By: Armbrister S.B. No. 565
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
1-25 of public securities or a credit agreement.
2-1 Sec. 1208.002. PLEDGE OF SECURITY. (a) A security interest
2-2 created by an issuer by means of a security agreement:
2-3 (1) is valid and effective according to the terms of
2-4 the security agreement as to all property of the governmental unit
2-5 stated to be covered by the security agreement, whether:
2-6 (A) held at the time the security agreement is
2-7 entered into or adopted; or
2-8 (B) later acquired or received;
2-9 (2) except as provided by Subsection (c), is perfected
2-10 from the time the security agreement is entered into or adopted
2-11 continuously through the termination of the security interest, in
2-12 accordance with its terms, without physical delivery or transfer of
2-13 control of the property, filing of a document, or another act;
2-14 (3) ranks as to priority in order of the time of
2-15 perfection, except as otherwise provided by the security agreement;
2-16 and
2-17 (4) may be enforced as provided by the security
2-18 agreement or the law that authorizes the security agreement.
2-19 (b) The rights of a lien creditor as defined by Section
2-20 9.102(a), Business & Commerce Code, are subordinate to a perfected
2-21 security interest described by Subsection (a).
2-22 (c) A security interest in real property is perfected when
2-23 the security agreement, a memorandum of the security agreement, or
2-24 other instrument creating the security interest is duly recorded in
2-25 the real property records of the county in which the property is
2-26 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.