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 to
1-13 read as follows:
1-14 Sec. 1201.027. AUTHORITY OF ISSUER [OF POLITICAL SUBDIVISION
1-15 OR MUNICIPAL CORPORATION] TO CONTRACT FOR SERVICES. (a) An issuer
1-16 [The governing body of a home-rule municipality or other political
1-17 subdivision or municipal corporation of this state or of an
1-18 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 issuer to be necessary in connection with the
1-22 issuer's issuance of public securities or administration of its
1-23 affairs that pertain to the issuance of public securities. The
1-24 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 (b) Subsection (a) does not impair the authority of the
2-7 attorney general under Section 402.0212 to approve a contract for
2-8 legal services entered into by a state agency.
2-9 (c) Except as provided by Subsection (b), to [To] the extent
2-10 of a conflict between this section and another law or a municipal
2-11 charter, this section controls.
2-12 SECTION 3. Section 1205.023, Government Code, is amended to
2-13 read as follows:
2-14 Sec. 1205.023. PROCEEDING IN REM; CLASS ACTION. An action
2-15 under this chapter is:
2-16 (1) a proceeding in rem; and
2-17 (2) a class action binding on [against] all persons
2-18 who:
2-19 (A) reside in the territory of the issuer;
2-20 (B) own property located within the boundaries
2-21 of the issuer;
2-22 (C) are taxpayers of the issuer; or
2-23 (D) have or claim a right, title, or interest in
2-24 any property or money to be affected by the public security
2-25 authorization or the issuance of the public securities.
2-26 SECTION 4. Section 1205.041(b), Government Code, is amended
2-27 to read as follows:
3-1 (b) The order must, in general terms and without naming
3-2 them, advise [require] the persons described by Subsection (a) and
3-3 the attorney general of their right to:
3-4 (1) appear for trial at 10 a.m. on the first Monday
3-5 after the 20th day after the date of the order; and
3-6 (2) show cause why the petition should not be granted
3-7 and the public securities or the public security authorization
3-8 validated and confirmed.
3-9 SECTION 5. Section 1205.044, Government Code, is amended to
3-10 read as follows:
3-11 Sec. 1205.044. EFFECT OF PUBLICATION. The effect of notice
3-12 given under Sections 1205.041 and 1205.043 is that:
3-13 (1) each person described by Section 1205.041(a) is a
3-14 party [defendant] to the action; and
3-15 (2) the court has jurisdiction over each person to the
3-16 same extent as if that person were individually named [as a
3-17 defendant] and personally served in the action.
3-18 SECTION 6. Section 1205.068(e), Government Code, is amended
3-19 to read as follows:
3-20 (e) An appeal under this section is governed by the rules of
3-21 the supreme court for accelerated appeals in civil cases and takes
3-22 priority over any other matter, other than writs of habeas corpus,
3-23 pending in the appellate court. The appellate court shall render
3-24 its final order or judgment with the least possible delay.
3-25 SECTION 7. Subchapter A, Chapter 1207, Government Code, is
3-26 amended by adding Sections 1207.007 and 1207.008 to read as
3-27 follows:
4-1 Sec. 1207.007. DELEGATION OF AUTHORITY. (a) In connection
4-2 with the issuance of refunding bonds, the governing body of an
4-3 issuer may:
4-4 (1) authorize the maximum principal amount of
4-5 refunding bonds that may be issued and the maximum rate of interest
4-6 to be borne by the bonds;
4-7 (2) identify the potential bonds, notes, or other
4-8 general or special obligations that may be refunded;
4-9 (3) recite the public purpose for which the refunding
4-10 bonds are to be issued; and
4-11 (4) delegate to any officer or employee of the issuer
4-12 the authority to:
4-13 (A) select any specific maturities or series of
4-14 bonds, notes, or other general or special obligations to be
4-15 refunded; and
4-16 (B) effect the sale of the refunding bonds.
4-17 (b) In exercising the authority delegated by the governing
4-18 body of the issuer to the officer or employee, the officer or
4-19 employee may establish the terms and details related to the
4-20 issuance and sale or exchange of the refunding bonds, including:
4-21 (1) the form and designation of the refunding bonds;
4-22 (2) the principal amount of the refunding bonds and
4-23 the amount of the refunding bonds to mature in each year;
4-24 (3) the dates, price, interest rates, interest payment
4-25 dates, principal payment dates, and redemption features of the
4-26 refunding bonds;
4-27 (4) the form of escrow agreement described by Section
5-1 1207.062; and
5-2 (5) any other details relating to the issuance and
5-3 sale or exchange of the refunding bonds as specified by the
5-4 governing body of the issuer in the proceedings authorizing the
5-5 issuance of the refunding bonds.
5-6 (c) A finding or determination made by an officer or
5-7 employee acting under the authority delegated to the officer or
5-8 employee has the same force and effect as a finding or
5-9 determination made by the governing body of the issuer.
5-10 Sec. 1207.008. LIMITATION. An issuer may not issue
5-11 refunding bonds if the aggregate amount of payments to be made
5-12 under the refunding bonds exceeds the aggregate amount of payments
5-13 that would have been made under the terms of the obligations being
5-14 refunded unless:
5-15 (1) the governing body of the issuer, in the
5-16 proceedings authorizing the issuance of the refunding bonds, finds
5-17 that the issuance is in the best interests of the issuer; and
5-18 (2) the maximum amount by which the aggregate amount
5-19 of payments to be made under the refunding bonds exceeds the
5-20 aggregate amount of payments that would have been made under the
5-21 terms of the obligations being refunded is specified in the
5-22 proceedings.
5-23 SECTION 8. Section 1207.022, Government Code, is amended to
5-24 read as follows:
5-25 Sec. 1207.022. LIMITATION. [(a)] An issuer may issue
5-26 refunding bonds to make a deposit under this subchapter or
5-27 Subchapter C only in connection with refunding bonds issued to
6-1 refund obligations that are:
6-2 (1) scheduled to mature not later than the 20th
6-3 anniversary of the date of the refunding bonds; or
6-4 (2) subject to redemption before maturity not later
6-5 than the 20th anniversary of the date of the refunding bonds.
6-6 [(b) Refunding bonds may not be issued to make a deposit
6-7 under this subchapter in connection with the refunding of electric
6-8 and gas system bonds issued by a municipality with a population of
6-9 more than 900,000.]
6-10 SECTION 9. Section 1207.025(a), Government Code, is amended
6-11 to read as follows:
6-12 (a) The [Refunding bonds must be registered by the]
6-13 comptroller may register refunding bonds as provided by Chapter
6-14 1202 before a deposit required by this subchapter or Subchapter C
6-15 is [may be] made.
6-16 SECTION 10. Section 1207.033, Government Code, is amended
6-17 by adding Subsections (c) and (d) to read as follows:
6-18 (c) After firm banking and financial arrangements for the
6-19 discharge and final payment or redemption of the obligations have
6-20 been made under Subsection (a), all rights of an issuer to initiate
6-21 proceedings to call the obligations for redemption or take any
6-22 other action amending the terms of the obligations are
6-23 extinguished. The right to call the obligations for redemption is
6-24 not extinguished if the issuer:
6-25 (1) in the proceedings providing for the firm banking
6-26 and financial arrangements, expressly reserves the right to call
6-27 the obligations for redemption;
7-1 (2) gives notice of the reservation of that right to
7-2 the owners of the obligations immediately following the making of
7-3 the firm banking and financial arrangements; and
7-4 (3) directs that notice of the reservation be included
7-5 in any redemption notices that it authorizes.
7-6 (d) Subsection (c) applies only to firm banking and
7-7 financial arrangements made on or after September 1, 1999, and has
7-8 no effect on the validity or legality of any such arrangements made
7-9 before that date.
7-10 SECTION 11. Section 1207.062, Government Code, is amended
7-11 by amending Subsections (b) and (c) and adding Subsections (d) and
7-12 (e) to read as follows:
7-13 (b) A deposit under Section 1207.061 may be invested only
7-14 in:
7-15 (1) direct noncallable obligations of the United
7-16 States, including obligations that [the principal of and interest
7-17 on which] are unconditionally guaranteed by the United States;
7-18 (2) noncallable obligations of an agency or
7-19 instrumentality of the United States, including obligations that
7-20 are unconditionally guaranteed or insured by the agency or
7-21 instrumentality and that, on the date the governing body of the
7-22 issuer adopts or approves the proceedings authorizing the issuance
7-23 of refunding bonds, are rated as to investment quality by a
7-24 nationally recognized investment rating firm not less than AAA or
7-25 its equivalent; and
7-26 (3) noncallable obligations of a state or an agency or
7-27 a county, municipality, or other political subdivision of a state
8-1 that have been refunded and that, on the date the governing body of
8-2 the issuer adopts or approves the proceedings authorizing the
8-3 issuance of refunding bonds, are rated as to investment quality by
8-4 a nationally recognized investment rating firm not less than AAA or
8-5 its equivalent.
8-6 (c) A deposit under Section 1207.061 may be invested only in
8-7 obligations that [and which] mature and bear interest payable at
8-8 times and in amounts sufficient to provide for the scheduled
8-9 payment or redemption of the obligation to be refunded. The
8-10 obligations may be in book-entry form.
