1-1 By: Capelo (Senate Sponsor - West) H.B. No. 3224
1-2 (In the Senate - Received from the House May 5, 1999;
1-3 May 6, 1999, read first time and referred to Committee on State
1-4 Affairs; May 12, 1999, reported favorably by the following vote:
1-5 Yeas 9, Nays 0; May 12, 1999, sent to printer.)
1-6 A BILL TO BE ENTITLED
1-7 AN ACT
1-8 relating to the issuance of public securities by or on behalf of
1-9 the state and political subdivisions.
1-10 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-11 SECTION 1. This Act amends a nonsubstantive revision of the
1-12 laws relating to public securities proposed by H.B. No. 3157, 76th
1-13 Legislature, Regular Session, 1999. This Act takes effect
1-14 September 1, 1999, but only if H.B. No. 3157, 76th Legislature,
1-15 Regular Session, 1999, is enacted and becomes law. If H.B. No.
1-16 3157, 76th Legislature, Regular Session, 1999, is not enacted or
1-17 does not become law, this Act has no effect.
1-18 SECTION 2. Section 1201.027, Government Code, is amended by
1-19 amending the heading and Subsection (a) to read as follows:
1-20 Sec. 1201.027. AUTHORITY OF ISSUER [OF POLITICAL SUBDIVISION
1-21 OR MUNICIPAL CORPORATION] TO CONTRACT FOR SERVICES. (a) The
1-22 governing body of an issuer [a home-rule municipality or other
1-23 political subdivision or municipal corporation of this state or of
1-24 an instrumentality of such an entity] has exclusive authority to
1-25 select, [and] contract with, and determine the basis for
1-26 compensation of a person to provide legal and other services as may
1-27 be determined by the governing body to be necessary in connection
1-28 with the issuer's issuance of public securities or administration
1-29 of its affairs that pertain to the issuance of public securities.
1-30 The selection of legal counsel shall be made in accordance with the
1-31 provisions of Subchapter A, Chapter 2254, applicable to the
1-32 selection by a governmental entity of a provider of professional
1-33 engineering services [a service in connection with a public
1-34 security being issued, including legal counsel, an underwriter, or
1-35 a financial advisor].
1-36 SECTION 3. Section 1205.023, Government Code, is amended to
1-37 read as follows:
1-38 Sec. 1205.023. PROCEEDING IN REM; CLASS ACTION. An action
1-39 under this chapter is:
1-40 (1) a proceeding in rem; and
1-41 (2) a class action binding on [against] all persons
1-42 who:
1-43 (A) reside in the territory of the issuer;
1-44 (B) own property located within the boundaries
1-45 of the issuer;
1-46 (C) are taxpayers of the issuer; or
1-47 (D) have or claim a right, title, or interest in
1-48 any property or money to be affected by the public security
1-49 authorization or the issuance of the public securities.
1-50 SECTION 4. Section 1205.041(b), Government Code, is amended
1-51 to read as follows:
1-52 (b) The order must, in general terms and without naming
1-53 them, advise [require] the persons described by Subsection (a) and
1-54 the attorney general of their right to:
1-55 (1) appear for trial at 10 a.m. on the first Monday
1-56 after the 20th day after the date of the order; and
1-57 (2) show cause why the petition should not be granted
1-58 and the public securities or the public security authorization
1-59 validated and confirmed.
1-60 SECTION 5. Section 1205.044, Government Code, is amended to
1-61 read as follows:
1-62 Sec. 1205.044. EFFECT OF PUBLICATION. The effect of notice
1-63 given under Sections 1205.041 and 1205.043 is that:
1-64 (1) each person described by Section 1205.041(a) is a
2-1 party [defendant] to the action; and
2-2 (2) the court has jurisdiction over each person to the
2-3 same extent as if that person were individually named [as a
2-4 defendant] and personally served in the action.
2-5 SECTION 6. Section 1205.068(e), Government Code, is amended
2-6 to read as follows:
2-7 (e) An appeal under this section is governed by the rules of
2-8 the supreme court for accelerated appeals in civil cases and takes
2-9 priority over any other matter, other than writs of habeas corpus,
2-10 pending in the appellate court. The appellate court shall render
2-11 its final order or judgment with the least possible delay.
2-12 SECTION 7. Subchapter A, Chapter 1207, Government Code, is
2-13 amended by adding Sections 1207.007 and 1207.008 to read as
2-14 follows:
2-15 Sec. 1207.007. DELEGATION OF AUTHORITY. (a) In connection
2-16 with the issuance of refunding bonds, the governing body of an
2-17 issuer may:
2-18 (1) authorize the maximum principal amount of
2-19 refunding bonds that may be issued and the maximum rate of interest
2-20 to be borne by the bonds;
2-21 (2) identify the potential bonds, notes, or other
2-22 general or special obligations that may be refunded;
2-23 (3) recite the public purpose for which the refunding
2-24 bonds are to be issued; and
2-25 (4) delegate to any officer or employee of the issuer
2-26 the authority to:
2-27 (A) select any specific maturities or series of
2-28 bonds, notes, or other general or special obligations to be
2-29 refunded; and
2-30 (B) effect the sale of the refunding bonds.
2-31 (b) In exercising the authority delegated by the governing
2-32 body of the issuer to the officer or employee, the officer or
2-33 employee may establish the terms and details related to the
2-34 issuance and sale or exchange of the refunding bonds, including:
2-35 (1) the form and designation of the refunding bonds;
2-36 (2) the principal amount of the refunding bonds and
2-37 the amount of the refunding bonds to mature in each year;
2-38 (3) the dates, price, interest rates, interest payment
2-39 dates, principal payment dates, and redemption features of the
2-40 refunding bonds;
2-41 (4) the form of escrow agreement described by Section
2-42 1207.062; and
2-43 (5) any other details relating to the issuance and
2-44 sale or exchange of the refunding bonds as specified by the
2-45 governing body of the issuer in the proceedings authorizing the
2-46 issuance of the refunding bonds.
2-47 (c) A finding or determination made by an officer or
2-48 employee acting under the authority delegated to the officer or
2-49 employee has the same force and effect as a finding or
2-50 determination made by the governing body of the issuer.
2-51 Sec. 1207.008. LIMITATION. An issuer may not issue
2-52 refunding bonds if the aggregate amount of payments to be made
2-53 under the refunding bonds exceeds the aggregate amount of payments
2-54 that would have been made under the terms of the obligations being
2-55 refunded unless:
2-56 (1) the governing body of the issuer, in the
2-57 proceedings authorizing the issuance of the refunding bonds, finds
2-58 that the issuance is in the best interests of the issuer; and
2-59 (2) the maximum amount by which the aggregate amount
2-60 of payments to be made under the refunding bonds exceeds the
2-61 aggregate amount of payments that would have been made under the
2-62 terms of the obligations being refunded is specified in the
2-63 proceedings.
2-64 SECTION 8. Section 1207.022, Government Code, is amended to
2-65 read as follows:
2-66 Sec. 1207.022. LIMITATION. [(a)] An issuer may issue
2-67 refunding bonds to make a deposit under this subchapter or
2-68 Subchapter C only in connection with refunding bonds issued to
2-69 refund obligations that are:
3-1 (1) scheduled to mature not later than the 20th
3-2 anniversary of the date of the refunding bonds; or
3-3 (2) subject to redemption before maturity not later
3-4 than the 20th anniversary of the date of the refunding bonds.
3-5 [(b) Refunding bonds may not be issued to make a deposit
3-6 under this subchapter in connection with the refunding of electric
3-7 and gas system bonds issued by a municipality with a population of
3-8 more than 900,000.]
3-9 SECTION 9. Section 1207.025(a), Government Code, is amended
3-10 to read as follows:
3-11 (a) The [Refunding bonds must be registered by the]
3-12 comptroller may register refunding bonds as provided by Chapter
3-13 1202 before a deposit required by this subchapter or Subchapter C
3-14 is [may be] made.
3-15 SECTION 10. Section 1207.033, Government Code, is amended
3-16 by adding Subsections (c) and (d) to read as follows:
3-17 (c) After firm banking and financial arrangements for the
3-18 discharge and final payment or redemption of the obligations have
3-19 been made under Subsection (a), all rights of an issuer to initiate
3-20 proceedings to call the obligations for redemption or take any
3-21 other action amending the terms of the obligations are
3-22 extinguished. The right to call the obligations for redemption is
3-23 not extinguished if the issuer:
3-24 (1) in the proceedings providing for the firm banking
3-25 and financial arrangements, expressly reserves the right to call
3-26 the obligations for redemption;
3-27 (2) gives notice of the reservation of that right to
3-28 the owners of the obligations immediately following the making of
3-29 the firm banking and financial arrangements; and
3-30 (3) directs that notice of the reservation be included
3-31 in any redemption notices that it authorizes.
3-32 (d) Subsection (c) applies only to firm banking and
3-33 financial arrangements made on or after September 1, 1999, and has
3-34 no effect on the validity or legality of any such arrangements made
3-35 before that date.
