S.B. No. 968
 
 
 
 
AN ACT
  relating to financing tools for certain obligations for public
  improvements and for certain obligations of The University of Texas
  System.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 1371.001, Government Code, is amended by
  amending Subdivisions (1), (2), (4), (5), (7), and (8) and adding
  Subdivision (3-a) to read as follows:
               (1)  "Credit agreement" means a loan agreement,
  revolving credit agreement, agreement establishing a line of
  credit, letter of credit, reimbursement agreement, insurance
  contract, commitment to purchase obligations [an obligation],
  purchase or sale agreement, interest rate management [swap]
  agreement, or other commitment or [other] agreement authorized by a
  governing body in anticipation of, related to, or in connection
  with the authorization, issuance, sale, resale, security,
  exchange, payment, purchase, remarketing, or redemption of some or
  all of an issuer's obligations or interest on obligations [an
  obligation, interest on an obligation], or both, or as otherwise
  authorized by this chapter.
               (2)  "Eligible project" means:
                     (A)  the acquisition or construction of or an
  improvement, addition, or extension to a public works, including a
  capital asset or facility incident and related to the operation,
  maintenance, or administration of the public works, and:
                           (i)  with respect to a property or a facility
  for the generation of electric power and energy, fuel acquisition
  or the development or transportation of power, energy, or fuel;
                           (ii)  with respect to a property or a
  facility for a public transportation system:
                                 (a)  a building, terminal, garage,
  shop, or other structure, rolling stock, equipment, or another
  facility for mass public transportation; or
                                 (b)  a vehicle parking area or a
  facility necessary or convenient for the beneficial use and access
  of persons and vehicles to a station, terminal, yard, car, or bus,
  or for the protection or environmental enhancement of a facility
  for mass public transportation; and
                           (iii)  with respect to a property or a
  facility for a port facility, a wharf or dock, a warehouse, grain
  elevator, or other storage facility, a bunkering facility,
  port-related railroad or bridge, floating plant or facility,
  lightering facility, cargo handling facility, towing facility, or
  any other facility or aid incident to or useful in the operation of
  a port facility;
                     (B)  a causeway, bridge, tunnel, turnpike,
  highway, or combination of those facilities, including:
                           (i)  a necessary overpass, underpass,
  interchange, entrance plaza, tollhouse, service station, approach,
  fixture, accessory, or item of equipment, or a storage,
  administration, or other necessary building; and
                           (ii)  a property right or other interest
  acquired in connection with those facilities;
                     (C)  a public improvement owned by a county that
  serves the purpose of attracting visitors and tourists to the
  county, including a civic center, auditorium, exhibition hall,
  coliseum, stadium, or parking area;
                     (D)  a project for which there exists authorized
  but unissued obligations approved by a majority of the voters of the
  issuer or for which the issuer is authorized to issue other
  indebtedness[, including obligations] payable from ad valorem
  taxes;
                     (E)  a project for which an issuer is authorized
  to issue revenue bonds secured, in whole or in part, by revenue
  derived from or related to student loans; or
                     (F)  an approved venue project under Chapter 334
  or 335, Local Government Code.
               (3-a)  "Interest rate management agreement" means an
  agreement that provides for an interest rate transaction, including
  a swap, basis, forward, option, cap, collar, floor, lock, or hedge
  transaction, a similar transaction, or any combination of those
  types of transactions. The term includes:
                     (A)  a master agreement that provides standard
  terms for transactions;
                     (B)  an agreement to transfer collateral as
  security for transactions; or
                     (C)  a confirmation of transactions.
               (4)  "Issuer" means:
                     (A)  a home-rule municipality that:
                           (i)  adopted its charter under Section 5,
  Article XI, Texas Constitution;
                           (ii)  has a population of 50,000 or more; and
                           (iii)  has outstanding long-term
  indebtedness that is rated by a nationally recognized rating agency
  for municipal securities in one of the four highest rating
  categories for a long-term obligation;
                     (B)  a conservation and reclamation district
  created and organized as a river authority under Section 52,
