Amend CSHB 2702 by adding the following appropriately numbers 
SECTIONS to the bill and renumbering the subsequent SECTIONS 
accordingly:
	SECTION __.  Subchapter A, Chapter 284, Transportation Code, 
is amended by adding Section 284.011 to read as follows:
	Sec. 284.011.  TRANSFER OF ASSETS.  (a)  A county, acting 
through the commissioners court of the county, may submit a request 
to the commission for authorization to create a regional mobility 
authority under Chapter 370 and to transfer all projects under this 
chapter to the regional mobility authority if:
		(1)  the creation of the regional mobility authority 
and transfer of projects is not prohibited under the bond 
proceedings applicable to the projects;
		(2)  adequate provision has been made for the 
assumption by the regional mobility authority of all debts, 
obligations, and liabilities of the county arising out of the 
transferred projects; and
		(3)  the commissioners courts of any additional 
counties to be part of the regional mobility authority have 
approved the request.
	(b)  The county may submit to the commission a proposed 
structure for the initial board of directors of the regional 
mobility authority and a method for appointment to the board of 
directors at the creation of the regional mobility authority.  
Subsequent appointments to the board of directors are subject to 
the requirements of Subchapter F, Chapter 370.
	(c)  After commission authorization, the county may transfer 
each of its projects under this chapter to the regional mobility 
authority to the extent authorized by the Texas Constitution if 
property and contract rights in the projects and bonds issued for 
the projects are not affected unfavorably.
	(d)  The commission shall adopt rules governing the creation 
of a regional mobility authority and the transfer of projects under 
this section.
	SECTION __.  Section 366.004(a), Transportation Code, is 
amended to read as follows:
	Sec. 366.004.  CONSTRUCTION COSTS DEFINED.  (a)  The cost of 
acquisition, construction, improvement, extension, or expansion of 
a turnpike project or system under this chapter includes the cost 
of:
		(1)  the actual acquisition, construction, 
improvement, extension, or expansion of the turnpike project or 
system;
		(2)  the acquisition of real property, rights-of-way, 
property rights, easements, and other interests in real property;
		(3)  machinery and equipment;                                                 
		(4)  interest payable before, during, and after 
acquisition, construction, improvement, extension, or expansion as 
provided in the bond proceedings;
		(5)  traffic estimates, revenue estimates, engineering 
and legal services, plans, specifications, surveys, appraisals, 
construction cost estimates, and other expenses necessary or 
incidental to determining the feasibility of the construction, 
improvement, extension, or expansion;
		(6)  necessary or incidental administrative, legal, 
and other expenses;     
		(7)  compliance with laws, regulations, and 
administrative rulings;         
		(8)  financing; [and]                                        
		(9)  the assumption of debts, obligations, and 
liabilities of an entity relating to a turnpike project or system 
transferred to an authority by that entity; and
		(10) [(9)]  expenses related to the initial operation 
of the turnpike project or system.
	SECTION __.  Section 366.033, Transportation Code, is 
amended by adding Subsection (k) to read as follows:
	(k)  An authority, acting through its board, may agree with 
another entity to acquire a turnpike project or system from that 
entity, and to assume any debts, obligations, and liabilities of 
the entity relating to a turnpike project or system transferred to 
the authority.
	SECTION __.  Subchapter B, Chapter 366, Transportation Code, 
is amended by adding Section 366.036 to read as follows:
	Sec. 366.036.  TRANSFER OF TURNPIKE PROJECT OR SYSTEM.  (a)  
An authority may transfer any of its turnpike projects or systems to 
one or more local governmental entities if:
		(1)  the authority has commitments from the governing 
bodies of the local governmental entities to assume jurisdiction 
over the transferred projects or systems;
		(2)  property and contract rights in the transferred 
projects or systems and bonds issued for the projects or systems are 
not affected unfavorably;
		(3)  the transfer is not prohibited under the bond 
proceedings applicable to the transferred projects or systems;
		(4)  adequate provision has been made for the 
assumption of all debts, obligations, and liabilities of the 
authority relating to the transferred projects or systems by the 
local governmental entities assuming jurisdiction over the 
transferred projects or systems;
		(5)  the local governmental entities are authorized to 
assume jurisdiction over the transferred projects or systems, and 
to assume the debts, obligations, and liabilities of the authority 
relating to the transferred projects or systems; and
		(6)  the transfer has been approved by the 
commissioners court of each county that is part of the authority.