3-36 SECTION 11. Section 1207.062, Government Code, is amended
3-37 by amending Subsections (b) and (c) and adding Subsections (d) and
3-38 (e) to read as follows:
3-39 (b) A deposit under Section 1207.061 may be invested only
3-40 in:
3-41 (1) direct noncallable obligations of the United
3-42 States, including obligations that [the principal of and interest
3-43 on which] are unconditionally guaranteed by the United States;
3-44 (2) noncallable obligations of an agency or
3-45 instrumentality of the United States, including obligations that
3-46 are unconditionally guaranteed or insured by the agency or
3-47 instrumentality and that, on the date the governing body of the
3-48 issuer adopts or approves the proceedings authorizing the issuance
3-49 of refunding bonds, are rated as to investment quality by a
3-50 nationally recognized investment rating firm not less than AAA or
3-51 its equivalent; and
3-52 (3) noncallable obligations of a state or an agency or
3-53 a county, municipality, or other political subdivision of a state
3-54 that have been refunded and that, on the date the governing body of
3-55 the issuer adopts or approves the proceedings authorizing the
3-56 issuance of refunding bonds, are rated as to investment quality by
3-57 a nationally recognized investment rating firm not less than AAA or
3-58 its equivalent.
3-59 (c) A deposit under Section 1207.061 may be invested only in
3-60 obligations that [and which] mature and bear interest payable at
3-61 times and in amounts sufficient to provide for the scheduled
3-62 payment or redemption of the obligation to be refunded. The
3-63 obligations may be in book-entry form.
3-64 (d) [(c)] An issuer shall enter into an agreement under
3-65 Subsection (a) if an obligation to be refunded is scheduled to be
3-66 paid or redeemed on a date later than the next scheduled interest
3-67 payment date on the obligation.
3-68 (e) Notwithstanding Subsection (b), a deposit under an
3-69 escrow agreement entered into under Subsection (a) before
4-1 September 1, 1999, may not be invested in an investment described
4-2 by Subsection (b)(2) or (3).
4-3 SECTION 12. Section 1231.044(b), Government Code, is
4-4 amended to read as follows:
4-5 (b) The state auditor shall prepare a report of the review
4-6 and file a copy of the report with:
4-7 (1) the board;
4-8 (2) the governor;
4-9 (3) [(2)] the lieutenant governor;
4-10 (4) [(3)] the speaker of the house of representatives;
4-11 (5) [(4)] the secretary of state; and
4-12 (6) [(5)] each member of the legislature.
4-13 SECTION 13. Section 1331.001, Government Code, is amended
4-14 to read as follows:
4-15 Sec. 1331.001. AUTHORITY OF MUNICIPALITY TO ISSUE BONDS. A
4-16 municipality may issue bonds payable from ad valorem taxes [with
4-17 one or more interest coupons] in the amount it considers expedient
4-18 to:
4-19 (1) construct or purchase permanent improvements
4-20 inside the municipal boundaries, including public buildings,
4-21 waterworks, or sewers;
4-22 (2) construct or improve the streets and bridges of
4-23 the municipality; or
4-24 (3) construct or purchase building sites or buildings
4-25 for the public schools and other institutions of learning inside
4-26 the municipality, if the municipality has assumed exclusive control
4-27 of those schools and institutions.
4-28 SECTION 14. Section 1331.002, Government Code, is amended
4-29 to read as follows:
4-30 Sec. 1331.002. SIGNATURES [OF MAYOR AND MUNICIPAL
4-31 SECRETARY]. Bonds [A bond] issued by a municipality under Section
4-32 1331.001 must be signed in the manner provided by the proceedings
4-33 authorizing the issuance of the bonds [by the mayor and
4-34 countersigned by the municipal secretary].
4-35 SECTION 15. Sections 1371.001(1), (4), and (5), Government
4-36 Code, are amended to read as follows:
4-37 (1) "Credit agreement" means a loan agreement,
4-38 revolving credit agreement, agreement establishing a line of
4-39 credit, letter of credit, reimbursement agreement, insurance
4-40 contract, commitment to purchase an obligation, purchase or sale
4-41 agreement, interest rate swap agreement, or commitment or other
4-42 agreement authorized [and approved] by a governing body in
4-43 connection with the authorization, issuance, sale, resale,
4-44 security, exchange, payment, purchase, remarketing, or redemption
4-45 of an obligation, interest on an obligation, or both, or as
4-46 otherwise authorized by this chapter.
4-47 (4) "Issuer" means:
4-48 (A) a home-rule municipality that:
4-49 (i) adopted its charter under Section 5,
4-50 Article XI, Texas Constitution;
4-51 (ii) has a population of 50,000 [90,000]
4-52 or more; and
4-53 (iii) has outstanding long-term
4-54 indebtedness [secured by the revenue of the public works for which
4-55 an obligation is being issued] that is rated by a nationally
4-56 recognized rating agency for municipal securities in one of the
4-57 four highest rating categories for a long-term obligation;
4-58 (B) a conservation and reclamation district
4-59 created and organized as a river authority under Section 52,
4-60 Article III, or Section 59, Article XVI, Texas Constitution;
4-61 (C) a joint powers agency organized and
4-62 operating under Chapter 163, Utilities Code;
4-63 (D) a metropolitan rapid transit authority or
4-64 regional transportation authority created, organized, and operating
4-65 under Chapter 451 or 452, Transportation Code;
4-66 (E) a conservation and reclamation district
4-67 organized or operating as a navigation district under Section 52,
4-68 Article III, or Section 59, Article XVI, Texas Constitution;
4-69 (F) a district organized or operating under
5-1 Section 59, Article XVI, Texas Constitution, that has all or part
5-2 of two or more municipalities within its boundaries;
5-3 (G) a state agency, including a state
5-4 institution of higher education;
5-5 (H) a hospital authority created or operating
5-6 under Chapter 262 or 264, Health and Safety Code, in a county that:
5-7 (i) has a population of more than two
5-8 million; or
5-9 (ii) is included, in whole or in part, in
5-10 a standard metropolitan statistical area of this state that
5-11 includes a county with a population of more than 1.8 million;
5-12 (I) a nonprofit corporation organized to
5-13 exercise the powers of a higher education authority under Section
5-14 53.47(e), Education Code; or
5-15 (J) a county with a population of two million or
5-16 more.
5-17 (5) "Obligation" means a [note, warrant, or other
5-18 special obligation authorized to be issued by an issuer under this
5-19 chapter or a] public security as defined by Section 1201.002 or
5-20 other special obligation authorized to be issued by an issuer that,
5-21 before delivery, is rated by a nationally recognized rating agency
5-22 for municipal securities in one of the three highest rating
5-23 categories for a short-term debt instrument or one of the four
5-24 highest rating categories for a long-term debt instrument. The
5-25 term does not include an obligation payable from ad valorem taxes
5-26 except as specifically permitted by this chapter.
5-27 SECTION 16. Subchapter A, Chapter 1371, Government Code, is
5-28 amended by adding Section 1371.004 to read as follows:
5-29 Sec. 1371.004. EFFECT OF FINDING OR DETERMINATION UNDER
5-30 DELEGATION OF AUTHORITY. A finding or determination made by an
5-31 officer or employee acting under the authority delegated to the
5-32 officer or employee under this chapter has the same force and
5-33 effect as a finding or determination made by the governing body.
5-34 SECTION 17. Section 1371.053(a), Government Code, is
5-35 amended to read as follows:
5-36 (a) A governing body must adopt or approve an obligation
5-37 authorization before an obligation may be issued [The issuance of
5-38 an obligation must be authorized by an obligation authorization].
5-39 SECTION 18. Section 1371.056, Government Code, is amended
5-40 to read as follows:
5-41 Sec. 1371.056. AUTHORITY TO ENTER INTO AND EXECUTE CREDIT
5-42 AGREEMENTS. (a) A [governing body may execute and deliver a
5-43 credit agreement to finance a project cost or to refund an
5-44 obligation issued in connection with an eligible project as may be
5-45 authorized and approved by the governing body.]
5-46 [(b) To enhance the security for or provide for the payment,
5-47 redemption, or remarketing of an obligation and interest on the
5-48 obligation in order to reduce the interest payable on the
5-49 obligation or in conjunction with the interim financing of an
5-50 eligible project of an issuer, a governing body may enter into a
5-51 credit agreement:]
5-52 [(1) at or after the issuance of the obligation; or]
5-53 [(2) in conjunction with the payment, sale, resale, or
5-54 exchange of the obligation.]
5-55 [(c) The] governing body may authorize the execution and
5-56 delivery of [execute] a credit agreement in connection with or
5-57 related [relation] to the authorization, issuance, security,
5-58 purchase, payment, sale, resale, redemption, remarketing, or
5-59 exchange of an obligation at any time, without regard to whether a
5-60 credit agreement was contemplated, authorized, or executed in
5-61 relation to the initial issuance, sale, or delivery of the
5-62 obligation.
5-63 (b) [(d)] A credit agreement must contain the terms and be
5-64 for the period the governing body approves.
5-65 (c) [(e)] The cost to the issuer of a credit agreement may
5-66 be paid from any source, including:
5-67 (1) the proceeds from the sale of the obligation to
5-68 which the credit agreement relates;
5-69 (2) revenue of the issuer that is available to pay the
6-1 obligation;
6-2 (3) any interest on the obligation or that may
6-3 otherwise be legally used; or
6-4 (4) ad valorem taxes to the extent permitted by this
6-5 chapter.
6-6 (d) [(f)] A credit agreement is an agreement for
6-7 professional services.
