By Capelo H.B. No. 3224
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the issuance of public securities by or on behalf of
1-3 the state and political subdivisions.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. This Act amends a nonsubstantive revision of the
1-6 laws relating to public securities proposed by H.B. No. 3157, 76th
1-7 Legislature, Regular Session, 1999. This Act takes effect
1-8 September 1, 1999, but only if H.B. No. 3157, 76th Legislature,
1-9 Regular Session, 1999, is enacted and becomes law. If H.B. No.
1-10 3157, 76th Legislature, Regular Session, 1999, is not enacted or
1-11 does not become law, this Act has no effect.
1-12 SECTION 2. Section 1201.027, Government Code, is amended by
1-13 amending the heading and Subsection (a) to read as follows:
1-14 Sec. 1201.027. AUTHORITY OF ISSUER [OF POLITICAL SUBDIVISION
1-15 OR MUNICIPAL CORPORATION] TO CONTRACT FOR SERVICES. (a) The
1-16 governing body of an issuer [a home-rule municipality or other
1-17 political subdivision or municipal corporation of this state or of
1-18 an instrumentality of such an entity] has exclusive authority to
1-19 select, [and] contract with, and determine the basis for
1-20 compensation of a person to provide legal and other services as may
1-21 be determined by the governing body to be necessary in connection
1-22 with the issuer's issuance of public securities or administration
1-23 of its affairs that pertain to the issuance of public securities.
1-24 The selection of legal counsel shall be made in accordance with the
2-1 provisions of Subchapter A, Chapter 2254, applicable to the
2-2 selection by a governmental entity of a provider of professional
2-3 engineering services [a service in connection with a public
2-4 security being issued, including legal counsel, an underwriter, or
2-5 a financial advisor].
2-6 SECTION 3. Section 1205.023, Government Code, is amended to
2-7 read as follows:
2-8 Sec. 1205.023. PROCEEDING IN REM; CLASS ACTION. An action
2-9 under this chapter is:
2-10 (1) a proceeding in rem; and
2-11 (2) a class action binding on [against] all persons
2-12 who:
2-13 (A) reside in the territory of the issuer;
2-14 (B) own property located within the boundaries
2-15 of the issuer;
2-16 (C) are taxpayers of the issuer; or
2-17 (D) have or claim a right, title, or interest in
2-18 any property or money to be affected by the public security
2-19 authorization or the issuance of the public securities.
2-20 SECTION 4. Section 1205.041(b), Government Code, is amended
2-21 to read as follows:
2-22 (b) The order must, in general terms and without naming
2-23 them, advise [require] the persons described by Subsection (a) and
2-24 the attorney general of their right to:
2-25 (1) appear for trial at 10 a.m. on the first Monday
2-26 after the 20th day after the date of the order; and
2-27 (2) show cause why the petition should not be granted
3-1 and the public securities or the public security authorization
3-2 validated and confirmed.
3-3 SECTION 5. Section 1205.044, Government Code, is amended to
3-4 read as follows:
3-5 Sec. 1205.044. EFFECT OF PUBLICATION. The effect of notice
3-6 given under Sections 1205.041 and 1205.043 is that:
3-7 (1) each person described by Section 1205.041(a) is a
3-8 party [defendant] to the action; and
3-9 (2) the court has jurisdiction over each person to the
3-10 same extent as if that person were individually named [as a
3-11 defendant] and personally served in the action.
3-12 SECTION 6. Section 1205.068(e), Government Code, is amended
3-13 to read as follows:
3-14 (e) An appeal under this section is governed by the rules of
3-15 the supreme court for accelerated appeals in civil cases and takes
3-16 priority over any other matter, other than writs of habeas corpus,
3-17 pending in the appellate court. The appellate court shall render
3-18 its final order or judgment with the least possible delay.
3-19 SECTION 7. Subchapter A, Chapter 1207, Government Code, is
3-20 amended by adding Sections 1207.007 and 1207.008 to read as
3-21 follows:
3-22 Sec. 1207.007. DELEGATION OF AUTHORITY. (a) In connection
3-23 with the issuance of refunding bonds, the governing body of an
3-24 issuer may:
3-25 (1) authorize the maximum principal amount of
3-26 refunding bonds that may be issued and the maximum rate of interest
3-27 to be borne by the bonds;
4-1 (2) identify the potential bonds, notes, or other
4-2 general or special obligations that may be refunded;
4-3 (3) recite the public purpose for which the refunding
4-4 bonds are to be issued; and
4-5 (4) delegate to any officer or employee of the issuer
4-6 the authority to:
4-7 (A) select any specific maturities or series of
4-8 bonds, notes, or other general or special obligations to be
4-9 refunded; and
4-10 (B) effect the sale of the refunding bonds.
4-11 (b) In exercising the authority delegated by the governing
4-12 body of the issuer to the officer or employee, the officer or
4-13 employee may establish the terms and details related to the
4-14 issuance and sale or exchange of the refunding bonds, including:
4-15 (1) the form and designation of the refunding bonds;
4-16 (2) the principal amount of the refunding bonds and
4-17 the amount of the refunding bonds to mature in each year;
4-18 (3) the dates, price, interest rates, interest payment
4-19 dates, principal payment dates, and redemption features of the
4-20 refunding bonds;
4-21 (4) the form of escrow agreement described by Section
4-22 1207.062; and
4-23 (5) any other details relating to the issuance and
4-24 sale or exchange of the refunding bonds as specified by the
4-25 governing body of the issuer in the proceedings authorizing the
4-26 issuance of the refunding bonds.
4-27 (c) A finding or determination made by an officer or
5-1 employee acting under the authority delegated to the officer or
5-2 employee has the same force and effect as a finding or
5-3 determination made by the governing body of the issuer.
5-4 Sec. 1207.008. LIMITATION. An issuer may not issue
5-5 refunding bonds if the aggregate amount of payments to be made
5-6 under the refunding bonds exceeds the aggregate amount of payments
5-7 that would have been made under the terms of the obligations being
5-8 refunded unless:
5-9 (1) the governing body of the issuer, in the
5-10 proceedings authorizing the issuance of the refunding bonds, finds
5-11 that the issuance is in the best interests of the issuer; and
5-12 (2) the maximum amount by which the aggregate amount
5-13 of payments to be made under the refunding bonds exceeds the
5-14 aggregate amount of payments that would have been made under the
5-15 terms of the obligations being refunded is specified in the
5-16 proceedings.
5-17 SECTION 8. Section 1207.022, Government Code, is amended to
5-18 read as follows:
5-19 Sec. 1207.022. LIMITATION. [(a)] An issuer may issue
5-20 refunding bonds to make a deposit under this subchapter or
5-21 Subchapter C only in connection with refunding bonds issued to
5-22 refund obligations that are:
5-23 (1) scheduled to mature not later than the 20th
5-24 anniversary of the date of the refunding bonds; or
5-25 (2) subject to redemption before maturity not later
5-26 than the 20th anniversary of the date of the refunding bonds.
5-27 [(b) Refunding bonds may not be issued to make a deposit
6-1 under this subchapter in connection with the refunding of electric
6-2 and gas system bonds issued by a municipality with a population of
6-3 more than 900,000.]
6-4 SECTION 9. Section 1207.025(a), Government Code, is amended
6-5 to read as follows:
6-6 (a) The [Refunding bonds must be registered by the]
6-7 comptroller may register refunding bonds as provided by Chapter
6-8 1202 before a deposit required by this subchapter or Subchapter C
6-9 is [may be] made.
6-10 SECTION 10. Section 1207.033, Government Code, is amended
6-11 by adding Subsections (c) and (d) to read as follows:
6-12 (c) After firm banking and financial arrangements for the
6-13 discharge and final payment or redemption of the obligations have
6-14 been made under Subsection (a), all rights of an issuer to initiate
6-15 proceedings to call the obligations for redemption or take any
6-16 other action amending the terms of the obligations are
6-17 extinguished. The right to call the obligations for redemption is
6-18 not extinguished if the issuer:
6-19 (1) in the proceedings providing for the firm banking
6-20 and financial arrangements, expressly reserves the right to call
6-21 the obligations for redemption;
6-22 (2) gives notice of the reservation of that right to
6-23 the owners of the obligations immediately following the making of
6-24 the firm banking and financial arrangements; and
6-25 (3) directs that notice of the reservation be included
6-26 in any redemption notices that it authorizes.
6-27 (d) Subsection (c) applies only to firm banking and
7-1 financial arrangements made on or after September 1, 1999, and has
7-2 no effect on the validity or legality of any such arrangements made
7-3 before that date.
7-4 SECTION 11. Section 1207.062, Government Code, is amended
7-5 by amending Subsections (b) and (c) and adding Subsections (d) and
7-6 (e) to read as follows:
7-7 (b) A deposit under Section 1207.061 may be invested only
7-8 in:
7-9 (1) direct noncallable obligations of the United
7-10 States, including obligations that [the principal of and interest
7-11 on which] are unconditionally guaranteed by the United States;
7-12 (2) noncallable obligations of an agency or
7-13 instrumentality of the United States, including obligations that
7-14 are unconditionally guaranteed or insured by the agency or
7-15 instrumentality and that, on the date the governing body of the
7-16 issuer adopts or approves the proceedings authorizing the issuance
7-17 of refunding bonds, are rated as to investment quality by a
7-18 nationally recognized investment rating firm not less than AAA or
7-19 its equivalent; and
7-20 (3) noncallable obligations of a state or an agency or
7-21 a county, municipality, or other political subdivision of a state
7-22 that have been refunded and that, on the date the governing body of
7-23 the issuer adopts or approves the proceedings authorizing the
7-24 issuance of refunding bonds, are rated as to investment quality by
7-25 a nationally recognized investment rating firm not less than AAA or
7-26 its equivalent.
