SRC-MKV, CTC H.B. 3357 77(R)   BILL ANALYSIS


Senate Research Center   H.B. 3357
77R9831 SGA-FBy: Kuempel (Armbrister)
Business & Commerce
5/2/2001
Engrossed


DIGEST AND PURPOSE 

Under current law, the board of directors of a river authority engaged in
the distribution and sale of electric energy is authorized to create a
nonprofit corporation to act on behalf of the river authority as its
authority and instrumentality. Such a nonprofit corporation has most of the
same powers as the creating river authority, including the issuance of the
bonds and public securities. However, it may take time for a newly formed
nonprofit corporation to develop credit ratings suitable for the issuance
of bonds and other securities. If a creating river authority was authorized
to guarantee the obligations of the nonprofit corporation, the potential
lower interest rates and improved marketability might reduce costs to the
public. H.B. 3357 authorizes a river authority to guarantee with its own
assets public securities and other obligations of a nonprofit corporation
established by the authority.  

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 Chapter 152B, Water Code, by adding Section 152.058, as
follows: 

Sec. 152.058.  GUARANTEE AND OTHER CREDIT SUPPORT RELATING TO PUBLIC
SECURITIES AND OTHER OBLIGATIONS.  Defines "public security." Authorizes a
river authority that has created a corporation under Section 152.051 to
guarantee or otherwise provide credit support, under Section 52-a, Article
III, Texas Constitution, for any public security or other obligation or
contract of that corporation if the board of directors of the river
authority (board) determines that the guarantee or other credit agreement
meets certain criteria.  Provides that a determination of the board under
this section is conclusive.  Authorizes a guarantee or other credit
agreement authorized by this section to provide for the guarantee of or
other credit support for public securities or other obligations or
contracts of the corporation, all or a portion of which may be authorized,
executed, and delivered in the future.  Provides that Chapter 1202
(Examination and Registration of Public Securities), Government Code,
applies to a guarantee or other credit agreement under this section as if
the guarantee or other credit agreement were a public security. 

SECTION2.  Effective date: September 1, 2001.