1-1 By: Madla S.B. No. 1520 1-2 (In the Senate - Filed March 12 1999; March 15, 1999, read 1-3 first time and referred to Committee on State Affairs; 1-4 April 30, 1999, reported favorably by the following vote: Yeas 8, 1-5 Nays 0; April 30, 1999, sent to printer.) 1-6 A BILL TO BE ENTITLED 1-7 AN ACT 1-8 relating to the authority of certain cities, counties, districts, 1-9 authorities, agencies, and nonprofit corporations to enter into 1-10 lease-leaseback transactions. 1-11 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-12 SECTION 1. Section 1, Chapter 656, Acts of the 68th 1-13 Legislature, Regular Session, 1983 (Article 717q, Vernon's Texas 1-14 Civil Statutes), is amended by amending Subdivision (6) and adding 1-15 Subdivision (8) to read as follows: 1-16 (6) "Credit agreement" means lease-leaseback 1-17 agreements, loan agreement, revolving credit agreement, agreement 1-18 establishing a line of credit, letter of credit, reimbursement 1-19 agreement, insurance contract, commitments to purchase obligations, 1-20 purchase or sale agreements, interest rate swap agreement, or 1-21 commitments or other contracts or agreements authorized and 1-22 approved by the governing body of an issuer either in connection 1-23 with the authorization, issuance, security, exchange, payment, 1-24 purchase, or redemption of obligations and/or interest thereon, or 1-25 as otherwise authorized by this Act. 1-26 (8) "Lease-leaseback agreements" means contracts, 1-27 agreements, notes, security agreements, conveyances, bills of sale, 1-28 deeds, leases as lessee or lessor, and currency hedges, swap 1-29 transactions, or agreements relating to foreign and domestic 1-30 currency entered into by issuers to provide tax benefits to another 1-31 party that are available with respect to property under the laws of 1-32 a foreign country or to encourage private investment with an issuer 1-33 in the United States. Lease-leaseback agreements may have the 1-34 terms, maturities, duration, indemnities, and other provisions that 1-35 are approved by the governing body of the issuer. In connection 1-36 with a lease-leaseback agreement, the issuer shall deposit, in 1-37 trust, escrow, or similar arrangement, cash or lawful investment 1-38 securities or shall enter into one or more payment agreements, 1-39 financial guarantees, or insurance contracts, with counterparties 1-40 having either a corporate credit or debt rating in any form, a 1-41 claims-paying ability, or a rating for financial strength of "AA" 1-42 or better by Moody's Investors Service, Inc. or Standard and Poor's 1-43 Ratings Group or of "A" (Class XII) or better by the A.M. Best 1-44 Company's rating system, or the equivalent of such ratings in the 1-45 future, that by their terms, including interest projected to be 1-46 earned on the cash or investment securities or payment obligations, 1-47 are sufficient in amount to pay when due all amounts required to be 1-48 paid by the issuer as rent over the full term of the agreement plus 1-49 any optional purchase price due under the agreement. Property 1-50 sold, acquired, or otherwise transferred under lease-leaseback 1-51 agreements is considered for all purposes to be property owned and 1-52 held by the issuer and used for public purposes and is exempt from 1-53 ad valorem taxes imposed in this state. A leasehold interest in 1-54 the property is exempt from Section 25.07(a), Tax Code. A sale, 1-55 lease, sublease, or other transfer of personal property by or to 1-56 the issuer under a lease-leaseback agreement is exempt from all 1-57 sales, use, and motor vehicle taxes imposed by this state or a 1-58 political subdivision of this state. 1-59 SECTION 2. The importance of this legislation and the 1-60 crowded condition of the calendars in both houses create an 1-61 emergency and an imperative public necessity that the 1-62 constitutional rule requiring bills to be read on three several 1-63 days in each house be suspended, and this rule is hereby suspended, 1-64 and that this Act take effect and be in force from and after its 2-1 passage, and it is so enacted. 2-2 * * * * *