7-27 (c) A deposit under Section 1207.061 may be invested only in
8-1 obligations that [and which] mature and bear interest payable at
8-2 times and in amounts sufficient to provide for the scheduled
8-3 payment or redemption of the obligation to be refunded. The
8-4 obligations may be in book-entry form.
8-5 (d) [(c)] An issuer shall enter into an agreement under
8-6 Subsection (a) if an obligation to be refunded is scheduled to be
8-7 paid or redeemed on a date later than the next scheduled interest
8-8 payment date on the obligation.
8-9 (e) Notwithstanding Subsection (b), a deposit under an
8-10 escrow agreement entered into under Subsection (a) before
8-11 September 1, 1999, may not be invested in an investment described
8-12 by Subsection (b)(2) or (3).
8-13 SECTION 12. Section 1231.044(b), Government Code, is
8-14 amended to read as follows:
8-15 (b) The state auditor shall prepare a report of the review
8-16 and file a copy of the report with:
8-17 (1) the board;
8-18 (2) the governor;
8-19 (3) [(2)] the lieutenant governor;
8-20 (4) [(3)] the speaker of the house of representatives;
8-21 (5) [(4)] the secretary of state; and
8-22 (6) [(5)] each member of the legislature.
8-23 SECTION 13. Section 1331.001, Government Code, is amended
8-24 to read as follows:
8-25 Sec. 1331.001. AUTHORITY OF MUNICIPALITY TO ISSUE BONDS. A
8-26 municipality may issue bonds payable from ad valorem taxes [with
8-27 one or more interest coupons] in the amount it considers expedient
9-1 to:
9-2 (1) construct or purchase permanent improvements
9-3 inside the municipal boundaries, including public buildings,
9-4 waterworks, or sewers;
9-5 (2) construct or improve the streets and bridges of
9-6 the municipality; or
9-7 (3) construct or purchase building sites or buildings
9-8 for the public schools and other institutions of learning inside
9-9 the municipality, if the municipality has assumed exclusive control
9-10 of those schools and institutions.
9-11 SECTION 14. Section 1331.002, Government Code, is amended
9-12 to read as follows:
9-13 Sec. 1331.002. SIGNATURES [OF MAYOR AND MUNICIPAL
9-14 SECRETARY]. Bonds [A bond] issued by a municipality under Section
9-15 1331.001 must be signed in the manner provided by the proceedings
9-16 authorizing the issuance of the bonds [by the mayor and
9-17 countersigned by the municipal secretary].
9-18 SECTION 15. Sections 1371.001(1), (4), and (5), Government
9-19 Code, are amended to read as follows:
9-20 (1) "Credit agreement" means a loan agreement,
9-21 revolving credit agreement, agreement establishing a line of
9-22 credit, letter of credit, reimbursement agreement, insurance
9-23 contract, commitment to purchase an obligation, purchase or sale
9-24 agreement, interest rate swap agreement, or commitment or other
9-25 agreement authorized [and approved] by a governing body in
9-26 connection with the authorization, issuance, sale, resale,
9-27 security, exchange, payment, purchase, remarketing, or redemption
10-1 of an obligation, interest on an obligation, or both, or as
10-2 otherwise authorized by this chapter.
10-3 (4) "Issuer" means:
10-4 (A) a home-rule municipality that:
10-5 (i) adopted its charter under Section 5,
10-6 Article XI, Texas Constitution;
10-7 (ii) has a population of 50,000 [90,000]
10-8 or more; and
10-9 (iii) has outstanding long-term
10-10 indebtedness [secured by the revenue of the public works for which
10-11 an obligation is being issued] that is rated by a nationally
10-12 recognized rating agency for municipal securities in one of the
10-13 four highest rating categories for a long-term obligation;
10-14 (B) a conservation and reclamation district
10-15 created and organized as a river authority under Section 52,
10-16 Article III, or Section 59, Article XVI, Texas Constitution;
10-17 (C) a joint powers agency organized and
10-18 operating under Chapter 163, Utilities Code;
10-19 (D) a metropolitan rapid transit authority or
10-20 regional transportation authority created, organized, and operating
10-21 under Chapter 451 or 452, Transportation Code;
10-22 (E) a conservation and reclamation district
10-23 organized or operating as a navigation district under Section 52,
10-24 Article III, or Section 59, Article XVI, Texas Constitution;
10-25 (F) a district organized or operating under
10-26 Section 59, Article XVI, Texas Constitution, that has all or part
10-27 of two or more municipalities within its boundaries;
11-1 (G) a state agency, including a state
11-2 institution of higher education;
11-3 (H) a hospital authority created or operating
11-4 under Chapter 262 or 264, Health and Safety Code, in a county that:
11-5 (i) has a population of more than two
11-6 million; or
11-7 (ii) is included, in whole or in part, in
11-8 a standard metropolitan statistical area of this state that
11-9 includes a county with a population of more than 1.8 million;
11-10 (I) a nonprofit corporation organized to
11-11 exercise the powers of a higher education authority under Section
11-12 53.47(e), Education Code; or
11-13 (J) a county with a population of two million or
11-14 more.
11-15 (5) "Obligation" means a [note, warrant, or other
11-16 special obligation authorized to be issued by an issuer under this
11-17 chapter or a] public security as defined by Section 1201.002 or
11-18 other special obligation authorized to be issued by an issuer that,
11-19 before delivery, is rated by a nationally recognized rating agency
11-20 for municipal securities in one of the three highest rating
11-21 categories for a short-term debt instrument or one of the four
11-22 highest rating categories for a long-term debt instrument. The
11-23 term does not include an obligation payable from ad valorem taxes
11-24 except as specifically permitted by this chapter.
11-25 SECTION 16. Subchapter A, Chapter 1371, Government Code, is
11-26 amended by adding Section 1371.004 to read as follows:
11-27 Sec. 1371.004. EFFECT OF FINDING OR DETERMINATION UNDER
12-1 DELEGATION OF AUTHORITY. A finding or determination made by an
12-2 officer or employee acting under the authority delegated to the
12-3 officer or employee under this chapter has the same force and
12-4 effect as a finding or determination made by the governing body.
12-5 SECTION 17. Section 1371.053(a), Government Code, is
12-6 amended to read as follows:
12-7 (a) A governing body must adopt or approve an obligation
12-8 authorization before an obligation may be issued [The issuance of
12-9 an obligation must be authorized by an obligation authorization].
12-10 SECTION 18. Section 1371.056, Government Code, is amended
12-11 to read as follows:
12-12 Sec. 1371.056. AUTHORITY TO ENTER INTO AND EXECUTE CREDIT
12-13 AGREEMENTS. (a) A [governing body may execute and deliver a
12-14 credit agreement to finance a project cost or to refund an
12-15 obligation issued in connection with an eligible project as may be
12-16 authorized and approved by the governing body.]
12-17 [(b) To enhance the security for or provide for the payment,
12-18 redemption, or remarketing of an obligation and interest on the
12-19 obligation in order to reduce the interest payable on the
12-20 obligation or in conjunction with the interim financing of an
12-21 eligible project of an issuer, a governing body may enter into a
12-22 credit agreement:]
12-23 [(1) at or after the issuance of the obligation; or]
12-24 [(2) in conjunction with the payment, sale, resale, or
12-25 exchange of the obligation.]
12-26 [(c) The] governing body may authorize the execution and
12-27 delivery of [execute] a credit agreement in connection with or
13-1 related [relation] to the authorization, issuance, security,
13-2 purchase, payment, sale, resale, redemption, remarketing, or
13-3 exchange of an obligation at any time, without regard to whether a
13-4 credit agreement was contemplated, authorized, or executed in
13-5 relation to the initial issuance, sale, or delivery of the
13-6 obligation.
13-7 (b) [(d)] A credit agreement must contain the terms and be
13-8 for the period the governing body approves.
13-9 (c) [(e)] The cost to the issuer of a credit agreement may
13-10 be paid from any source, including:
13-11 (1) the proceeds from the sale of the obligation to
13-12 which the credit agreement relates;
13-13 (2) revenue of the issuer that is available to pay the
13-14 obligation;
13-15 (3) any interest on the obligation or that may
13-16 otherwise be legally used; or
13-17 (4) ad valorem taxes to the extent permitted by this
13-18 chapter.
13-19 (d) [(f)] A credit agreement is an agreement for
13-20 professional services.
13-21 (e) Notwithstanding Subsection (b), the governing body may
13-22 delegate to an officer or employee the authority, under the terms
13-23 and for the period approved by the governing body, to:
13-24 (1) enter into a credit agreement and transactions
13-25 under a credit agreement; and
13-26 (2) execute any instruments in connection with those
13-27 transactions.