6-8 (e) Notwithstanding Subsection (b), the governing body may
6-9 delegate to an officer or employee the authority, under the terms
6-10 and for the period approved by the governing body, to:
6-11 (1) enter into a credit agreement and transactions
6-12 under a credit agreement; and
6-13 (2) execute any instruments in connection with those
6-14 transactions.
6-15 SECTION 19. Subchapter B, Chapter 1371, Government Code, is
6-16 amended by amending Sections 1371.057 and 1371.058 and adding
6-17 Sections 1371.059 and 1371.060 to read as follows:
6-18 Sec. 1371.057. REVIEW AND APPROVAL OF OBLIGATION, CREDIT
6-19 AGREEMENT, AND CONTRACT BY ATTORNEY GENERAL. (a) Before an
6-20 obligation may be issued or a credit agreement executed, a record
6-21 of the proceedings of the issuer authorizing the issuance,
6-22 execution, and delivery of the obligation, the credit agreement,
6-23 and any contract providing revenue or security to pay the
6-24 obligation or the credit agreement must be submitted to the
6-25 attorney general for review.
6-26 (b) If the attorney general finds that the credit agreement,
6-27 contract, and other authorizing proceedings conform to the
6-28 requirements of the Texas Constitution and this chapter, the
6-29 attorney general shall approve them and deliver to the comptroller
6-30 a copy of the attorney general's legal opinion stating that
6-31 approval and the record of proceedings. After approval, the
6-32 obligation and credit agreement may be executed and delivered,
6-33 exchanged, or refinanced from time to time in accordance with those
6-34 authorizing proceedings.
6-35 Sec. 1371.058. REGISTRATION. On receipt of the documents
6-36 required by Section 1371.057(b), the comptroller shall register the
6-37 record of the proceedings relating to the issuance of obligations
6-38 or the execution of a credit agreement.
6-39 Sec. 1371.059. VALIDITY AND INCONTESTABILITY. [(c)] On
6-40 approval by the attorney general, registration by the comptroller,
6-41 and initial delivery of the obligation, a credit agreement, a
6-42 contract providing revenue or security, an initial obligation, and
6-43 any obligation subsequently issued under the authorizing
6-44 proceedings are incontestable in a court or other forum and are
6-45 valid and binding obligations enforceable according to their terms.
6-46 Sec. 1371.060 [1371.058]. REFINANCING, RENEWAL, OR REFUNDING
6-47 OF OBLIGATION OR CREDIT AGREEMENT. An obligation, including
6-48 accrued interest, or a credit agreement may from time to time be
6-49 refinanced, renewed, or refunded by the issuance of another
6-50 obligation or credit agreement.
6-51 SECTION 20. Section 1371.103(b), Government Code, is
6-52 amended to read as follows:
6-53 (b) A governing body may secure an obligation and pay the
6-54 cost of a credit agreement executed and delivered in connection
6-55 with the financing of a project cost with:
6-56 (1) the [ad valorem taxes or with other] sources
6-57 permitted by this chapter; and
6-58 (2) ad valorem taxes to the extent the project cost
6-59 relates to an eligible project financed or to be financed with
6-60 obligations payable from ad valorem taxes.
6-61 SECTION 21. The heading to Chapter 1502, Government Code, is
6-62 amended to read as follows:
6-63 CHAPTER 1502. PUBLIC SECURITIES [OBLIGATIONS] FOR
6-64 MUNICIPAL UTILITIES, PARKS, OR POOLS
6-65 SECTION 22. Subchapters A and B, Chapter 1502, Government
6-66 Code, are amended to read as follows:
6-67 SUBCHAPTER A. GENERAL PROVISIONS
6-68 Sec. 1502.001. DEFINITIONS [DEFINITION]. In this chapter:
6-69 (1) "Combined system" means any combination of one or
7-1 more of the following:
7-2 (A) an electric system;
7-3 (B) a water system;
7-4 (C) a sewer system;
7-5 (D) a solid waste disposal system;
7-6 (E) a drainage utility system; and
7-7 (F) a natural gas system.
7-8 (2) "Public security" has the meaning assigned by
7-9 Section 1201.002.
7-10 (3) "Utility system" means an electric, water, sewer,
7-11 solid waste disposal, drainage utility, or natural gas system. The
7-12 term includes one or more combined systems[, "paying agent" means
7-13 the person, including a bank or trust company, at whose location
7-14 payment of a refunded obligation is to be made].
7-15 Sec. 1502.002. GENERAL AUTHORITY FOR UTILITY SYSTEMS, PARKS,
7-16 AND POOLS. (a) A municipality may acquire, purchase, construct,
7-17 improve, enlarge, equip, operate, or maintain any property,
7-18 interests in property, buildings, structures, activities, services,
7-19 operations, or other facilities, with respect to:
7-20 (1) a utility system;
7-21 (2) a park; or
7-22 (3) a swimming pool.
7-23 (b) The governing body of a municipality may authorize the
7-24 execution and delivery of contracts between the municipality and
7-25 any person to accomplish any purpose described by Subsection (a).
7-26 Sec. 1502.003. CREATION AND MAINTENANCE OF COMBINED SYSTEM.
7-27 Notwithstanding any law or municipal charter provision to the
7-28 contrary, the governing body of a municipality may create and
7-29 maintain one or more combined systems on a finding by the governing
7-30 body that it is in the best interests of the municipality to create
7-31 and maintain the combined system. A finding by a governing body
7-32 under this section is conclusive and incontestable.
7-33 Sec. 1502.004. CONFLICT WITH MUNICIPAL CHARTER. To the
7-34 extent of a conflict between this chapter and a municipal charter,
7-35 this chapter controls.
7-36 SUBCHAPTER B. PUBLIC SECURITIES [REVENUE BONDS] FOR
7-37 UTILITY SYSTEMS, PARKS, OR POOLS
7-38 Sec. 1502.051. AUTHORITY TO ISSUE PUBLIC SECURITIES. (a)
7-39 The governing body of a municipality may provide funds to acquire,
7-40 purchase, construct, improve, renovate, enlarge, or equip property,
7-41 buildings, structures, facilities, or related infrastructure for:
7-42 (1) a utility system;
7-43 (2) a park; or
7-44 (3) a swimming pool.
7-45 (b) In connection with exercising the authority to provide
7-46 funds for the purposes described by Subsection (a)(1), the
7-47 governing body of a municipality may provide funds to acquire,
7-48 purchase, or otherwise obtain any interest in property, including
7-49 additional water or riparian rights.
7-50 (c) The governing body of a municipality may issue public
7-51 securities and incur obligations under contracts in accordance with
7-52 this chapter for any purpose authorized by law in connection with
7-53 providing funds for a purpose described by Subsection (a) or (b)
7-54 [DEFINITIONS. In this subchapter:]
7-55 [(1) "Encumbered facility" means a utility system,
7-56 sanitary disposal system, park, or swimming pool encumbered under
7-57 this subchapter.]
7-58 [(2) "Utility system" means an electric, water, sewer,
7-59 or natural gas system].
7-60 Sec. 1502.052. [AUTHORITY TO BUILD, PURCHASE, OR ENCUMBER
7-61 UTILITY SYSTEM, SANITARY DISPOSAL EQUIPMENT, PARK, OR POOL. (a) A
7-62 municipality may:]
7-63 [(1) build, purchase, or encumber a municipal utility
7-64 system, sanitary disposal equipment, a park, or a swimming pool;]
7-65 [(2) encumber anything acquired or to be acquired that
7-66 relates to a municipal utility system, sanitary disposal equipment,
7-67 a park, or a pool;]
7-68 [(3) purchase additional water powers or riparian
7-69 rights; or]
8-1 [(4) improve, enlarge, extend, or repair a municipal
8-2 utility system, sanitary disposal equipment, a park, or a pool.]
8-3 [(b) A municipality may encumber one or more municipal
8-4 utility systems, items of sanitary disposal equipment, parks, or
8-5 pools to build, purchase, improve, extend, or repair the same or
8-6 another municipal utility system, item of sanitary disposal
8-7 equipment, park, or pool.]
8-8 [Sec. 1502.053. AUTHORITY TO ISSUE BONDS, NOTES, OR
8-9 WARRANTS. A municipality may issue bonds, notes, or warrants to
8-10 provide money to build, purchase, improve, enlarge, extend, or
8-11 repair a facility described by Section 1502.052.]
8-12 [Sec. 1502.054.] PLEDGE OF REVENUE. (a) The governing body
8-13 of a municipality may pledge to the payment of any public
8-14 securities issued or any obligations incurred under Section
8-15 1502.051(c) all or any part of the revenue of:
8-16 (1) a utility system;
8-17 (2) a park; or
8-18 (3) a swimming pool.
8-19 (b) The governing body of a municipality may grant a lien on
8-20 the revenue pledged under Subsection (a). The lien has the
8-21 priority determined by the governing body, subject to the
8-22 provisions of Section 1502.056 [A municipality may pledge the
8-23 revenue and encumber the franchise of a facility described by
8-24 Section 1502.052 to secure the payment of obligations issued under
8-25 this subchapter].
8-26 Sec. 1502.053 [1502.055]. GRANT OF FRANCHISE. As additional
8-27 security for public securities issued or obligations incurred under
8-28 this chapter [the encumbrance], the municipality by the terms of
8-29 the encumbrance may grant a purchaser under sale or foreclosure a
8-30 franchise to operate the encumbered utility system, park, or pool
8-31 [facility or property] for a term not to exceed 20 years from the
8-32 date of purchase, subject to all laws regulating the operation of
8-33 the utility system, park, or pool [same then] in force at the time
8-34 of the sale or foreclosure.