  Article III, or Section 59, Article XVI, Texas Constitution;
                     (C)  a joint powers agency organized and operating
  under Chapter 163, Utilities Code;
                     (D)  a metropolitan rapid transit authority or
  regional transportation authority created, organized, and
  operating under Chapter 451 or 452, Transportation Code;
                     (E)  a conservation and reclamation district
  organized or operating as a navigation district under Section 52,
  Article III, or Section 59, Article XVI, Texas Constitution;
                     (F)  a district organized or operating under
  Section 59, Article XVI, Texas Constitution, that has all or part of
  two or more municipalities within its boundaries;
                     (G)  a state agency, including a state institution
  of higher education;
                     (H)  a hospital authority created or operating
  under Chapter 262 or 264, Health and Safety Code, in a county that:
                           (i)  has a population of more than 3.3
  million; or
                           (ii)  is included, in whole or in part, in a
  standard metropolitan statistical area of this state that includes
  a county with a population of more than 2.2 million;
                     (I)  a hospital district in a county that has a
  population of more than two million;
                     (J)  a nonprofit corporation organized to
  exercise the powers of a higher education loan authority under
  Section 53B.47(e), Education Code;
                     (K)  a county:
                           (i)  that has a population of 3.3 million or
  more; or
                           (ii)  that, on the date of issuance of
  obligations under this chapter, has authorized, outstanding, or any
  combination of authorized and outstanding, indebtedness of at least
  $100 million secured by and payable from the county's ad valorem
  taxes and the authorized long-term indebtedness of which is rated
  by a nationally recognized rating agency of securities issued by
  local governments in one of the four highest rating categories for a
  long-term obligation;
                     (L)  an independent school district that has an
  average daily attendance of 50,000 or more as determined under
  Section 42.005, Education Code;
                     (M)  a municipality or county operating under
  Chapter 334, Local Government Code;
                     (N)  a district created under Chapter 335, Local
  Government Code; [or]
                     (O)  a junior college district that has a total
  headcount enrollment of 40,000 or more based on enrollment in the
  most recent regular semester; or
                     (P)  an issuer, as defined by Section 1201.002,
  that has:
                           (i)  a principal amount of at least $100
  million in outstanding long-term indebtedness, in long-term
  indebtedness proposed to be issued, or in a combination of
  outstanding or proposed long-term indebtedness; and
                           (ii)  some amount of long-term indebtedness
  outstanding or proposed to be issued that is rated in one of the
  four highest rating categories for long-term debt instruments by a
  nationally recognized rating agency for municipal securities,
  without regard to the effect of any credit agreement or other form
  of credit enhancement entered into in connection with the
  obligation.
               (5)  "Obligation" means a public security as defined by
  Section 1201.002 or other [special] obligation that may [authorized
  to] be issued by an issuer and that is expected to be rated, and 
  before delivery[,] is rated, by a nationally recognized rating
  agency for municipal securities in one of the three highest rating
  categories for a short-term debt instrument or one of the four
  highest rating categories for a long-term debt instrument. The
  term does not include an obligation payable wholly or partly from ad
  valorem taxes unless:
                     (A)  issuance of the obligation or an obligation
  refunded by the obligation has been approved by the voters of the
  issuer in an election held for that purpose; or
                     (B)  the issuer:
                           (i)  is authorized by law to issue public
  securities payable wholly or partly from ad valorem taxes for the
  purpose for which the obligation is to be issued; and
                           (ii)  has complied with any conditions
  imposed by law before its pledge of ad valorem taxes to pay the
  principal of or interest on the obligation [except as specifically
  permitted by this chapter].
               (7)  "Project cost" means a cost or expense incurred in
  relation to an eligible project. The term includes:
                     (A)  design, planning, engineering, and legal
  cost;
                     (B)  acquisition cost of land or an interest in
  land;
                     (C)  construction cost;
                     (D)  cost of machinery, equipment, and other
  capital assets incident and related to the operation, maintenance,
  and administration of an eligible project; and