14-1 SECTION 19. Subchapter B, Chapter 1371, Government Code, is
14-2 amended by amending Sections 1371.057 and 1371.058 and adding
14-3 Sections 1371.059 and 1371.060 to read as follows:
14-4 Sec. 1371.057. REVIEW AND APPROVAL OF OBLIGATION, CREDIT
14-5 AGREEMENT, AND CONTRACT BY ATTORNEY GENERAL. (a) Before an
14-6 obligation may be issued or a credit agreement executed, a record
14-7 of the proceedings of the issuer authorizing the issuance,
14-8 execution, and delivery of the obligation, the credit agreement,
14-9 and any contract providing revenue or security to pay the
14-10 obligation or the credit agreement must be submitted to the
14-11 attorney general for review.
14-12 (b) If the attorney general finds that the credit agreement,
14-13 contract, and other authorizing proceedings conform to the
14-14 requirements of the Texas Constitution and this chapter, the
14-15 attorney general shall approve them and deliver to the comptroller
14-16 a copy of the attorney general's legal opinion stating that
14-17 approval and the record of proceedings. After approval, the
14-18 obligation and credit agreement may be executed and delivered,
14-19 exchanged, or refinanced from time to time in accordance with those
14-20 authorizing proceedings.
14-21 Sec. 1371.058. REGISTRATION. On receipt of the documents
14-22 required by Section 1371.057(b), the comptroller shall register the
14-23 record of the proceedings relating to the issuance of obligations
14-24 or the execution of a credit agreement.
14-25 Sec. 1371.059. VALIDITY AND INCONTESTABILITY. [(c)] On
14-26 approval by the attorney general, registration by the comptroller,
14-27 and initial delivery of the obligation, a credit agreement, a
15-1 contract providing revenue or security, an initial obligation, and
15-2 any obligation subsequently issued under the authorizing
15-3 proceedings are incontestable in a court or other forum and are
15-4 valid and binding obligations enforceable according to their terms.
15-5 Sec. 1371.060 [1371.058]. REFINANCING, RENEWAL, OR REFUNDING
15-6 OF OBLIGATION OR CREDIT AGREEMENT. An obligation, including
15-7 accrued interest, or a credit agreement may from time to time be
15-8 refinanced, renewed, or refunded by the issuance of another
15-9 obligation or credit agreement.
15-10 SECTION 20. Section 1371.103(b), Government Code, is
15-11 amended to read as follows:
15-12 (b) A governing body may secure an obligation and pay the
15-13 cost of a credit agreement executed and delivered in connection
15-14 with the financing of a project cost with:
15-15 (1) the [ad valorem taxes or with other] sources
15-16 permitted by this chapter; and
15-17 (2) ad valorem taxes to the extent the project cost
15-18 relates to an eligible project financed or to be financed with
15-19 obligations payable from ad valorem taxes.
15-20 SECTION 21. The heading to Chapter 1502, Government Code, is
15-21 amended to read as follows:
15-22 CHAPTER 1502. PUBLIC SECURITIES [OBLIGATIONS] FOR
15-23 MUNICIPAL UTILITIES, PARKS, OR POOLS
15-24 SECTION 22. Subchapters A and B, Chapter 1502, Government
15-25 Code, are amended to read as follows:
15-26 SUBCHAPTER A. GENERAL PROVISIONS
15-27 Sec. 1502.001. DEFINITIONS [DEFINITION]. In this chapter:
16-1 (1) "Combined system" means any combination of one or
16-2 more of the following:
16-3 (A) an electric system;
16-4 (B) a water system;
16-5 (C) a sewer system;
16-6 (D) a solid waste disposal system;
16-7 (E) a drainage utility system; and
16-8 (F) a natural gas system.
16-9 (2) "Public security" has the meaning assigned by
16-10 Section 1201.002.
16-11 (3) "Utility system" means an electric, water, sewer,
16-12 solid waste disposal, drainage utility, or natural gas system. The
16-13 term includes one or more combined systems[, "paying agent" means
16-14 the person, including a bank or trust company, at whose location
16-15 payment of a refunded obligation is to be made].
16-16 Sec. 1502.002. GENERAL AUTHORITY FOR UTILITY SYSTEMS, PARKS,
16-17 AND POOLS. (a) A municipality may acquire, purchase, construct,
16-18 improve, enlarge, equip, operate, or maintain any property,
16-19 interests in property, buildings, structures, activities, services,
16-20 operations, or other facilities, with respect to:
16-21 (1) a utility system;
16-22 (2) a park; or
16-23 (3) a swimming pool.
16-24 (b) The governing body of a municipality may authorize the
16-25 execution and delivery of contracts between the municipality and
16-26 any person to accomplish any purpose described by Subsection (a).
16-27 Sec. 1502.003. CREATION AND MAINTENANCE OF COMBINED SYSTEM.
17-1 Notwithstanding any law or municipal charter provision to the
17-2 contrary, the governing body of a municipality may create and
17-3 maintain one or more combined systems on a finding by the governing
17-4 body that it is in the best interests of the municipality to create
17-5 and maintain the combined system. A finding by a governing body
17-6 under this section is conclusive and incontestable.
17-7 Sec. 1502.004. CONFLICT WITH MUNICIPAL CHARTER. To the
17-8 extent of a conflict between this chapter and a municipal charter,
17-9 this chapter controls.
17-10 SUBCHAPTER B. PUBLIC SECURITIES [REVENUE BONDS] FOR
17-11 UTILITY SYSTEMS, PARKS, OR POOLS
17-12 Sec. 1502.051. AUTHORITY TO ISSUE PUBLIC SECURITIES. (a)
17-13 The governing body of a municipality may provide funds to acquire,
17-14 purchase, construct, improve, renovate, enlarge, or equip property,
17-15 buildings, structures, facilities, or related infrastructure for:
17-16 (1) a utility system;
17-17 (2) a park; or
17-18 (3) a swimming pool.
17-19 (b) In connection with exercising the authority to provide
17-20 funds for the purposes described by Subsection (a)(1), the
17-21 governing body of a municipality may provide funds to acquire,
17-22 purchase, or otherwise obtain any interest in property, including
17-23 additional water or riparian rights.
17-24 (c) The governing body of a municipality may issue public
17-25 securities and incur obligations under contracts in accordance with
17-26 this chapter for any purpose authorized by law in connection with
17-27 providing funds for a purpose described by Subsection (a) or (b)
18-1 [DEFINITIONS. In this subchapter:]
18-2 [(1) "Encumbered facility" means a utility system,
18-3 sanitary disposal system, park, or swimming pool encumbered under
18-4 this subchapter.]
18-5 [(2) "Utility system" means an electric, water, sewer,
18-6 or natural gas system].
18-7 Sec. 1502.052. [AUTHORITY TO BUILD, PURCHASE, OR ENCUMBER
18-8 UTILITY SYSTEM, SANITARY DISPOSAL EQUIPMENT, PARK, OR POOL. (a) A
18-9 municipality may:]
18-10 [(1) build, purchase, or encumber a municipal utility
18-11 system, sanitary disposal equipment, a park, or a swimming pool;]
18-12 [(2) encumber anything acquired or to be acquired that
18-13 relates to a municipal utility system, sanitary disposal equipment,
18-14 a park, or a pool;]
18-15 [(3) purchase additional water powers or riparian
18-16 rights; or]
18-17 [(4) improve, enlarge, extend, or repair a municipal
18-18 utility system, sanitary disposal equipment, a park, or a pool.]
18-19 [(b) A municipality may encumber one or more municipal
18-20 utility systems, items of sanitary disposal equipment, parks, or
18-21 pools to build, purchase, improve, extend, or repair the same or
18-22 another municipal utility system, item of sanitary disposal
18-23 equipment, park, or pool.]
18-24 [Sec. 1502.053. AUTHORITY TO ISSUE BONDS, NOTES, OR
18-25 WARRANTS. A municipality may issue bonds, notes, or warrants to
18-26 provide money to build, purchase, improve, enlarge, extend, or
18-27 repair a facility described by Section 1502.052.]
19-1 [Sec. 1502.054.] PLEDGE OF REVENUE. (a) The governing body
19-2 of a municipality may pledge to the payment of any public
19-3 securities issued or any obligations incurred under Section
19-4 1502.051(c) all or any part of the revenue of:
19-5 (1) a utility system;
19-6 (2) a park; or
19-7 (3) a swimming pool.
19-8 (b) The governing body of a municipality may grant a lien on
19-9 the revenue pledged under Subsection (a). The lien has the
19-10 priority determined by the governing body, subject to the
19-11 provisions of Section 1502.056 [A municipality may pledge the
19-12 revenue and encumber the franchise of a facility described by
19-13 Section 1502.052 to secure the payment of obligations issued under
19-14 this subchapter].
19-15 Sec. 1502.053 [1502.055]. GRANT OF FRANCHISE. As additional
19-16 security for public securities issued or obligations incurred under
19-17 this chapter [the encumbrance], the municipality by the terms of
19-18 the encumbrance may grant a purchaser under sale or foreclosure a
19-19 franchise to operate the encumbered utility system, park, or pool
19-20 [facility or property] for a term not to exceed 20 years from the
19-21 date of purchase, subject to all laws regulating the operation of
19-22 the utility system, park, or pool [same then] in force at the time
19-23 of the sale or foreclosure.