	(b)  An authority may transfer to one or more local 
governmental entities any traffic estimates, revenue estimates, 
plans, specifications, surveys, appraisals, and other work product 
developed by the authority in determining the feasibility of the 
construction, improvement, extension, or expansion of a turnpike 
project or system, and the authority's rights and obligations under 
any related agreements, if the requirements of Subsection (a)(1) 
and (6) are met.
	(c)  A local governmental entity shall, using any lawfully 
available funds, reimburse any expenditures made by an authority 
from its feasibility study fund or otherwise pay the costs of work 
product transferred to the local governmental entity under 
Subsection (b), and any other amounts expended under related 
agreements transferred to the local governmental entity.  The 
reimbursement may be made over time, as determined by the local 
governmental entity and the authority.
	SECTION __.  Section 370.003, Transportation Code, is 
amended by amending Subdivision (14) and adding Subdivisions (16), 
(17), (18), and (19) to read as follows:
		(14)  "Transportation project" means:                                         
			(A)  a turnpike project;                                                     
			(B)  a system;                                                               
			(C)  a passenger or freight rail facility, 
including:                      
				(i)  tracks;                                                                
				(ii)  a rail line;                                                          
				(iii)  switching, signaling, or other 
operating equipment;                
				(iv)  a depot;                                                              
				(v)  a locomotive;                                                          
				(vi)  rolling stock;                                                        
				(vii)  a maintenance facility; and                                          
				(viii)  other real and personal property 
associated with a rail operation;
			(D)  a roadway with a functional classification 
greater than a local road or rural minor collector;
			(E)  a ferry;                                                                
			(F)  an airport;                                                             
			(G)  a pedestrian or bicycle facility;                                       
			(H)  an intermodal hub;                                                      
			(I)  an automated conveyor belt for the movement 
of freight;               
			(J)  a border crossing inspection station;                                   
			(K)  an air quality improvement initiative;                                  
			(L)  a public utility facility; [and]                       
			(M)  a transit system; and                                            
			(N)  if applicable, projects and programs listed 
in the most recently approved state implementation plan for the 
area covered by the authority, including an early action compact.
		(16)  "Mass transit" means the transportation of 
passengers and hand-carried packages or baggage of a passenger by 
any means of surface, overhead, or underground transportation, 
other than an aircraft or taxicab.
		(17)  "Service area" means the county or counties in 
which an authority or transit provider has established a transit 
system.
		(18)  "Transit provider" means an entity that provides 
mass transit for the public and that was created under Chapter 451, 
452, 453, 454, 457, 458, or 460.
		(19)  "Transit system" means:                                          
			(A)  property owned or held by an authority for 
mass transit purposes; and
			(B)  facilities necessary, convenient, or useful 
for:               
				(i)  the use of or access to mass transit by 
persons or vehicles; or
				(ii)  the protection or environmental 
enhancement of mass transit. 
	SECTION __.  Section 370.004(a), Transportation Code, is 
amended to read as follows:
	Sec. 370.004.  CONSTRUCTION COSTS DEFINED.  (a)  The cost of 
acquisition, construction, improvement, extension, or expansion of 
a transportation project under this chapter includes the cost of:
		(1)  the actual acquisition, construction, 
improvement, extension, or expansion of the transportation 
project;
		(2)  the acquisition of real property, rights-of-way, 
property rights, easements, and other interests in real property;
		(3)  machinery and equipment;                                                 
		(4)  interest payable before, during, and for not more 
than three years after acquisition, construction, improvement, 
extension, or expansion as provided in the bond proceedings;
		(5)  traffic estimates, revenue estimates, engineering 
and legal services, plans, specifications, surveys, appraisals, 
construction cost estimates, and other expenses necessary or 
incidental to determining the feasibility of the acquisition, 
construction, improvement, extension, or expansion;
		(6)  necessary or incidental administrative, legal, 
and other expenses;     
		(7)  compliance with laws, regulations, and 
administrative rulings, including any costs associated with 
necessary environmental mitigation measures;
		(8)  financing; [and]                                        
		(9)  the assumption of debts, obligations, and 
liabilities of an entity relating to a transportation project 
transferred to an authority by that entity; and
		(10) [(9)]  expenses related to the initial operation 
of the transportation project.
