SRC-JEC H.B. 2525 77(R)   BILL ANALYSIS


Senate Research Center   H.B. 2525
77R11207 YDB-DBy: Junell (Fraser)
Intergovernmental Relations
5/6/2001
Engrossed


DIGEST AND PURPOSE 

Currently, the Mitchell County Hospital District is administered through
legislation enacted in 1967. H.B. 2525 amends that Act to address district
needs that have arisen since 1967. The amendments include expanding the
hospital district's options for the effective provision of health care to
Mitchell County residents, broadening the financing options available to
the hospital district, and updating language to conform to current Texas
law.  

RULEMAKING AUTHORITY

This bill does not expressly grant any additional rulemaking authority to a
state officer, institution, or agency.  

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Section 4, Chapter 466, Acts of the 60th Legislature,
Regular Session, 1967, as follows:  

(c) Provides that qualifications for election to the board of directors of
the Mitchell County Hospital District (district) include being a qualified
voter and a resident of the district.  Prohibits an employee of the
district from serving as a director.  Provides that a director is not
entitled to compensation, but is entitled to receive reimbursement for
actual expenses incurred in attending to the district's business, provide
the expenses are reported in the district's minute book or other district
records and approved by the remainder of the board of directors.  Deletes
text prohibiting a person from being a board member unless he is a resident
of the district, a landowner, and older than 21 years of age.   

(d)  Requires the board to elect one person who is not required to be a
director to serve as secretary and treasurer.  Provides that each officer
serves a one-year term.  Deletes text regarding a secretary.  Provides that
vacancies in the board are filled by a majority vote, rather than
appointment, of the remainder of the board of directors, and that the
person elected to fill a vacancy shall hold office for the remainder of the
unexpired term. 

(e) Requires the board to order a regular election of directors on a
certain date each year. Requires the board to issue the order at least 45
days before the date of the election.  Requires the order to contain
certain statements.  Requires the board to appoint the presiding judge, who
is required to appoint election clerks as required.  Requires a person who
wishes to be on the ballot as a candidate for director to file an
application, rather than a petition signed by qualified electors.  Requires
the application to be filed at least 31, rather than 25, days prior to the
date of the election. 

SECTION 2.  Amends Section 5, Chapter 466, Acts of the 60th Legislature,
Regular Session, 1967, as follows: 

(a) Authorizes the board to require the administrator, upon assuming the
administrator's duties,  to execute a certain bond, conditioned that the
administrator shall perform the duties required and containing such other
conditions as the board may require.  Authorizes the board to pay for the
bond with district funds.  Deletes references to a manager of the hospital
district. 

 (b) Makes a conforming change.

(c) Authorizes the board of directors to provide retirement benefits for
the employees of the district by establishing or administering a retirement
program or electing to participate in a statewide retirement system. 

(d) Authorizes the board to spend district funds to recruit physicians,
nurses, and other trained medical personnel. 

(e) Authorizes the board to institute a suit to enforce the payment of
taxes and to foreclose liens to secure the payment of taxes due to the
district. 

(f) Authorizes the board to provide or contract to provide educational
programs or courses for employees and medical staff of the district. 

(g) Authorizes the board to institute a suit to collect amounts owed to the
district by patients who are not able to pay under Section 17 of this Act. 

(h) Authorizes the district to sponsor and create a nonprofit corporation
under the Texas NonProfit Corporation Act (Article 1396-1.01 et seq.,
V.T.C.S.) and to contribute funds to or solicit funds for the corporation.
Authorizes the corporation to use district funds only to provide health
care or other services the district is authorized to provide under this
Act.  Requires the board to establish adequate controls to ensure the
corporation uses funds as required by this subsection.  Authorizes the
corporation to invest corporation funds in any manner in which the district
is authorized to invest funds, including investing funds as authorized by
Chapter 2256, Government Code. 