8-11 (d) [(c)] An issuer shall enter into an agreement under
8-12 Subsection (a) if an obligation to be refunded is scheduled to be
8-13 paid or redeemed on a date later than the next scheduled interest
8-14 payment date on the obligation.
8-15 (e) Notwithstanding Subsection (b), a deposit under an
8-16 escrow agreement entered into under Subsection (a) before
8-17 September 1, 1999, may not be invested in an investment described
8-18 by Subsection (b)(2) or (3).
8-19 SECTION 12. Section 1231.044(b), Government Code, is
8-20 amended to read as follows:
8-21 (b) The state auditor shall prepare a report of the review
8-22 and file a copy of the report with:
8-23 (1) the board;
8-24 (2) the governor;
8-25 (3) [(2)] the lieutenant governor;
8-26 (4) [(3)] the speaker of the house of representatives;
8-27 (5) [(4)] the secretary of state; and
9-1 (6) [(5)] each member of the legislature.
9-2 SECTION 13. Section 1331.001, Government Code, is amended
9-3 to read as follows:
9-4 Sec. 1331.001. AUTHORITY OF MUNICIPALITY TO ISSUE BONDS. A
9-5 municipality may issue bonds payable from ad valorem taxes [with
9-6 one or more interest coupons] in the amount it considers expedient
9-7 to:
9-8 (1) construct or purchase permanent improvements
9-9 inside the municipal boundaries, including public buildings,
9-10 waterworks, or sewers;
9-11 (2) construct or improve the streets and bridges of
9-12 the municipality; or
9-13 (3) construct or purchase building sites or buildings
9-14 for the public schools and other institutions of learning inside
9-15 the municipality, if the municipality has assumed exclusive control
9-16 of those schools and institutions.
9-17 SECTION 14. Section 1331.002, Government Code, is amended
9-18 to read as follows:
9-19 Sec. 1331.002. SIGNATURES [OF MAYOR AND MUNICIPAL
9-20 SECRETARY]. Bonds [A bond] issued by a municipality under Section
9-21 1331.001 must be signed in the manner provided by the proceedings
9-22 authorizing the issuance of the bonds [by the mayor and
9-23 countersigned by the municipal secretary].
9-24 SECTION 15. Sections 1371.001(1), (4), and (5), Government
9-25 Code, are amended to read as follows:
9-26 (1) "Credit agreement" means a loan agreement,
9-27 revolving credit agreement, agreement establishing a line of
10-1 credit, letter of credit, reimbursement agreement, insurance
10-2 contract, commitment to purchase an obligation, purchase or sale
10-3 agreement, interest rate swap agreement, or commitment or other
10-4 agreement authorized [and approved] by a governing body in
10-5 connection with the authorization, issuance, sale, resale,
10-6 security, exchange, payment, purchase, remarketing, or redemption
10-7 of an obligation, interest on an obligation, or both, or as
10-8 otherwise authorized by this chapter.
10-9 (4) "Issuer" means:
10-10 (A) a home-rule municipality that:
10-11 (i) adopted its charter under Section 5,
10-12 Article XI, Texas Constitution;
10-13 (ii) has a population of 50,000 [90,000]
10-14 or more; and
10-15 (iii) has outstanding long-term
10-16 indebtedness [secured by the revenue of the public works for which
10-17 an obligation is being issued] that is rated by a nationally
10-18 recognized rating agency for municipal securities in one of the
10-19 four highest rating categories for a long-term obligation;
10-20 (B) a conservation and reclamation district
10-21 created and organized as a river authority under Section 52,
10-22 Article III, or Section 59, Article XVI, Texas Constitution;
10-23 (C) a joint powers agency organized and
10-24 operating under Chapter 163, Utilities Code;
10-25 (D) a metropolitan rapid transit authority or
10-26 regional transportation authority created, organized, and operating
10-27 under Chapter 451 or 452, Transportation Code;
11-1 (E) a conservation and reclamation district
11-2 organized or operating as a navigation district under Section 52,
11-3 Article III, or Section 59, Article XVI, Texas Constitution;
11-4 (F) a district organized or operating under
11-5 Section 59, Article XVI, Texas Constitution, that has all or part
11-6 of two or more municipalities within its boundaries;
11-7 (G) a state agency, including a state
11-8 institution of higher education;
11-9 (H) a hospital authority created or operating
11-10 under Chapter 262 or 264, Health and Safety Code, in a county that:
11-11 (i) has a population of more than two
11-12 million; or
11-13 (ii) is included, in whole or in part, in
11-14 a standard metropolitan statistical area of this state that
11-15 includes a county with a population of more than 1.8 million;
11-16 (I) a nonprofit corporation organized to
11-17 exercise the powers of a higher education authority under Section
11-18 53.47(e), Education Code; or
11-19 (J) a county with a population of two million or
11-20 more.
11-21 (5) "Obligation" means a [note, warrant, or other
11-22 special obligation authorized to be issued by an issuer under this
11-23 chapter or a] public security as defined by Section 1201.002 or
11-24 other special obligation authorized to be issued by an issuer that,
11-25 before delivery, is rated by a nationally recognized rating agency
11-26 for municipal securities in one of the three highest rating
11-27 categories for a short-term debt instrument or one of the four
12-1 highest rating categories for a long-term debt instrument. The
12-2 term does not include an obligation payable from ad valorem taxes
12-3 except as specifically permitted by this chapter.
12-4 SECTION 16. Subchapter A, Chapter 1371, Government Code, is
12-5 amended by adding Section 1371.004 to read as follows:
12-6 Sec. 1371.004. EFFECT OF FINDING OR DETERMINATION UNDER
12-7 DELEGATION OF AUTHORITY. A finding or determination made by an
12-8 officer or employee acting under the authority delegated to the
12-9 officer or employee under this chapter has the same force and
12-10 effect as a finding or determination made by the governing body.
12-11 SECTION 17. Section 1371.053(a), Government Code, is
12-12 amended to read as follows:
12-13 (a) A governing body must adopt or approve an obligation
12-14 authorization before an obligation may be issued [The issuance of
12-15 an obligation must be authorized by an obligation authorization].
12-16 SECTION 18. Section 1371.056, Government Code, is amended
12-17 to read as follows:
12-18 Sec. 1371.056. AUTHORITY TO ENTER INTO AND EXECUTE CREDIT
12-19 AGREEMENTS. (a) A [governing body may execute and deliver a
12-20 credit agreement to finance a project cost or to refund an
12-21 obligation issued in connection with an eligible project as may be
12-22 authorized and approved by the governing body.]
12-23 [(b) To enhance the security for or provide for the payment,
12-24 redemption, or remarketing of an obligation and interest on the
12-25 obligation in order to reduce the interest payable on the
12-26 obligation or in conjunction with the interim financing of an
12-27 eligible project of an issuer, a governing body may enter into a
13-1 credit agreement:]
13-2 [(1) at or after the issuance of the obligation; or]
13-3 [(2) in conjunction with the payment, sale, resale, or
13-4 exchange of the obligation.]
13-5 [(c) The] governing body may authorize the execution and
13-6 delivery of [execute] a credit agreement in connection with or
13-7 related [relation] to the authorization, issuance, security,
13-8 purchase, payment, sale, resale, redemption, remarketing, or
13-9 exchange of an obligation at any time, without regard to whether a
13-10 credit agreement was contemplated, authorized, or executed in
13-11 relation to the initial issuance, sale, or delivery of the
13-12 obligation.
13-13 (b) [(d)] A credit agreement must contain the terms and be
13-14 for the period the governing body approves.
13-15 (c) [(e)] The cost to the issuer of a credit agreement may
13-16 be paid from any source, including:
13-17 (1) the proceeds from the sale of the obligation to
13-18 which the credit agreement relates;
13-19 (2) revenue of the issuer that is available to pay the
13-20 obligation;
13-21 (3) any interest on the obligation or that may
13-22 otherwise be legally used; or
13-23 (4) ad valorem taxes to the extent permitted by this
13-24 chapter.
13-25 (d) [(f)] A credit agreement is an agreement for
13-26 professional services.
13-27 (e) Notwithstanding Subsection (b), the governing body may
14-1 delegate to an officer or employee the authority, under the terms
14-2 and for the period approved by the governing body, to:
14-3 (1) enter into a credit agreement and transactions
14-4 under a credit agreement; and
14-5 (2) execute any instruments in connection with those
14-6 transactions.
14-7 SECTION 19. Subchapter B, Chapter 1371, Government Code, is
14-8 amended by amending Sections 1371.057 and 1371.058 and adding
14-9 Sections 1371.059 and 1371.060 to read as follows:
14-10 Sec. 1371.057. REVIEW AND APPROVAL OF OBLIGATION, CREDIT
14-11 AGREEMENT, AND CONTRACT BY ATTORNEY GENERAL. (a) Before an
14-12 obligation may be issued or a credit agreement executed, a record
14-13 of the proceedings of the issuer authorizing the issuance,
14-14 execution, and delivery of the obligation, the credit agreement,
14-15 and any contract providing revenue or security to pay the
14-16 obligation or the credit agreement must be submitted to the
14-17 attorney general for review.