	SECTION __.  Section 370.031, Transportation Code, is 
amended by adding Subsection (c) to read as follows:
	(c)  A municipality that borders the United Mexican States 
and has a population of 500,000 or more has the same authority as a 
county to create and participate in an authority.  A municipality 
creating or participating in an authority has the same powers and 
duties as a county participating in an authority, the governing 
body of the municipality has the same powers and duties as the 
commissioners court of a county participating in an authority, and 
an elected member of the municipality's governing body has the same 
powers and duties as a commissioner of a county that is 
participating in an authority.
	SECTION __.  Section 370.033, Transportation Code, is 
amended by amending Subsection (m) and adding Subsections (o) and 
(p) to read as follows:
	(m)  If an authority receives money from the general revenue 
fund, the Texas Mobility Fund, or the state highway fund it may use 
the money only to acquire, design, finance, construct, operate, or 
maintain a turnpike project under Section 370.003(14)(A) or (D), or 
a transit system under Section 370.351.
	(o)  Except as provided in Subchapter J, an authority may not 
provide mass transit services in the service area of another 
transit provider that has taxing authority and has implemented it 
anywhere in the service area unless the service is provided under a 
written agreement with the transit provider or under Section 
370.186.
	(p)  An authority, acting through its board, may agree with 
another entity to acquire a transportation project or system from 
that entity, and to assume any debts, obligations, and liabilities 
of the entity relating to a transportation project or system 
transferred to the authority.
	SECTION __.  Subchapter B, Chapter 370, Transportation Code, 
is amended by adding Section 370.039 to read as follows:
	Sec. 370.039.  TRANSFER OF TRANSPORTATION PROJECT OR SYSTEM.  
(a)  An authority may transfer any of its transportation projects or 
systems to one or more governmental entities if:
		(1)  the authority has commitments from the governing 
bodies of the governmental entities to assume jurisdiction over the 
transferred projects or systems;
		(2)  property and contract rights in the transferred 
projects or systems and bonds issued for the projects or systems are 
not affected unfavorably;
		(3)  the transfer is not prohibited under the bond 
proceedings applicable to the transferred projects or systems;
		(4)  adequate provision has been made for the 
assumption of all debts, obligations, and liabilities of the 
authority relating to the transferred projects or systems by the 
governmental entities assuming jurisdiction over the transferred 
projects or systems;
		(5)  the governmental entities are authorized to assume 
jurisdiction over the transferred projects or systems, and to 
assume the debts, obligations, and liabilities of the authority 
relating to the transferred projects or systems; and
		(6)  the transfer has been approved by the 
commissioners court of each county that is part of the authority.
	(b)  An authority may transfer to one or more governmental 
entities any traffic estimates, revenue estimates, plans, 
specifications, surveys, appraisals, and other work product 
developed by the authority in determining the feasibility of the 
construction, improvement, extension, or expansion of a 
transportation project or system, and the authority's rights and 
obligations under any related agreements, if the requirements of 
Subsection (a)(1) and (6) are met.
	(c)  A governmental entity shall, using any lawfully 
available funds, reimburse any expenditures made by an authority 
from its feasibility study fund or otherwise to pay the costs of 
work product transferred to the governmental entity under 
Subsection (b), and any other amounts expended under related 
agreements transferred to the governmental entity.  The 
reimbursement may be made over time, as determined by the 
governmental entity and the authority.
	SECTION __.  Section 370.186, Transportation Code, is 
amended by amending Subsection (a) and adding Subsections (c) and 
(d) to read as follows:
	(a)  Except as provided by Subsection (c), an [An] authority 
may not construct, maintain, or operate a turnpike or toll project 
in an area having a governmental entity established under Chapter 
284 or 366 unless the governmental entity and the authority enter 
into a written agreement specifying the terms and conditions under 
which the project shall be undertaken.  An authority may not 
construct, maintain, or operate a transportation project that 
another governmental entity has determined to be a project under 
Chapter 451, 452, or 460 unless the governmental entity and the 
authority enter into a written agreement specifying the terms and 
conditions under which the project shall be undertaken.