                     (E)  financing cost, including:
                           (i)  interest on obligations and payments on
  credit agreements during and after construction;
                           (ii)  underwriter's discount or fee; and
                           (iii)  cost of legal, financial, and other
  professional services.
               (8)  "Public works" means property or a facility for:
                     (A)  the conservation, storage, supply,
  treatment, or transmission of water;
                     (B)  the treatment, collection, or disposal of
  water-carried wastes or solid wastes;
                     (C)  the generation, transmission, or
  distribution of electric power and energy;
                     (D)  the acquisition, distribution, or storage of
  gas;
                     (E)  a transit authority system, as defined by
  Section 451.001, Transportation Code, or a public transportation
  system, as defined by Section 452.001 [Chapter 452], Transportation
  Code;
                     (F)  an airport as defined by Section 22.001,
  Transportation Code;
                     (G)  a port facility, including a facility for the
  operation or development of a port or waterway or in aid of
  navigation or navigation-related commerce in a port or on a
  waterway;
                     (H)  a project as defined by Section 284.001,
  Transportation Code; or
                     (I)  the carrying out of a purpose or function for
  which an issuer may issue public securities.
         SECTION 2.  Subsection (a), Section 1371.003, Government
  Code, is amended to read as follows:
         (a)  This chapter is wholly sufficient authority within
  itself for the issuance of obligations, the execution of a credit
  agreement, and the performance of the other acts and procedures
  authorized by this chapter or under any agreement, without
  reference to any other laws or any restrictions or limitations
  contained in those laws.  Any restrictions or limitations contained
  in other laws do not apply to the procedures prescribed by this
  chapter or to the issuance of obligations, the execution of credit
  agreements, or the performance of other acts authorized by this
  chapter.
         SECTION 3.  Section 1371.051, Government Code, is amended to
  read as follows:
         Sec. 1371.051.  AUTHORITY TO ISSUE OBLIGATION. As
  authorized and approved by the governing body of an issuer, the
  governing body may issue, sell, and deliver an obligation to:
               (1)  finance a project cost;
               (2)  refund an obligation issued in connection with an
  eligible project; or
               (3)  finance all or part of a payment owed or to be owed
  on:
                     (A)  the establishment of a [an interest rate
  lock, interest rate hedging agreement, or other] credit agreement;
  or
                     (B)  the settlement or termination, at maturity or
  otherwise, of a [an interest rate lock, interest rate hedging
  agreement, or other] credit agreement, whether the settlement or
  termination occurs:
                           (i)  at the option of the issuer or the other
  party to the credit agreement; or
                           (ii)  by operation of the terms of the credit
  agreement.
         SECTION 4.  Section 1371.056, Government Code, is amended to
  read as follows:
         Sec. 1371.056.  AUTHORITY TO ENTER INTO AND EXECUTE CREDIT
  AGREEMENTS. (a)  An issuer [A governing body] may execute and
  deliver any number of credit agreements in anticipation of, related
  to, or [authorize the execution and delivery of a credit agreement]
  in connection with [or related to] the authorization, issuance,
  security, purchase, payment, sale, resale, redemption,
  remarketing, or exchange of some or all of the issuer's obligations
  or interest on obligations, or both, [an obligation] at any time,
  without regard to whether the:
               (1)  obligations have been authorized or issued; or
               (2)  [a] credit agreement was contemplated,
  authorized, or executed in relation to the initial issuance, sale,
  or delivery of the obligations [obligation].
         (b)  Except as provided by this section, a [A] credit
  agreement must substantially contain the terms and be for the
  period the governing body approves. A credit agreement may provide
  that it:
               (1)  may be terminated with or without cause;  or
               (2)  becomes effective at the option of another party
  to the credit agreement, if the governing body first finds that the
  option serves best the interests of the issuer.
         (c)  The governing body may delegate to any number of
  officers or employees of the issuer the authority to approve
  specific terms of, to execute and deliver, or to terminate or amend
  in accordance with its terms, a credit agreement or transactions
  under a credit agreement on the behalf of the issuer, subject to any
  condition the governing body specifies.  The delegation must
  include limits on:
               (1)  the principal amount or the notional amount;