SECTION 3.  Amends Section 6, Chapter 466, Acts of the 60th Legislature,
Regular Session, 1967, to provide that the district operates on the fiscal
year established by the board of directors.  Prohibits the fiscal year from
being changed if revenue bonds of the district are outstanding or more than
once in a 24-month period.  Deletes text specifying the fiscal year.
Specifies that the regular audit of the financial condition of the district
is an annual audit.  Specifies that notice of the public hearing on the
budget is required to be printed in a newspaper of general circulation in
the district.  Makes conforming changes. 

SECTION 4.  Amends Chapter 466, Acts of the 60th legislature, Regular
Session, 1967, by amending Section 7 and adding Sections 7A, 7B, and 7C, as
follows:  

Sec. 7. (a)  Authorizes the board to issue and sell bonds authorized by an
election in the name and on the faith and credit of the hospital district
to purchase, construct, acquire, repair, or renovate buildings or
improvements, equip buildings or improvements for hospital purposes, or
acquire and operate a mobile emergency medical or air ambulance service. 

(b)  Requires the board, at the time the bonds are issued by the district,
to levy a tax. Requires the tax to be sufficient to create an interest and
sinking fund to pay the principal of and interest on the bonds as they
mature.  Prohibits, in any year, the sum of the tax and any other tax the
district levies from exceeding the limit approved by the voters at the
election authorizing the levy of taxes. 

(c)  Authorizes the district to issue general obligation bonds only if the
bonds are authorized by a majority of the qualified voters of the district
voting at an election called  and held for that purpose.  Authorizes the
board to order a bond election. 

(d)  Requires the bond election to be conducted as provided by Chapter 1251
(Bond Elections), Government Code. 

Sec. 7A.  (a)  Authorizes the board to issue revenue bonds to purchase,
construct, acquire, repair, equip, or renovate buildings or improvements
for hospital purposes, acquire sites to be used for hospital purposes, or
acquire and operate a mobile emergency medical or air ambulance service to
assist the district in carrying out its hospital purposes. 

(b)  Requires the bonds to be payable from and secured by a pledge of all
or part of the revenues derived from the operation of the district's
hospital system.  Authorizes the bonds to be additionally secured by a
mortgage or deed of trust lien on all or part of district property. 

(c)  Requires the bonds to be issued in the manner provided by Sections
264.042 (Form and Procedure), 264.043 (Terms), 264.046 (Junior Lien Bonds;
Parity Bonds), 264.047 (Bond Proceeds; Investment of Funds), 264.048
(Refunding Bonds), and 264.049 (Approval and Registration of Bonds), Health
and Safety Code, for issuance of revenue bonds by county hospital
authorities.  Deletes text regarding the board's powers related to bonds
and provisions of the bonds. 

Sec. 7B.  Requires refunding bonds to be issued in accordance with Chapter
1207 (Refunding Bonds), Government Code.  Deletes text regarding refunding
bonds. 

Sec. 7C.  Requires bonds of the district to bear interest at a rate not to
exceed the rate provided by Chapter 1204 (Interest Rate), Government Code,
rather than six per centum per annum, and to be countersigned by the
secretary in the manner provided by Chapter 618 (Uniform Facsimile
Signature of Public Officials Act), rather than Article 717j-1, V.T.C.S. 

SECTION 5.  Amends Section 9, Chapter 466, Acts of the 60th Legislature,
Regular Session, 1967, to authorize the board to purchase or lease
property, facilities, and equipment for the district to use in the hospital
system and to mortgage or pledge it as security for the payment of the
purchase price. Authorizes the board to enter into a contract or contracts
to provide personnel for the operation of the hospital facilities, but
prohibits a contract from being for a period exceeding 25 years.
Authorizes the board to transfer district hospital facilities by lease to
individuals, corporations, or other legal entities and to sell or otherwise
dispose of the district's property, facilities, and equipment.  Deletes
text regarding the board's authority to enter into contracts and to dispose
of property. 