8-35 Sec. 1502.054 [1502.056]. OBLIGATIONS NOT PAYABLE FROM
8-36 TAXES. (a) A public security issued or an [An] obligation
8-37 incurred [issued] under this chapter [subchapter]:
8-38 (1) is not a debt of the municipality;
8-39 (2) may be a charge only on the encumbered utility
8-40 system, park, or pool [facility or property]; and
8-41 (3) may not be included in determining the
8-42 municipality's power to issue public securities [bonds] for any
8-43 purpose authorized by law.
8-44 (b) Each public security [contract, bond, note,] or other
8-45 evidence of indebtedness issued or included under this chapter
8-46 [subchapter] must contain the following provision: "The holder of
8-47 this obligation is not entitled to demand payment of this
8-48 obligation out of any money raised by taxation."
8-49 Sec. 1502.055 [1502.057]. ELECTION. (a) Unless authorized
8-50 by a majority vote of the qualified voters of the municipality, a
8-51 municipality may not[:]
8-52 [(1) encumber a utility system, park, or swimming pool
8-53 for more than $10,000 except to:]
8-54 [(A) obtain money to acquire, construct,
8-55 improve, extend, or repair a utility system, park, or pool; or]
8-56 [(B) refund existing debt that was authorized by
8-57 law for a purpose stated in Paragraph (A); or]
8-58 [(2)] sell a utility system, park, or pool.
8-59 (b) The governing body of the municipality shall hold an
8-60 election under this section in the manner provided for bond
8-61 elections in the municipality.
8-62 (c) [The encumbrances authorized by this section apply only
8-63 to bonds payable from revenue derived from the encumbered system.]
8-64 [(d)] This section does not apply to the sale of an
8-65 unencumbered natural gas system owned by a municipality with a
8-66 population of more than 1.2 million.
8-67 Sec. 1502.056 [1502.058]. OPERATING EXPENSES AS FIRST LIEN.
8-68 (a) If the revenue of a utility system, park, or swimming pool
8-69 secures the payment of public securities issued or obligations
9-1 incurred under this chapter [is encumbered under this subchapter],
9-2 each expense of operation and maintenance, including all salaries,
9-3 labor, materials, interest, repairs and extensions necessary to
9-4 provide efficient service, and each proper item of expense, is a
9-5 first lien against that revenue.
9-6 (b) An expense for a repair or extension is a first lien
9-7 only if, in the judgment of the governing body of the municipality,
9-8 the repair or extension is necessary to:
9-9 (1) keep the plant or utility system in operation and
9-10 provide adequate service to the municipality and its residents; or
9-11 (2) respond to a physical accident or condition that
9-12 would otherwise impair the original securities.
9-13 (c) A contract between a municipality and an issuer, as
9-14 defined by Section 1201.002, under which the municipality obtains
9-15 from the issuer or the issuer provides part or all of the
9-16 facilities or services of a utility system to the municipality may
9-17 provide that payments made by the municipality from the revenue of
9-18 the utility system are an operating expense of the municipality's
9-19 utility system.
9-20 Sec. 1502.057 [1502.059]. CHARGES FOR SERVICES. (a) A
9-21 municipality shall impose and collect charges for services provided
9-22 by a utility [an encumbered] system in amounts at least sufficient
9-23 to pay:
9-24 (1) all operating, maintenance, depreciation,
9-25 replacement, improvement, and interest charges in connection with
9-26 the utility [encumbered] system;
9-27 (2) for an interest and sinking fund sufficient to pay
9-28 any public securities [bonds] issued or obligations incurred for
9-29 any purpose described by Section 1502.002 relating to the utility
9-30 system [to purchase, construct, or improve the encumbered system];
9-31 and
9-32 (3) any outstanding debt against the system.
9-33 (b) The rates charged for services provided by a utility [an
9-34 encumbered] system must be equal and uniform. A municipality may
9-35 not allow any free service except for:
9-36 (1) municipal public schools; or
9-37 (2) buildings and institutions operated by the
9-38 municipality.
9-39 Sec. 1502.058 [1502.060]. LIMITATION ON USE OF REVENUE. (a)
9-40 Except as provided by Subsection (b) or (c), by Section 1502.059,
9-41 or by Section 271.052, Local Government Code [1502.061], a
9-42 municipality may not use the revenue of a utility [an encumbered]
9-43 system, park, or swimming pool to pay any other debt, expense, or
9-44 obligation of the municipality until the debt secured by the
9-45 revenue is finally paid.
9-46 (b) This section does not apply to a payment made in lieu of
9-47 ad valorem taxes previously paid by a private owner of a utility
9-48 [an encumbered] system.
9-49 (c) This section does not apply to a payment made from
9-50 surplus revenue of a utility system, park, or swimming pool, as
9-51 provided by the proceedings authorizing the issuance of public
9-52 securities under this chapter.
9-53 Sec. 1502.059 [1502.061]. TRANSFER OF REVENUE TO GENERAL
9-54 FUND. Notwithstanding Section 1502.058(a) [1502.060(a)] or a
9-55 similar law or municipal charter provision, a municipality and its
9-56 officers and utility trustees may transfer to the municipality's
9-57 general fund and may use for general or special purposes revenue of
9-58 any municipally owned utility system in the amount and to the
9-59 extent authorized in the indenture, deed of trust, or ordinance
9-60 providing for and securing payment of public securities [revenue
9-61 bonds] issued under this chapter [subchapter] or similar law.
9-62 Sec. 1502.060. USE AND INVESTMENT OF PROCEEDS. (a) To the
9-63 extent provided by the proceedings authorizing the issuance of the
9-64 public securities issued under this chapter, a municipality may:
9-65 (1) use proceeds from the sale of public securities
9-66 issued to provide funds for a utility system under this chapter for
9-67 any purpose authorized by Section 1502.051(a)(1) or (b);
9-68 (2) use proceeds from the sale of public securities
9-69 issued to provide funds for a park under this chapter for any
10-1 purpose authorized by Section 1502.051(a)(2); or
10-2 (3) use proceeds from the sale of public securities to
10-3 provide funds for a swimming pool under this chapter for any
10-4 purpose authorized by Section 1502.051(a)(3).
10-5 (b) A municipality may use proceeds from the sale of public
10-6 securities issued under this chapter to pay interest on the public
10-7 securities during the period of the acquisition or construction of
10-8 any facilities to be provided through the issuance of the public
10-9 securities, and for one year after completion of the acquisition or
10-10 construction of the facilities.
10-11 (c) A municipality may use proceeds from the sale of public
10-12 securities issued under this chapter to:
10-13 (1) provide a reserve for the payment of debt service
10-14 on the public securities;
10-15 (2) provide a reserve for extraordinary repairs and
10-16 replacements; or
10-17 (3) obtain a credit agreement as provided by Section
10-18 1502.064.
10-19 (d) A municipality may invest proceeds from the sale of
10-20 public securities issued under this chapter to the extent and in
10-21 the manner provided in the proceedings authorizing the issuance of
10-22 the public securities.
10-23 [Sec. 1502.062. USE OF BOND PROCEEDS: MUNICIPALITY WITH
10-24 POPULATION OF 75,000 OR MORE. (a) A municipality with a
10-25 population of 75,000 or more, in issuing bonds under this
10-26 subchapter, as part of the cost of constructing new electric
10-27 utility plant facilities may set aside and use a portion of the
10-28 bond proceeds, to the extent provided in the ordinance authorizing
10-29 the issuance of the bonds:]
10-30 [(1) to pay interest on bonds, the proceeds of which
10-31 are for the construction of the facilities, to the first interest
10-32 payment date after the date the new electric utility facilities are
10-33 estimated to become operational; and]
10-34 [(2) to establish or supplement a reserve fund created
10-35 for the benefit of the bond holders.]
10-36 [(b) The bond proceeds, an interest and sinking fund, or a
10-37 reserve fund, pending their use for their intended purposes, may be
10-38 invested in any security, interest-bearing certificate, or time
10-39 deposit as specified in the proceedings authorizing the issuance of
10-40 the bonds.]
10-41 [(c) This section controls over any other state law or any
10-42 municipal charter.]
10-43 [Sec. 1502.063. REVENUE BONDS TO IMPROVE WATERWORKS SYSTEM:
10-44 TWO SERIES WITH DIFFERENT SECURITY. (a) For the purpose of
10-45 improving, enlarging, or extending a waterworks system, a
10-46 municipality may issue revenue bonds under this subchapter in two
10-47 series as follows:]
10-48 [(1) one series payable from and secured by a pledge
10-49 of all or part of the proceeds of a contract between the
10-50 municipality and a private corporation under which the municipality
10-51 agrees to sell water to the corporation for specified payments; and]
10-52 [(2) the other series payable from and secured by a
10-53 pledge of the net revenue of the waterworks system or waterworks
10-54 and sewer systems other than the proceeds of the water supply
10-55 contract.]
10-56 [(b) The ordinance authorizing the issuance of the bonds may
10-57 provide that the entire cost of operation, maintenance, and repair
10-58 of the system or systems shall be paid from the revenue of the
10-59 system or systems other than the proceeds of the water supply
10-60 contract.]