               (2)  the term;
               (3)  the rate;
               (4)  the source of payment;
               (5)  the security;
               (6)  the identity or credit rating of an authorized
  counterparty;
               (7)  the duration of the authorization; and
               (8)  for an interest rate management agreement, the:
                     (A)  fixed or floating rates;
                     (B)  economic consequences;
                     (C)  early termination provisions;
                     (D)  type;
                     (E)  provider; and
                     (F)  costs of credit enhancement.
         (d)  The cost to the issuer of a credit agreement or payments
  owed by an issuer under a credit agreement may be paid from and
  secured by any source, including:
               (1)  the proceeds from the sale of the obligation to
  which the credit agreement relates;
               (2)  any revenue and money of the issuer that is
  available to pay the obligation;
               (3)  any interest on the obligation or that may
  otherwise be legally used; or
               (4)  ad valorem taxes if the credit agreement is
  authorized in anticipation of, in relation to, or in connection
  with an obligation that is wholly or partly payable from or is to be
  wholly or partly payable from ad valorem taxes [to the extent
  permitted by this chapter].
         (e) [(d)]  A credit agreement is an agreement for
  professional services but is not a contract subject to Subchapter
  I, Chapter 271, Local Government Code.
         (f)  If a credit agreement is authorized and is executed in
  anticipation of the issuance of an obligation described by Section
  1371.001(5)(B) because the issuer is authorized by Subchapter C,
  Chapter 271, Local Government Code, to issue certificates of
  obligation:
               (1)  notice required by Section 271.049, Local
  Government Code, in addition to the other requirements for the
  notice, must describe the time and place tentatively set for the
  adoption of the order or ordinance authorizing the credit
  agreement, the maximum amount and term of the obligations and
  credit agreement, and the manner in which the certificates of
  obligation and credit agreement will be paid; and
               (2)  the issuer may enter into the credit agreement and
  issue the certificates of obligation only if:
                     (A)  the municipal secretary or clerk or person
  with similar authority does not receive a petition signed by at
  least five percent of the registered voters of the issuer that
  protests the issuance of the certificates of obligation or the
  execution of the credit agreement before the later of the date
  tentatively set for the adoption of the order or ordinance to
  authorize the credit agreement or the date the order or ordinance is
  adopted;
                     (B)  the issuance and execution are approved at an
  election held for that purpose conducted as provided for a bond
  election under Chapter 1251; or
                     (C)  notice is not required by Section 271.049,
  Local Government Code, before the certificates of obligation are
  authorized.
         (g)  Payments received by an issuer under a credit agreement
  or on termination of all or part of a credit agreement may be used
  to:
               (1)  pay the obligations in anticipation of which, in
  relation to which, or in connection with which the credit agreement
  was entered into or pay the costs to be financed by the obligations
  in anticipation of which, in relation to which, or in connection
  with which the credit agreement was entered into;
               (2)  pay other liabilities or expenses that are secured
  on parity with or senior to the obligations in anticipation of
  which, in relation to which, or in connection with which the credit
  agreement was entered into; or
               (3)  after the satisfaction of the obligations or costs
  described by Subdivision (1) and of the liabilities and expenses
  described by Subdivision (2) that are due, make payments for any
  other purpose for which the issuer may issue obligations under this
  subchapter or that is otherwise authorized by law, unless the
  credit agreement is paid primarily from ad valorem taxes.
         (h)  An issuer may agree to pay or receive a payment on early
  termination of an interest rate management agreement due to a
  breach or for another reason as provided by the interest rate
  management agreement. The agreement may specify the payment by a
  specific amount, by a formula, or by a process or algorithm.
         (i)  A credit agreement secured in the manner described by
  Subsection (d)(4) may be executed without an election or the
  imposition of an ad valorem tax for the credit agreement unless
  required by the Texas Constitution. If the Texas Constitution
  requires an election for the credit agreement, the election must be
  held substantially in the manner provided for an election under
  Chapter 1251.
         (j)  An issuer may enter into an interest rate management