14-18 (b) If the attorney general finds that the credit agreement,
14-19 contract, and other authorizing proceedings conform to the
14-20 requirements of the Texas Constitution and this chapter, the
14-21 attorney general shall approve them and deliver to the comptroller
14-22 a copy of the attorney general's legal opinion stating that
14-23 approval and the record of proceedings. After approval, the
14-24 obligation and credit agreement may be executed and delivered,
14-25 exchanged, or refinanced from time to time in accordance with those
14-26 authorizing proceedings.
14-27 Sec. 1371.058. REGISTRATION. On receipt of the documents
15-1 required by Section 1371.057(b), the comptroller shall register the
15-2 record of the proceedings relating to the issuance of obligations
15-3 or the execution of a credit agreement.
15-4 Sec. 1371.059. VALIDITY AND INCONTESTABILITY. [(c)] On
15-5 approval by the attorney general, registration by the comptroller,
15-6 and initial delivery of the obligation, a credit agreement, a
15-7 contract providing revenue or security, an initial obligation, and
15-8 any obligation subsequently issued under the authorizing
15-9 proceedings are incontestable in a court or other forum and are
15-10 valid and binding obligations enforceable according to their terms.
15-11 Sec. 1371.060 [1371.058]. REFINANCING, RENEWAL, OR REFUNDING
15-12 OF OBLIGATION OR CREDIT AGREEMENT. An obligation, including
15-13 accrued interest, or a credit agreement may from time to time be
15-14 refinanced, renewed, or refunded by the issuance of another
15-15 obligation or credit agreement.
15-16 SECTION 20. Section 1371.103(b), Government Code, is
15-17 amended to read as follows:
15-18 (b) A governing body may secure an obligation and pay the
15-19 cost of a credit agreement executed and delivered in connection
15-20 with the financing of a project cost with:
15-21 (1) the [ad valorem taxes or with other] sources
15-22 permitted by this chapter; and
15-23 (2) ad valorem taxes to the extent the project cost
15-24 relates to an eligible project financed or to be financed with
15-25 obligations payable from ad valorem taxes.
15-26 SECTION 21. The heading to Chapter 1502, Government Code, is
15-27 amended to read as follows:
16-1 CHAPTER 1502. PUBLIC SECURITIES [OBLIGATIONS] FOR
16-2 MUNICIPAL UTILITIES, PARKS, OR POOLS
16-3 SECTION 22. Subchapters A and B, Chapter 1502, Government
16-4 Code, are amended to read as follows:
16-5 SUBCHAPTER A. GENERAL PROVISIONS
16-6 Sec. 1502.001. DEFINITIONS [DEFINITION]. In this chapter:
16-7 (1) "Combined system" means any combination of one or
16-8 more of the following:
16-9 (A) an electric system;
16-10 (B) a water system;
16-11 (C) a sewer system;
16-12 (D) a solid waste disposal system;
16-13 (E) a drainage utility system; and
16-14 (F) a natural gas system.
16-15 (2) "Public security" has the meaning assigned by
16-16 Section 1201.002.
16-17 (3) "Utility system" means an electric, water, sewer,
16-18 solid waste disposal, drainage utility, or natural gas system. The
16-19 term includes one or more combined systems[, "paying agent" means
16-20 the person, including a bank or trust company, at whose location
16-21 payment of a refunded obligation is to be made].
16-22 Sec. 1502.002. GENERAL AUTHORITY FOR UTILITY SYSTEMS, PARKS,
16-23 AND POOLS. (a) A municipality may acquire, purchase, construct,
16-24 improve, enlarge, equip, operate, or maintain any property,
16-25 interests in property, buildings, structures, activities, services,
16-26 operations, or other facilities, with respect to:
16-27 (1) a utility system;
17-1 (2) a park; or
17-2 (3) a swimming pool.
17-3 (b) The governing body of a municipality may authorize the
17-4 execution and delivery of contracts between the municipality and
17-5 any person to accomplish any purpose described by Subsection (a).
17-6 Sec. 1502.003. CREATION AND MAINTENANCE OF COMBINED SYSTEM.
17-7 Notwithstanding any law or municipal charter provision to the
17-8 contrary, the governing body of a municipality may create and
17-9 maintain one or more combined systems on a finding by the governing
17-10 body that it is in the best interests of the municipality to create
17-11 and maintain the combined system. A finding by a governing body
17-12 under this section is conclusive and incontestable.
17-13 Sec. 1502.004. CONFLICT WITH MUNICIPAL CHARTER. To the
17-14 extent of a conflict between this chapter and a municipal charter,
17-15 this chapter controls.
17-16 SUBCHAPTER B. PUBLIC SECURITIES [REVENUE BONDS] FOR
17-17 UTILITY SYSTEMS, PARKS, OR POOLS
17-18 Sec. 1502.051. AUTHORITY TO ISSUE PUBLIC SECURITIES. (a)
17-19 The governing body of a municipality may provide funds to acquire,
17-20 purchase, construct, improve, renovate, enlarge, or equip property,
17-21 buildings, structures, facilities, or related infrastructure for:
17-22 (1) a utility system;
17-23 (2) a park; or
17-24 (3) a swimming pool.
17-25 (b) In connection with exercising the authority to provide
17-26 funds for the purposes described by Subsection (a)(1), the
17-27 governing body of a municipality may provide funds to acquire,
18-1 purchase, or otherwise obtain any interest in property, including
18-2 additional water or riparian rights.
18-3 (c) The governing body of a municipality may issue public
18-4 securities and incur obligations under contracts in accordance with
18-5 this chapter for any purpose authorized by law in connection with
18-6 providing funds for a purpose described by Subsection (a) or (b)
18-7 [DEFINITIONS. In this subchapter:]
18-8 [(1) "Encumbered facility" means a utility system,
18-9 sanitary disposal system, park, or swimming pool encumbered under
18-10 this subchapter.]
18-11 [(2) "Utility system" means an electric, water, sewer,
18-12 or natural gas system].
18-13 Sec. 1502.052. [AUTHORITY TO BUILD, PURCHASE, OR ENCUMBER
18-14 UTILITY SYSTEM, SANITARY DISPOSAL EQUIPMENT, PARK, OR POOL. (a) A
18-15 municipality may:]
18-16 [(1) build, purchase, or encumber a municipal utility
18-17 system, sanitary disposal equipment, a park, or a swimming pool;]
18-18 [(2) encumber anything acquired or to be acquired that
18-19 relates to a municipal utility system, sanitary disposal equipment,
18-20 a park, or a pool;]
18-21 [(3) purchase additional water powers or riparian
18-22 rights; or]
18-23 [(4) improve, enlarge, extend, or repair a municipal
18-24 utility system, sanitary disposal equipment, a park, or a pool.]
18-25 [(b) A municipality may encumber one or more municipal
18-26 utility systems, items of sanitary disposal equipment, parks, or
18-27 pools to build, purchase, improve, extend, or repair the same or
19-1 another municipal utility system, item of sanitary disposal
19-2 equipment, park, or pool.]
19-3 [Sec. 1502.053. AUTHORITY TO ISSUE BONDS, NOTES, OR
19-4 WARRANTS. A municipality may issue bonds, notes, or warrants to
19-5 provide money to build, purchase, improve, enlarge, extend, or
19-6 repair a facility described by Section 1502.052.]
19-7 [Sec. 1502.054.] PLEDGE OF REVENUE. (a) The governing body
19-8 of a municipality may pledge to the payment of any public
19-9 securities issued or any obligations incurred under Section
19-10 1502.051(c) all or any part of the revenue of:
19-11 (1) a utility system;
19-12 (2) a park; or
19-13 (3) a swimming pool.
19-14 (b) The governing body of a municipality may grant a lien on
19-15 the revenue pledged under Subsection (a). The lien has the
19-16 priority determined by the governing body, subject to the
19-17 provisions of Section 1502.056 [A municipality may pledge the
19-18 revenue and encumber the franchise of a facility described by
19-19 Section 1502.052 to secure the payment of obligations issued under
19-20 this subchapter].
19-21 Sec. 1502.053 [1502.055]. GRANT OF FRANCHISE. As additional
19-22 security for public securities issued or obligations incurred under
19-23 this chapter [the encumbrance], the municipality by the terms of
19-24 the encumbrance may grant a purchaser under sale or foreclosure a
19-25 franchise to operate the encumbered utility system, park, or pool
19-26 [facility or property] for a term not to exceed 20 years from the
19-27 date of purchase, subject to all laws regulating the operation of
20-1 the utility system, park, or pool [same then] in force at the time
20-2 of the sale or foreclosure.
20-3 Sec. 1502.054 [1502.056]. OBLIGATIONS NOT PAYABLE FROM
20-4 TAXES. (a) A public security issued or an [An] obligation
20-5 incurred [issued] under this chapter [subchapter]:
20-6 (1) is not a debt of the municipality;
20-7 (2) may be a charge only on the encumbered utility
20-8 system, park, or pool [facility or property]; and
20-9 (3) may not be included in determining the
20-10 municipality's power to issue public securities [bonds] for any
20-11 purpose authorized by law.
20-12 (b) Each public security [contract, bond, note,] or other
20-13 evidence of indebtedness issued or included under this chapter
20-14 [subchapter] must contain the following provision: "The holder of
20-15 this obligation is not entitled to demand payment of this
20-16 obligation out of any money raised by taxation."