19-24 Sec. 1502.054 [1502.056]. OBLIGATIONS NOT PAYABLE FROM
19-25 TAXES. (a) A public security issued or an [An] obligation
19-26 incurred [issued] under this chapter [subchapter]:
19-27 (1) is not a debt of the municipality;
20-1 (2) may be a charge only on the encumbered utility
20-2 system, park, or pool [facility or property]; and
20-3 (3) may not be included in determining the
20-4 municipality's power to issue public securities [bonds] for any
20-5 purpose authorized by law.
20-6 (b) Each public security [contract, bond, note,] or other
20-7 evidence of indebtedness issued or included under this chapter
20-8 [subchapter] must contain the following provision: "The holder of
20-9 this obligation is not entitled to demand payment of this
20-10 obligation out of any money raised by taxation."
20-11 Sec. 1502.055 [1502.057]. ELECTION. (a) Unless authorized
20-12 by a majority vote of the qualified voters of the municipality, a
20-13 municipality may not[:]
20-14 [(1) encumber a utility system, park, or swimming pool
20-15 for more than $10,000 except to:]
20-16 [(A) obtain money to acquire, construct,
20-17 improve, extend, or repair a utility system, park, or pool; or]
20-18 [(B) refund existing debt that was authorized by
20-19 law for a purpose stated in Paragraph (A); or]
20-20 [(2)] sell a utility system, park, or pool.
20-21 (b) The governing body of the municipality shall hold an
20-22 election under this section in the manner provided for bond
20-23 elections in the municipality.
20-24 (c) [The encumbrances authorized by this section apply only
20-25 to bonds payable from revenue derived from the encumbered system.]
20-26 [(d)] This section does not apply to the sale of an
20-27 unencumbered natural gas system owned by a municipality with a
21-1 population of more than 1.2 million.
21-2 Sec. 1502.056 [1502.058]. OPERATING EXPENSES AS FIRST LIEN.
21-3 (a) If the revenue of a utility system, park, or swimming pool
21-4 secures the payment of public securities issued or obligations
21-5 incurred under this chapter [is encumbered under this subchapter],
21-6 each expense of operation and maintenance, including all salaries,
21-7 labor, materials, interest, repairs and extensions necessary to
21-8 provide efficient service, and each proper item of expense, is a
21-9 first lien against that revenue.
21-10 (b) An expense for a repair or extension is a first lien
21-11 only if, in the judgment of the governing body of the municipality,
21-12 the repair or extension is necessary to:
21-13 (1) keep the plant or utility system in operation and
21-14 provide adequate service to the municipality and its residents; or
21-15 (2) respond to a physical accident or condition that
21-16 would otherwise impair the original securities.
21-17 (c) A contract between a municipality and an issuer, as
21-18 defined by Section 1201.002, under which the municipality obtains
21-19 from the issuer or the issuer provides part or all of the
21-20 facilities or services of a utility system to the municipality may
21-21 provide that payments made by the municipality from the revenue of
21-22 the utility system are an operating expense of the municipality's
21-23 utility system.
21-24 Sec. 1502.057 [1502.059]. CHARGES FOR SERVICES. (a) A
21-25 municipality shall impose and collect charges for services provided
21-26 by a utility [an encumbered] system in amounts at least sufficient
21-27 to pay:
22-1 (1) all operating, maintenance, depreciation,
22-2 replacement, improvement, and interest charges in connection with
22-3 the utility [encumbered] system;
22-4 (2) for an interest and sinking fund sufficient to pay
22-5 any public securities [bonds] issued or obligations incurred for
22-6 any purpose described by Section 1502.002 relating to the utility
22-7 system [to purchase, construct, or improve the encumbered system];
22-8 and
22-9 (3) any outstanding debt against the system.
22-10 (b) The rates charged for services provided by a utility [an
22-11 encumbered] system must be equal and uniform. A municipality may
22-12 not allow any free service except for:
22-13 (1) municipal public schools; or
22-14 (2) buildings and institutions operated by the
22-15 municipality.
22-16 Sec. 1502.058 [1502.060]. LIMITATION ON USE OF REVENUE. (a)
22-17 Except as provided by Subsection (b) or (c), by Section 1502.059,
22-18 or by Section 271.052, Local Government Code [1502.061], a
22-19 municipality may not use the revenue of a utility [an encumbered]
22-20 system, park, or swimming pool to pay any other debt, expense, or
22-21 obligation of the municipality until the debt secured by the
22-22 revenue is finally paid.
22-23 (b) This section does not apply to a payment made in lieu of
22-24 ad valorem taxes previously paid by a private owner of a utility
22-25 [an encumbered] system.
22-26 (c) This section does not apply to a payment made from
22-27 surplus revenue of a utility system, park, or swimming pool, as
23-1 provided by the proceedings authorizing the issuance of public
23-2 securities under this chapter.
23-3 Sec. 1502.059 [1502.061]. TRANSFER OF REVENUE TO GENERAL
23-4 FUND. Notwithstanding Section 1502.058(a) [1502.060(a)] or a
23-5 similar law or municipal charter provision, a municipality and its
23-6 officers and utility trustees may transfer to the municipality's
23-7 general fund and may use for general or special purposes revenue of
23-8 any municipally owned utility system in the amount and to the
23-9 extent authorized in the indenture, deed of trust, or ordinance
23-10 providing for and securing payment of public securities [revenue
23-11 bonds] issued under this chapter [subchapter] or similar law.
23-12 Sec. 1502.060. USE AND INVESTMENT OF PROCEEDS. (a) To the
23-13 extent provided by the proceedings authorizing the issuance of the
23-14 public securities issued under this chapter, a municipality may:
23-15 (1) use proceeds from the sale of public securities
23-16 issued to provide funds for a utility system under this chapter for
23-17 any purpose authorized by Section 1502.051(a)(1) or (b);
23-18 (2) use proceeds from the sale of public securities
23-19 issued to provide funds for a park under this chapter for any
23-20 purpose authorized by Section 1502.051(a)(2); or
23-21 (3) use proceeds from the sale of public securities to
23-22 provide funds for a swimming pool under this chapter for any
23-23 purpose authorized by Section 1502.051(a)(3).
23-24 (b) A municipality may use proceeds from the sale of public
23-25 securities issued under this chapter to pay interest on the public
23-26 securities during the period of the acquisition or construction of
23-27 any facilities to be provided through the issuance of the public
24-1 securities, and for one year after completion of the acquisition or
24-2 construction of the facilities.
24-3 (c) A municipality may use proceeds from the sale of public
24-4 securities issued under this chapter to:
24-5 (1) provide a reserve for the payment of debt service
24-6 on the public securities;
24-7 (2) provide a reserve for extraordinary repairs and
24-8 replacements; or
24-9 (3) obtain a credit agreement as provided by Section
24-10 1502.064.
24-11 (d) A municipality may invest proceeds from the sale of
24-12 public securities issued under this chapter to the extent and in
24-13 the manner provided in the proceedings authorizing the issuance of
24-14 the public securities.
24-15 [Sec. 1502.062. USE OF BOND PROCEEDS: MUNICIPALITY WITH
24-16 POPULATION OF 75,000 OR MORE. (a) A municipality with a
24-17 population of 75,000 or more, in issuing bonds under this
24-18 subchapter, as part of the cost of constructing new electric
24-19 utility plant facilities may set aside and use a portion of the
24-20 bond proceeds, to the extent provided in the ordinance authorizing
24-21 the issuance of the bonds:]
24-22 [(1) to pay interest on bonds, the proceeds of which
24-23 are for the construction of the facilities, to the first interest
24-24 payment date after the date the new electric utility facilities are
24-25 estimated to become operational; and]
24-26 [(2) to establish or supplement a reserve fund created
24-27 for the benefit of the bond holders.]
25-1 [(b) The bond proceeds, an interest and sinking fund, or a
25-2 reserve fund, pending their use for their intended purposes, may be
25-3 invested in any security, interest-bearing certificate, or time
25-4 deposit as specified in the proceedings authorizing the issuance of
25-5 the bonds.]
25-6 [(c) This section controls over any other state law or any
25-7 municipal charter.]
25-8 [Sec. 1502.063. REVENUE BONDS TO IMPROVE WATERWORKS SYSTEM:
25-9 TWO SERIES WITH DIFFERENT SECURITY. (a) For the purpose of
25-10 improving, enlarging, or extending a waterworks system, a
25-11 municipality may issue revenue bonds under this subchapter in two
25-12 series as follows:]
25-13 [(1) one series payable from and secured by a pledge
25-14 of all or part of the proceeds of a contract between the
25-15 municipality and a private corporation under which the municipality
25-16 agrees to sell water to the corporation for specified payments; and]
25-17 [(2) the other series payable from and secured by a
25-18 pledge of the net revenue of the waterworks system or waterworks
25-19 and sewer systems other than the proceeds of the water supply
25-20 contract.]
25-21 [(b) The ordinance authorizing the issuance of the bonds may
25-22 provide that the entire cost of operation, maintenance, and repair
25-23 of the system or systems shall be paid from the revenue of the
25-24 system or systems other than the proceeds of the water supply
25-25 contract.]
25-26 [(c) A municipality may contract to sell water to a private
25-27 corporation on terms prescribed by the municipality's governing
26-1 body for a period not to exceed 40 years.]