SECTION 6.  Amends Section 10, Chapter 466, Acts of the 60th Legislature,
Regular Session, 1967, to authorize the board to contract for construction
only after competitive bidding as provided by Chapter 271B (Competitive
Bidding on Certain Public Works Contracts), Local Government Code.
Prohibits the district from incurring an obligation payable from any
revenues of the district (taxes or otherwise) except those on hand or to be
on hand within the then current fiscal year of the district, except as
permitted in this section and by Sections 7, 7A, 7B, 7C, and 8.  Deletes
text regarding purchases of more than $2,000. 

SECTION 7.  Amends Section 11, Chapter 466, Acts of the 60th Legislature,
Regular Session, 1967, to delete the requirement that the bank appointed as
depository for the district's funds be within the district's boundaries. 

SECTION 8.  Amends Section 14, Chapter 466, Acts of the 60th Legislature,
Regular Session, 1967, to provide that the district has the right of
eminent domain, with conditions, provided that the district not be required
to make deposits in the registry of the trial court of the sum required by
Section 21.021(a) (Possession Pending Litigation), Property Code, rather
than paragraph 2 of Article 3268, V.T.C.S.,  1925, as amended. 

SECTION 9.  Amends Section 15, Chapter 466, Acts of the 60th Legislature,
Regular Session, 1967, to authorize the board to impose annual property
taxes in an amount not to exceed the limit approved by the voters at an
election authorizing the levy of taxes.  Prohibits the tax rate for all
district purposes from exceeding a certain amount.  Authorizes the taxes to
be used to pay for indebtedness issued or assumed by the district and for
the maintenance and operating expenses of the district.  Prohibits the
district from imposing taxes to pay the principal of or interest on revenue
bonds.  Provides that the Tax Code governs the appraisal, assessment, and
collection of district taxes.  Authorizes the board to provide for the
appointment of a tax assessor-collector for the district or to contract for
the assessment and collection of taxes as provided by the Tax Code.
Deletes text regarding district taxes, the tax assessor-collector, the
assessment and collection of taxes, the depositing of fees, tax interest
and penalties, the residue, the board's authority to levy the tax, the bond
of the tax assessor-collector, and the tax assessor-collector's authority. 

SECTION 10.  Amends Section 17, Chapter 466, Acts of the 60th Legislature,
Regular Session, 1967, to authorize the administrator to inquire as to the
financial circumstances of a patient or a patient's legally responsible
relatives.  Deletes text regarding the substantial evidence rule. Makes
conforming and nonsubstantive changes. 

SECTION 11.  Amends Chapter 466, Acts of the 60th Legislature, Regular
Session, 1967, by adding Sections 20A, 20B, and 20C, as follows: 

Sec. 20A.  (a)  Authorizes  the board, if it determines that funds are not
available to meet lawfully authorized obligations of the district and that
an emergency exists, to borrow money at a rate not to exceed the maximum
annual percentage rate allowed by law for district obligations at the time
the loan is made. 

  (b)  Authorizes the board to pledge certain revenues to secure a loan.

(c)  Requires a loan for which tax revenue or bonds are pledged to mature
not later than the first anniversary of the date on which the loan was
made.  Requires a loan for which other district revenues are pledged to
mature not later than the fifth anniversary of the date on which the loan
was made. 

(d)  Prohibits the board from spending loan proceeds under this section for
any purpose other than the purpose for which the board declared an
emergency existed.  Prohibits the board, if tax revenues or bonds are
pledged to pay the loan, from using the loan proceeds for a purpose other
than for the purpose for which the taxes were imposed or the bonds were
authorized. 

Sec. 20B. (a)  Authorizes the board to borrow money at a rate not to exceed
the maximum annual percentage rate allowed by law for district obligations
at the time of the loan. 

  (b) and (c) Make conforming changes.

Sec. 20C. (a)  Authorizes the district to be dissolved only if the
dissolution is approved by a majority of the qualified voters of the
district voting in an election called and held for that purpose. 

