BILL ANALYSIS

C.S.H.B. 2116

By: Pickett

Transportation

Committee Report (Substituted)

BACKGROUND AND PURPOSE

In the November 2007 election, the people of Texas approved a constitutional amendment to allow the Texas Department of Transportation to issue general obligation bonds for highway improvement projects.  However, the enabling legislation for that constitutional amendment failed to pass during the 80th Legislature.

C.S.H.B. 2116 authorizes the issuance of general obligation bonds by the Texas Transportation Commission (TTC) to fund state highway improvement projects.  The bill also sets forth certain limits on the principal amount of the bonds and the use of the proceeds of the bonds and authorizes TTC to enter into credit agreements relating to the bonds.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.

ANALYSIS

C.S.H.B. 2116 amends the Transportation Code to authorize the Texas Transportation Commission by order or resolution to issue general obligation bonds for highway improvement project purposes, and prohibits the aggregate principal amount of the bonds from exceeding $5 billion, as specified by the Texas Constitution.  The bill authorizes the commission to enter into credit agreements relating to the bonds, and provides that a credit agreement entered into may be secured by and payable from the same sources as the bonds. The bill defines "improvement" to include the design, acquisition, construction, and major maintenance of a highway, and the acquisition of highway rights-of-way. The bill defines "bonds" and "credit agreement."

C.S.H.B. 2116 requires the bonds to be executed in the form, on the terms, and in the denominations, and to bear interest and be issued in installments, as prescribed by the commission, and to mature not later than 30 years after their dates of issuance, subject to any refundings or renewals.  The bill authorizes the bonds to be issued in multiple series and issues from time to time and to include any provision the commission determines appropriate and in the interest of Texas.  The bill grants the commission any power necessary or appropriate to carry out the bill's provisions or to implement provisions of the Texas Constitution regarding the commission and Texas highway improvement funds, including each power granted to other governmental units or agencies authorized to issue bonds or to a nonprofit corporation by the Public Security Procedures Act and provisions relating to refunding bonds and obligations for certain public improvements.  The bill requires the bonds, the record of the proceedings that authorize the bonds, and any related credit agreement to be submitted to the attorney general for approval as to their legality.  The bill requires the attorney general to approve the bonds if the attorney general finds that the bonds will be issued in accordance with the bill's provisions and other applicable law.  The bill establishes that after payment by the purchasers of the bonds in accordance with the terms of sale and the execution and delivery of any related credit agreement, the bonds and the related credit agreement are incontestable for any cause.  The bill authorizes bonds to be issued for one or more of the following purposes: to pay all or part of the costs of a highway improvement project; to pay the costs of administering a project authorized under the bill, the cost or expense of the issuance of the bonds, or all or part of a payment owed or to be owed under a credit agreement; to provide money, for deposit to the credit of the Texas Transportation Revolving Fund or a similar revolving fund authorized by law, to be used to make loans for highway improvement projects as provided by law; and to provide money to be used to finance projects authorized by pass-through toll provisions.  The bill prohibits proceeds from the sale of the bonds from being spent or used for a purpose authorized by the bill unless the legislature has appropriated the proceeds.

C.S.H.B. 2116 requires 10 percent of the proceeds from the sale of the bonds to be used for the sole purpose of financing projects authorized by pass-through toll provisions.  The bill requires those dedicated bond proceeds to be deposited to the credit of a separate account in the general revenue fund created for the deposit of money to be used to finance projects authorized by pass-through toll provisions.  The bill requires the comptroller of public accounts to pay the principal of the bonds as the bonds mature and the interest as it becomes payable and to pay any costs related to the bonds that becomes due, including a payment under a credit agreement.  The bill requires the commission to make a good faith effort to recruit women and minorities who are in the private sector to underwrite the issuance of bonds under the bill.

EFFECTIVE DATE

On passage, or, if the act does not receive the necessary vote, the act takes effect September 1, 2009.

COMPARISON OF ORIGINAL AND SUBSTITUTE

C.S.H.B. 2116 authorizes the Texas Transportation Commission to issue general obligation bonds to fund highway improvement projects, bond issuance costs, a payment under a credit agreement, payments to a revolving fund that makes loans for highway projects, and pass-through toll projects, whereas the original authorizes the commission to issue bonds to fund highway improvement projects and bond issuance costs.  The substitute adds provisions not in the original to define "bonds," "credit agreement," and "improvement."  The substitute prohibits bond proceeds from being spent or used for a purpose authorized by the bill unless the legislature has appropriated the proceeds, whereas the original prohibits bond proceeds from being used for any purpose other than the payment of costs related to the bonds and the purposes for which revenues are dedicated under Section 7-a, Article VIII, Texas Constitution.  The substitute removes a provision in the original applying all laws affecting the issuance of bonds and other public securities by governmental entities to the bonds and credit agreements under the bill.  The substitute differs from the original by requiring the bonds to be issued in installments.  The substitute adds provisions not in the original to authorize the bonds to be issued in multiple series; establish commission powers related to the bonds, require the bonds to be submitted to the attorney general for approval, require 10 percent of bond proceeds to be used to finance pass-through toll projects, and require the commission to make a good faith effort to recruit certain individuals to underwrite the bonds.