By:  Armbrister                                       S.B. No. 1759
         Line and page numbers may not match official copy.
         Bill not drafted by TLC or Senate E&E.
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to the issuance and sale of and security and payment for
 1-3     public securities.
 1-5           SECTION 1.  Section 1201.022(a), Government Code, is amended
 1-6     to read as follows:
 1-7           (a)  A public security may be:
 1-8                 (1)  issued singly or in a series;
 1-9                 (2)  made payable in a specified amount or amounts or
1-10     installments to:
1-11                       (A)  the bearer;
1-12                       (B)  a registered or named person;
1-13                       (C)  the order of a registered or named person;
1-14     or
1-15                       (D)  a successor or assign of a registered or
1-16     named person; [and]
1-17                 (3)  issued to be sold:
1-18                       (A)  at a public or private sale; and
1-19                       (B)  under the terms determined by the governing
1-20     body of the issuer to be in the issuer's best interests; and
1-21                 (4)  issued with other specified characteristics, on
1-22     additional specified terms, or in a specified manner.
1-23           SECTION 2.  Subchapter B, Chapter 1201, Government Code, is
 2-1     amended by adding Section 1201.028 to read as follows:
 2-3     Notwithstanding any other law, including a provision in a municipal
 2-4     charter, the following actions taken at a meeting of the governing
 2-5     body of an issuer are effective immediately and a subsequent
 2-6     meeting is not required:
 2-7                 (1)  a resolution, order, or ordinance calling an
 2-8     election to:
 2-9                       (A)  authorize the issuance and sale of a public
2-10     security; or
2-11                       (B)  approve the resources, revenue, or income of
2-12     the issuer that may be pledged as security for a public security;
2-13                 (2)  a resolution, order, or ordinance canvassing the
2-14     results of an election described by Subdivision (1); or
2-15                 (3)  a public security authorization.
2-16           SECTION 3.  Section 1203.023, Government Code, is amended to
2-17     read as follows:
2-19     COMPANY OR COMMERCIAL BANK.  At the direction of the issuer, a [A]
2-20     trust company or a commercial bank acting as a registrar under this
2-21     chapter shall maintain the registrar records in this state.
2-22           SECTION 4.  Section 1207.008, Government Code, is amended to
2-23     read as follows:
2-24           Sec. 1207.008.  LIMITATION.  (a)  An issuer may not issue
2-25     refunding bonds if the aggregate amount of payments to be made
2-26     under the refunding bonds exceeds the aggregate amount of payments
 3-1     that would have been made under the terms of the obligations being
 3-2     refunded unless:
 3-3                 (1)  the governing body of the issuer, in the
 3-4     proceedings authorizing the issuance of the refunding bonds, finds
 3-5     that the issuance is in the best interests of the issuer; and
 3-6                 (2)  the maximum amount by which the aggregate amount
 3-7     of payments to be made under the refunding bonds exceeds the
 3-8     aggregate amount of payments that would have been made under the
 3-9     terms of the obligations being refunded is specified in the
3-10     proceedings.
3-11           (b)  An issuer is not required to comply with Subsection
3-12     (a)(2) if the governing body of the issuer determines and states in
3-13     the proceedings authorizing the issuance of the refunding bonds
3-14     that the manner in which the refunding is being executed does not
3-15     make it practicable to make the determination required by that
3-16     subsection.
3-17           SECTION 5.  Section 1207.061(a), Government Code, is amended
3-18     to read as follows:
3-19           (a)  An issuer may, in lieu of making a deposit with the
3-20     comptroller under Subchapter B, deposit an amount of money
3-21     sufficient to provide for the payment or redemption of the
3-22     obligations, including assumed obligations, to be refunded or to be
3-23     paid or redeemed in whole or in part without issuing refunding
3-24     bonds, directly with:
3-25                 (1)  a paying agent for any of the obligations to be
3-26     refunded, paid, or redeemed; [or]
 4-1                 (2)  the trustee under a trust indenture, deed of
 4-2     trust, or similar instrument providing security for the obligations
 4-3     to be refunded, paid, or redeemed; or
 4-4                 (3)  a trust company or commercial bank other than one
 4-5     described by Subdivision (1) or (2) that:
 4-6                       (A)  does not act as a depository for the issuer;
 4-7     and
 4-8                       (B)  is named in the proceedings of the issuer
 4-9     authorizing execution of an agreement under Section 1207.062.
