SRC-JLB S.B. 1632 78(R)   BILL ANALYSIS


Senate Research Center   S.B. 1632
By: Wentworth
Intergovernmental Relations
3/29/2003
As Filed


DIGEST AND PURPOSE 

Current law is silent on the ability of a jointly owned city-county
hospital to borrow money using real property as collateral.  As proposed,
S.B. 1632 allows a city-county hospital to borrow money using real
property as collateral.  

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 265B, Health and Safety Code, by adding
Sections 265.0177 through 265.0179, as follows: 
 
Sec. 265.0177.  AUTHORITY TO BORROW MONEY.  (a)  Authorizes the board of
managers of a jointly-owned city and county hospital to borrow money in
the name of the hospital for the purposes described in Section 265.0179
and to, in connection with the loan, execute a loan agreement or
promissory note as evidence of the obligation to repay the loan. 
 
(b)  Requires the loan amount, interest rate, maturity, security, and
other terms and conditions of the loan to be found to be reasonable by the
board of managers. Prohibits the maturity of the loan from exceeding 30
years. 
 
(c)  Requires the board of managers, before entering into a loan under
this section, to determine that it will have sufficient funds available
from revenues generated by the hospital to pay the loan when the loan is
due. 
 
(d)  Requires the commissioners court and the governing body of the
municipality to approve the terms of the loan by written resolution. 
 
(e)  Provides that Chapter 1202, Government Code, does not apply to a
promissory note or any other instrument evidencing a loan under this
section. 
 
Sec. 265.0178.  PLEDGE OF SECURITY.  (a)  Authorizes certain loans under
Section 265.0177. 

(b)  Provides that the holder of a loan obligation under Section 265.0177
does not have the right to demand payment of the principal and interest on
the loan out of any funds or property of the hospital other than the funds
or property specifically pledged to secure payment of the loan. 
 
Sec. 265.0179.  PERMISSIBLE USES OF LOAN PROCEEDS.  Authorizes the
proceeds from a loan under Sec. 265.0177 to be used to pay costs relating
to the acquisition, construction, rehabilitation, and equipping of
hospital facilities, including costs related to the acquisition of real
property and any other improvements deemed necessary and appropriate by
the board of managers. 
  
SECTION 2.  Effective date:  upon passage or September 1, 2003.