20-17 Sec. 1502.055 [1502.057]. ELECTION. (a) Unless authorized
20-18 by a majority vote of the qualified voters of the municipality, a
20-19 municipality may not[:]
20-20 [(1) encumber a utility system, park, or swimming pool
20-21 for more than $10,000 except to:]
20-22 [(A) obtain money to acquire, construct,
20-23 improve, extend, or repair a utility system, park, or pool; or]
20-24 [(B) refund existing debt that was authorized by
20-25 law for a purpose stated in Paragraph (A); or]
20-26 [(2)] sell a utility system, park, or pool.
20-27 (b) The governing body of the municipality shall hold an
21-1 election under this section in the manner provided for bond
21-2 elections in the municipality.
21-3 (c) [The encumbrances authorized by this section apply only
21-4 to bonds payable from revenue derived from the encumbered system.]
21-5 [(d)] This section does not apply to the sale of an
21-6 unencumbered natural gas system owned by a municipality with a
21-7 population of more than 1.2 million.
21-8 Sec. 1502.056 [1502.058]. OPERATING EXPENSES AS FIRST LIEN.
21-9 (a) If the revenue of a utility system, park, or swimming pool
21-10 secures the payment of public securities issued or obligations
21-11 incurred under this chapter [is encumbered under this subchapter],
21-12 each expense of operation and maintenance, including all salaries,
21-13 labor, materials, interest, repairs and extensions necessary to
21-14 provide efficient service, and each proper item of expense, is a
21-15 first lien against that revenue.
21-16 (b) An expense for a repair or extension is a first lien
21-17 only if, in the judgment of the governing body of the municipality,
21-18 the repair or extension is necessary to:
21-19 (1) keep the plant or utility system in operation and
21-20 provide adequate service to the municipality and its residents; or
21-21 (2) respond to a physical accident or condition that
21-22 would otherwise impair the original securities.
21-23 (c) A contract between a municipality and an issuer, as
21-24 defined by Section 1201.002, under which the municipality obtains
21-25 from the issuer or the issuer provides part or all of the
21-26 facilities or services of a utility system to the municipality may
21-27 provide that payments made by the municipality from the revenue of
22-1 the utility system are an operating expense of the municipality's
22-2 utility system.
22-3 Sec. 1502.057 [1502.059]. CHARGES FOR SERVICES. (a) A
22-4 municipality shall impose and collect charges for services provided
22-5 by a utility [an encumbered] system in amounts at least sufficient
22-6 to pay:
22-7 (1) all operating, maintenance, depreciation,
22-8 replacement, improvement, and interest charges in connection with
22-9 the utility [encumbered] system;
22-10 (2) for an interest and sinking fund sufficient to pay
22-11 any public securities [bonds] issued or obligations incurred for
22-12 any purpose described by Section 1502.002 relating to the utility
22-13 system [to purchase, construct, or improve the encumbered system];
22-14 and
22-15 (3) any outstanding debt against the system.
22-16 (b) The rates charged for services provided by a utility [an
22-17 encumbered] system must be equal and uniform. A municipality may
22-18 not allow any free service except for:
22-19 (1) municipal public schools; or
22-20 (2) buildings and institutions operated by the
22-21 municipality.
22-22 Sec. 1502.058 [1502.060]. LIMITATION ON USE OF REVENUE. (a)
22-23 Except as provided by Subsection (b) or (c), by Section 1502.059,
22-24 or by Section 271.052, Local Government Code [1502.061], a
22-25 municipality may not use the revenue of a utility [an encumbered]
22-26 system, park, or swimming pool to pay any other debt, expense, or
22-27 obligation of the municipality until the debt secured by the
23-1 revenue is finally paid.
23-2 (b) This section does not apply to a payment made in lieu of
23-3 ad valorem taxes previously paid by a private owner of a utility
23-4 [an encumbered] system.
23-5 (c) This section does not apply to a payment made from
23-6 surplus revenue of a utility system, park, or swimming pool, as
23-7 provided by the proceedings authorizing the issuance of public
23-8 securities under this chapter.
23-9 Sec. 1502.059 [1502.061]. TRANSFER OF REVENUE TO GENERAL
23-10 FUND. Notwithstanding Section 1502.058(a) [1502.060(a)] or a
23-11 similar law or municipal charter provision, a municipality and its
23-12 officers and utility trustees may transfer to the municipality's
23-13 general fund and may use for general or special purposes revenue of
23-14 any municipally owned utility system in the amount and to the
23-15 extent authorized in the indenture, deed of trust, or ordinance
23-16 providing for and securing payment of public securities [revenue
23-17 bonds] issued under this chapter [subchapter] or similar law.
23-18 Sec. 1502.060. USE AND INVESTMENT OF PROCEEDS. (a) To the
23-19 extent provided by the proceedings authorizing the issuance of the
23-20 public securities issued under this chapter, a municipality may:
23-21 (1) use proceeds from the sale of public securities
23-22 issued to provide funds for a utility system under this chapter for
23-23 any purpose authorized by Section 1502.051(a)(1) or (b);
23-24 (2) use proceeds from the sale of public securities
23-25 issued to provide funds for a park under this chapter for any
23-26 purpose authorized by Section 1502.051(a)(2); or
23-27 (3) use proceeds from the sale of public securities to
24-1 provide funds for a swimming pool under this chapter for any
24-2 purpose authorized by Section 1502.051(a)(3).
24-3 (b) A municipality may use proceeds from the sale of public
24-4 securities issued under this chapter to pay interest on the public
24-5 securities during the period of the acquisition or construction of
24-6 any facilities to be provided through the issuance of the public
24-7 securities, and for one year after completion of the acquisition or
24-8 construction of the facilities.
24-9 (c) A municipality may use proceeds from the sale of public
24-10 securities issued under this chapter to:
24-11 (1) provide a reserve for the payment of debt service
24-12 on the public securities;
24-13 (2) provide a reserve for extraordinary repairs and
24-14 replacements; or
24-15 (3) obtain a credit agreement as provided by Section
24-16 1502.064.
24-17 (d) A municipality may invest proceeds from the sale of
24-18 public securities issued under this chapter to the extent and in
24-19 the manner provided in the proceedings authorizing the issuance of
24-20 the public securities.
24-21 [Sec. 1502.062. USE OF BOND PROCEEDS: MUNICIPALITY WITH
24-22 POPULATION OF 75,000 OR MORE. (a) A municipality with a
24-23 population of 75,000 or more, in issuing bonds under this
24-24 subchapter, as part of the cost of constructing new electric
24-25 utility plant facilities may set aside and use a portion of the
24-26 bond proceeds, to the extent provided in the ordinance authorizing
24-27 the issuance of the bonds:]
25-1 [(1) to pay interest on bonds, the proceeds of which
25-2 are for the construction of the facilities, to the first interest
25-3 payment date after the date the new electric utility facilities are
25-4 estimated to become operational; and]
25-5 [(2) to establish or supplement a reserve fund created
25-6 for the benefit of the bond holders.]
25-7 [(b) The bond proceeds, an interest and sinking fund, or a
25-8 reserve fund, pending their use for their intended purposes, may be
25-9 invested in any security, interest-bearing certificate, or time
25-10 deposit as specified in the proceedings authorizing the issuance of
25-11 the bonds.]
25-12 [(c) This section controls over any other state law or any
25-13 municipal charter.]
25-14 [Sec. 1502.063. REVENUE BONDS TO IMPROVE WATERWORKS SYSTEM:
25-15 TWO SERIES WITH DIFFERENT SECURITY. (a) For the purpose of
25-16 improving, enlarging, or extending a waterworks system, a
25-17 municipality may issue revenue bonds under this subchapter in two
25-18 series as follows:]
25-19 [(1) one series payable from and secured by a pledge
25-20 of all or part of the proceeds of a contract between the
25-21 municipality and a private corporation under which the municipality
25-22 agrees to sell water to the corporation for specified payments; and]
25-23 [(2) the other series payable from and secured by a
25-24 pledge of the net revenue of the waterworks system or waterworks
25-25 and sewer systems other than the proceeds of the water supply
25-26 contract.]
25-27 [(b) The ordinance authorizing the issuance of the bonds may
26-1 provide that the entire cost of operation, maintenance, and repair
26-2 of the system or systems shall be paid from the revenue of the
26-3 system or systems other than the proceeds of the water supply
26-4 contract.]
26-5 [(c) A municipality may contract to sell water to a private
26-6 corporation on terms prescribed by the municipality's governing
26-7 body for a period not to exceed 40 years.]
26-8 Sec. 1502.061 [1502.064]. ADDITIONAL OBLIGATIONS TO IMPROVE
26-9 OR EXTEND UTILITY SYSTEM. (a) A municipality that has outstanding
26-10 public securities [bonds] secured by the net revenue of a utility
26-11 system [one or more of its utility systems] may issue additional
26-12 public securities [bonds] or incur other obligations for a purpose
26-13 described by Section 1502.051(a)(1) or (b) [to improve or extend
26-14 one or more of the utility systems. The additional bonds may be
26-15 payable from the revenue from the operation of the utility system
26-16 or systems that is pledged to the payment of outstanding bonds].