  agreement transaction only:
               (1)  if the issuer has either entered into at least
  three interest rate management transactions before November 1,
  2006, or has entered into one or more interest rate management
  transactions with notional amounts totaling at least $400 million
  before that date; or
               (2)  as provided by Subsection (k).
         (k)  An issuer may enter into an interest rate management
  transaction if:
               (1)  the governing body has adopted, amended, or
  ratified during the preceding two years a risk management policy
  governing entering into and managing interest rate management
  agreements and transactions that addresses:
                     (A)  conditions, if any, under which the issuer
  may enter into an interest rate management agreement transaction
  without independent advice from a financial advisor or swap advisor
  who has experience in interest rate management transactions; and
                     (B)  authorized purposes, permitted types and
  creditworthiness of counterparties, credit risks and other risks,
  liquidity, methods of selection of counterparties, and limits
  concerning awarding a transaction, monitoring, and exposure;
               (2)  the issuer has received from the counterparty:
                     (A)  if the transaction was not awarded through a
  competitive bidding process:
                           (i)  a statement that, in the counterparty's
  judgment, the difference in basis points between the rate of the
  transaction and the mid-market rate for a comparable transaction
  falls within the commonly occurring range for comparable
  transactions;
                           (ii)  a statement of the amount of the
  difference as determined by the counterparty; or
                           (iii)  if the counterparty does not know of a
  comparable transaction or mid-market rate, a statement of another
  suitable measure of pricing acceptable to the counterparty; and
                     (B)  the counterparty's disclosure of any
  payments the counterparty made to another person to procure the
  transaction; and
               (3)  the governing body or an authorized officer or
  employee of the issuer has determined that the transaction will
  conform to the issuer's interest rate management agreement policy
  after reviewing a report of the chief financial officer of the
  issuer that identifies with respect to the transaction:
                     (A)  its purpose;
                     (B)  the anticipated economic benefit and the
  method used to determine the anticipated benefit;
                     (C)  the use of the receipts of the transaction;
                     (D)  the notional amount, amortization, and
  average life compared to the related obligation;
                     (E)  any floating indices;
                     (F)  its effective date and duration;
                     (G)  the identity and credit rating of the
  counterparties;
                     (H)  the cost and anticipated benefit of
  transaction insurance;
                     (I)  the financial advisors and the legal advisors
  and their fees;
                     (J)  any security for scheduled and early
  termination payments;
                     (K)  any associated risks and risk mitigation
  features; and
                     (L)  early termination provisions.
         (l)  While an interest rate management agreement transaction
  is outstanding, the governing body of the issuer shall review and
  ratify or modify its related risk management policy at least
  biennially [(e) Notwithstanding Subsection (b), the governing body
  may delegate to an officer or employee the authority, under the
  terms and for the period approved by the governing body, to:
               [(1)     enter into a credit agreement and transactions
  under a credit agreement; and
               [(2)     execute any instruments in connection with those
  transactions].
         SECTION 5.  Section 1371.057, Government Code, is amended to
  read as follows:
         Sec. 1371.057.  REVIEW AND APPROVAL OF OBLIGATION, CREDIT
  AGREEMENT, AND CONTRACT BY ATTORNEY GENERAL.  (a)  Before an
  obligation may be issued or a credit agreement executed, a record of
  the proceedings of the issuer authorizing the issuance, execution,
  and delivery of the obligation or[, the] credit agreement[,] and
  any contract providing revenue or security to pay the obligation or
  [the] credit agreement must be submitted to the attorney general
  for review.
         (b)  If the attorney general finds that the [credit
  agreement, contract, and other authorizing] proceedings
  authorizing an obligation or credit agreement conform to the
  requirements of the Texas Constitution and this chapter, the
  attorney general shall approve them and deliver to the comptroller
  a copy of the attorney general's legal opinion stating that
  approval and the record of proceedings. After approval, the
  obligation or [and] credit agreement may be executed and delivered,
  exchanged, or refinanced from time to time in accordance with those