10-61 [(c) A municipality may contract to sell water to a private
10-62 corporation on terms prescribed by the municipality's governing
10-63 body for a period not to exceed 40 years.]
10-64 Sec. 1502.061 [1502.064]. ADDITIONAL OBLIGATIONS TO IMPROVE
10-65 OR EXTEND UTILITY SYSTEM. (a) A municipality that has outstanding
10-66 public securities [bonds] secured by the net revenue of a utility
10-67 system [one or more of its utility systems] may issue additional
10-68 public securities [bonds] or incur other obligations for a purpose
10-69 described by Section 1502.051(a)(1) or (b) [to improve or extend
11-1 one or more of the utility systems. The additional bonds may be
11-2 payable from the revenue from the operation of the utility system
11-3 or systems that is pledged to the payment of outstanding bonds].
11-4 (b) Except as provided by Subsection (c), public securities
11-5 [bonds] issued under Subsection (a) constitute a lien on the
11-6 revenue of the affected system:
11-7 (1) in the order of issuance; and
11-8 (2) inferior to a lien securing payment of outstanding
11-9 public securities, as determined by the governing body of the
11-10 municipality [bonds].
11-11 (c) A municipality may issue additional public securities
11-12 [bonds or series of bonds] under this section on a parity and of
11-13 equal dignity with the outstanding public securities [bonds] if the
11-14 ordinance, deed of trust, or indenture of trust authorizing or
11-15 securing the outstanding public securities [bonds] provides for the
11-16 subsequent issuance of additional parity public securities [bonds],
11-17 subject to that ordinance, deed of trust, or indenture of trust.
11-18 (d) To the extent of a conflict or inconsistency between
11-19 this section and another law, this section controls.
11-20 Sec. 1502.062. MATURITY. A public security issued under
11-21 this chapter must mature not later than 50 years after its date.
11-22 Sec. 1502.063. ADDITIONAL AUTHORITY OF MUNICIPALITY WITH A
11-23 POPULATION OF 50,000 OR MORE. Notwithstanding any other provision
11-24 of this chapter, in connection with the issuance of public
11-25 securities under this chapter, the governing body of a municipality
11-26 with a population of 50,000 or more may exercise any authority
11-27 granted to a governing body under Chapter 1371 in connection with
11-28 the issuance of obligations under that chapter.
11-29 Sec. 1502.064. CREDIT AGREEMENT FOR RESERVE FUND. (a) The
11-30 governing body of a municipality may provide that in lieu of or in
11-31 addition to providing a cash reserve, a credit agreement, as
11-32 defined by Section 1371.001, may be used to provide the reserve.
11-33 (b) A credit agreement obtained to provide a reserve must be
11-34 submitted to the attorney general for examination and approval.
11-35 After approval by the attorney general, the credit agreement is
11-36 incontestable in any court or other forum for any reason and is a
11-37 valid and binding obligation of the municipality in accordance with
11-38 its terms for all purposes.
11-39 Sec. 1502.065. REFUNDING BONDS. A municipality may issue
11-40 public securities in the manner provided by applicable law to
11-41 refund or otherwise refinance any obligation incurred under this
11-42 chapter to which revenue has been pledged.
11-43 [Sec. 1502.065. LIEN PRIORITY: REFUNDING BONDS. (a) This
11-44 section applies only to refunding bonds issued by a municipality
11-45 that are payable from and secured by a pledge of the revenue of one
11-46 or more of the municipality's utility systems.]
11-47 [(b) Refunding bonds described by Subsection (a) have a
11-48 priority of lien on the revenue pledged that is on a parity with
11-49 the lien priority of the bonds being refunded.]
11-50 [(c) The lien of all refunding bonds issued in a single
11-51 issue to refund two or more consecutive series or issues of bonds
11-52 is equal if all of the outstanding bonds of those series or issues
11-53 of bonds are surrendered in exchange for the new refunding bonds.]
11-54 [(d) Refunding bonds may not have a lien priority higher
11-55 than the highest lien priority of any series or issue of bonds
11-56 being refunded.]
11-57 [Sec. 1502.066. BONDS FOR ACQUISITION OF HYDROELECTRIC
11-58 GENERATING FACILITIES. (a) A municipality that owns an electric
11-59 distribution system, regardless of whether the municipality also
11-60 owns a facility for the generation of electricity, may issue bonds
11-61 under this subchapter to purchase and improve, maintain, and
11-62 operate a privately owned facility for the generation of
11-63 hydroelectric power having an installed capacity of not less than
11-64 2,000 kilowatts that is located within five miles of the
11-65 municipality's boundaries, including any land, flowage right or
11-66 water right, and related generating and transmission equipment and
11-67 lines. The municipality may purchase the facility with the
11-68 proceeds of the bonds or by issuing the bonds in exchange for the
11-69 facility but only if authorized at an election held in accordance
12-1 with Section 1502.057.]
12-2 [(b) For the purpose of the issuance and payment of the
12-3 bonds, a hydroelectric generating facility acquired under this
12-4 section may be regarded as an independent electric system that,
12-5 together with its revenue, may be pledged to the payment of the
12-6 bonds without any pledge of the municipality's other electric
12-7 facilities or the revenue of those facilities.]
12-8 [(c) A municipality that acquires a hydroelectric generating
12-9 facility under this section shall perform any contract in existence
12-10 at the time of acquisition for the sale of electricity generated by
12-11 the facility unless the contract is canceled by voluntary agreement
12-12 of the municipality and each party entitled to purchase
12-13 electricity under the contract.]
12-14 [(d) Subject to the rights of any party to an existing
12-15 contract, the municipality shall take for distribution by its
12-16 distribution system the part of the output of the acquired
12-17 generating facility needed for distribution. The municipality in
12-18 the proceedings authorizing the bonds may covenant, as the
12-19 municipality considers proper, for the use of the electricity and
12-20 for payment for the electricity from the revenue from the resale of
12-21 the electricity.]
12-22 [(e) The municipality may enter into long-term or short-term
12-23 contracts to sell to other purchasers any electricity generated by
12-24 the facility that the municipality does not distribute by its
12-25 system to its consumers.]
12-26 Sec. 1502.066 [1502.067]. RECORDS. The mayor of the
12-27 municipality shall establish and maintain a complete system of
12-28 records for a utility system, park, or swimming pool the revenue of
12-29 which is encumbered under this chapter [subchapter] that:
12-30 (1) shows any [the] free service provided and the
12-31 value of the free service; and
12-32 (2) shows separately the amounts spent and the amounts
12-33 set aside for operation, salaries, labor, materials, repairs,
12-34 maintenance, depreciation, replacements, extensions, interest, and
12-35 the creation of a sinking fund to pay the public securities [bonds]
12-36 and debt.
12-37 Sec. 1502.067 [1502.068]. RECORDS: NONCASH BASIS. (a) A
12-38 municipality may maintain its records on facilities under this
12-39 chapter [subchapter] or any other municipal records on a basis
12-40 other than a cash basis to the extent permitted or required under
12-41 generally accepted accounting principles for a governmental entity.
12-42 (b) A change in accounting methods does not affect the terms
12-43 of an existing contract with respect to the power to issue
12-44 additional obligations payable from the facilities.
12-45 Sec. 1502.068 [1502.069]. ANNUAL REPORT. (a) Annually, on
12-46 the date determined by the governing body of the municipality [Not
12-47 later than February 1 of each year], the superintendent or manager
12-48 of a utility system, park, or pool or another person designated by
12-49 the governing body [plant the revenue of which is encumbered under
12-50 this subchapter] shall file with the mayor and governing body of
12-51 the municipality a detailed report of the operation of the system,
12-52 park, or pool [plant] for the preceding 12-month period specified
12-53 by the governing body [year ending on the preceding January 1].
12-54 (b) The report must show the total amount of money collected
12-55 and the balance due, and the total disbursements made and the
12-56 amounts remaining unpaid, resulting from the operation of the
12-57 utility system, park, or pool [plant] during that year.
12-58 Sec. 1502.069 [1502.070]. OFFENSES; PENALTY. (a) A mayor
12-59 commits an offense if the mayor fails to:
12-60 (1) establish the system of records required by
12-61 Section 1502.066 [1502.067] before the 91st day after the date the
12-62 utility system, park, or pool [plant] is completed; or
12-63 (2) maintain the system of records required by Section
12-64 1502.066 [1502.067].
12-65 (b) The person responsible for filing a report required by
12-66 Section 1502.068 [A superintendent or manager of a plant] commits
12-67 an offense if the person [superintendent or manager] fails to
12-68 timely file the [a] report [required by Section 1502.069].
12-69 (c) An offense under this section is a misdemeanor
13-1 punishable by a fine of not less than $100 or more than $1,000.
13-2 Sec. 1502.070 [1502.071]. MANAGEMENT AND CONTROL OF UTILITY
13-3 SYSTEM [ENCUMBERED FACILITY]. (a) Management and control of a
13-4 utility system may be vested in [The contract under which a
13-5 facility is encumbered may give management and control of the
13-6 encumbered facility during the time the facility is encumbered to]:
13-7 (1) the municipality's governing body; or
13-8 (2) a board of trustees named in the proceedings
13-9 adopted by the municipality [encumbrance] and consisting of not
13-10 more than five members, one of whom must be the mayor of the
13-11 municipality.