4-10           SECTION 6.  Section 1207.062(a), Government Code, is amended
4-11     to read as follows:
4-12           (a)  An issuer may enter into an escrow or similar agreement
4-13     with a person described by Section 1207.061(a) [paying agent or
4-14     trustee] with respect to the safekeeping, investment,
4-15     administration, and disposition of a deposit made under Section
4-16     1207.061.
4-17           SECTION 7.  Section 1207.063, Government Code, is amended to
4-18     read as follows:
4-19           Sec. 1207.063.  DUTY TO COMPLY.  A person described by
4-20     Section 1201.061(a) [paying agent or trustee] that enters into an
4-21     agreement under Section 1207.062 shall comply with each term of
4-22     that agreement and, from the deposited money and in the manner and
4-23     to the extent provided by the agreement, make available to any
4-24     other paying agent or trustee for an obligation of the same or a
4-25     different series of obligations to be refunded, paid, or redeemed,
4-26     the amounts required by the terms of the obligation to pay or
 5-1     redeem the principal of and interest on the obligation when due.
 5-2           SECTION 8.  Section 1371.001(2), Government Code, is amended
 5-3     to conform to Section 1, Chapter 1018, Acts of the 76th
 5-4     Legislature, Regular Session, 1999, to read as follows:
 5-5                 (2)  "Eligible project" means:
 5-6                       (A)  the acquisition or construction of or an
 5-7     improvement, addition, or extension to a public works, including a
 5-8     capital asset or facility incident and related to the operation,
 5-9     maintenance, or administration of the public works, and:
5-10                             (i)  with respect to a property or a
5-11     facility for the generation of electric power and energy, fuel
5-12     acquisition or the development or transportation of power, energy,
5-13     or fuel;
5-14                             (ii)  with respect to a property or a
5-15     facility for a public transportation system:
5-16                                   (a)  a building, terminal, garage,
5-17     shop, or other structure, rolling stock, equipment, or another
5-18     facility for mass public transportation; or
5-19                                   (b)  a vehicle parking area or a
5-20     facility necessary or convenient for the beneficial use and access
5-21     of persons and vehicles to a station, terminal, yard, car, or bus,
5-22     or for the protection or environmental enhancement of a facility
5-23     for mass public transportation; and
5-24                             (iii)  with respect to a property or a
5-25     facility for a port facility, a wharf or dock, a warehouse, grain
5-26     elevator, or other storage facility, a bunkering facility,
 6-1     port-related railroad or bridge, floating plant or facility,
 6-2     lightering facility, cargo handling facility, towing facility, or
 6-3     any other facility or aid incident to or useful in the operation of
 6-4     a port facility;
 6-5                       (B)  a causeway, bridge, tunnel, turnpike,
 6-6     highway, or combination of those facilities, including:
 6-7                             (i)  a necessary overpass, underpass,
 6-8     interchange, entrance plaza, tollhouse, service station, approach,
 6-9     fixture, accessory, or item of equipment, or a storage,
6-10     administration, or other necessary building; and
6-11                             (ii)  a property right or other interest
6-12     acquired in connection with those facilities;
6-13                       (C)  a public improvement owned by a county that
6-14     serves the purpose of attracting visitors and tourists to the
6-15     county, including a civic center, auditorium, exhibition hall,
6-16     coliseum, stadium, or parking area;
6-17                       (D)  a project for which there exists authorized
6-18     but unissued obligations approved by a majority of the voters of
6-19     the issuer, including obligations payable from ad valorem taxes;
6-20     [or]
6-21                       (E)  a project for which an issuer is authorized
6-22     to issue revenue bonds secured, in whole or in part, by revenue
6-23     derived from or related to student loans; or
6-24                       (F)  an approved venue project under Chapter 334
6-25     or 335, Local Government Code.