  authorizing proceedings.
         (c)  If the [obligation] authorization of an obligation or of
  a credit agreement provides that the issuer intends to refinance
  the [an] obligation or a payment [loan] under the [a] credit
  agreement with refunding bonds issued under Chapter 1207, then the
  obligation or payment [loan] shall be treated, for purposes of
  attorney general review and approval, as having the intended term
  and payment schedule of the refunding bonds.
         SECTION 6.  Section 1371.059, Government Code, is amended to
  read as follows:
         Sec. 1371.059.  VALIDITY AND INCONTESTABILITY. (a)  If
  proceedings to authorize an obligation or credit agreement are
  approved [On approval] by the attorney general and registered[,
  registration] by the comptroller, each obligation or [and initial
  delivery of the obligation, a] credit agreement, as applicable,
  or[,] a contract providing revenue or security included in or
  executed and delivered according to[, an initial obligation, and
  any obligation subsequently issued under] the authorizing
  proceedings is [are] incontestable in a court or other forum and is
  [are] valid, [and] binding, and [obligations] enforceable
  according to its [their] terms.
         (b)  Notwithstanding Subsection (a) and Section 1371.003,
  and except as provided by this subsection, an obligation authorized
  by this chapter is not valid, binding, or enforceable unless the
  obligation is approved by the attorney general and registered by
  the comptroller in accordance with Chapter 1202. The attorney
  general's approval and registration by the comptroller is not
  required for an obligation:
               (1)  to which Chapter 1202 does not apply or that is
  exempt from approval and registration as provided by Section
  1202.007(a)(1), (2), (3), (4), (6), or (7); or
               (2)  that matures within one year after the issuer
  receives payment for the obligation, regardless of whether the
  obligation is evidenced by an instrument with a nominal term of
  longer than one year.
         (c)  An issuer in the proceedings to authorize obligations or
  a credit agreement, or in a credit agreement, may agree to waive
  sovereign immunity from suit or liability for the purpose of
  adjudicating a claim to enforce the credit agreement or obligation
  or for damages for breach of the credit agreement or obligation.  
  This subsection does not apply to an issuer that is:
               (1)  a state agency, including a state institution of
  higher education; or
               (2)  a county with a population of 900,000 or more.
         SECTION 7.  Subchapter B, Chapter 1371, Government Code, is
  amended by adding Section 1371.061 to read as follows:
         Sec. 1371.061.  MANAGEMENT REPORTS. (a)  If a governing
  body authorizes an interest rate management agreement transaction,
  the governing body shall designate an officer of the issuer to
  monitor and report on the transaction. At least annually, the
  designated officer shall present to the governing body a written
  report, signed by the designated officer, on all outstanding
  interest rate management agreement transactions conducted for the
  issuer. The report must:
               (1)  describe the terms of the transactions;
               (2)  contain a statement:
                     (A)  of the fair value of each transaction;
                     (B)  of the value of any collateral posted to or by
  the issuer under the transactions with each counterparty at the
  year's end; and
                     (C)  reviewing the transactions' cash flows;
               (3)  identify with respect to each transaction the
  counterparty, any guarantor of the counterparty's obligations
  under the transaction, and the credit ratings of the counterparty
  and the guarantor; and
               (4)  state whether the continuation of the transactions
  under the agreement would comply with the issuer's interest rate
  management agreement policy.
         (b)  This section does not apply to an issuer that has
  entered into:
               (1)  at least three interest rate management agreement
  transactions before November 1, 2006; or
               (2)  one or more interest rate management agreement
  transactions with notional amounts totaling at least $400 million
  before November 1, 2006.
         SECTION 8.  Subchapter C, Chapter 65, Education Code, is
  amended by adding Section 65.461 to read as follows:
         Sec. 65.461.  BOND ENHANCEMENT AGREEMENTS.  (a)  In this
  section:
               (1)  "Bond" or "note" means a bond or note that the
  board is authorized to issue according to law, including Section
  18, Article VII, Texas Constitution, Chapter 55 or 66 of this code,
  or other applicable law.
               (2)  "Bond enhancement agreement" means an interest
  rate swap agreement, a currency swap agreement, a forward payment
  conversion agreement, an agreement providing for payments based on
  levels of or changes in interest rates or currency exchange rates,
