Office of House Bill AnalysisC.S.H.B. 3357
By: Kuempel
Financial Institutions
Committee Report (Substituted)


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. C.S.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. 


It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 


C.S.H.B. 3357 amends the Water Code to authorize a creating river authority
of a nonprofit corporation engaged in the distribution and sale of electric
energy to guarantee or otherwise provide credit support for any public
security or other obligation or contract of that corporation if the board
of directors of the river authority determines that the guarantee or other
credit agreement is beneficial to a public purpose of the river authority
and is for the public purpose of the development and diversification of the
economy of the state, the elimination of unemployment or underemployment in
the state, or the development or expansion of commerce in the state.  The
bill provides that a determination by the board of directors of a river
authority is conclusive.     

The bill authorizes a guarantee or other credit agreement 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.   Existing law
governing the examination and registration of public securities applies to
a guarantee or other credit agreement as if the guarantee or other credit
agreement were a public security.   


September 1, 2001.


C.S.H.B. 3357 modifies the original bill to conform to Texas Legislative
Council style and format.