26-2 Sec. 1502.061 [1502.064]. ADDITIONAL OBLIGATIONS TO IMPROVE
26-3 OR EXTEND UTILITY SYSTEM. (a) A municipality that has outstanding
26-4 public securities [bonds] secured by the net revenue of a utility
26-5 system [one or more of its utility systems] may issue additional
26-6 public securities [bonds] or incur other obligations for a purpose
26-7 described by Section 1502.051(a)(1) or (b) [to improve or extend
26-8 one or more of the utility systems. The additional bonds may be
26-9 payable from the revenue from the operation of the utility system
26-10 or systems that is pledged to the payment of outstanding bonds].
26-11 (b) Except as provided by Subsection (c), public securities
26-12 [bonds] issued under Subsection (a) constitute a lien on the
26-13 revenue of the affected system:
26-14 (1) in the order of issuance; and
26-15 (2) inferior to a lien securing payment of outstanding
26-16 public securities, as determined by the governing body of the
26-17 municipality [bonds].
26-18 (c) A municipality may issue additional public securities
26-19 [bonds or series of bonds] under this section on a parity and of
26-20 equal dignity with the outstanding public securities [bonds] if the
26-21 ordinance, deed of trust, or indenture of trust authorizing or
26-22 securing the outstanding public securities [bonds] provides for the
26-23 subsequent issuance of additional parity public securities [bonds],
26-24 subject to that ordinance, deed of trust, or indenture of trust.
26-25 (d) To the extent of a conflict or inconsistency between
26-26 this section and another law, this section controls.
26-27 Sec. 1502.062. MATURITY. A public security issued under
27-1 this chapter must mature not later than 50 years after its date.
27-2 Sec. 1502.063. ADDITIONAL AUTHORITY OF MUNICIPALITY WITH A
27-3 POPULATION OF 50,000 OR MORE. Notwithstanding any other provision
27-4 of this chapter, in connection with the issuance of public
27-5 securities under this chapter, the governing body of a municipality
27-6 with a population of 50,000 or more may exercise any authority
27-7 granted to a governing body under Chapter 1371 in connection with
27-8 the issuance of obligations under that chapter.
27-9 Sec. 1502.064. CREDIT AGREEMENT FOR RESERVE FUND. (a) The
27-10 governing body of a municipality may provide that in lieu of or in
27-11 addition to providing a cash reserve, a credit agreement, as
27-12 defined by Section 1371.001, may be used to provide the reserve.
27-13 (b) A credit agreement obtained to provide a reserve must be
27-14 submitted to the attorney general for examination and approval.
27-15 After approval by the attorney general, the credit agreement is
27-16 incontestable in any court or other forum for any reason and is a
27-17 valid and binding obligation of the municipality in accordance with
27-18 its terms for all purposes.
27-19 Sec. 1502.065. REFUNDING BONDS. A municipality may issue
27-20 public securities in the manner provided by applicable law to
27-21 refund or otherwise refinance any obligation incurred under this
27-22 chapter to which revenue has been pledged.
27-23 [Sec. 1502.065. LIEN PRIORITY: REFUNDING BONDS. (a) This
27-24 section applies only to refunding bonds issued by a municipality
27-25 that are payable from and secured by a pledge of the revenue of one
27-26 or more of the municipality's utility systems.]
27-27 [(b) Refunding bonds described by Subsection (a) have a
28-1 priority of lien on the revenue pledged that is on a parity with
28-2 the lien priority of the bonds being refunded.]
28-3 [(c) The lien of all refunding bonds issued in a single
28-4 issue to refund two or more consecutive series or issues of bonds
28-5 is equal if all of the outstanding bonds of those series or issues
28-6 of bonds are surrendered in exchange for the new refunding bonds.]
28-7 [(d) Refunding bonds may not have a lien priority higher
28-8 than the highest lien priority of any series or issue of bonds
28-9 being refunded.]
28-10 [Sec. 1502.066. BONDS FOR ACQUISITION OF HYDROELECTRIC
28-11 GENERATING FACILITIES. (a) A municipality that owns an electric
28-12 distribution system, regardless of whether the municipality also
28-13 owns a facility for the generation of electricity, may issue bonds
28-14 under this subchapter to purchase and improve, maintain, and
28-15 operate a privately owned facility for the generation of
28-16 hydroelectric power having an installed capacity of not less than
28-17 2,000 kilowatts that is located within five miles of the
28-18 municipality's boundaries, including any land, flowage right or
28-19 water right, and related generating and transmission equipment and
28-20 lines. The municipality may purchase the facility with the
28-21 proceeds of the bonds or by issuing the bonds in exchange for the
28-22 facility but only if authorized at an election held in accordance
28-23 with Section 1502.057.]
28-24 [(b) For the purpose of the issuance and payment of the
28-25 bonds, a hydroelectric generating facility acquired under this
28-26 section may be regarded as an independent electric system that,
28-27 together with its revenue, may be pledged to the payment of the
29-1 bonds without any pledge of the municipality's other electric
29-2 facilities or the revenue of those facilities.]
29-3 [(c) A municipality that acquires a hydroelectric generating
29-4 facility under this section shall perform any contract in existence
29-5 at the time of acquisition for the sale of electricity generated by
29-6 the facility unless the contract is canceled by voluntary agreement
29-7 of the municipality and each party entitled to purchase
29-8 electricity under the contract.]
29-9 [(d) Subject to the rights of any party to an existing
29-10 contract, the municipality shall take for distribution by its
29-11 distribution system the part of the output of the acquired
29-12 generating facility needed for distribution. The municipality in
29-13 the proceedings authorizing the bonds may covenant, as the
29-14 municipality considers proper, for the use of the electricity and
29-15 for payment for the electricity from the revenue from the resale of
29-16 the electricity.]
29-17 [(e) The municipality may enter into long-term or short-term
29-18 contracts to sell to other purchasers any electricity generated by
29-19 the facility that the municipality does not distribute by its
29-20 system to its consumers.]
29-21 Sec. 1502.066 [1502.067]. RECORDS. The mayor of the
29-22 municipality shall establish and maintain a complete system of
29-23 records for a utility system, park, or swimming pool the revenue of
29-24 which is encumbered under this chapter [subchapter] that:
29-25 (1) shows any [the] free service provided and the
29-26 value of the free service; and
29-27 (2) shows separately the amounts spent and the amounts
30-1 set aside for operation, salaries, labor, materials, repairs,
30-2 maintenance, depreciation, replacements, extensions, interest, and
30-3 the creation of a sinking fund to pay the public securities [bonds]
30-4 and debt.
30-5 Sec. 1502.067 [1502.068]. RECORDS: NONCASH BASIS. (a) A
30-6 municipality may maintain its records on facilities under this
30-7 chapter [subchapter] or any other municipal records on a basis
30-8 other than a cash basis to the extent permitted or required under
30-9 generally accepted accounting principles for a governmental entity.
30-10 (b) A change in accounting methods does not affect the terms
30-11 of an existing contract with respect to the power to issue
30-12 additional obligations payable from the facilities.
30-13 Sec. 1502.068 [1502.069]. ANNUAL REPORT. (a) Annually, on
30-14 the date determined by the governing body of the municipality [Not
30-15 later than February 1 of each year], the superintendent or manager
30-16 of a utility system, park, or pool or another person designated by
30-17 the governing body [plant the revenue of which is encumbered under
30-18 this subchapter] shall file with the mayor and governing body of
30-19 the municipality a detailed report of the operation of the system,
30-20 park, or pool [plant] for the preceding 12-month period specified
30-21 by the governing body [year ending on the preceding January 1].
30-22 (b) The report must show the total amount of money collected
30-23 and the balance due, and the total disbursements made and the
30-24 amounts remaining unpaid, resulting from the operation of the
30-25 utility system, park, or pool [plant] during that year.
30-26 Sec. 1502.069 [1502.070]. OFFENSES; PENALTY. (a) A mayor
30-27 commits an offense if the mayor fails to:
31-1 (1) establish the system of records required by
31-2 Section 1502.066 [1502.067] before the 91st day after the date the
31-3 utility system, park, or pool [plant] is completed; or
31-4 (2) maintain the system of records required by Section
31-5 1502.066 [1502.067].
31-6 (b) The person responsible for filing a report required by
31-7 Section 1502.068 [A superintendent or manager of a plant] commits
31-8 an offense if the person [superintendent or manager] fails to
31-9 timely file the [a] report [required by Section 1502.069].
31-10 (c) An offense under this section is a misdemeanor
31-11 punishable by a fine of not less than $100 or more than $1,000.
31-12 Sec. 1502.070 [1502.071]. MANAGEMENT AND CONTROL OF UTILITY
31-13 SYSTEM [ENCUMBERED FACILITY]. (a) Management and control of a
31-14 utility system may be vested in [The contract under which a
31-15 facility is encumbered may give management and control of the
31-16 encumbered facility during the time the facility is encumbered to]:
31-17 (1) the municipality's governing body; or
31-18 (2) a board of trustees named in the proceedings
31-19 adopted by the municipality [encumbrance] and consisting of not
31-20 more than five members, one of whom must be the mayor of the
31-21 municipality.
31-22 (b) The compensation of the trustees shall be specified by
31-23 the proceedings [contract of encumbrance]. The compensation may
31-24 not exceed five percent of the [encumbered facility's] gross
31-25 receipts of the utility system in any year.