	(c)  Subsection (a) does not apply to a turnpike or toll 
project located in a county in which a regional tollway authority 
has transferred under Section 366.036 or Section 366.172:
		(1)  all turnpike projects of the regional tollway 
authority that are located in the county; and
		(2)  all work product developed by the regional tollway 
authority in determining the feasibility of the construction, 
improvement, extension, or expansion of a turnpike project to be 
located in the county.
	(d)  An authority may not construct, maintain, or operate a 
passenger rail facility within the boundaries of an intermunicipal 
commuter rail district created under Article 6550c-1, Vernon's 
Texas Civil Statutes, as those boundaries existed on September 1, 
2005, unless the district and the authority enter into a written 
agreement specifying the terms and conditions under which the 
project will be undertaken.
	SECTION __.  Chapter 370, Transportation Code, is amended by 
adding Subchapters I and J to read as follows:
SUBCHAPTER I. TRANSIT SYSTEMS
Sec. 370.351. TRANSIT SYSTEMS. (a) An authority may construct, own, operate, and maintain a transit system. (b) An authority shall determine each transit route, including transit route changes. (c) This chapter does not prohibit an authority, municipality, or transit provider from providing any service that complements a transit system, including providing parking garages, special transportation for persons who are disabled or elderly, or medical transportation services. Sec. 370.352. PUBLIC HEARING ON FARE AND SERVICE CHANGES. (a) In this section: (1) "Service change" means any addition or deletion resulting in the physical realignment of a transit route or a change in the type or frequency of service provided in a specific, regularly scheduled transit route. (2) "Transit revenue vehicle mile" means one mile traveled by a transit vehicle while the vehicle is available to public passengers. (3) "Transit route" means a route over which a transit vehicle travels that is specifically labeled or numbered for the purpose of picking up or discharging passengers at regularly scheduled stops and intervals. (4) "Transit route mile" means one mile along a transit route regularly traveled by transit vehicles while available to public passengers. (b) Except as provided by Section 370.353, an authority shall hold a public hearing on: (1) a fare change; (2) a service change involving: (A) 25 percent or more of the number of transit route miles of a transit route; or (B) 25 percent or more of the number of transit revenue vehicle miles of a transit route, computed daily, for the day of the week for which the change is made; or (3) the establishment of a new transit route. (c) An authority shall hold the public hearing required by Subsection (b) before the cumulative amount of service changes in a fiscal year equals a percentage amount described in Subsection (b)(2)(A) or (B). Sec. 370.353. PUBLIC HEARING ON FARE AND SERVICE CHANGES: EXCEPTIONS. (a) In this section, "experimental service change" means an addition of service to an existing transit route or the establishment of a new transit route. (b) A public hearing under Section 370.352 is not required for: (1) a reduced or free promotional fare that is instituted daily or periodically over a period of not more than 180 days; (2) a headway adjustment of not more than five minutes during peak-hour service and not more than 15 minutes during nonpeak-hour service; (3) a standard seasonal variation unless the number, timing, or type of the standard seasonal variation changes; or (4) an emergency or experimental service change in effect for 180 days or less. (c) A hearing on an experimental service change in effect for more than 180 days may be held before or while the experimental service change is in effect and satisfies the requirement for a public hearing if the hearing notice required by Section 370.354 states that the change may become permanent at the end of the effective period. If a hearing is not held before or while the experimental service change is in effect, the service that existed before the change must be reinstituted at the end of the 180th day after the change became effective and a public hearing must be held in accordance with Section 370.352 before the experimental service change may be continued. Sec. 370.354. NOTICE OF HEARING ON FARE OR SERVICE CHANGE. (a) After calling a public hearing required by Section 370.352, the authority shall: (1) at least 30 days before the date of the hearing, publish notice of the hearing at least once in a newspaper of general circulation in the territory of the authority; and (2) post notice in each transit vehicle in service on any transit route affected by the proposed change for at least two weeks within 30 days before the date of the hearing. (b) The notice must contain: (1) a description of each proposed fare or service change, as appropriate; (2) the time and place of the hearing; and (3) if the hearing is required under Section 370.352(c), a description of the latest proposed change and the previous changes. (c) The requirement for a public hearing under Section 370.352 is satisfied at a public hearing required by federal law if: (1) the notice requirements of this section are met; and (2) the proposed fare or service change is addressed at the meeting. Sec. 370.355. CRIMINAL PENALTIES. (a) An authority by resolution may prohibit the use of the transit system by a person who fails to possess evidence