  an agreement to exchange cash flows or a series of payments, or
  other agreement, including an option, put, or call, to hedge or
  modify payment, currency, rate, spread, or other exposure.
         (b)  The board may at any time and from time to time enter
  into one or more bond enhancement agreements that the board
  determines to be necessary or appropriate to place the obligation
  of the board, as represented by the bonds or notes issued or to be
  issued, in whole or in part, on the interest rate, currency, cash
  flow, or other basis desired by the board.  A bond enhancement
  agreement is an agreement for professional services and shall
  contain the terms and conditions and be for the period that the
  board authorizes.  The fees and expenses of the board in connection
  with a bond enhancement agreement, including any payments due from
  the board under a bond enhancement agreement, may be paid from and
  secured by a lien on and pledge of all or any part of any of the
  revenue funds of the board and its institutions, proceeds of the
  sale of bonds or notes to which the bond enhancement agreement
  relates, or from any other source that is legally available for the
  purpose of paying the bonds or notes and the interest on the bonds
  or notes or that may otherwise be legally available to make those
  payments.  Payments due from the board under a bond enhancement
  agreement relating to bonds or notes issued pursuant to Section 18,
  Article VII, Texas Constitution, are deemed to be for the support
  and maintenance of The University of Texas System administration
  and may be paid from the available university fund.
         (c)  The resolution of the board authorizing a bond
  enhancement agreement may authorize one or more designated officers
  or employees of the board to act on behalf of the board in entering
  into and delivering the bond enhancement agreement and in
  determining or setting the counterparty and terms of the bond
  enhancement agreement specified in the resolution.
         (d)  The resolution of the board authorizing a financing
  program pursuant to Section 65.46 may include authorization of one
  or more bond enhancement agreements.
         (e)  Unless the board or its designee elects otherwise in its
  authorization or approval of a bond enhancement agreement, the bond
  enhancement agreement is not a credit agreement for purposes of
  Chapter 1371, Government Code, or Section 65.46 of this chapter, or
  any successor to such laws, regardless of whether the bonds or notes
  relating to the bond enhancement agreement were issued in part
  under either such law.
         (f)  This section shall be construed liberally to effect the
  legislative intent and purposes of this section, and all powers
  granted by this section shall be broadly interpreted to effect that
  intent and those purposes and not as a limitation of powers.
         SECTION 9.  The changes in law made by this Act apply only to
  proceedings related to authorizing the issuance of obligations or
  the execution of credit agreements or interest rate management
  agreements that are adopted on or after the effective date of this
  Act and to transactions related to the obligations or agreements.
  Proceedings related to authorizing the issuance of obligations or
  the execution of credit agreements or interest rate management
  agreements that are adopted before the effective date of this Act,
  and transactions related to the obligations or agreements, are
  governed by the law in effect on the date the proceedings were
  initiated and the former law is continued in effect for that
  purpose.
         SECTION 10.  An agreement described by this section is
  ratified in all respects, without regard to whether the agreement
  to waive sovereign immunity is limited to the extent permitted by
  law, if the agreement:
               (1)  is entered into before the effective date of this
  Act by an issuer as defined by Subdivision (4), Section 1371.001,
  Government Code, that has authority by statute or under its charter
  to sue and be sued or to plead and be impleaded; and
               (2)  waives sovereign immunity from suit or liability
  for breach of an obligation or of a credit agreement authorized by
  Chapter 1371, Government Code.
         SECTION 11.  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, 2007.
 
 
 
 
 
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
 
         I hereby certify that S.B. No. 968 passed the Senate on
  April 19, 2007, by the following vote: Yeas 31, Nays 0; and that
  the Senate concurred in House amendment on May 25, 2007, by the
  following vote: Yeas 30, Nays 0.
 
 
  ______________________________
  Secretary of the Senate    
 
         I hereby certify that S.B. No. 968 passed the House, with
  amendment, on May 17, 2007, by the following vote: Yeas 146,
  Nays 0, two present not voting.
 
 
  ______________________________
  Chief Clerk of the House   
 
 
 
  Approved:
 
  ______________________________ 
              Date
 
 
  ______________________________ 
            Governor