26-17 (b) Except as provided by Subsection (c), public securities
26-18 [bonds] issued under Subsection (a) constitute a lien on the
26-19 revenue of the affected system:
26-20 (1) in the order of issuance; and
26-21 (2) inferior to a lien securing payment of outstanding
26-22 public securities, as determined by the governing body of the
26-23 municipality [bonds].
26-24 (c) A municipality may issue additional public securities
26-25 [bonds or series of bonds] under this section on a parity and of
26-26 equal dignity with the outstanding public securities [bonds] if the
26-27 ordinance, deed of trust, or indenture of trust authorizing or
27-1 securing the outstanding public securities [bonds] provides for the
27-2 subsequent issuance of additional parity public securities [bonds],
27-3 subject to that ordinance, deed of trust, or indenture of trust.
27-4 (d) To the extent of a conflict or inconsistency between
27-5 this section and another law, this section controls.
27-6 Sec. 1502.062. MATURITY. A public security issued under
27-7 this chapter must mature not later than 50 years after its date.
27-8 Sec. 1502.063. ADDITIONAL AUTHORITY OF MUNICIPALITY WITH A
27-9 POPULATION OF 50,000 OR MORE. Notwithstanding any other provision
27-10 of this chapter, in connection with the issuance of public
27-11 securities under this chapter, the governing body of a municipality
27-12 with a population of 50,000 or more may exercise any authority
27-13 granted to a governing body under Chapter 1371 in connection with
27-14 the issuance of obligations under that chapter.
27-15 Sec. 1502.064. CREDIT AGREEMENT FOR RESERVE FUND. (a) The
27-16 governing body of a municipality may provide that in lieu of or in
27-17 addition to providing a cash reserve, a credit agreement, as
27-18 defined by Section 1371.001, may be used to provide the reserve.
27-19 (b) A credit agreement obtained to provide a reserve must be
27-20 submitted to the attorney general for examination and approval.
27-21 After approval by the attorney general, the credit agreement is
27-22 incontestable in any court or other forum for any reason and is a
27-23 valid and binding obligation of the municipality in accordance with
27-24 its terms for all purposes.
27-25 Sec. 1502.065. REFUNDING BONDS. A municipality may issue
27-26 public securities in the manner provided by applicable law to
27-27 refund or otherwise refinance any obligation incurred under this
28-1 chapter to which revenue has been pledged.
28-2 [Sec. 1502.065. LIEN PRIORITY: REFUNDING BONDS. (a) This
28-3 section applies only to refunding bonds issued by a municipality
28-4 that are payable from and secured by a pledge of the revenue of one
28-5 or more of the municipality's utility systems.]
28-6 [(b) Refunding bonds described by Subsection (a) have a
28-7 priority of lien on the revenue pledged that is on a parity with
28-8 the lien priority of the bonds being refunded.]
28-9 [(c) The lien of all refunding bonds issued in a single
28-10 issue to refund two or more consecutive series or issues of bonds
28-11 is equal if all of the outstanding bonds of those series or issues
28-12 of bonds are surrendered in exchange for the new refunding bonds.]
28-13 [(d) Refunding bonds may not have a lien priority higher
28-14 than the highest lien priority of any series or issue of bonds
28-15 being refunded.]
28-16 [Sec. 1502.066. BONDS FOR ACQUISITION OF HYDROELECTRIC
28-17 GENERATING FACILITIES. (a) A municipality that owns an electric
28-18 distribution system, regardless of whether the municipality also
28-19 owns a facility for the generation of electricity, may issue bonds
28-20 under this subchapter to purchase and improve, maintain, and
28-21 operate a privately owned facility for the generation of
28-22 hydroelectric power having an installed capacity of not less than
28-23 2,000 kilowatts that is located within five miles of the
28-24 municipality's boundaries, including any land, flowage right or
28-25 water right, and related generating and transmission equipment and
28-26 lines. The municipality may purchase the facility with the
28-27 proceeds of the bonds or by issuing the bonds in exchange for the
29-1 facility but only if authorized at an election held in accordance
29-2 with Section 1502.057.]
29-3 [(b) For the purpose of the issuance and payment of the
29-4 bonds, a hydroelectric generating facility acquired under this
29-5 section may be regarded as an independent electric system that,
29-6 together with its revenue, may be pledged to the payment of the
29-7 bonds without any pledge of the municipality's other electric
29-8 facilities or the revenue of those facilities.]
29-9 [(c) A municipality that acquires a hydroelectric generating
29-10 facility under this section shall perform any contract in existence
29-11 at the time of acquisition for the sale of electricity generated by
29-12 the facility unless the contract is canceled by voluntary agreement
29-13 of the municipality and each party entitled to purchase
29-14 electricity under the contract.]
29-15 [(d) Subject to the rights of any party to an existing
29-16 contract, the municipality shall take for distribution by its
29-17 distribution system the part of the output of the acquired
29-18 generating facility needed for distribution. The municipality in
29-19 the proceedings authorizing the bonds may covenant, as the
29-20 municipality considers proper, for the use of the electricity and
29-21 for payment for the electricity from the revenue from the resale of
29-22 the electricity.]
29-23 [(e) The municipality may enter into long-term or short-term
29-24 contracts to sell to other purchasers any electricity generated by
29-25 the facility that the municipality does not distribute by its
29-26 system to its consumers.]
29-27 Sec. 1502.066 [1502.067]. RECORDS. The mayor of the
30-1 municipality shall establish and maintain a complete system of
30-2 records for a utility system, park, or swimming pool the revenue of
30-3 which is encumbered under this chapter [subchapter] that:
30-4 (1) shows any [the] free service provided and the
30-5 value of the free service; and
30-6 (2) shows separately the amounts spent and the amounts
30-7 set aside for operation, salaries, labor, materials, repairs,
30-8 maintenance, depreciation, replacements, extensions, interest, and
30-9 the creation of a sinking fund to pay the public securities [bonds]
30-10 and debt.
30-11 Sec. 1502.067 [1502.068]. RECORDS: NONCASH BASIS. (a) A
30-12 municipality may maintain its records on facilities under this
30-13 chapter [subchapter] or any other municipal records on a basis
30-14 other than a cash basis to the extent permitted or required under
30-15 generally accepted accounting principles for a governmental entity.
30-16 (b) A change in accounting methods does not affect the terms
30-17 of an existing contract with respect to the power to issue
30-18 additional obligations payable from the facilities.
30-19 Sec. 1502.068 [1502.069]. ANNUAL REPORT. (a) Annually, on
30-20 the date determined by the governing body of the municipality [Not
30-21 later than February 1 of each year], the superintendent or manager
30-22 of a utility system, park, or pool or another person designated by
30-23 the governing body [plant the revenue of which is encumbered under
30-24 this subchapter] shall file with the mayor and governing body of
30-25 the municipality a detailed report of the operation of the system,
30-26 park, or pool [plant] for the preceding 12-month period specified
30-27 by the governing body [year ending on the preceding January 1].
31-1 (b) The report must show the total amount of money collected
31-2 and the balance due, and the total disbursements made and the
31-3 amounts remaining unpaid, resulting from the operation of the
31-4 utility system, park, or pool [plant] during that year.
31-5 Sec. 1502.069 [1502.070]. OFFENSES; PENALTY. (a) A mayor
31-6 commits an offense if the mayor fails to:
31-7 (1) establish the system of records required by
31-8 Section 1502.066 [1502.067] before the 91st day after the date the
31-9 utility system, park, or pool [plant] is completed; or
31-10 (2) maintain the system of records required by Section
31-11 1502.066 [1502.067].
31-12 (b) The person responsible for filing a report required by
31-13 Section 1502.068 [A superintendent or manager of a plant] commits
31-14 an offense if the person [superintendent or manager] fails to
31-15 timely file the [a] report [required by Section 1502.069].
31-16 (c) An offense under this section is a misdemeanor
31-17 punishable by a fine of not less than $100 or more than $1,000.
31-18 Sec. 1502.070 [1502.071]. MANAGEMENT AND CONTROL OF UTILITY
31-19 SYSTEM [ENCUMBERED FACILITY]. (a) Management and control of a
31-20 utility system may be vested in [The contract under which a
31-21 facility is encumbered may give management and control of the
31-22 encumbered facility during the time the facility is encumbered to]:
31-23 (1) the municipality's governing body; or
31-24 (2) a board of trustees named in the proceedings
31-25 adopted by the municipality [encumbrance] and consisting of not
31-26 more than five members, one of whom must be the mayor of the
31-27 municipality.
32-1 (b) The compensation of the trustees shall be specified by
32-2 the proceedings [contract of encumbrance]. The compensation may
32-3 not exceed five percent of the [encumbered facility's] gross
32-4 receipts of the utility system in any year.
32-5 (c) The proceedings of the municipality [contract of
32-6 encumbrance] may specify the terms of office of the board of
32-7 trustees, their powers and duties, the manner of exercising those
32-8 powers and duties, the election of successor trustees, and any
32-9 matter relating to the organization and duties of the board. On
32-10 any matter not covered by the proceedings [contract], the board of
32-11 trustees is governed by the laws and rules governing the
32-12 municipality's governing body, to the extent applicable.