showing that the appropriate fare for the use of the system has been paid and may establish reasonable and appropriate methods, including using peace officers under Section 370.181(c), to ensure that persons using the transit system pay the appropriate fare for that use. (b) An authority by resolution may provide that a fare for or charge for the use of the transit system that is not paid incurs a penalty, not to exceed $100. (c) The authority shall post signs designating each area in which a person is prohibited from using the transit system without possession of evidence showing that the appropriate fare has been paid. (d) A person commits an offense if: (1) the person or another for whom the person is criminally responsible under Section 7.02, Penal Code, uses the transit system and does not possess evidence showing that the appropriate fare has been paid; and (2) the person fails to pay the appropriate fare or other charge for the use of the transit system and any penalty on the fare on or before the 30th day after the date the authority notifies the person that the person is required to pay the amount of the fare or charge and the penalty. (e) The notice required by Subsection (d)(2) may be included in a citation issued to the person by a peace officer under Article 14.06, Code of Criminal Procedure, in connection with an offense relating to the nonpayment of the appropriate fare or charge for the use of the transit system. (f) An offense under Subsection (d) is a Class C misdemeanor. (g) An offense under Subsection (d) is not a crime of moral turpitude.
[Sections 370.356-370.360 reserved for expansion]
SUBCHAPTER J. ACQUIRING TRANSIT SYSTEMS
Sec. 370.361. TRANSFER OF TRANSIT SYSTEMS. (a) In this section, "unit of election" means a political subdivision that previously voted to join the service area of a transit provider. (b) An authority may request in writing a transit provider to transfer the provider's transit system and taxing authority to the authority if the board determines that the traffic needs of the counties in which the authority operates could be most efficiently and economically met by the transfer. (c) On receipt of a written request under Subsection (b), the governing body of the transit provider may authorize the authority to solicit public comment and conduct at least one public hearing on the proposed transfer in each unit of election in the transit provider's service area. Notice of a hearing must be published in the Texas Register, one or more newspapers of general circulation in the transit provider's service area, and a newspaper, if any, published in the counties of the requesting authority. The notice shall also solicit written comments on the proposed transfer. The transit provider may participate fully with the authority in conducting a public hearing. (d) A board may approve the acquisition of the transit provider if the governing body of the transit provider approves transfer of its operations to the authority and dissolution of the transit provider is approved in an election ordered under Subsection (e). Before approving the acquisition, the board shall consider public comments received under Subsection (c). (e) After considering public comments received under Subsection (c), the governing body of the transit provider may order an election to dissolve the transit provider and transfer all services, property, funds, assets, employees, debts, and obligations to the authority. The governing body of the transit provider shall submit to the qualified voters in the units of election in the transit provider's service area a proposition that reads substantially as follows: "Shall (name of transit provider) be dissolved and its services, property, funds, assets, employees, debts, and obligations be transferred to (name of regional mobility authority)?" (f) An election under Subsection (e) shall be conducted so that votes are separately tabulated and canvassed in each participating unit of election in the transit provider's service area. (g) The governing body of the transit provider shall canvass the returns and declare the results of the election separately with respect to each unit of election. If a majority of the votes received in a unit of election are in favor of the proposition, the proposition is approved in that unit of election. The transit provider is dissolved and its services, property, funds, assets, employees, debts, and obligations are transferred to the authority only if the proposition is approved in every unit of election. If the proposition is not approved in every unit of election, the proposition does not pass and the transit provider is not dissolved. (h) A certified copy of the order or resolution recording the results of the election shall be filed with the department, the comptroller, and the governing body of each unit of election in the transit provider's service area. (i) The authority shall assume all debts or other obligations of the transferred transit provider in connection with the acquisition of property under Subsection (g). The authority may not use revenue from sales and use tax collected under this subchapter or other revenue of the transit system in a manner inconsistent with any pledge of that revenue for the payment of any outstanding bonds, unless provisions have been made for a full discharge of the bonds. Sec. 370.362. SALES AND USE TAX. (a) If an authority acquires a transit provider with taxing authority, the authority may impose a sales and use tax at a