13-12 (b) The compensation of the trustees shall be specified by
13-13 the proceedings [contract of encumbrance]. The compensation may
13-14 not exceed five percent of the [encumbered facility's] gross
13-15 receipts of the utility system in any year.
13-16 (c) The proceedings of the municipality [contract of
13-17 encumbrance] may specify the terms of office of the board of
13-18 trustees, their powers and duties, the manner of exercising those
13-19 powers and duties, the election of successor trustees, and any
13-20 matter relating to the organization and duties of the board. On
13-21 any matter not covered by the proceedings [contract], the board of
13-22 trustees is governed by the laws and rules governing the
13-23 municipality's governing body, to the extent applicable.
13-24 Sec. 1502.071 [1502.072]. RULES. (a) The governing body or
13-25 board of trustees having management and control of a utility system
13-26 [an encumbered facility] may adopt rules to:
13-27 (1) govern the provision of and payment for service;
13-28 and
13-29 (2) provide for the discontinuance of service for
13-30 failure to pay when due until payment is made.
13-31 (b) The governing body may provide penalties for:
13-32 (1) the violation of a rule adopted under this
13-33 section;
13-34 (2) the use of service without the consent or
13-35 knowledge of the authorities in charge; or
13-36 (3) any interference with, trespass on, or injury to a
13-37 system or appliance or the premises on which the system or
13-38 appliance is located.
13-39 Sec. 1502.072 [1502.073]. TRUSTEE. The proceedings adopted
13-40 by the governing body of a municipality [A contract under which a
13-41 facility is encumbered] may provide for:
13-42 (1) the selection of a trustee to sell the encumbered
13-43 facility on default in the payment of principal or interest under
13-44 the contract;
13-45 (2) the selection of a successor trustee if the
13-46 original trustee is disqualified or fails to act; and
13-47 (3) the collection by the trustee of a fee of not more
13-48 than five percent of the principal.
13-49 Sec. 1502.073 [1502.074]. NOTICE TO GOVERNING BODY BEFORE
13-50 FORECLOSURE OR OTHER ACTION. (a) Unless written notice is given
13-51 to the governing body of the municipality and to any board of
13-52 trustees in accordance with this section that there is a default in
13-53 payment of any installment of principal of or interest on an
13-54 obligation issued under this subchapter and that payment has been
13-55 demanded:
13-56 (1) a collection fee may not accrue;
13-57 (2) a foreclosure proceeding may not be begun in a
13-58 court or through a trustee; and
13-59 (3) an option to mature any part of the obligation
13-60 because of the default may not be exercised.
13-61 (b) A notice under Subsection (a) must be sent by prepaid
13-62 registered mail to each member of the governing body and each
13-63 member of any board of trustees, addressed to the member at the
13-64 post office in the municipality.
13-65 (c) An action described by Subsection (a) may not be taken
13-66 before the 91st day after the date the notice is mailed.
13-67 (d) A payment of a delinquent installment of principal and
13-68 interest that is paid before the expiration of the period
13-69 prescribed by Subsection (c) and that is accompanied by a payment
14-1 of interest as prescribed in the contract, at a rate not to exceed
14-2 10 percent per year, from the date of default until the date of
14-3 payment, has the same effect as if paid on the date the installment
14-4 was originally due.
14-5 [Sec. 1502.075. APPROPRIATION OF UTILITY SYSTEM INCOME:
14-6 MUNICIPALITY WITH POPULATION OF 12,410 OR LESS. (a) This section
14-7 applies only to a municipality that:]
14-8 [(1) has a population of 12,410 or less; and]
14-9 [(2) owns and operates its light system and waterworks
14-10 system.]
14-11 [(b) In the annual appropriation of the income and revenue
14-12 of any public utility system, service, or enterprise, the governing
14-13 body of a municipality that has adopted this section as provided by
14-14 Subsections (c) and (d) shall provide for appropriations in the
14-15 following order:]
14-16 [(1) the maintenance and operating expenses of the
14-17 system, service, or enterprise;]
14-18 [(2) the principal and interest of any debt
14-19 outstanding against the system, service, or enterprise; and]
14-20 [(3) any appropriations the remaining income and
14-21 revenue of the system, service, or enterprise may justify, to be
14-22 appropriated among municipal departments or otherwise for public
14-23 uses as the governing body considers best.]
14-24 [(c) At a special election called for the purpose, the
14-25 governing body of a municipality may submit the question of
14-26 adoption of this section to the municipality's qualified voters.
14-27 The election shall be held as nearly as possible in compliance with
14-28 the laws applying to regular municipal elections.]
14-29 [(d) If a majority of the voters voting in the election
14-30 favor adoption:]
14-31 [(1) the governing body shall enter the election
14-32 result in its minutes; and]
14-33 [(2) this section applies to the municipality
14-34 effective at the time the result is entered in the minutes.]
14-35 [(e) This section does not:]
14-36 [(1) restrict a municipality's authority under other
14-37 state law to issue bonds, notes, or warrants payable from revenue
14-38 other than taxes; or]
14-39 [(2) affect the applicability of Section 1502.057.]
14-40 Sec. 1502.074 [1502.076]. CIVIL ENFORCEMENT. A person who
14-41 resides in a municipality and is a taxpayer or holder of a public
14-42 security issued or an obligation incurred [issued] under this
14-43 chapter [subchapter] and secured by the [encumbered] revenue of the
14-44 municipality's utility system, park, or swimming pool as provided
14-45 by this chapter is entitled to enforce this chapter [subchapter] by
14-46 appropriate civil action in a district court in the county in which
14-47 the municipality is located.
14-48 [Sec. 1502.077. CONFLICT WITH MUNICIPAL CHARTER. To the
14-49 extent of a conflict between this subchapter and a municipal
14-50 charter, this subchapter controls.]
14-51 SECTION 23. Section 1506.164, Government Code, is amended
14-52 to read as follows:
14-53 Sec. 1506.164. CONFLICT OR INCONSISTENCY WITH OTHER LAW.
14-54 (a) When bonds are issued under this subchapter, to the extent of
14-55 any conflict or inconsistency between this subchapter and another
14-56 law, this subchapter controls.
14-57 (b) This subchapter is cumulative of all other law on the
14-58 subject, but this subchapter is wholly sufficient authority within
14-59 itself for the issuance of bonds and the performance of the other
14-60 acts and procedures authorized by this subchapter without reference
14-61 to any other law or any restrictions or limitations contained in
14-62 that law, except as specifically provided by this subchapter.
14-63 SECTION 24. Section 152.001(a), Water Code, is amended to
14-64 read as follows:
14-65 (a) This chapter applies only to a river authority that,
14-66 directly or through a corporation created under Section 152.051, is
14-67 engaged in the distribution and sale of electric energy to the
14-68 public.
14-69 SECTION 25. Section 152.052, Water Code, is amended by
15-1 adding Subsection (d) to read follows:
15-2 (d) A corporation created under Section 152.051 and the
15-3 creating river authority may:
15-4 (1) share officers, directors, employees, equipment,
15-5 and facilities; and
15-6 (2) provide goods or services to each other at cost
15-7 without the requirement of competitive bidding.
15-8 SECTION 26. Subchapter B, Chapter 152, Water Code, is
15-9 amended by adding Sections 152.056 and 152.057 to read as follows:
15-10 Sec. 152.056. TRANSFER OF RIVER AUTHORITY ASSETS TO
15-11 CORPORATION. Notwithstanding any other law, the board of directors
15-12 of a river authority may sell, lease, loan, or otherwise transfer
15-13 some, all, or substantially all of the electric generation property
15-14 of the river authority to a corporation created under Section
15-15 152.051. The property transfer must be made under terms approved
15-16 by the board of directors of the river authority.
15-17 Sec. 152.057. APPLICATION OF OTHER LAW TO RIVER AUTHORITY.
15-18 Reference in any other law to a river authority that is engaged in
15-19 the distribution and sale of electric energy to the public includes
15-20 a river authority that has created a corporation under Section
15-21 152.051 that is engaged in the distribution and sale of electric
15-22 energy to the public.
15-23 SECTION 27. Section 152.156, Water Code, is amended to read
15-24 as follows:
15-25 Sec. 152.156. PARTICIPATION IN PROGRAM BY PERSON OTHER THAN
15-26 RIVER AUTHORITY. An economic development program may involve the
15-27 granting or lending of money, services, or property to a person
15-28 engaged in an economic development activity[, including:]
15-29 [(1) a public fire-fighting organization;]
15-30 [(2) a governmental body;]
15-31 [(3) a nonprofit corporation;]
15-32 [(4) a local or regional development council; or]
15-33 [(5) any other nonprofit or noncommercial
15-34 organization].
15-35 SECTION 28. Section 152.201, Water Code, is amended to read
15-36 as follows:
15-37 Sec. 152.201. AUTHORITY TO ISSUE OBLIGATIONS. (a) A river
15-38 authority may issue revenue bonds, notes, or other obligations for
15-39 a purpose authorized by:
15-40 (1) this chapter; or
15-41 (2) another law, if the purpose relates to the
15-42 generation, transmission, or distribution of electricity.
15-43 (b) This chapter constitutes full authority for a river
15-44 authority to issue revenue bonds and other obligations without
15-45 reference to any other law.
