1-1     By:  Armbrister                                        S.B. No. 565
 1-2           (In the Senate - Filed February 6, 2001; February 7, 2001,
 1-3     read first time and referred to Committee on State Affairs;
 1-4     February 28, 2001, reported favorably by the following vote:  Yeas
 1-5     9, Nays 0; February 28, 2001, sent to printer.)
 1-6                            A BILL TO BE ENTITLED
 1-7                                   AN ACT
 1-8     relating to security for public securities issued by governmental
 1-9     entities.
1-10           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-11           SECTION 1.  Subtitle A, Title 9, Government Code, is amended
1-12     by adding Chapter 1208 to read as follows:
1-13                CHAPTER 1208.  SECURITY FOR PUBLIC SECURITIES
1-14           Sec. 1208.001.  DEFINITIONS.  In this chapter:
1-15                 (1)  "Credit agreement" means any agreement authorized
1-16     by a governing body of an issuer in connection with or related to
1-17     the authorization, issuance, sale, resale, security, exchange,
1-18     payment, purchase, remarketing, or redemption of a public security,
1-19     interest on a public security, or both.  The term includes any
1-20     agreement relating to public securities that is defined or
1-21     described in state law as a "credit agreement" or a "bond
1-22     enhancement agreement."
1-23                 (2)  "Issuer" and "public security" have the meanings
1-24     assigned by Section 1202.001.
1-25                 (3)  "Security agreement" means a resolution, order,
1-26     ordinance, or agreement that creates a security interest with
1-27     respect to a public security or a credit agreement.
1-28                 (4)  "Security interest" means a pledge of, lien on, or
1-29     other interest in taxes, revenue, receipts, funds, or other
1-30     personal property or fixtures that secures payment or performance
1-31     of public securities or a credit agreement.
1-32           Sec. 1208.002.  PLEDGE OF SECURITY.  (a)  A security interest
1-33     created by an issuer by means of a security agreement:
1-34                 (1)  is valid and effective according to the terms of
1-35     the security agreement as to all property of the governmental unit
1-36     stated to be covered by the security agreement, whether:
1-37                       (A)  held at the time the security agreement is
1-38     entered into or adopted; or
1-39                       (B)  later acquired or received;
1-40                 (2)  except as provided by Subsection (c), is perfected
1-41     from the time the security agreement is entered into or adopted
1-42     continuously through the termination of the security interest, in
1-43     accordance with its terms, without physical delivery or transfer of
1-44     control of the property, filing of a document, or another act;
1-45                 (3)  ranks as to priority in order of the time of
1-46     perfection, except as otherwise provided by the security agreement;
1-47     and
1-48                 (4)  may be enforced as provided by the security
1-49     agreement or the law that authorizes the security agreement.
1-50           (b)  The rights of a lien creditor as defined by Section
1-51     9.102(a), Business & Commerce Code, are subordinate to a perfected
1-52     security interest described by Subsection (a).
1-53           (c)  A security interest in real property is perfected when
1-54     the security agreement, a memorandum of the security agreement, or
1-55     other instrument creating the security interest is duly recorded in
1-56     the real property records of the county in which the property is
1-57     located.
1-58           (d)  This section does not:
1-59                 (1)  create or exempt an issuer from a duty to submit
1-60     public securities to the attorney general for approval and
1-61     registration by the comptroller; or
1-62                 (2)  authorize an issuer to enter into or adopt a
1-63     security agreement.
1-64           Sec. 1208.003.  PREEMPTION.  This chapter is a statute
 2-1     described by Section 9.109(c)(2), Business & Commerce Code, and an
 2-2     issuer is considered to be a governmental unit for purposes of that
 2-3     section.
 2-4           SECTION 2.  Chapter 1208, Government Code, as added by this
 2-5     Act, applies to any security interest as defined by Section
 2-6     1208.001, Government Code, as added by this Act, regardless of the
 2-7     date on which the security interest was created.
 2-8           SECTION 3.  This Act takes effect July 1, 2001, if it
 2-9     receives a vote of two-thirds of all the members elected to each
2-10     house, as provided by Section 39, Article III, Texas Constitution.
2-11     If this Act does not receive the vote necessary for immediate
2-12     effect, this Act takes effect September 1, 2001.
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