permissible rate that does not exceed the rate approved by the voters who reside in the service area of the transit provider's transit system at an election under this subchapter. (b) The authority by resolution may: (1) decrease the rate of the sales and use tax to a permissible rate; or (2) call an election for the increase or decrease of the sales and use tax to a permissible rate. (c) If an authority orders an election, the authority shall publish notice of the election in a newspaper of general circulation in the territory of the authority at least once each week for three consecutive weeks, with the first publication occurring at least 21 days before the date of the election. (d) A resolution ordering an election and the election notice required by Subsection (c) must show, in addition to the requirements of the Election Code, the hours of the election and polling places in election precincts. (e) A copy of the election notice required by Subsection (c) shall be furnished to the commission and the comptroller. (f) The permissible rates for a sales and use tax imposed under this subchapter are: (1) one-quarter of one percent; (2) one-half of one percent; (3) three-quarters of one percent; or (4) one percent. (g) Chapter 322, Tax Code, applies to a sales and use tax imposed under this subchapter. Sec. 370.363. MAXIMUM TAX RATE. (a) An authority may not adopt a sales and use tax rate, including a rate increase, that when combined with the rates of all sales and use taxes imposed by all political subdivisions of this state having territory in the service area of the transferred transit system exceeds two percent in any location in the service area. (b) An election to approve a sales and use tax or increase the rate of an authority's sales and use tax has no effect if: (1) the voters in the service area approve the authority's sales and use tax rate or rate increase at an election held on the same day on which a municipality or county having territory in the jurisdiction of the service area adopts a sales and use tax or an additional sales and use tax; and (2) the combined rates of all sales and use taxes imposed by the authority and all political subdivisions of this state would exceed two percent in any part of the territory in the service area. Sec. 370.364. ELECTION TO CHANGE TAX RATE. (a) At an election ordered under Section 370.362(b)(2), the ballots shall be printed to permit voting for or against the proposition: "The increase (decrease) of the local sales and use tax rate for mass transit to (percentage)." (b) The increase or decrease in the tax rate becomes effective only if it is approved by a majority of the votes cast. (c) A notice of the election and a certified copy of the order canvassing the election results shall be: (1) sent to the commission and the comptroller; and (2) filed in the deed records of the county. Sec. 370.365. SALES TAX: EFFECTIVE DATES. (a) A sales and use tax implemented under this subchapter takes effect on the first day of the second calendar quarter that begins after the date the comptroller receives a copy of the order required to be sent under Section 370.364(c). (b) An increase or decrease in the rate of a sales and use tax implemented under this subchapter takes effect on: (1) the first day of the first calendar quarter that begins after the date the comptroller receives the notice provided under Section 370.364(c); or (2) the first day of the second calendar quarter that begins after the date the comptroller receives the notice, if within 10 days after the date of receipt of the notice the comptroller gives written notice to the board that the comptroller requires more time to implement tax collection and reporting procedures. SECTION __. Section 451.554, Transportation Code, is amended to read as follows: Sec. 451.554. BOARD APPROVAL OF ANNEXATION: EFFECTIVE DATE. (a) The addition of territory annexed under Section 451.551, or approved under Section 451.552 or 451.553, does not take effect if, before the effective date of the addition under Subsection (b), the board of the authority gives written notice to the governing body of the municipality that added new territory to the authority by virtue of annexation, or to the governing body of the municipality or the commissioners court of the county that held the election, that the addition would create a financial hardship on the authority because: (1) the territory to be added is not contiguous to the territory of the existing authority; or (2) the addition of the territory would impair the imposition of the sales and use tax authorized by this chapter. (b) In the absence of a notice under Subsection (a), the addition of territory takes effect on the 31st day after the date of the: (1) municipal ordinance, if annexed by a municipality under Section 451.551; or (2) election, if approved under Section 451.552 or 451.553 [approved under Section 451.552 or 451.553 takes effect on the 31st day after the date of the election]. SECTION __. Section 370.161(b), Transportation Code, is repealed. SECTION __. The changes in law made by this Act to Chapter 370, Transportation Code, apply to a regional mobility authority created or participated in by a municipality described by Section 370.031(c), Transportation Code, as added by this Act, or Section 370.161(b), Transportation Code, as it existed before the effective date of this Act, in the same manner as they apply to any other entity that creates or participates in a regional mobility authority.