31-26 (c) The proceedings of the municipality [contract of
31-27 encumbrance] may specify the terms of office of the board of
32-1 trustees, their powers and duties, the manner of exercising those
32-2 powers and duties, the election of successor trustees, and any
32-3 matter relating to the organization and duties of the board. On
32-4 any matter not covered by the proceedings [contract], the board of
32-5 trustees is governed by the laws and rules governing the
32-6 municipality's governing body, to the extent applicable.
32-7 Sec. 1502.071 [1502.072]. RULES. (a) The governing body or
32-8 board of trustees having management and control of a utility system
32-9 [an encumbered facility] may adopt rules to:
32-10 (1) govern the provision of and payment for service;
32-11 and
32-12 (2) provide for the discontinuance of service for
32-13 failure to pay when due until payment is made.
32-14 (b) The governing body may provide penalties for:
32-15 (1) the violation of a rule adopted under this
32-16 section;
32-17 (2) the use of service without the consent or
32-18 knowledge of the authorities in charge; or
32-19 (3) any interference with, trespass on, or injury to a
32-20 system or appliance or the premises on which the system or
32-21 appliance is located.
32-22 Sec. 1502.072 [1502.073]. TRUSTEE. The proceedings adopted
32-23 by the governing body of a municipality [A contract under which a
32-24 facility is encumbered] may provide for:
32-25 (1) the selection of a trustee to sell the encumbered
32-26 facility on default in the payment of principal or interest under
32-27 the contract;
33-1 (2) the selection of a successor trustee if the
33-2 original trustee is disqualified or fails to act; and
33-3 (3) the collection by the trustee of a fee of not more
33-4 than five percent of the principal.
33-5 Sec. 1502.073 [1502.074]. NOTICE TO GOVERNING BODY BEFORE
33-6 FORECLOSURE OR OTHER ACTION. (a) Unless written notice is given
33-7 to the governing body of the municipality and to any board of
33-8 trustees in accordance with this section that there is a default in
33-9 payment of any installment of principal of or interest on an
33-10 obligation issued under this subchapter and that payment has been
33-11 demanded:
33-12 (1) a collection fee may not accrue;
33-13 (2) a foreclosure proceeding may not be begun in a
33-14 court or through a trustee; and
33-15 (3) an option to mature any part of the obligation
33-16 because of the default may not be exercised.
33-17 (b) A notice under Subsection (a) must be sent by prepaid
33-18 registered mail to each member of the governing body and each
33-19 member of any board of trustees, addressed to the member at the
33-20 post office in the municipality.
33-21 (c) An action described by Subsection (a) may not be taken
33-22 before the 91st day after the date the notice is mailed.
33-23 (d) A payment of a delinquent installment of principal and
33-24 interest that is paid before the expiration of the period
33-25 prescribed by Subsection (c) and that is accompanied by a payment
33-26 of interest as prescribed in the contract, at a rate not to exceed
33-27 10 percent per year, from the date of default until the date of
34-1 payment, has the same effect as if paid on the date the installment
34-2 was originally due.
34-3 [Sec. 1502.075. APPROPRIATION OF UTILITY SYSTEM INCOME:
34-4 MUNICIPALITY WITH POPULATION OF 12,410 OR LESS. (a) This section
34-5 applies only to a municipality that:]
34-6 [(1) has a population of 12,410 or less; and]
34-7 [(2) owns and operates its light system and waterworks
34-8 system.]
34-9 [(b) In the annual appropriation of the income and revenue
34-10 of any public utility system, service, or enterprise, the governing
34-11 body of a municipality that has adopted this section as provided by
34-12 Subsections (c) and (d) shall provide for appropriations in the
34-13 following order:]
34-14 [(1) the maintenance and operating expenses of the
34-15 system, service, or enterprise;]
34-16 [(2) the principal and interest of any debt
34-17 outstanding against the system, service, or enterprise; and]
34-18 [(3) any appropriations the remaining income and
34-19 revenue of the system, service, or enterprise may justify, to be
34-20 appropriated among municipal departments or otherwise for public
34-21 uses as the governing body considers best.]
34-22 [(c) At a special election called for the purpose, the
34-23 governing body of a municipality may submit the question of
34-24 adoption of this section to the municipality's qualified voters.
34-25 The election shall be held as nearly as possible in compliance with
34-26 the laws applying to regular municipal elections.]
34-27 [(d) If a majority of the voters voting in the election
35-1 favor adoption:]
35-2 [(1) the governing body shall enter the election
35-3 result in its minutes; and]
35-4 [(2) this section applies to the municipality
35-5 effective at the time the result is entered in the minutes.]
35-6 [(e) This section does not:]
35-7 [(1) restrict a municipality's authority under other
35-8 state law to issue bonds, notes, or warrants payable from revenue
35-9 other than taxes; or]
35-10 [(2) affect the applicability of Section 1502.057.]
35-11 Sec. 1502.074 [1502.076]. CIVIL ENFORCEMENT. A person who
35-12 resides in a municipality and is a taxpayer or holder of a public
35-13 security issued or an obligation incurred [issued] under this
35-14 chapter [subchapter] and secured by the [encumbered] revenue of the
35-15 municipality's utility system, park, or swimming pool as provided
35-16 by this chapter is entitled to enforce this chapter [subchapter] by
35-17 appropriate civil action in a district court in the county in which
35-18 the municipality is located.
35-19 [Sec. 1502.077. CONFLICT WITH MUNICIPAL CHARTER. To the
35-20 extent of a conflict between this subchapter and a municipal
35-21 charter, this subchapter controls.]
35-22 SECTION 23. Section 1506.164, Government Code, is amended
35-23 to read as follows:
35-24 Sec. 1506.164. CONFLICT OR INCONSISTENCY WITH OTHER LAW.
35-25 (a) When bonds are issued under this subchapter, to the extent of
35-26 any conflict or inconsistency between this subchapter and another
35-27 law, this subchapter controls.
36-1 (b) This subchapter is cumulative of all other law on the
36-2 subject, but this subchapter is wholly sufficient authority within
36-3 itself for the issuance of bonds and the performance of the other
36-4 acts and procedures authorized by this subchapter without reference
36-5 to any other law or any restrictions or limitations contained in
36-6 that law, except as specifically provided by this subchapter.
36-7 SECTION 24. Section 152.001(a), Water Code, is amended to
36-8 read as follows:
36-9 (a) This chapter applies only to a river authority that,
36-10 directly or through a corporation created under Section 152.051, is
36-11 engaged in the distribution and sale of electric energy to the
36-12 public.
36-13 SECTION 25. Section 152.052, Water Code, is amended by
36-14 adding Subsection (d) to read follows:
36-15 (d) A corporation created under Section 152.051 and the
36-16 creating river authority may:
36-17 (1) share officers, directors, employees, equipment,
36-18 and facilities; and
36-19 (2) provide goods or services to each other at cost
36-20 without the requirement of competitive bidding.
36-21 SECTION 26. Subchapter B, Chapter 152, Water Code, is
36-22 amended by adding Sections 152.056 and 152.057 to read as follows:
36-23 Sec. 152.056. TRANSFER OF RIVER AUTHORITY ASSETS TO
36-24 CORPORATION. Notwithstanding any other law, the board of directors
36-25 of a river authority may sell, lease, loan, or otherwise transfer
36-26 some, all, or substantially all of the electric generation property
36-27 of the river authority to a corporation created under Section
37-1 152.051. The property transfer must be made under terms approved
37-2 by the board of directors of the river authority.
37-3 Sec. 152.057. APPLICATION OF OTHER LAW TO RIVER AUTHORITY.
37-4 Reference in any other law to a river authority that is engaged in
37-5 the distribution and sale of electric energy to the public includes
37-6 a river authority that has created a corporation under Section
37-7 152.051 that is engaged in the distribution and sale of electric
37-8 energy to the public.
37-9 SECTION 27. Section 152.156, Water Code, is amended to read
37-10 as follows:
37-11 Sec. 152.156. PARTICIPATION IN PROGRAM BY PERSON OTHER THAN
37-12 RIVER AUTHORITY. An economic development program may involve the
37-13 granting or lending of money, services, or property to a person
37-14 engaged in an economic development activity[, including:]
37-15 [(1) a public fire-fighting organization;]
37-16 [(2) a governmental body;]
37-17 [(3) a nonprofit corporation;]
37-18 [(4) a local or regional development council; or]
37-19 [(5) any other nonprofit or noncommercial
37-20 organization].
37-21 SECTION 28. Section 152.201, Water Code, is amended to read
37-22 as follows:
37-23 Sec. 152.201. AUTHORITY TO ISSUE OBLIGATIONS. (a) A river
37-24 authority may issue revenue bonds, notes, or other obligations for
37-25 a purpose authorized by:
37-26 (1) this chapter; or
37-27 (2) another law, if the purpose relates to the
38-1 generation, transmission, or distribution of electricity.
38-2 (b) This chapter constitutes full authority for a river
38-3 authority to issue revenue bonds and other obligations without
38-4 reference to any other law.
38-5 SECTION 29. Chapter 152, Water Code, is amended by adding
38-6 Subchapter G to read as follows:
38-7 SUBCHAPTER G. ELECTRIC TRANSMISSION SERVICES AND
38-8 FACILITIES OF RIVER AUTHORITY
38-9 Sec. 152.301. ELECTRIC TRANSMISSION SERVICES AND FACILITIES.
