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


Senate Research CenterC.S.S.B. 1632
78R9743 EMT-FBy: Wentworth
Intergovernmental Relations
4/29/2003
Committee Report (Substituted)


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.  C.S.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 Subchapter B, Chapter 265, Health and Safety Code, by
adding Sections 265.0177- 265.0179, as follows: 
 
Sec. 265.0177.  AUTHORITY TO BORROW MONEY.  (a)  Authorizes the board of
managers, after approval by resolution of the commissioners court of the
county and the governing body of the municipality that appointed the board
of managers, to, on behalf of the hospital, borrow money from a federally
insured lending institution for a purpose described by Section 265.0179.
Authorizes the board of managers to execute a loan agreement or promissory
note as evidence of the obligation to repay the loan. 

(b)  Authorizes the board of managers to borrow money in an amount it
considers advisable, subject to a rate of interest, security, and other
terms it considers advisable.  Requires the loan to mature not later than
the 30th anniversary of the date on which the loan in made. 

(c)  Requires the board of managers, before entering into a loan under
this section, to determine that there will be sufficient money available
from revenues generated by the hospital to pay the loan when the loan
becomes due.   
 
(d)  Requires the commissioners court of the county and the governing body
of the municipality that appointed the board of managers to approve the
terms of a loan agreement 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
is not entitled to demand payment of the principal and interest on the
loan from any money or property of the hospital other than the money 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 related
to the acquisition,  construction, rehabilitation, and equipping of a
hospital facility, including costs related to the acquisition of real
property and any other improvement considered necessary and appropriate by
the board of managers. 
 
SECTION 2.  Effective date:  upon passage or September 1, 2003.