SRC-LBB, LBB S.B. 876 78(R)   BILL ANALYSIS


Senate Research Center   S.B. 876
78R4232 JJT-FBy: Duncan
Business & Commerce
4/5/2003
As Filed


DIGEST AND PURPOSE 

The 76th Texas Legislature enacted S.B. 1091, allowing school districts
and college districts voter authorized debt to be sold at either a
competitive or a negotiated sale.  This additional method of sale was
designed to give the entities issuing debt another, equally beneficial
method of sale and allow greater flexibility in debt structuring so as to
provide certain benefits.  The attorney general has interpreted the law so
as to treat the commissions paid in negotiated sales differently than in
those paid competitive sales.  Under this interpretation, commissions paid
on negotiated sales must be paid from the voter-approved debt amount.  As
proposed, S.B. 876 allows commissions on certain negotiated bond sales to
be paid above the vote-authorized amount. 

RULEMAKING AUTHORITY

This bill does not expressly grant any additional rulemaking authority to
a state officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Chapter 1201B, Government Code, by adding Section
1201.029, as follows: 

  Sec. 1201.029.  COMMISSIONS NOT TO BE PAID FROM PRINCIPAL.  Provides
that in a public or private sale of public securities the principal amount
of which is limited by law, by voted authorization, or by other means, for
purposes of determining whether the principal amount of the public
securities that are issued exceeds the limitation, amounts produced by the
initial purchaser through market pricing of the public securities when the
public securities are resold by the initial purchaser are not considered
proceeds of the issuer if the amounts constitute all or part of the
compensation of the initial purchaser. 
 
SECTION 2.  (a)  Effective date:  September 1, 2003.

            (b)  Provides that Section 1201.029, Government Code, as added
by this Act,  
           applies to bonds approved by voters before the effective date
of this act if the                     bonds are issued on or after the
effective date of this Act.