38-10 A river authority may:
38-11 (1) provide transmission services, as defined by
38-12 Section 31.002, Utilities Code, on a regional basis to any eligible
38-13 transmission customer at any location within or outside the
38-14 boundaries of the river authority; and
38-15 (2) acquire, finance, lease, construct, rebuild,
38-16 operate, or sell electric transmission facilities at any location
38-17 within or outside the boundaries of the river authority.
38-18 Sec. 152.302. LIMITATION ON ELECTRIC TRANSMISSION
38-19 FACILITIES. This subchapter does not authorize a river authority
38-20 to construct electric transmission facilities for an ultimate
38-21 consumer of electricity to enable that consumer to bypass the
38-22 transmission or distribution facilities of its existing provider.
38-23 SECTION 30. Section 418.107(d), Government Code, is amended
38-24 to read as follows:
38-25 (d) A political subdivision may issue time warrants for the
38-26 payment of the cost of any equipment, construction, acquisition, or
38-27 any improvements for carrying out this chapter. The warrants shall
39-1 be issued in accordance with Chapter 252, Local Government Code, in
39-2 the case of a municipality, or Subchapter C, Chapter 262, Local
39-3 Government Code, in the case of a county [the Bond and Warrant Law
39-4 of 1931 (Article 2368a, Vernon's Texas Civil Statutes)]. Time
39-5 warrants issued for financing permanent construction or improvement
39-6 for emergency management purposes are subject to the right of the
39-7 voters to require a referendum vote under Section 252.045 or
39-8 262.029, Local Government Code, as applicable [4 of that law].
39-9 SECTION 31. Section 1433.022(b), Government Code, is amended
39-10 to read as follows:
39-11 (b) Land previously acquired by an issuer by eminent domain
39-12 may be sold, leased, or otherwise used in accordance with this
39-13 chapter, if the governing body determines that:
39-14 (1) the use will not interfere with the purpose for
39-15 which that land was originally acquired or that the land is no
39-16 longer needed for that purpose;
39-17 (2) at least seven years have elapsed since the land
39-18 was acquired by eminent domain; and
39-19 (3) the land was not acquired for park purposes unless
39-20 the sale or lease of that land has been approved at an election
39-21 held under Section 1502.055 [1502.057].
39-22 SECTION 32. Sections 263.026(b) and (i), Health and Safety
39-23 Code, are amended to read as follows:
39-24 (b) Payments for the sites or buildings shall be made from
39-25 the county permanent improvement fund. To pay for a site or
39-26 building for a health unit or center, the commissioners court may:
39-27 (1) issue negotiable bonds and impose taxes to pay the
40-1 principal of and interest on the bonds in accordance with Subtitles
40-2 A and C, Title 9, Government Code [Chapter 1, Title 22, Revised
40-3 Statutes];
40-4 (2) issue time warrants and impose taxes to pay the
40-5 principal of and interest on the time warrants in accordance with
40-6 Subchapter C, Chapter 262, Local Government Code [the Bond and
40-7 Warrant Law of 1931 (Article 2368a, Vernon's Texas Civil
40-8 Statutes)]; or
40-9 (3) by order issue certificates of indebtedness and
40-10 impose taxes to pay the principal of and interest on the
40-11 certificates in accordance with this section.
40-12 (i) The commissioners court may issue refunding bonds to
40-13 refund time warrants issued under this section[, subject to the
40-14 Bond and Warrant Law of 1931 (Article 2368a, Vernon's Texas Civil
40-15 Statutes)].
40-16 SECTION 33. Section 264.033, Health and Safety Code, is
40-17 amended to read as follows:
40-18 Sec. 264.033. TIME WARRANTS. The authority may issue time
40-19 warrants in the manner in which a commissioners court may issue
40-20 time warrants under Subchapter C, Chapter 262, Local Government
40-21 Code [the Bond and Warrant Law of 1931 (Article 2368a, Vernon's
40-22 Texas Civil Statutes)].
40-23 SECTION 34. Section 383.013(c), Health and Safety Code, is
40-24 amended to read as follows:
40-25 (c) Any [The Bond and Warrant Law of 1931 (Article 2368a,
40-26 Vernon's Texas Civil Statutes) and any other] law requiring
40-27 competitive bids does [do] not apply to a construction contract for
41-1 a project authorized by this chapter.
41-2 SECTION 35. Section 43.074(f), Local Government Code, is
41-3 amended to read as follows:
41-4 (f) The municipality may issue refunding bonds in its own
41-5 name to refund bonds, warrants, or other obligations, including
41-6 unpaid accrued interest on an obligation, that is assumed by the
41-7 municipality. The refunding bonds must be issued in the manner
41-8 provided by Chapter 1207, Government Code [the Bond and Warrant Law
41-9 of 1931 (Article 2368a, Vernon's Texas Civil Statutes), except that
41-10 a notice of the intention to issue the bonds is not required and a
41-11 right of referendum does not exist].
41-12 SECTION 36. Section 43.075(h), Local Government Code, is
41-13 amended to read as follows:
41-14 (h) If a district bond, warrant, or other obligation payable
41-15 in whole or in part from property taxes is assumed under this
41-16 section by the municipality, the governing body shall levy and
41-17 collect taxes on all taxable property in the municipality in an
41-18 amount sufficient to pay the principal of and interest on the bond,
41-19 warrant, or other obligation as it becomes due and payable. The
41-20 municipality may issue refunding bonds or warrants to refund bonds,
41-21 warrants, or other obligations, including unpaid earned interest on
41-22 them, that is assumed by the municipality. The refunding bonds or
41-23 warrants must be issued in the manner provided by Chapter 1207,
41-24 Government Code [the Bond and Warrant Law of 1931 (Article 2368a,
41-25 Vernon's Texas Civil Statutes), except a notice of the intention to
41-26 issue the bonds or warrants is not required and a right of
41-27 referendum does not exist]. A refunding bond must bear interest at
42-1 the same rate or at a lower rate than that borne by the refunded
42-2 obligation unless it is shown mathematically that a different rate
42-3 results in a savings in the total amount of interest to be paid.
42-4 SECTION 37. Sections 43.076(h) and (i), Local Government
42-5 Code, are amended to read as follows:
42-6 (h) The municipality may issue general obligation refunding
42-7 bonds in its own name to refund in whole or in part its pro rata
42-8 share of any outstanding district bonds, warrants, or other
42-9 obligations, including unpaid earned interest on them, that are
42-10 assumed by the municipality and that are payable in whole or in
42-11 part from property taxes. The refunding bonds must be issued in
42-12 the manner provided by Chapter 1207, Government Code [the Bond and
42-13 Warrant Law of 1931 (Article 2368a, Vernon's Texas Civil Statutes),
42-14 except that a notice of the intention to issue the refunding bonds
42-15 is not required and a right of referendum does not exist].
42-16 Refunding bonds must bear interest at the same rate or at a lower
42-17 rate than that borne by the refunded obligations unless it is shown
42-18 mathematically that a different rate results in a savings in the
42-19 total amount of interest to be paid.
42-20 (i) The municipality may issue revenue refunding bonds or
42-21 general obligation refunding bonds in its own name to refund in
42-22 whole or in part its pro rata share of any outstanding district
42-23 bonds, warrants, or other obligations, including unpaid earned
42-24 interest on them, that are assumed by the municipality and that are
42-25 payable solely from net revenues. The municipality may combine the
42-26 different issues or the bonds of different issues of both district
42-27 and municipal revenue bonds, warrants, or other obligations into
43-1 one or more series of revenue refunding bonds. The municipality
43-2 may pledge the net revenues of the district utility system or
43-3 property to the payment of those bonds, warrants, or other
43-4 obligations. The municipality may also combine the different
43-5 issues or the bonds of the different issues into one or more series
43-6 of general obligation refunding bonds. An originally issued
43-7 municipal revenue bond may not be refunded into municipal general
43-8 obligation refunding bonds. Except as otherwise provided by this
43-9 section, Subchapter B, Chapter 1502, Government Code, applies
43-10 [Articles 1111-1118, Vernon's Texas Civil Statutes, apply] to the
43-11 revenue refunding bonds, but an election for the issuance of the
43-12 bonds is not required. Revenue [In the issuance of revenue]
43-13 refunding bonds or general [, the municipality has the benefits of
43-14 and may exercise the authority granted under Chapter 541, Acts of
43-15 the 51st Legislature, Regular Session, 1949 (Article 1118n-5,
43-16 Vernon's Texas Civil Statutes). The provisions of that Act
43-17 relating to outstanding revenue bonds apply to outstanding revenue
43-18 bonds assumed by municipalities under this section. General]
43-19 obligation refunding bonds must be issued in the manner provided by
43-20 Chapter 1207, Government Code [the Bond and Warrant Law of 1931
43-21 (Article 2368a, Vernon's Texas Civil Statutes), except that a
43-22 notice of the intention to issue the bonds is not required and a
43-23 right of referendum does not exist]. The revenue refunding bonds
43-24 and the general obligation refunding bonds must bear interest at
43-25 the same rate or at a lower rate than that borne by the refunded
43-26 obligations unless it is shown mathematically that a different rate
43-27 results in a savings in the total amount of interest to be paid.
