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. 2-13 * * * * *