15-46 SECTION 29. Chapter 152, Water Code, is amended by adding
15-47 Subchapter G to read as follows:
15-48 SUBCHAPTER G. ELECTRIC TRANSMISSION SERVICES AND
15-49 FACILITIES OF RIVER AUTHORITY
15-50 Sec. 152.301. ELECTRIC TRANSMISSION SERVICES AND FACILITIES.
15-51 A river authority may:
15-52 (1) provide transmission services, as defined by
15-53 Section 31.002, Utilities Code, on a regional basis to any eligible
15-54 transmission customer at any location within or outside the
15-55 boundaries of the river authority; and
15-56 (2) acquire, finance, lease, construct, rebuild,
15-57 operate, or sell electric transmission facilities at any location
15-58 within or outside the boundaries of the river authority.
15-59 Sec. 152.302. LIMITATION ON ELECTRIC TRANSMISSION
15-60 FACILITIES. This subchapter does not authorize a river authority
15-61 to construct electric transmission facilities for an ultimate
15-62 consumer of electricity to enable that consumer to bypass the
15-63 transmission or distribution facilities of its existing provider.
15-64 SECTION 30. Section 418.107(d), Government Code, is amended
15-65 to read as follows:
15-66 (d) A political subdivision may issue time warrants for the
15-67 payment of the cost of any equipment, construction, acquisition, or
15-68 any improvements for carrying out this chapter. The warrants shall
15-69 be issued in accordance with Chapter 252, Local Government Code, in
16-1 the case of a municipality, or Subchapter C, Chapter 262, Local
16-2 Government Code, in the case of a county [the Bond and Warrant Law
16-3 of 1931 (Article 2368a, Vernon's Texas Civil Statutes)]. Time
16-4 warrants issued for financing permanent construction or improvement
16-5 for emergency management purposes are subject to the right of the
16-6 voters to require a referendum vote under Section 252.045 or
16-7 262.029, Local Government Code, as applicable [4 of that law].
16-8 SECTION 31. Section 1433.022(b), Government Code, is amended
16-9 to read as follows:
16-10 (b) Land previously acquired by an issuer by eminent domain
16-11 may be sold, leased, or otherwise used in accordance with this
16-12 chapter, if the governing body determines that:
16-13 (1) the use will not interfere with the purpose for
16-14 which that land was originally acquired or that the land is no
16-15 longer needed for that purpose;
16-16 (2) at least seven years have elapsed since the land
16-17 was acquired by eminent domain; and
16-18 (3) the land was not acquired for park purposes unless
16-19 the sale or lease of that land has been approved at an election
16-20 held under Section 1502.055 [1502.057].
16-21 SECTION 32. Sections 263.026(b) and (i), Health and Safety
16-22 Code, are amended to read as follows:
16-23 (b) Payments for the sites or buildings shall be made from
16-24 the county permanent improvement fund. To pay for a site or
16-25 building for a health unit or center, the commissioners court may:
16-26 (1) issue negotiable bonds and impose taxes to pay the
16-27 principal of and interest on the bonds in accordance with Subtitles
16-28 A and C, Title 9, Government Code [Chapter 1, Title 22, Revised
16-29 Statutes];
16-30 (2) issue time warrants and impose taxes to pay the
16-31 principal of and interest on the time warrants in accordance with
16-32 Subchapter C, Chapter 262, Local Government Code [the Bond and
16-33 Warrant Law of 1931 (Article 2368a, Vernon's Texas Civil
16-34 Statutes)]; or
16-35 (3) by order issue certificates of indebtedness and
16-36 impose taxes to pay the principal of and interest on the
16-37 certificates in accordance with this section.
16-38 (i) The commissioners court may issue refunding bonds to
16-39 refund time warrants issued under this section[, subject to the
16-40 Bond and Warrant Law of 1931 (Article 2368a, Vernon's Texas Civil
16-41 Statutes)].
16-42 SECTION 33. Section 264.033, Health and Safety Code, is
16-43 amended to read as follows:
16-44 Sec. 264.033. TIME WARRANTS. The authority may issue time
16-45 warrants in the manner in which a commissioners court may issue
16-46 time warrants under Subchapter C, Chapter 262, Local Government
16-47 Code [the Bond and Warrant Law of 1931 (Article 2368a, Vernon's
16-48 Texas Civil Statutes)].
16-49 SECTION 34. Section 383.013(c), Health and Safety Code, is
16-50 amended to read as follows:
16-51 (c) Any [The Bond and Warrant Law of 1931 (Article 2368a,
16-52 Vernon's Texas Civil Statutes) and any other] law requiring
16-53 competitive bids does [do] not apply to a construction contract for
16-54 a project authorized by this chapter.
16-55 SECTION 35. Section 43.074(f), Local Government Code, is
16-56 amended to read as follows:
16-57 (f) The municipality may issue refunding bonds in its own
16-58 name to refund bonds, warrants, or other obligations, including
16-59 unpaid accrued interest on an obligation, that is assumed by the
16-60 municipality. The refunding bonds must be issued in the manner
16-61 provided by Chapter 1207, Government Code [the Bond and Warrant Law
16-62 of 1931 (Article 2368a, Vernon's Texas Civil Statutes), except that
16-63 a notice of the intention to issue the bonds is not required and a
16-64 right of referendum does not exist].
16-65 SECTION 36. Section 43.075(h), Local Government Code, is
16-66 amended to read as follows:
16-67 (h) If a district bond, warrant, or other obligation payable
16-68 in whole or in part from property taxes is assumed under this
16-69 section by the municipality, the governing body shall levy and
17-1 collect taxes on all taxable property in the municipality in an
17-2 amount sufficient to pay the principal of and interest on the bond,
17-3 warrant, or other obligation as it becomes due and payable. The
17-4 municipality may issue refunding bonds or warrants to refund bonds,
17-5 warrants, or other obligations, including unpaid earned interest on
17-6 them, that is assumed by the municipality. The refunding bonds or
17-7 warrants must be issued in the manner provided by Chapter 1207,
17-8 Government Code [the Bond and Warrant Law of 1931 (Article 2368a,
17-9 Vernon's Texas Civil Statutes), except a notice of the intention to
17-10 issue the bonds or warrants is not required and a right of
17-11 referendum does not exist]. A refunding bond must bear interest at
17-12 the same rate or at a lower rate than that borne by the refunded
17-13 obligation unless it is shown mathematically that a different rate
17-14 results in a savings in the total amount of interest to be paid.
17-15 SECTION 37. Sections 43.076(h) and (i), Local Government
17-16 Code, are amended to read as follows:
17-17 (h) The municipality may issue general obligation refunding
17-18 bonds in its own name to refund in whole or in part its pro rata
17-19 share of any outstanding district bonds, warrants, or other
17-20 obligations, including unpaid earned interest on them, that are
17-21 assumed by the municipality and that are payable in whole or in
17-22 part from property taxes. The refunding bonds must be issued in
17-23 the manner provided by Chapter 1207, Government Code [the Bond and
17-24 Warrant Law of 1931 (Article 2368a, Vernon's Texas Civil Statutes),
17-25 except that a notice of the intention to issue the refunding bonds
17-26 is not required and a right of referendum does not exist].
17-27 Refunding bonds must bear interest at the same rate or at a lower
17-28 rate than that borne by the refunded obligations unless it is shown
17-29 mathematically that a different rate results in a savings in the
17-30 total amount of interest to be paid.
17-31 (i) The municipality may issue revenue refunding bonds or
17-32 general obligation refunding bonds in its own name to refund in
17-33 whole or in part its pro rata share of any outstanding district
17-34 bonds, warrants, or other obligations, including unpaid earned
17-35 interest on them, that are assumed by the municipality and that are
17-36 payable solely from net revenues. The municipality may combine the
17-37 different issues or the bonds of different issues of both district
17-38 and municipal revenue bonds, warrants, or other obligations into
17-39 one or more series of revenue refunding bonds. The municipality
17-40 may pledge the net revenues of the district utility system or
17-41 property to the payment of those bonds, warrants, or other
17-42 obligations. The municipality may also combine the different
17-43 issues or the bonds of the different issues into one or more series
17-44 of general obligation refunding bonds. An originally issued
17-45 municipal revenue bond may not be refunded into municipal general
17-46 obligation refunding bonds. Except as otherwise provided by this
17-47 section, Subchapter B, Chapter 1502, Government Code, applies
17-48 [Articles 1111-1118, Vernon's Texas Civil Statutes, apply] to the
17-49 revenue refunding bonds, but an election for the issuance of the
17-50 bonds is not required. Revenue [In the issuance of revenue]
17-51 refunding bonds or general [, the municipality has the benefits of
17-52 and may exercise the authority granted under Chapter 541, Acts of
17-53 the 51st Legislature, Regular Session, 1949 (Article 1118n-5,
17-54 Vernon's Texas Civil Statutes). The provisions of that Act
17-55 relating to outstanding revenue bonds apply to outstanding revenue
17-56 bonds assumed by municipalities under this section. General]
17-57 obligation refunding bonds must be issued in the manner provided by
17-58 Chapter 1207, Government Code [the Bond and Warrant Law of 1931
17-59 (Article 2368a, Vernon's Texas Civil Statutes), except that a
17-60 notice of the intention to issue the bonds is not required and a
17-61 right of referendum does not exist]. The revenue refunding bonds
17-62 and the general obligation refunding bonds must bear interest at
17-63 the same rate or at a lower rate than that borne by the refunded
17-64 obligations unless it is shown mathematically that a different rate
17-65 results in a savings in the total amount of interest to be paid.
