purposes specified in Subsection (c), the

1-27     municipality must limit the principal amount of certificates to be

1-28     issued for the purpose of funding its contractual obligations to an

1-29     amount equal to (i) the aggregate of the contractual payments or

1-30     the total costs allocated or attributed, under generally accepted

1-31     accounting principles, to the capital costs of the project, as

1-32     opposed to any maintenance or operating costs to be paid under the

1-33     written agreement or (ii) the total cost of the project multiplied

1-34     by the percentage of the nameplate capacity of the project acquired

1-35     or conveyed by the written agreement to the municipality, whichever

1-36     limitation is applicable to the contractual interests or rights

1-37     being conveyed or identified in the written agreement.

1-38           SECTION 2.  The importance of this legislation and the

1-39     crowded condition of the calendars in both houses create an

1-40     emergency and an imperative public necessity that the

1-41     constitutional rule requiring bills to be read on three several

1-42     days in each house be suspended, and this rule is hereby suspended,

1-43     and that this Act take effect and be in force from and after its

1-44     passage, and it is so enacted.

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