(b)  Authorizes the board to order an election on the question of
dissolving the district and disposing of the district's assets and
obligations.  Requires the board of directors to order an election to be
held on the question of dissolution of the district if the board receives a
petition requesting an election that is signed by at least 15 percent of
the registered voters of the district. 
 
(c)  Requires the election to be held not later than the 60th day after the
date the election is ordered.  Provides that Section 41.001(a) (Uniform
Election Dates), Election Code, does not apply to an election ordered under
this section.  Requires the order calling the election to make certain
statements. 

(d)  Requires the board to give notice of the election by publishing a copy
of the election order in a newspaper with general circulation in the
district once a week for two consecutive weeks.  Requires the first
publication to appear on or before the 35th day before the date set for the
election.  Requires the ballot for an election at which the dissolution of
the district is proposed to be printed to permit voting for or against the
proposition:  "The dissolution of the Mitchell County Hospital District." 

(e)  Requires the board, if a majority of the votes in the election favor
dissolution, to find that the district is dissolved.  Requires the board,
if a majority of the votes in the election do not favor dissolution, to
continue to administer the district, and prohibits another election on the
question of dissolution from being held before the first anniversary of the
most recent election to dissolve the district. 

(f)  Requires the board, if a majority of the votes in the election favor
dissolution, to:  transfer the land, buildings, improvements, equipment,
and other assets that belong to the district to a county or to another
governmental entity in Mitchell County; sell the assets and liabilities to
another person or entity; or administer the property, assets, and debts
until all funds have been disposed of and all district debts have been paid
or settled. 

(g)  Provides that if the district transfers the land, buildings,
improvements, equipment, and other assets to a county or other governmental
entity, the county or entity assumes all debts and obligations of the
district at the time of the transfer, and the district is dissolved.
Provides that if the transfer is not made, or the property and assets are
not sold, the board is required to administer the property, assets, and
debts until all has been disposed, paid, or settled, at which time the
district is dissolved. 

(h)  Requires the board, after it finds that the district is dissolved, to:
determine the debt owed by the district; and impose on the property
included in the district's tax rolls a tax that is in proportion of the
debt to the property value. 
 
(i)  Requires the board, when all outstanding debts and obligations of the
district are paid, to order the secretary to return the pro rata share of
all unused tax money to each district taxpayer.   

(j)  Authorizes a taxpayer to request that the taxpayer's share of surplus
tax money be credited to the taxpayer's county taxes.  Provides that if a
taxpayer requests the credit, the board is required to direct the secretary
to transmit the funds to the county tax assessor-collector. 

(k)  Requires the board, after the district has paid all its debts and has
disposed of all its assets and funds as required by this section, to file a
written report with the commissioners court of Mitchell County setting
forth a summary of the board of directors' actions in dissolving the
district. 

(l)  Requires the commissioners court of Mitchell County, not later than
the 10th day after the date it receives the report and determines that the
requirements of this section have been fulfilled, to enter an order
dissolving the district and releasing the board from any further duty or
obligation. 

 (m)  Authorizes the district to provide for the sale or transfer of the
district's assets and liabilities to another person or entity and the
district's subsequent dissolution.  Provides that the dissolution of the
district and the sale or transfer of the district's assets and liabilities
to another person or entity may not contravene a trust indenture or bond
resolution relating to the outstanding bonds of the district.  Provides
that the dissolution and sale or transfer does not diminish or impair the
rights of a holder of an outstanding bond, warrant, or other obligation of
the district. 

(n)  Requires the sale or transfer of the district's assets and liabilities
to satisfy the debt and bond obligations of the district in a manner that
protects the interests of the residents of the district, including the
residents' collective property rights.  Provides that a grant from federal
funds is an obligation to be repaid in satisfaction.   Prohibits the
district from transferring or disposing of the district's assets except for
due compensation unless the transfer is made to another governmental entity
that serves the district and requires the transferred assets to be used for
the benefit of the residents of the district. 

SECTION 12.  Effective date: upon passage or September 1, 2001.