17-66 SECTION 38. Section 252.045(c), Local Government Code, is
17-67 amended to read as follows:
17-68 (c) The provisions of Subtitles A and C, Title 9, Government
17-69 Code [Chapters 1 and 2, Title 22, Revised Statutes], relating to
18-1 elections for the issuance of municipal bonds and to the issuance,
18-2 approval, registration, and sale of bonds govern the referendum and
18-3 the time warrants to the extent those provisions are consistent
18-4 with this chapter [and Chapter 163, General Laws, Acts of the 42nd
18-5 Legislature, Regular Session, 1931 (Article 2368a, Vernon's Texas
18-6 Civil Statutes)]. However, the time warrants may mature over a
18-7 term exceeding 40 years only if the governing body finds that the
18-8 financial condition of the municipality will not permit payment of
18-9 warrants issued for a term of 40 years or less from taxes that are
18-10 imposed substantially uniformly during the term of the warrants
18-11 [and are payable as provided by Article 2368a for funding bonds].
18-12 SECTION 39. Section 271.042, Local Government Code, is
18-13 amended to read as follows:
18-14 Sec. 271.042. PURPOSE; CONFLICT. (a) It is the purpose of
18-15 this subchapter to provide:
18-16 (1) a procedure for certain financing that is an
18-17 alternative to the more cumbersome procedure under Chapter 252 [of
18-18 this code and the Bond and Warrant Law of 1931 (Article 2368a,
18-19 Vernon's Texas Civil Statutes)]; and
18-20 (2) a new class of securities to be issued and
18-21 delivered within the financial capabilities of an issuer on
18-22 compliance with the procedures prescribed by this subchapter.
18-23 (b) If there is a conflict between a provision of this
18-24 subchapter and a provision of [either] Chapter 252 [of this code or
18-25 the Bond and Warrant Law of 1931 (Article 2368a, Vernon's Texas
18-26 Civil Statutes)], an issuer may use either provision, and it is not
18-27 necessary for the governing body to designate the law under which
18-28 action is being taken.
18-29 SECTION 40. Section 280.001(c), Local Government Code, is
18-30 amended to read as follows:
18-31 (c) For the purpose of acquiring land under this section, a
18-32 municipality or county may appropriate any available funds and
18-33 issue time warrants in payment. If time warrants are issued, the
18-34 provisions of Chapter 252 or[,] Subchapter C of Chapter 262 [, and
18-35 the Bond and Warrant Law of 1931 (Article 2368a, Vernon's Texas
18-36 Civil Statutes)] shall be followed to the extent applicable.
18-37 SECTION 41. Section 411.008(b), Local Government Code, is
18-38 amended to read as follows:
18-39 (b) The commissioners court shall:
18-40 (1) issue any bonds and impose related taxes in
18-41 compliance with Subtitles A and C, Title 9, Government Code; or
18-42 (2) issue any time warrants in compliance with
18-43 Subchapter C, Chapter 262, and impose related taxes in compliance
18-44 with Chapter 1251 [1253], Government Code.
18-45 SECTION 42. Section 22.053(b), Transportation Code, is
18-46 amended to read as follows:
18-47 (b) The commissioners court of a county that issues time
18-48 warrants under this section shall comply with:
18-49 (1) Subchapter C, Chapter 262, Local Government Code
18-50 [Chapter 163, General Laws, Acts of the 42nd Legislature, Regular
18-51 Session, 1931 (Article 2368a, Vernon's Texas Civil Statutes)],
18-52 regarding:
18-53 (A) [(1)] notice to issue the time warrants; and
18-54 (B) [(2) the levy and collection of taxes in
18-55 payment of the time warrants; and]
18-56 [(3)] the right to a referendum; and
18-57 (2) Chapter 1251, regarding the imposition of taxes
18-58 for payment of the time warrants.
18-59 SECTION 43. Section 367.068(a), Transportation Code, is
18-60 amended to read as follows:
18-61 (a) Sections 252.046, 252.047, and 252.048, Local Government
18-62 Code, [Chapter 1253, Government Code,] and Subchapter B, Chapter
18-63 1502, Government Code, apply, except as provided by Section
18-64 367.051, Section 367.059, or another provision of this subchapter,
18-65 to:
18-66 (1) the purchase of a toll bridge under this
18-67 subchapter;
18-68 (2) the issuance, sale, or delivery of bonds under
18-69 this subchapter;
19-1 (3) the manner of securing payment of the bonds;
19-2 (4) the enforcement of the obligations relating to the
19-3 bonds;
19-4 (5) the rights and remedies of the owners or holders
19-5 of the bonds or of any person acting on their behalf;
19-6 (6) the maintenance or operation of property acquired
19-7 under this subchapter; and
19-8 (7) the accomplishment of any other purpose of this
19-9 subchapter.
19-10 SECTION 44. Section 16.345(b), Water Code, is amended to
19-11 read as follows:
19-12 (b) In addition to any other authority to issue bonds or
19-13 other obligations or incur any debt, a political subdivision other
19-14 than a nonprofit water supply corporation eligible for financial
19-15 assistance under Subchapter K, Chapter 17, of this code may issue
19-16 bonds payable from and secured by a pledge of the revenues derived
19-17 or to be derived from the operation of water supply or sewer
19-18 service systems for the purpose of acquiring, constructing,
19-19 improving, extending, or repairing water supply or sewer
19-20 facilities. The bonds shall be issued in accordance with and a
19-21 political subdivision may exercise the powers granted by:
19-22 (1) Subchapter B, Chapter 1502, Government Code
19-23 [Articles 1111 through 1118, Revised Statutes; Chapters 249 and
19-24 250, Acts of the 51st Legislature, Regular Session, 1949 (Articles
19-25 1111a and 1111b, Vernon's Texas Civil Statutes); Chapter 428, Acts
19-26 of the 52nd Legislature, 1951 (Article 1111c, Vernon's Texas Civil
19-27 Statutes); Chapter 122, Acts of the 43rd Legislature, Regular
19-28 Session, 1933 (Articles 1114a, 1114b, and 1114c, Vernon's Texas
19-29 Civil Statutes); and Chapter 56, Acts of the 45th Legislature, 2nd
19-30 Called Session, 1937 (Article 1114d, Vernon's Texas Civil
19-31 Statutes)];
19-32 (2) Chapter 1201, Government Code [by the Bond
19-33 Procedures Act of 1981 (Article 717k-6, Vernon's Texas Civil
19-34 Statutes)];
19-35 (3) Chapter 1371, Government Code [by Chapter 656,
19-36 Acts of the 68th Legislature, Regular Session, 1983 (Article 717q,
19-37 Vernon's Texas Civil Statutes)]; and
19-38 (4) [by] other laws of the state.
19-39 SECTION 45. Section 2(h), Chapter 702, Acts of the 68th
19-40 Legislature, Regular Session, 1983 (Article 717r, Vernon's Texas
19-41 Civil Statutes), is amended to read as follows:
19-42 (h) Notice of intention to issue refunding bonds shall be
19-43 published by the metropolitan water control and improvement
19-44 district at least once a week for two consecutive weeks in a
19-45 newspaper of general circulation within the metropolitan water
19-46 control and improvement district at least 15 days before the
19-47 meeting of the governing body at which it is proposed to issue such
19-48 bonds. At any time prior to the issuance of the bonds, if a
19-49 petition signed by not less than 10 percent of the qualified voters
19-50 of the metropolitan water control and improvement district is filed
19-51 with the metropolitan water control and improvement district
19-52 calling for a referendum on the refunding bond issue, the governing
19-53 body shall, at its next meeting, order an election to be held
19-54 within the metropolitan water control and improvement district to
19-55 determine whether or not the bonds shall be issued. The election
19-56 shall be held in the manner prescribed by Chapter 1251, Government
19-57 Code, for the issuance of municipal bonds [Section 7, Bond and
19-58 Warrant Law of 1931 (Article 2368a, Vernon's Texas Civil
19-59 Statutes)].
19-60 SECTION 46. (a) All public securities authorized and issued
19-61 by any issuer before September 1, 1999, a public security
19-62 authorization approved or adopted by an issuer in connection with
19-63 the authorization and issuance of the public securities, and any
19-64 contracts or agreements executed and delivered in connection with
19-65 the public securities that were approved by the public security
19-66 authorization are validated, ratified, and confirmed in all
19-67 respects.
19-68 (b) In this section, "issuer," "public security," and
19-69 "public security authorization" have the meanings assigned by
20-1 Section 1201.002, Government Code.
20-2 SECTION 47. The following provisions of the Government Code
20-3 are repealed:
20-4 (1) Section 1207.081(c);
20-5 (2) Chapter 1253;
20-6 (3) Subchapter C, Chapter 1331;
20-7 (4) Section 1473.052(c);
20-8 (5) Subchapters C-K, Chapter 1502;
20-9 (6) Subchapters B and D, Chapter 1504; and
20-10 (7) Subchapters B and F, Chapter 1509.
20-11 SECTION 48. The importance of this legislation and the
20-12 crowded condition of the calendars in both houses create an
20-13 emergency and an imperative public necessity that the
20-14 constitutional rule requiring bills to be read on three several
20-15 days in each house be suspended, and this rule is hereby suspended.
20-16 * * * * *