6-26           SECTION 9.  Section 1371.001(4), Government Code, is amended
 7-1     to conform to Section 1, Chapter 378, Acts of the 76th Legislature,
 7-2     Regular Session, 1999, Section 1, Chapter 984, Acts of the 76th
 7-3     Legislature, Regular Session, 1999, and Section 1, Chapter 1018,
 7-4     Acts of the 76th Legislature, Regular Session, 1999, and further
 7-5     amended to read as follows:
 7-6                 (4)  "Issuer" means:
 7-7                       (A)  a home-rule municipality that:
 7-8                             (i)  adopted its charter under Section 5,
 7-9     Article XI, Texas Constitution;
7-10                             (ii)  has a population of 50,000 or more;
7-11     and
7-12                             (iii)  has outstanding long-term
7-13     indebtedness that is rated by a nationally recognized rating agency
7-14     for municipal securities in one of the four highest rating
7-15     categories for a long-term obligation;
7-16                       (B)  a conservation and reclamation district
7-17     created and organized as a river authority under Section 52,
7-18     Article III, or Section 59, Article XVI, Texas Constitution;
7-19                       (C)  a joint powers agency organized and
7-20     operating under Chapter 163, Utilities Code;
7-21                       (D)  a metropolitan rapid transit authority or
7-22     regional transportation authority created, organized, and operating
7-23     under Chapter 451 or 452, Transportation Code;
7-24                       (E)  a conservation and reclamation district
7-25     organized or operating as a navigation district under Section 52,
7-26     Article III, or Section 59, Article XVI, Texas Constitution;
 8-1                       (F)  a district organized or operating under
 8-2     Section 59, Article XVI, Texas Constitution, that has all or part
 8-3     of two or more municipalities within its boundaries;
 8-4                       (G)  a state agency, including a state
 8-5     institution of higher education;
 8-6                       (H)  a hospital authority created or operating
 8-7     under Chapter 262 or 264, Health and Safety Code, in a county that:
 8-8                             (i)  has a population of more than two
 8-9     million; or
8-10                             (ii)  is included, in whole or in part, in
8-11     a standard metropolitan statistical area of this state that
8-12     includes a county with a population of more than 1.8 million;
8-13                       (I)  a hospital district in a county that has a
8-14     population of more than two million;
8-15                       (J)  a nonprofit corporation organized to
8-16     exercise the powers of a higher education authority under Section
8-17     53.47(e), Education Code; [or]
8-18                       (K) [(J)]  a county with a population of two
8-19     million or more;
8-20                       (L)  an independent school district that has an
8-21     average daily attendance of 50,000 or more as determined under
8-22     Section 42.005, Education Code;
8-23                       (M)  a municipality or county operating under
8-24     Chapter 334, Local Government Code; or
8-25                       (N)  a district created under Chapter 335, Local
8-26     Government Code.
 9-1           SECTION 10.  Section 1371.051, Government Code, is amended to
 9-2     read as follows:
 9-3           Sec. 1371.051.  AUTHORITY TO ISSUE OBLIGATION.  As authorized
 9-4     and approved by the [The] governing body of an issuer, the
 9-5     governing body may issue, sell, and deliver an obligation to:
 9-6                 (1)  finance a project cost;
 9-7                 (2)  [or to] refund an obligation issued in connection
 9-8     with an eligible project; or
 9-9                 (3)  finance all or part of a payment owed or to be
9-10     owed on:
9-11                       (A)  the establishment of an interest rate lock,
9-12     interest rate hedging agreement, or other credit agreement; or
9-13                       (B)  the settlement or termination, at maturity
9-14     or otherwise, of an interest rate lock, interest rate hedging
9-15     agreement, or other credit agreement, whether the settlement or
9-16     termination occurs:
9-17                             (i)  at the option of the issuer or the
9-18     other party to the credit agreement; or
9-19                             (ii)  by operation of the terms of the
9-20     credit agreement [as may be authorized and approved by the
9-21     governing body].
