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.
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