32-13 Sec. 1502.071 [1502.072]. RULES. (a) The governing body or
32-14 board of trustees having management and control of a utility system
32-15 [an encumbered facility] may adopt rules to:
32-16 (1) govern the provision of and payment for service;
32-17 and
32-18 (2) provide for the discontinuance of service for
32-19 failure to pay when due until payment is made.
32-20 (b) The governing body may provide penalties for:
32-21 (1) the violation of a rule adopted under this
32-22 section;
32-23 (2) the use of service without the consent or
32-24 knowledge of the authorities in charge; or
32-25 (3) any interference with, trespass on, or injury to a
32-26 system or appliance or the premises on which the system or
32-27 appliance is located.
33-1 Sec. 1502.072 [1502.073]. TRUSTEE. The proceedings adopted
33-2 by the governing body of a municipality [A contract under which a
33-3 facility is encumbered] may provide for:
33-4 (1) the selection of a trustee to sell the encumbered
33-5 facility on default in the payment of principal or interest under
33-6 the contract;
33-7 (2) the selection of a successor trustee if the
33-8 original trustee is disqualified or fails to act; and
33-9 (3) the collection by the trustee of a fee of not more
33-10 than five percent of the principal.
33-11 Sec. 1502.073 [1502.074]. NOTICE TO GOVERNING BODY BEFORE
33-12 FORECLOSURE OR OTHER ACTION. (a) Unless written notice is given
33-13 to the governing body of the municipality and to any board of
33-14 trustees in accordance with this section that there is a default in
33-15 payment of any installment of principal of or interest on an
33-16 obligation issued under this subchapter and that payment has been
33-17 demanded:
33-18 (1) a collection fee may not accrue;
33-19 (2) a foreclosure proceeding may not be begun in a
33-20 court or through a trustee; and
33-21 (3) an option to mature any part of the obligation
33-22 because of the default may not be exercised.
33-23 (b) A notice under Subsection (a) must be sent by prepaid
33-24 registered mail to each member of the governing body and each
33-25 member of any board of trustees, addressed to the member at the
33-26 post office in the municipality.
33-27 (c) An action described by Subsection (a) may not be taken
34-1 before the 91st day after the date the notice is mailed.
34-2 (d) A payment of a delinquent installment of principal and
34-3 interest that is paid before the expiration of the period
34-4 prescribed by Subsection (c) and that is accompanied by a payment
34-5 of interest as prescribed in the contract, at a rate not to exceed
34-6 10 percent per year, from the date of default until the date of
34-7 payment, has the same effect as if paid on the date the installment
34-8 was originally due.
34-9 [Sec. 1502.075. APPROPRIATION OF UTILITY SYSTEM INCOME:
34-10 MUNICIPALITY WITH POPULATION OF 12,410 OR LESS. (a) This section
34-11 applies only to a municipality that:]
34-12 [(1) has a population of 12,410 or less; and]
34-13 [(2) owns and operates its light system and waterworks
34-14 system.]
34-15 [(b) In the annual appropriation of the income and revenue
34-16 of any public utility system, service, or enterprise, the governing
34-17 body of a municipality that has adopted this section as provided by
34-18 Subsections (c) and (d) shall provide for appropriations in the
34-19 following order:]
34-20 [(1) the maintenance and operating expenses of the
34-21 system, service, or enterprise;]
34-22 [(2) the principal and interest of any debt
34-23 outstanding against the system, service, or enterprise; and]
34-24 [(3) any appropriations the remaining income and
34-25 revenue of the system, service, or enterprise may justify, to be
34-26 appropriated among municipal departments or otherwise for public
34-27 uses as the governing body considers best.]
35-1 [(c) At a special election called for the purpose, the
35-2 governing body of a municipality may submit the question of
35-3 adoption of this section to the municipality's qualified voters.
35-4 The election shall be held as nearly as possible in compliance with
35-5 the laws applying to regular municipal elections.]
35-6 [(d) If a majority of the voters voting in the election
35-7 favor adoption:]
35-8 [(1) the governing body shall enter the election
35-9 result in its minutes; and]
35-10 [(2) this section applies to the municipality
35-11 effective at the time the result is entered in the minutes.]
35-12 [(e) This section does not:]
35-13 [(1) restrict a municipality's authority under other
35-14 state law to issue bonds, notes, or warrants payable from revenue
35-15 other than taxes; or]
35-16 [(2) affect the applicability of Section 1502.057.]
35-17 Sec. 1502.074 [1502.076]. CIVIL ENFORCEMENT. A person who
35-18 resides in a municipality and is a taxpayer or holder of a public
35-19 security issued or an obligation incurred [issued] under this
35-20 chapter [subchapter] and secured by the [encumbered] revenue of the
35-21 municipality's utility system, park, or swimming pool as provided
35-22 by this chapter is entitled to enforce this chapter [subchapter] by
35-23 appropriate civil action in a district court in the county in which
35-24 the municipality is located.
35-25 [Sec. 1502.077. CONFLICT WITH MUNICIPAL CHARTER. To the
35-26 extent of a conflict between this subchapter and a municipal
35-27 charter, this subchapter controls.]
36-1 SECTION 23. Section 1506.164, Government Code, is amended
36-2 to read as follows:
36-3 Sec. 1506.164. CONFLICT OR INCONSISTENCY WITH OTHER LAW.
36-4 (a) When bonds are issued under this subchapter, to the extent of
36-5 any conflict or inconsistency between this subchapter and another
36-6 law, this subchapter controls.
36-7 (b) This subchapter is cumulative of all other law on the
36-8 subject, but this subchapter is wholly sufficient authority within
36-9 itself for the issuance of bonds and the performance of the other
36-10 acts and procedures authorized by this subchapter without reference
36-11 to any other law or any restrictions or limitations contained in
36-12 that law, except as specifically provided by this subchapter.
36-13 SECTION 24. Section 152.001(a), Water Code, is amended to
36-14 read as follows:
36-15 (a) This chapter applies only to a river authority that,
36-16 directly or through a corporation created under Section 152.051, is
36-17 engaged in the distribution and sale of electric energy to the
36-18 public.
36-19 SECTION 25. Section 152.052, Water Code, is amended by
36-20 adding Subsection (d) to read follows:
36-21 (d) A corporation created under Section 152.051 and the
36-22 creating river authority may:
36-23 (1) share officers, directors, employees, equipment,
36-24 and facilities; and
36-25 (2) provide goods or services to each other at cost
36-26 without the requirement of competitive bidding.
36-27 SECTION 26. Subchapter B, Chapter 152, Water Code, is
37-1 amended by adding Sections 152.056 and 152.057 to read as follows:
37-2 Sec. 152.056. TRANSFER OF RIVER AUTHORITY ASSETS TO
37-3 CORPORATION. Notwithstanding any other law, the board of directors
37-4 of a river authority may sell, lease, loan, or otherwise transfer
37-5 some, all, or substantially all of the electric generation property
37-6 of the river authority to a corporation created under Section
37-7 152.051. The property transfer must be made under terms approved
37-8 by the board of directors of the river authority.
37-9 Sec. 152.057. APPLICATION OF OTHER LAW TO RIVER AUTHORITY.
37-10 Reference in any other law to a river authority that is engaged in
37-11 the distribution and sale of electric energy to the public includes
37-12 a river authority that has created a corporation under Section
37-13 152.051 that is engaged in the distribution and sale of electric
37-14 energy to the public.
37-15 SECTION 27. Section 152.156, Water Code, is amended to read
37-16 as follows:
37-17 Sec. 152.156. PARTICIPATION IN PROGRAM BY PERSON OTHER THAN
37-18 RIVER AUTHORITY. An economic development program may involve the
37-19 granting or lending of money, services, or property to a person
37-20 engaged in an economic development activity[, including:]
37-21 [(1) a public fire-fighting organization;]
37-22 [(2) a governmental body;]
37-23 [(3) a nonprofit corporation;]
37-24 [(4) a local or regional development council; or]
37-25 [(5) any other nonprofit or noncommercial
37-26 organization].
37-27 SECTION 28. Section 152.201, Water Code, is amended to read
38-1 as follows:
38-2 Sec. 152.201. AUTHORITY TO ISSUE OBLIGATIONS. (a) A river
38-3 authority may issue revenue bonds, notes, or other obligations for
38-4 a purpose authorized by:
38-5 (1) this chapter; or
38-6 (2) another law, if the purpose relates to the
38-7 generation, transmission, or distribution of electricity.
38-8 (b) This chapter constitutes full authority for a river
38-9 authority to issue revenue bonds and other obligations without
38-10 reference to any other law.
38-11 SECTION 29. Chapter 152, Water Code, is amended by adding
38-12 Subchapter G to read as follows:
38-13 SUBCHAPTER G. ELECTRIC TRANSMISSION SERVICES AND
38-14 FACILITIES OF RIVER AUTHORITY
38-15 Sec. 152.301. ELECTRIC TRANSMISSION SERVICES AND FACILITIES.
38-16 A river authority may:
38-17 (1) provide transmission services, as defined by
38-18 Section 31.002, Utilities Code, on a regional basis to any eligible
38-19 transmission customer at any location within or outside the
38-20 boundaries of the river authority; and
38-21 (2) acquire, finance, lease, construct, rebuild,
38-22 operate, or sell electric transmission facilities at any location
38-23 within or outside the boundaries of the river authority.