9-22           SECTION 11.  Subchapter B, Chapter 1371, Government Code, is
9-23     amended by adding Section 1371.0521 to read as follows:
9-24           Sec. 1371.0521.  INDEPENDENT SCHOOL DISTRICT OBLIGATION.  An
9-25     independent school district may not issue an obligation under this
9-26     chapter unless the obligation is authorized in accordance with
 10-1    Section 45.003, Education Code.
 10-2          SECTION 12.  Section 1502.055(c), Government Code, is amended
 10-3    to read as follows:
 10-4          (c)  This section does not apply to the sale of an
 10-5    unencumbered natural gas system owned by a municipality with a
 10-6    population of more than 100,000 [1.2 million].
 10-7          SECTION 13.  Subchapter C, Chapter 271, Local Government
 10-8    Code, is amended by adding Section 271.0521 to read as follows:
10-11    section applies only to a municipality with a population of 50,000
10-12    or more.
10-13          (b)  Instead of or in addition to any other method of payment
10-14    provided by this subchapter, a municipality may issue certificates
10-15    under this subchapter to be paid from and secured by:
10-16                (1)  a municipal sales and use tax imposed under
10-17    Chapter 321, Tax Code, for a project for which there exists
10-18    authorized but unissued obligations approved by a majority of the
10-19    voters of the municipality, including obligations payable from ad
10-20    valorem taxes;
10-21                (2)  a municipal sales and use tax imposed under
10-22    Section 4A, Development Corporation Act of 1979 (Article 5190.6,
10-23    Vernon's Texas Civil Statutes), if the certificates are issued in
10-24    connection with a municipally owned project to which that section
10-25    applies that has been approved by a majority of the voters of the
10-26    municipality; and
 11-1                (3)  a municipal sales and use tax imposed under
 11-2    Section 4B, Development Corporation Act of 1979 (Article 5190.6,
 11-3    Vernon's Texas Civil Statutes), if the certificates are issued in
 11-4    connection with a municipally owned project to which that section
 11-5    applies that has been approved by a majority of the voters of the
 11-6    municipality.
 11-7          SECTION 14.  Section 321.506, Tax Code, is amended to read as
 11-8    follows:
 11-9          Sec. 321.506.  USE OF TAX REVENUE BY MUNICIPALITY.  Except as
11-10    provided by Section 321.507 of this code or Section 271.0521, Local
11-11    Government Code, the money received by a municipality under this
11-12    chapter is for the use and benefit of the municipality and may be
11-13    used for any purpose for which the general funds of the
11-14    municipality may be used, except that a municipality may not pledge
11-15    the revenue received under this chapter to the payment of bonds or
11-16    other indebtedness.
11-17          SECTION 15.  Section 4A(e), Development Corporation Act of
11-18    1979 (Article 5190.6, Vernon's Texas Civil Statutes), is amended to
11-19    read as follows:
11-20          (e)  The Municipal Sales and Use Tax Act (Chapter 321, Tax
11-21    Code) governs an election to authorize the imposition of the sales
11-22    and use tax under this section and governs the imposition,
11-23    computation, administration, governance, abolition, and use of the
11-24    tax except as inconsistent with this section or as provided by
11-25    Section 271.0521, Local Government Code.  The tax imposed under
11-26    this section takes effect as provided by Section 321.102(a), Tax
 12-1    Code.
 12-2          SECTION 16.  Section 4B(g), Development Corporation Act of
 12-3    1979 (Article 5190.6, Vernon's Texas Civil Statutes), is amended to
 12-4    read as follows:
 12-5          (g)  On receipt of the proceeds of the sales and use tax
 12-6    imposed under this section from the comptroller, the eligible city
 12-7    shall deliver the proceeds to the corporation.  Tax proceeds may be
 12-8    used [to]:
 12-9                (1)  to pay the costs of projects of the types added to
12-10    the definition of that term by Subsection (a)  of this section;
12-11    [or]
12-12                (2)  to pay the principal of, interest on, and other
12-13    costs relating to bonds or other obligations issued by the
12-14    corporation to pay the costs of the projects or to refund bonds or
12-15    other obligations issued to pay the costs of projects; or
12-16                (3)  as provided by Section 271.0521, Local Government
12-17    Code, to secure and pay certificates of obligation issued by the
12-18    municipality in connection with the projects.
