By: Madla S.B. No. 1520
A BILL TO BE ENTITLED
AN ACT
1-1 relating to the authority of certain cities, counties, districts,
1-2 authorities, agencies, and nonprofit corporations to enter into
1-3 lease-leaseback transactions.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 1, Chapter 656, Acts of the 68th
1-6 Legislature, Regular Session, 1983 (Article 717q, Vernon's Texas
1-7 Civil Statutes), is amended by amending Subdivision (6) and adding
1-8 Subdivision (8) to read as follows:
1-9 (6) "Credit agreement" means lease-leaseback
1-10 agreements, loan agreement, revolving credit agreement, agreement
1-11 establishing a line of credit, letter of credit, reimbursement
1-12 agreement, insurance contract, commitments to purchase obligations,
1-13 purchase or sale agreements, interest rate swap agreement, or
1-14 commitments or other contracts or agreements authorized and
1-15 approved by the governing body of an issuer either in connection
1-16 with the authorization, issuance, security, exchange, payment,
1-17 purchase, or redemption of obligations and/or interest thereon, or
1-18 as otherwise authorized by this Act.
1-19 (8) "Lease-leaseback agreements" means contracts,
1-20 agreements, notes, security agreements, conveyances, bills of sale,
1-21 deeds, leases as lessee or lessor, and currency hedges, swap
1-22 transactions, or agreements relating to foreign and domestic
1-23 currency entered into by issuers to provide tax benefits to another
1-24 party that are available with respect to property under the laws of
2-1 a foreign country or to encourage private investment with an issuer
2-2 in the United States. Lease-leaseback agreements may have the
2-3 terms, maturities, duration, indemnities, and other provisions that
2-4 are approved by the governing body of the issuer. In connection
2-5 with a lease-leaseback agreement, the issuer shall deposit, in
2-6 trust, escrow, or similar arrangement, cash or lawful investment
2-7 securities or shall enter into one or more payment agreements,
2-8 financial guarantees, or insurance contracts, with counterparties
2-9 having either a corporate credit or debt rating in any form, a
2-10 claims-paying ability, or a rating for financial strength of "AA"
2-11 or better by Moody's Investors Service, Inc. or Standard and Poor's
2-12 Ratings Group or of "A" (Class XII) or better by the A.M. Best
2-13 Company's rating system, or the equivalent of such ratings in the
2-14 future, that by their terms, including interest projected to be
2-15 earned on the cash or investment securities or payment obligations,
2-16 are sufficient in amount to pay when due all amounts required to be
2-17 paid by the issuer as rent over the full term of the agreement plus
2-18 any optional purchase price due under the agreement. Property
2-19 sold, acquired, or otherwise transferred under lease-leaseback
2-20 agreements is considered for all purposes to be property owned and
2-21 held by the issuer and used for public purposes and is exempt from
2-22 ad valorem taxes imposed in this state. A leasehold interest in
2-23 the property is exempt from Section 25.07(a), Tax Code. A sale,
2-24 lease, sublease, or other transfer of personal property by or to
2-25 the issuer under a lease-leaseback agreement is exempt from all
2-26 sales, use, and motor vehicle taxes imposed by this state or a
3-1 political subdivision of this state.
3-2 SECTION 2. The importance of this legislation and the
3-3 crowded condition of the calendars in both houses create an
3-4 emergency and an imperative public necessity that the
3-5 constitutional rule requiring bills to be read on three several
3-6 days in each house be suspended, and this rule is hereby suspended,
3-7 and that this Act take effect and be in force from and after its
3-8 passage, and it is so enacted.