38-24 Sec. 152.302. LIMITATION ON ELECTRIC TRANSMISSION
38-25 FACILITIES. This subchapter does not authorize a river authority
38-26 to construct electric transmission facilities for an ultimate
38-27 consumer of electricity to enable that consumer to bypass the
39-1 transmission or distribution facilities of its existing provider.
39-2 SECTION 30. Section 418.107(d), Government Code, is amended
39-3 to read as follows:
39-4 (d) A political subdivision may issue time warrants for the
39-5 payment of the cost of any equipment, construction, acquisition, or
39-6 any improvements for carrying out this chapter. The warrants shall
39-7 be issued in accordance with Chapter 252, Local Government Code, in
39-8 the case of a municipality, or Subchapter C, Chapter 262, Local
39-9 Government Code, in the case of a county [the Bond and Warrant Law
39-10 of 1931 (Article 2368a, Vernon's Texas Civil Statutes)]. Time
39-11 warrants issued for financing permanent construction or improvement
39-12 for emergency management purposes are subject to the right of the
39-13 voters to require a referendum vote under Section 252.045 or
39-14 262.029, Local Government Code, as applicable [4 of that law].
39-15 SECTION 31. Section 1433.022(b), Government Code, is amended
39-16 to read as follows:
39-17 (b) Land previously acquired by an issuer by eminent domain
39-18 may be sold, leased, or otherwise used in accordance with this
39-19 chapter, if the governing body determines that:
39-20 (1) the use will not interfere with the purpose for
39-21 which that land was originally acquired or that the land is no
39-22 longer needed for that purpose;
39-23 (2) at least seven years have elapsed since the land
39-24 was acquired by eminent domain; and
39-25 (3) the land was not acquired for park purposes unless
39-26 the sale or lease of that land has been approved at an election
39-27 held under Section 1502.055 [1502.057].
40-1 SECTION 32. Sections 263.026(b) and (i), Health and Safety
40-2 Code, are amended to read as follows:
40-3 (b) Payments for the sites or buildings shall be made from
40-4 the county permanent improvement fund. To pay for a site or
40-5 building for a health unit or center, the commissioners court may:
40-6 (1) issue negotiable bonds and impose taxes to pay the
40-7 principal of and interest on the bonds in accordance with Subtitles
40-8 A and C, Title 9, Government Code [Chapter 1, Title 22, Revised
40-9 Statutes];
40-10 (2) issue time warrants and impose taxes to pay the
40-11 principal of and interest on the time warrants in accordance with
40-12 Subchapter C, Chapter 262, Local Government Code [the Bond and
40-13 Warrant Law of 1931 (Article 2368a, Vernon's Texas Civil
40-14 Statutes)]; or
40-15 (3) by order issue certificates of indebtedness and
40-16 impose taxes to pay the principal of and interest on the
40-17 certificates in accordance with this section.
40-18 (i) The commissioners court may issue refunding bonds to
40-19 refund time warrants issued under this section[, subject to the
40-20 Bond and Warrant Law of 1931 (Article 2368a, Vernon's Texas Civil
40-21 Statutes)].
40-22 SECTION 33. Section 264.033, Health and Safety Code, is
40-23 amended to read as follows:
40-24 Sec. 264.033. TIME WARRANTS. The authority may issue time
40-25 warrants in the manner in which a commissioners court may issue
40-26 time warrants under Subchapter C, Chapter 262, Local Government
40-27 Code [the Bond and Warrant Law of 1931 (Article 2368a, Vernon's
41-1 Texas Civil Statutes)].
41-2 SECTION 34. Section 383.013(c), Health and Safety Code, is
41-3 amended to read as follows:
41-4 (c) Any [The Bond and Warrant Law of 1931 (Article 2368a,
41-5 Vernon's Texas Civil Statutes) and any other] law requiring
41-6 competitive bids does [do] not apply to a construction contract for
41-7 a project authorized by this chapter.
41-8 SECTION 35. Section 43.074(f), Local Government Code, is
41-9 amended to read as follows:
41-10 (f) The municipality may issue refunding bonds in its own
41-11 name to refund bonds, warrants, or other obligations, including
41-12 unpaid accrued interest on an obligation, that is assumed by the
41-13 municipality. The refunding bonds must be issued in the manner
41-14 provided by Chapter 1207, Government Code [the Bond and Warrant Law
41-15 of 1931 (Article 2368a, Vernon's Texas Civil Statutes), except that
41-16 a notice of the intention to issue the bonds is not required and a
41-17 right of referendum does not exist].
41-18 SECTION 36. Section 43.075(h), Local Government Code, is
41-19 amended to read as follows:
41-20 (h) If a district bond, warrant, or other obligation payable
41-21 in whole or in part from property taxes is assumed under this
41-22 section by the municipality, the governing body shall levy and
41-23 collect taxes on all taxable property in the municipality in an
41-24 amount sufficient to pay the principal of and interest on the bond,
41-25 warrant, or other obligation as it becomes due and payable. The
41-26 municipality may issue refunding bonds or warrants to refund bonds,
41-27 warrants, or other obligations, including unpaid earned interest on
42-1 them, that is assumed by the municipality. The refunding bonds or
42-2 warrants must be issued in the manner provided by Chapter 1207,
42-3 Government Code [the Bond and Warrant Law of 1931 (Article 2368a,
42-4 Vernon's Texas Civil Statutes), except a notice of the intention to
42-5 issue the bonds or warrants is not required and a right of
42-6 referendum does not exist]. A refunding bond must bear interest at
42-7 the same rate or at a lower rate than that borne by the refunded
42-8 obligation unless it is shown mathematically that a different rate
42-9 results in a savings in the total amount of interest to be paid.
42-10 SECTION 37. Sections 43.076(h) and (i), Local Government
42-11 Code, are amended to read as follows:
42-12 (h) The municipality may issue general obligation refunding
42-13 bonds in its own name to refund in whole or in part its pro rata
42-14 share of any outstanding district bonds, warrants, or other
42-15 obligations, including unpaid earned interest on them, that are
42-16 assumed by the municipality and that are payable in whole or in
42-17 part from property taxes. The refunding bonds must be issued in
42-18 the manner provided by Chapter 1207, Government Code [the Bond and
42-19 Warrant Law of 1931 (Article 2368a, Vernon's Texas Civil Statutes),
42-20 except that a notice of the intention to issue the refunding bonds
42-21 is not required and a right of referendum does not exist].
42-22 Refunding bonds must bear interest at the same rate or at a lower
42-23 rate than that borne by the refunded obligations unless it is shown
42-24 mathematically that a different rate results in a savings in the
42-25 total amount of interest to be paid.
42-26 (i) The municipality may issue revenue refunding bonds or
42-27 general obligation refunding bonds in its own name to refund in
43-1 whole or in part its pro rata share of any outstanding district
43-2 bonds, warrants, or other obligations, including unpaid earned
43-3 interest on them, that are assumed by the municipality and that are
43-4 payable solely from net revenues. The municipality may combine the
43-5 different issues or the bonds of different issues of both district
43-6 and municipal revenue bonds, warrants, or other obligations into
43-7 one or more series of revenue refunding bonds. The municipality
43-8 may pledge the net revenues of the district utility system or
43-9 property to the payment of those bonds, warrants, or other
43-10 obligations. The municipality may also combine the different
43-11 issues or the bonds of the different issues into one or more series
43-12 of general obligation refunding bonds. An originally issued
43-13 municipal revenue bond may not be refunded into municipal general
43-14 obligation refunding bonds. Except as otherwise provided by this
43-15 section, Subchapter B, Chapter 1502, Government Code, applies
43-16 [Articles 1111-1118, Vernon's Texas Civil Statutes, apply] to the
43-17 revenue refunding bonds, but an election for the issuance of the
43-18 bonds is not required. Revenue [In the issuance of revenue]
43-19 refunding bonds or general [, the municipality has the benefits of
43-20 and may exercise the authority granted under Chapter 541, Acts of
43-21 the 51st Legislature, Regular Session, 1949 (Article 1118n-5,
43-22 Vernon's Texas Civil Statutes). The provisions of that Act
43-23 relating to outstanding revenue bonds apply to outstanding revenue
43-24 bonds assumed by municipalities under this section. General]
43-25 obligation refunding bonds must be issued in the manner provided by
43-26 Chapter 1207, Government Code [the Bond and Warrant Law of 1931
43-27 (Article 2368a, Vernon's Texas Civil Statutes), except that a
44-1 notice of the intention to issue the bonds is not required and a
44-2 right of referendum does not exist]. The revenue refunding bonds
44-3 and the general obligation refunding bonds must bear interest at
44-4 the same rate or at a lower rate than that borne by the refunded
44-5 obligations unless it is shown mathematically that a different rate
44-6 results in a savings in the total amount of interest to be paid.