44-1 SECTION 38. Section 252.045(c), Local Government Code, is
44-2 amended to read as follows:
44-3 (c) The provisions of Subtitles A and C, Title 9, Government
44-4 Code [Chapters 1 and 2, Title 22, Revised Statutes], relating to
44-5 elections for the issuance of municipal bonds and to the issuance,
44-6 approval, registration, and sale of bonds govern the referendum and
44-7 the time warrants to the extent those provisions are consistent
44-8 with this chapter [and Chapter 163, General Laws, Acts of the 42nd
44-9 Legislature, Regular Session, 1931 (Article 2368a, Vernon's Texas
44-10 Civil Statutes)]. However, the time warrants may mature over a
44-11 term exceeding 40 years only if the governing body finds that the
44-12 financial condition of the municipality will not permit payment of
44-13 warrants issued for a term of 40 years or less from taxes that are
44-14 imposed substantially uniformly during the term of the warrants
44-15 [and are payable as provided by Article 2368a for funding bonds].
44-16 SECTION 39. Section 271.042, Local Government Code, is
44-17 amended to read as follows:
44-18 Sec. 271.042. PURPOSE; CONFLICT. (a) It is the purpose of
44-19 this subchapter to provide:
44-20 (1) a procedure for certain financing that is an
44-21 alternative to the more cumbersome procedure under Chapter 252 [of
44-22 this code and the Bond and Warrant Law of 1931 (Article 2368a,
44-23 Vernon's Texas Civil Statutes)]; and
44-24 (2) a new class of securities to be issued and
44-25 delivered within the financial capabilities of an issuer on
44-26 compliance with the procedures prescribed by this subchapter.
44-27 (b) If there is a conflict between a provision of this
45-1 subchapter and a provision of [either] Chapter 252 [of this code or
45-2 the Bond and Warrant Law of 1931 (Article 2368a, Vernon's Texas
45-3 Civil Statutes)], an issuer may use either provision, and it is not
45-4 necessary for the governing body to designate the law under which
45-5 action is being taken.
45-6 SECTION 40. Section 280.001(c), Local Government Code, is
45-7 amended to read as follows:
45-8 (c) For the purpose of acquiring land under this section, a
45-9 municipality or county may appropriate any available funds and
45-10 issue time warrants in payment. If time warrants are issued, the
45-11 provisions of Chapter 252 or[,] Subchapter C of Chapter 262 [, and
45-12 the Bond and Warrant Law of 1931 (Article 2368a, Vernon's Texas
45-13 Civil Statutes)] shall be followed to the extent applicable.
45-14 SECTION 41. Section 411.008(b), Local Government Code, is
45-15 amended to read as follows:
45-16 (b) The commissioners court shall:
45-17 (1) issue any bonds and impose related taxes in
45-18 compliance with Subtitles A and C, Title 9, Government Code; or
45-19 (2) issue any time warrants in compliance with
45-20 Subchapter C, Chapter 262, and impose related taxes in compliance
45-21 with Chapter 1251 [1253], Government Code.
45-22 SECTION 42. Section 22.053(b), Transportation Code, is
45-23 amended to read as follows:
45-24 (b) The commissioners court of a county that issues time
45-25 warrants under this section shall comply with:
45-26 (1) Subchapter C, Chapter 262, Local Government Code
45-27 [Chapter 163, General Laws, Acts of the 42nd Legislature, Regular
46-1 Session, 1931 (Article 2368a, Vernon's Texas Civil Statutes)],
46-2 regarding:
46-3 (A) [(1)] notice to issue the time warrants; and
46-4 (B) [(2) the levy and collection of taxes in
46-5 payment of the time warrants; and]
46-6 [(3)] the right to a referendum; and
46-7 (2) Chapter 1251, regarding the imposition of taxes
46-8 for payment of the time warrants.
46-9 SECTION 43. Section 367.068(a), Transportation Code, is
46-10 amended to read as follows:
46-11 (a) Sections 252.046, 252.047, and 252.048, Local Government
46-12 Code, [Chapter 1253, Government Code,] and Subchapter B, Chapter
46-13 1502, Government Code, apply, except as provided by Section
46-14 367.051, Section 367.059, or another provision of this subchapter,
46-15 to:
46-16 (1) the purchase of a toll bridge under this
46-17 subchapter;
46-18 (2) the issuance, sale, or delivery of bonds under
46-19 this subchapter;
46-20 (3) the manner of securing payment of the bonds;
46-21 (4) the enforcement of the obligations relating to the
46-22 bonds;
46-23 (5) the rights and remedies of the owners or holders
46-24 of the bonds or of any person acting on their behalf;
46-25 (6) the maintenance or operation of property acquired
46-26 under this subchapter; and
46-27 (7) the accomplishment of any other purpose of this
47-1 subchapter.
47-2 SECTION 44. Section 16.345(b), Water Code, is amended to
47-3 read as follows:
47-4 (b) In addition to any other authority to issue bonds or
47-5 other obligations or incur any debt, a political subdivision other
47-6 than a nonprofit water supply corporation eligible for financial
47-7 assistance under Subchapter K, Chapter 17, of this code may issue
47-8 bonds payable from and secured by a pledge of the revenues derived
47-9 or to be derived from the operation of water supply or sewer
47-10 service systems for the purpose of acquiring, constructing,
47-11 improving, extending, or repairing water supply or sewer
47-12 facilities. The bonds shall be issued in accordance with and a
47-13 political subdivision may exercise the powers granted by:
47-14 (1) Subchapter B, Chapter 1502, Government Code
47-15 [Articles 1111 through 1118, Revised Statutes; Chapters 249 and
47-16 250, Acts of the 51st Legislature, Regular Session, 1949 (Articles
47-17 1111a and 1111b, Vernon's Texas Civil Statutes); Chapter 428, Acts
47-18 of the 52nd Legislature, 1951 (Article 1111c, Vernon's Texas Civil
47-19 Statutes); Chapter 122, Acts of the 43rd Legislature, Regular
47-20 Session, 1933 (Articles 1114a, 1114b, and 1114c, Vernon's Texas
47-21 Civil Statutes); and Chapter 56, Acts of the 45th Legislature, 2nd
47-22 Called Session, 1937 (Article 1114d, Vernon's Texas Civil
47-23 Statutes)];
47-24 (2) Chapter 1201, Government Code [by the Bond
47-25 Procedures Act of 1981 (Article 717k-6, Vernon's Texas Civil
47-26 Statutes)];
47-27 (3) Chapter 1371, Government Code [by Chapter 656,
48-1 Acts of the 68th Legislature, Regular Session, 1983 (Article 717q,
48-2 Vernon's Texas Civil Statutes)]; and
48-3 (4) [by] other laws of the state.
48-4 SECTION 45. Section 2(h), Chapter 702, Acts of the 68th
48-5 Legislature, Regular Session, 1983 (Article 717r, Vernon's Texas
48-6 Civil Statutes), is amended to read as follows:
48-7 (h) Notice of intention to issue refunding bonds shall be
48-8 published by the metropolitan water control and improvement
48-9 district at least once a week for two consecutive weeks in a
48-10 newspaper of general circulation within the metropolitan water
48-11 control and improvement district at least 15 days before the
48-12 meeting of the governing body at which it is proposed to issue such
48-13 bonds. At any time prior to the issuance of the bonds, if a
48-14 petition signed by not less than 10 percent of the qualified voters
48-15 of the metropolitan water control and improvement district is filed
48-16 with the metropolitan water control and improvement district
48-17 calling for a referendum on the refunding bond issue, the governing
48-18 body shall, at its next meeting, order an election to be held
48-19 within the metropolitan water control and improvement district to
48-20 determine whether or not the bonds shall be issued. The election
48-21 shall be held in the manner prescribed by Chapter 1251, Government
48-22 Code, for the issuance of municipal bonds [Section 7, Bond and
48-23 Warrant Law of 1931 (Article 2368a, Vernon's Texas Civil
48-24 Statutes)].
48-25 SECTION 46. (a) All public securities authorized and issued
48-26 by any issuer before September 1, 1999, a public security
48-27 authorization approved or adopted by an issuer in connection with
49-1 the authorization and issuance of the public securities, and any
49-2 contracts or agreements executed and delivered in connection with
49-3 the public securities that were approved by the public security
49-4 authorization are validated, ratified, and confirmed in all
49-5 respects.
49-6 (b) In this section, "issuer," "public security," and
49-7 "public security authorization" have the meanings assigned by
49-8 Section 1201.002, Government Code.
49-9 SECTION 47. The following provisions of the Government Code
49-10 are repealed:
49-11 (1) Section 1207.081(c);
49-12 (2) Chapter 1253;
49-13 (3) Subchapter C, Chapter 1331;
49-14 (4) Section 1473.052(c);
49-15 (5) Subchapters C-K, Chapter 1502;
49-16 (6) Subchapters B and D, Chapter 1504; and
49-17 (7) Subchapters B and F, Chapter 1509.
49-18 SECTION 48. The importance of this legislation and the
49-19 crowded condition of the calendars in both houses create an
49-20 emergency and an imperative public necessity that the
49-21 constitutional rule requiring bills to be read on three several
49-22 days in each house be suspended, and this rule is hereby suspended.