SRC-BWC S.B. 565 77(R)BILL ANALYSIS


Senate Research CenterS.B. 565
By: Armbrister
State Affairs
6/13/2001
Enrolled


DIGEST AND PURPOSE 

Due to significant differences between governmental units and private
organizations, governmental units cannot perfect their bond pledges by the
means afforded under the Business and Commerce Code. This problem subjects
governments and their pledges to increased insolvency risks under the 1999
law, making financing harder and more expensive to obtain.   
S.B. 565 restores the Public Securities Code (Article 9, Government Code)
as the basic law governing security pledges for bond and other obligations
of governmental units.   

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 Title 9A, Government Code, by adding Chapter 1208, as
follows: 

CHAPTER 1208.  SECURITY FOR PUBLIC SECURITIES

Sec. 1208.001.  DEFINITIONS.  Defines "credit agreement," "issuer," "public
security," "security agreement," and "security interest." 

Sec. 1208.002.  PLEDGE OF SECURITY.  Provides that a security interest
created by an issuer by means of a security agreement meets certain terms
and requirements.  Provides that the rights of a lien creditor as defined
by Section 9.102(a) (Definitions and Index of Definitions), Business &
Commerce Code, are subordinate to a perfected security interest described
by Subsection (a).  Provides that a security interest in real property is
perfected when the security agreement, a memorandum of the security
agreement, or other instrument creating the security interest is duly
recorded in the real property records of the county in which the property
is located.  Provides that this section does not create or exempt an issuer
from a duty to submit public securities to the attorney general for
approval and registration by the comptroller, or authorize an issuer to
enter into or adopt a security agreement. 

Sec. 1208.003.  PREEMPTION.  Provides that this chapter is a statute
described by Section 9.109(c)(2) (Scope), Business & Commerce Code, and an
issuer is considered to be a governmental unit for purposes of that
section. 

SECTION 2.  Provides that Chapter 1208, Government Code, as added by this
Act, applies to any security interest as defined by Section 1208.001,
Government Code, as added by this Act, regardless of the date on which the
security interest was created. 

SECTION 3.  Effective date:  July 1, 2001 if passes, or September 1, 2001.