12-19          SECTION 17.  Section 55.16, Education Code, is amended to
12-20    read as follows:
12-21          Sec. 55.16.  BOARD RESPONSIBILITY.  (a)  Each board shall be
12-22    authorized to fix and collect rentals, rates, and charges from
12-23    students and others for the occupancy, services, use, and/or
12-24    availability of all or any of its property, buildings, structures,
12-25    activities, operations, or other facilities as provided by this
12-26    section.
 13-1          (b)  Unless it is expressly provided by law that specified
 13-2    funds under the control of a board are not considered revenue
 13-3    funds, a provision in this title or another law that limits the
 13-4    purpose for which funds under the control of the board may be spent
 13-5    does not impair a board's ability to pledge and use all revenue
 13-6    funds under the board's control to secure and pay obligations of
 13-7    the board under this chapter or other law.
 13-8          (c)  A board shall fix each rental, rate, charge, or fee that
 13-9    the board has authority under this title to fix in an amount
13-10    determined to be necessary to pay or provide, for each activity or
13-11    service, all associated capital costs, including debt service,
13-12    operation and  maintenance costs, including associated overhead
13-13    costs of a system or institution, and prudent reserves.  Except as
13-14    otherwise provided by Subsection (e), this section does not
13-15    authorize a board to impose a rental, rate, charge, or fee at an
13-16    amount exceeding a limit imposed by another provision of this
13-17    title.
13-18          (d)  For billing and reporting purposes, a board shall
13-19    accumulate all mandatory fees or charges provided for by this
13-20    section or Chapter 54 as a separate facilities and services charge.
13-21          (e)  [, in such amounts and in such manner as may be
13-22    determined by the board.]  If bonds have been or are issued
13-23    pursuant to this title, or secured or to be secured by a pledge of
13-24    part or all of the board's revenue funds, and if, at the time of
13-25    authorizing the issuance of the bonds, (1) the estimated maximum
13-26    amount per semester hour of such pledged revenue funds (based on
 14-1    then current enrollment and conditions) during any future semester
 14-2    necessary to provide for the payment of the principal of and
 14-3    interest on the bonds when due, together with (2) the aggregate
 14-4    amount of all such pledged revenue funds which were levied on a
 14-5    semester hour basis for the then current semester to pay the
 14-6    principal of and interest on all previously issued bonds, do not
 14-7    exceed the amount permitted by this title, then any necessary fees,
 14-8    tuition, rentals, rates, or other charges constituting revenue
 14-9    funds shall be levied and collected when and to the extent required
14-10    by the resolution authorizing the issuance of the bonds in any
14-11    amount required to provide revenue funds sufficient for the payment
14-12    of the principal of and interest on the bonds, regardless of any
14-13    other provision or limitation provided by this title.
14-14          (f) [(b)]  A board is not required to charge students
14-15    enrolled in different degree programs at the institution the same
14-16    rentals, rates, charges, and fees under this section.
14-17          SECTION 18.  (a)  All acts and proceedings of each governing
14-18    board, as defined by Section 55.01, Education Code, and as used in
14-19    Chapter 130, Education Code, relating to the establishment and
14-20    collection of rates, rentals, charges, and fees are validated as of
14-21    the dates they occurred.
14-22          (b)  The provisions of this section do not apply to an act or
14-23    proceeding that on September 1, 2001:
14-24                (1)  is involved in litigation if the litigation
14-25    ultimately results in the act or proceeding being held invalid by a
14-26    final judgment of a court; or
 15-1                (2)  has been held invalid by a final judgment of a
 15-2    court.
 15-3          SECTION 19.  This Act takes effect September 1, 2001.