44-7 SECTION 38. Section 252.045(c), Local Government Code, is
44-8 amended to read as follows:
44-9 (c) The provisions of Subtitles A and C, Title 9, Government
44-10 Code [Chapters 1 and 2, Title 22, Revised Statutes], relating to
44-11 elections for the issuance of municipal bonds and to the issuance,
44-12 approval, registration, and sale of bonds govern the referendum and
44-13 the time warrants to the extent those provisions are consistent
44-14 with this chapter [and Chapter 163, General Laws, Acts of the 42nd
44-15 Legislature, Regular Session, 1931 (Article 2368a, Vernon's Texas
44-16 Civil Statutes)]. However, the time warrants may mature over a
44-17 term exceeding 40 years only if the governing body finds that the
44-18 financial condition of the municipality will not permit payment of
44-19 warrants issued for a term of 40 years or less from taxes that are
44-20 imposed substantially uniformly during the term of the warrants
44-21 [and are payable as provided by Article 2368a for funding bonds].
44-22 SECTION 39. Section 271.042, Local Government Code, is
44-23 amended to read as follows:
44-24 Sec. 271.042. PURPOSE; CONFLICT. (a) It is the purpose of
44-25 this subchapter to provide:
44-26 (1) a procedure for certain financing that is an
44-27 alternative to the more cumbersome procedure under Chapter 252 [of
45-1 this code and the Bond and Warrant Law of 1931 (Article 2368a,
45-2 Vernon's Texas Civil Statutes)]; and
45-3 (2) a new class of securities to be issued and
45-4 delivered within the financial capabilities of an issuer on
45-5 compliance with the procedures prescribed by this subchapter.
45-6 (b) If there is a conflict between a provision of this
45-7 subchapter and a provision of [either] Chapter 252 [of this code or
45-8 the Bond and Warrant Law of 1931 (Article 2368a, Vernon's Texas
45-9 Civil Statutes)], an issuer may use either provision, and it is not
45-10 necessary for the governing body to designate the law under which
45-11 action is being taken.
45-12 SECTION 40. Section 280.001(c), Local Government Code, is
45-13 amended to read as follows:
45-14 (c) For the purpose of acquiring land under this section, a
45-15 municipality or county may appropriate any available funds and
45-16 issue time warrants in payment. If time warrants are issued, the
45-17 provisions of Chapter 252 or[,] Subchapter C of Chapter 262 [, and
45-18 the Bond and Warrant Law of 1931 (Article 2368a, Vernon's Texas
45-19 Civil Statutes)] shall be followed to the extent applicable.
45-20 SECTION 41. Section 411.008(b), Local Government Code, is
45-21 amended to read as follows:
45-22 (b) The commissioners court shall:
45-23 (1) issue any bonds and impose related taxes in
45-24 compliance with Subtitles A and C, Title 9, Government Code; or
45-25 (2) issue any time warrants in compliance with
45-26 Subchapter C, Chapter 262, and impose related taxes in compliance
45-27 with Chapter 1251 [1253], Government Code.
46-1 SECTION 42. Section 22.053(b), Transportation Code, is
46-2 amended to read as follows:
46-3 (b) The commissioners court of a county that issues time
46-4 warrants under this section shall comply with:
46-5 (1) Subchapter C, Chapter 262, Local Government Code
46-6 [Chapter 163, General Laws, Acts of the 42nd Legislature, Regular
46-7 Session, 1931 (Article 2368a, Vernon's Texas Civil Statutes)],
46-8 regarding:
46-9 (A) [(1)] notice to issue the time warrants; and
46-10 (B) [(2) the levy and collection of taxes in
46-11 payment of the time warrants; and]
46-12 [(3)] the right to a referendum; and
46-13 (2) Chapter 1251, regarding the imposition of taxes
46-14 for payment of the time warrants.
46-15 SECTION 43. Section 367.068(a), Transportation Code, is
46-16 amended to read as follows:
46-17 (a) Sections 252.046, 252.047, and 252.048, Local Government
46-18 Code, [Chapter 1253, Government Code,] and Subchapter B, Chapter
46-19 1502, Government Code, apply, except as provided by Section
46-20 367.051, Section 367.059, or another provision of this subchapter,
46-21 to:
46-22 (1) the purchase of a toll bridge under this
46-23 subchapter;
46-24 (2) the issuance, sale, or delivery of bonds under
46-25 this subchapter;
46-26 (3) the manner of securing payment of the bonds;
46-27 (4) the enforcement of the obligations relating to the
47-1 bonds;
47-2 (5) the rights and remedies of the owners or holders
47-3 of the bonds or of any person acting on their behalf;
47-4 (6) the maintenance or operation of property acquired
47-5 under this subchapter; and
47-6 (7) the accomplishment of any other purpose of this
47-7 subchapter.
47-8 SECTION 44. Section 16.345(b), Water Code, is amended to
47-9 read as follows:
47-10 (b) In addition to any other authority to issue bonds or
47-11 other obligations or incur any debt, a political subdivision other
47-12 than a nonprofit water supply corporation eligible for financial
47-13 assistance under Subchapter K, Chapter 17, of this code may issue
47-14 bonds payable from and secured by a pledge of the revenues derived
47-15 or to be derived from the operation of water supply or sewer
47-16 service systems for the purpose of acquiring, constructing,
47-17 improving, extending, or repairing water supply or sewer
47-18 facilities. The bonds shall be issued in accordance with and a
47-19 political subdivision may exercise the powers granted by:
47-20 (1) Subchapter B, Chapter 1502, Government Code
47-21 [Articles 1111 through 1118, Revised Statutes; Chapters 249 and
47-22 250, Acts of the 51st Legislature, Regular Session, 1949 (Articles
47-23 1111a and 1111b, Vernon's Texas Civil Statutes); Chapter 428, Acts
47-24 of the 52nd Legislature, 1951 (Article 1111c, Vernon's Texas Civil
47-25 Statutes); Chapter 122, Acts of the 43rd Legislature, Regular
47-26 Session, 1933 (Articles 1114a, 1114b, and 1114c, Vernon's Texas
47-27 Civil Statutes); and Chapter 56, Acts of the 45th Legislature, 2nd
48-1 Called Session, 1937 (Article 1114d, Vernon's Texas Civil
48-2 Statutes)];
48-3 (2) Chapter 1201, Government Code [by the Bond
48-4 Procedures Act of 1981 (Article 717k-6, Vernon's Texas Civil
48-5 Statutes)];
48-6 (3) Chapter 1371, Government Code [by Chapter 656,
48-7 Acts of the 68th Legislature, Regular Session, 1983 (Article 717q,
48-8 Vernon's Texas Civil Statutes)]; and
48-9 (4) [by] other laws of the state.
48-10 SECTION 45. Section 2(h), Chapter 702, Acts of the 68th
48-11 Legislature, Regular Session, 1983 (Article 717r, Vernon's Texas
48-12 Civil Statutes), is amended to read as follows:
48-13 (h) Notice of intention to issue refunding bonds shall be
48-14 published by the metropolitan water control and improvement
48-15 district at least once a week for two consecutive weeks in a
48-16 newspaper of general circulation within the metropolitan water
48-17 control and improvement district at least 15 days before the
48-18 meeting of the governing body at which it is proposed to issue such
48-19 bonds. At any time prior to the issuance of the bonds, if a
48-20 petition signed by not less than 10 percent of the qualified voters
48-21 of the metropolitan water control and improvement district is filed
48-22 with the metropolitan water control and improvement district
48-23 calling for a referendum on the refunding bond issue, the governing
48-24 body shall, at its next meeting, order an election to be held
48-25 within the metropolitan water control and improvement district to
48-26 determine whether or not the bonds shall be issued. The election
48-27 shall be held in the manner prescribed by Chapter 1251, Government
49-1 Code, for the issuance of municipal bonds [Section 7, Bond and
49-2 Warrant Law of 1931 (Article 2368a, Vernon's Texas Civil
49-3 Statutes)].
49-4 SECTION 46. (a) All public securities authorized and issued
49-5 by any issuer before September 1, 1999, a public security
49-6 authorization approved or adopted by an issuer in connection with
49-7 the authorization and issuance of the public securities, and any
49-8 contracts or agreements executed and delivered in connection with
49-9 the public securities that were approved by the public security
49-10 authorization are validated, ratified, and confirmed in all
49-11 respects.
49-12 (b) In this section, "issuer," "public security," and
49-13 "public security authorization" have the meanings assigned by
49-14 Section 1201.002, Government Code.
49-15 SECTION 47. The following provisions of the Government Code
49-16 are repealed:
49-17 (1) Section 1207.081(c);
49-18 (2) Chapter 1253;
49-19 (3) Subchapter C, Chapter 1331;
49-20 (4) Section 1473.052(c);
49-21 (5) Subchapters C-K, Chapter 1502;
49-22 (6) Subchapters B and D, Chapter 1504; and
49-23 (7) Subchapters B and F, Chapter 1509.
49-24 SECTION 48. The importance of this legislation and the
49-25 crowded condition of the calendars in both houses create an
49-26 emergency and an imperative public necessity that the
49-27 constitutional rule requiring bills to be read on three several
50-1 days in each house be suspended, and this rule is hereby suspended.
_______________________________ _______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 3224 was passed by the House on May
4, 1999, by a non-record vote; and that the House concurred in
Senate amendments to H.B. No. 3224 on May 20, 1999, by a non-record
vote.
_______________________________
Chief Clerk of the House
I certify that H.B. No. 3224 was passed by the Senate, with
amendments, on May 18, 1999, by a viva-voce vote.
_______________________________
Secretary of the Senate
APPROVED: _____________________
Date
_____________________
Governor