By Capelo H.B. No. 1385 77R4135 ESH-F A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to security for public securities issued by governmental 1-3 entities. 1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-5 SECTION 1. Subtitle A, Title 9, Government Code, is amended 1-6 by adding Chapter 1208 to read as follows: 1-7 CHAPTER 1208. SECURITY FOR PUBLIC SECURITIES 1-8 Sec. 1208.001. DEFINITIONS. In this chapter: 1-9 (1) "Credit agreement" means any agreement authorized 1-10 by a governing body of an issuer in connection with or related to 1-11 the authorization, issuance, sale, resale, security, exchange, 1-12 payment, purchase, remarketing, or redemption of a public security, 1-13 interest on a public security, or both. The term includes any 1-14 agreement relating to public securities that is defined or 1-15 described in state law as a "credit agreement" or a "bond 1-16 enhancement agreement." 1-17 (2) "Issuer" and "public security" have the meanings 1-18 assigned by Section 1202.001. 1-19 (3) "Security agreement" means a resolution, order, 1-20 ordinance, or agreement that creates a security interest with 1-21 respect to a public security or a credit agreement. 1-22 (4) "Security interest" means a pledge of, lien on, or 1-23 other interest in taxes, revenue, receipts, funds, or other 1-24 personal property or fixtures that secures payment or performance 2-1 of public securities or a credit agreement. 2-2 Sec. 1208.002. PLEDGE OF SECURITY. (a) A security interest 2-3 created by an issuer by means of a security agreement: 2-4 (1) is valid and effective according to the terms of 2-5 the security agreement as to all property of the governmental unit 2-6 stated to be covered by the security agreement, whether: 2-7 (A) held at the time the security agreement is 2-8 entered into or adopted; or 2-9 (B) later acquired or received; 2-10 (2) except as provided by Subsection (c), is perfected 2-11 from the time the security agreement is entered into or adopted 2-12 continuously through the termination of the security interest, in 2-13 accordance with its terms, without physical delivery or transfer of 2-14 control of the property, filing of a document, or another act; 2-15 (3) ranks as to priority in order of the time of 2-16 perfection, except as otherwise provided by the security agreement; 2-17 and 2-18 (4) may be enforced as provided by the security 2-19 agreement or the law that authorizes the security agreement. 2-20 (b) The rights of a lien creditor as defined by Section 2-21 9.102(a), Business & Commerce Code, are subordinate to a perfected 2-22 security interest described by Subsection (a). 2-23 (c) A security interest in real property is perfected when 2-24 the security agreement, a memorandum of the security agreement, or 2-25 other instrument creating the security interest is duly recorded in 2-26 the real property records of the county in which the property is 2-27 located. 3-1 (d) This section does not: 3-2 (1) create or exempt an issuer from a duty to submit 3-3 public securities to the attorney general for approval and 3-4 registration by the comptroller; or 3-5 (2) authorize an issuer to enter into or adopt a 3-6 security agreement. 3-7 Sec. 1208.003. PREEMPTION. This chapter is a statute 3-8 described by Section 9.109(c)(2), Business & Commerce Code, and an 3-9 issuer is considered to be a governmental unit for purposes of that 3-10 section. 3-11 SECTION 2. Chapter 1208, Government Code, as added by this 3-12 Act, applies to any security interest as defined by Section 3-13 1208.001, Government Code, as added by this Act, regardless of the 3-14 date on which the security interest was created. 3-15 SECTION 3. This Act takes effect July 1, 2001, if it 3-16 receives a vote of two-thirds of all the members elected to each 3-17 house, as provided by Section 39, Article III, Texas Constitution. 3-18 If this Act does not receive the vote necessary for immediate 3-19 effect, this Act takes effect September 1, 2001.