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78R8360 T
By: Smithee H.B. No. 1958
A BILL TO BE ENTITLED
AN ACT
relating to revenue bond program and procedures for certain
residential property insurance.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter E, Chapter 21, Insurance Code, is
amended by adding Article 21.80 to read as follows:
Article 21.80. Revenue Bond Program for FAIR Plan
Association.
Sec. 1. LEGISLATIVE FINDING; PURPOSE. The legislature
finds that the issuance of bonds to provide a method to raise funds
to provide residential property insurance through the Fair Access
to Insurance Requirements Plan association in this state is for the
benefit of the public and in furtherance of a public purpose.
Sec. 2. DEFINITIONS. In this article:
(1) "Association" means the Fair Access to Insurance
Requirements (FAIR) Plan association established under Article
21.49A of this code.
(2) "Bond resolution" means the resolution or order
authorizing the bonds to be issued under this article.
(3) "Board" means the board of directors of the Texas
Public Finance Authority.
(4) "Insurer" means any insurer required to
participate in the association under Section 4, Article 21.49A of
this code.
Sec. 3. BONDS AUTHORIZED; APPLICATION OF TEXAS PUBLIC
FINANCE AUTHORITY ACT. (a) On behalf of the association, the Texas
Public Finance Authority shall issue revenue bonds to:
(1) fund the association established under Section 4,
Article 21.49A of this code;
(2) pay costs related to issuance of the bonds; and
(3) pay other costs related to the bonds as may be
determined by the board.
(b) To the extent not inconsistent with this article,
Chapter 1232, Government Code, applies to bonds issued under this
article. In the event of a conflict, this article controls.
Sec. 4. APPLICABILITY OF OTHER STATUTES. The following
laws apply to bonds issued under this article to the extent
consistent with this article:
(1) Chapters 1201, 1202, 1204, 1205, 1231, and 1371,
Government Code; and
(2) Subchapter A, Chapter 1206, Government Code.
Sec. 5. LIMITS. The Texas Public Finance Authority may
issue, on behalf of the association, bonds in a total amount not to
exceed $75 million.
Sec. 6. CONDITIONS. (a) Bonds may be issued at public or
private sale.
(b) Bonds may mature not more than 10 years after the date
issued.
(c) Bonds must be issued in the name of the association.
Sec. 7. ADDITIONAL COVENANTS. In a bond resolution, the
board may make additional covenants with respect to the bonds and
the designated income and receipts of the association pledged to
their payment and may provide for the flow of funds and the
establishment, maintenance, and investment of funds and accounts
with respect to the bonds.
Sec. 8. SPECIAL ACCOUNTS. (a) A bond resolution may
establish special accounts, including an interest and sinking fund
account, reserve account, and other accounts.
(b) The association shall administer the accounts in
accordance with Article 21.49A of this code.
Sec. 9. SECURITY. (a) Bonds are payable only from the
surcharge fee established in Section 10 of this article or other
sources the association is authorized to levy, charge, and collect
in connection with paying any portion of the bonds.
(b) Bonds are obligations solely of the association. Bonds
do not create a pledging, giving, or lending of the faith, credit,
or taxing authority of this state.
(c) Each bond must include a statement that the state is not
obligated to pay any amount on the bond and that the faith, credit,
and taxing authority of this state are not pledged, given, or lent
to those payments.
(d) Each bond issued under this article must state on its
face that the bond is payable solely from the revenues pledged for
that purpose and that the bond does not and may not constitute a
legal or moral obligation of the state.
Sec. 10. SURCHARGE FEE. (a) A surcharge fee is assessed
against:
(1) each insurer; and
(2) the association.
(b) The surcharge fee shall be set by the commissioner in an
amount sufficient to pay all debt service on the bonds. The
surcharge shall be paid by each insurer and the association as
required by the commissioner by rule.
(c) The comptroller shall collect the surcharge fee and the
department shall reimburse the comptroller in the manner described
by Article 4.19 of this code.
(d) The commissioner, in consultation with the comptroller,
may coordinate payment and collection of the surcharge fee with
other payments made by insurers and collected by the comptroller.
(e) As a condition of engaging in the business of insurance
in this state, an insurer agrees that if the company leaves the
property insurance market in this state the insurer remains
obligated to pay, until the bonds are retired, the insurer's share
of the surcharge fee assessed under this section in an amount
proportionate to that insurer's share of the property insurance
market, including residential property insurance, in this state as
of the last complete reporting period before the date on which the
insurer ceases to engage in that insurance business in this state.
The proportion assessed against the insurer shall be based on the
insurer's gross premiums for property insurance, including
residential property insurance, for the insurer's last reporting
period. However, an insurer is not required to pay the
proportionate amount in any year in which the surcharge fee
assessed against insurers continuing to write property insurance in
this state is sufficient to service the bond obligation.
Sec. 11. TAX EXEMPT. The bonds issued under this article,
and any interest from the bonds, and all assets pledged to secure
the payment of the bonds are free from taxation by the state or a
political subdivision of this state.
Sec. 12. AUTHORIZED INVESTMENTS. The bonds issued under
this article constitute authorized investments under Article 2.10
and Subpart A, Part I, Article 3.39, of this code.
Sec. 13. STATE PLEDGE. The state pledges to and agrees with
the owners of any bonds issued in accordance with this article that
the state will not limit or alter the rights vested in the
association to fulfill the terms of any agreements made with the
owners of the bonds or in any way impair the rights and remedies of
those owners until the bonds, any premium or interest, and all costs
and expenses in connection with any action or proceeding by or on
behalf of those owners are fully met and discharged. The
association may include this pledge and agreement of the state in
any agreement with the owners of the bonds.
Sec. 14. ENFORCEMENT BY MANDAMUS. A writ of mandamus and
all other legal and equitable remedies are available to any party at
interest to require the association and any other party to carry out
agreements and to perform functions and duties under this article,
the Texas Constitution, or a bond resolution.
SECTION 2. This Act takes effect immediately if it receives
a vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect September 1, 2003.