By: Merritt, et al. (Senate Sponsor - Carona) H.B. No. 3650

(In the Senate - Received from the House May 11, 2009; May 11, 2009, read first time and referred to Committee on Transportation and Homeland Security; May 22, 2009, reported favorably, as amended, by the following vote: Yeas 7, Nays 2; May 22, 2009, sent to printer.)

COMMITTEE AMENDMENT NO. 1 By: Carona

Amend H.B. No. 3650 (engrossed version) as follows:

(1) In SECTION 1 of the bill, at the end of added Subchapter A, Chapter 175, Transportation Code (page 1, between lines 61 and 62), add:

Sec. 175.002. ACTIVITIES OF HIGH-SPEED RAIL LOCAL GOVERNMENT CORPORATION UNAFFECTED. An authority created and operating under this chapter may not interfere or compete with, obstruct, delay, or compromise the activities, goals, and objectives of a local government corporation created to facilitate, analyze, develop, maintain, and implement high-speed passenger rail generally along the federally designated routes.

(2) In SECTION 1 of the bill, strike added Section 175.152, Transportation Code (page 2, lines 49-67), and substitute:

Sec. 175.152. GENERAL POWERS OF AUTHORITY. An authority has all the powers necessary or convenient to carry out the purposes of this chapter.

A BILL TO BE ENTITLED

AN ACT

relating to the creation, administration, powers, duties, operations, and financing of a border region higher-speed rail authority for the Texas-Louisiana and the Texas-Mexico border regions; granting the power to issue bonds; imposing a tax; granting the power of eminent domain.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Subtitle I, Title 5, Transportation Code, is amended by adding Chapter 175 to read as follows:

CHAPTER 175. BORDER REGION HIGHER-SPEED RAIL AUTHORITIES

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 175.001. DEFINITIONS. In this chapter:

(1) "Authority" means a border region higher-speed rail authority created under this chapter.

(2) "Authority property" means all property an authority owns or leases under a long-term lease.

(3) "Board" means an authority's board of directors.

(4) "Border region" means the Texas-Louisiana border region or the Texas-Mexico border region, as defined by Section 2056.002, Government Code.

(5) "Commission" means the Texas Transportation Commission.

(6) "Department" means the Texas Department of Transportation.

(7) "Director" means a board member.

(8) "Higher-speed rail" means the rail technology that permits the operation of rolling stock between scheduled stops at speeds greater than 70 miles per hour but less than 110 miles per hour.

(9) "Higher-speed rail facility" means any property necessary for the transportation of passengers and baggage between points in a border region by higher-speed rail. The term includes rolling stock, locomotives, stations, parking areas, and rail lines.

(10) "System" means all of the higher-speed rail and intermodal facilities leased or owned by or operated on behalf of an authority.

[Sections 175.002-175.050 reserved for expansion]

SUBCHAPTER B. CREATION

Sec. 175.051. CREATION OF AUTHORITIES. The commission by order may authorize the creation of an authority in each border region for the purposes of financing, acquiring property for, constructing, maintaining, operating, and improving a higher-speed rail system in each border region.

[Sections 175.052-175.100 reserved for expansion]

SUBCHAPTER C. GOVERNANCE

Sec. 175.101. COMPOSITION OF BOARDS. (a) The governing body of an authority in the Texas-Louisiana border region is a board of seven directors consisting of:

(1) the county judges of the five most populous counties in the region; and

(2) two directors selected by the county judges to represent the remaining counties in the region.

(b) The governing body of an authority in the Texas-Mexico border region is a board of 11 directors consisting of:

(1) the county judges of the seven most populous counties in the region; and

(2) four directors selected by the county judges to represent the remaining counties in the region.

Sec. 175.102. PRESIDING OFFICER. (a) The directors shall elect one director as presiding officer.

(b) The presiding officer may select another director to preside in the absence of the presiding officer.

Sec. 175.103. MEETINGS. The presiding officer shall call at least one meeting of the board each year and may call other meetings as the presiding officer determines are appropriate.

Sec. 175.104. COMPENSATION; REIMBURSEMENT. A director is not entitled to compensation for serving as a director but is entitled to reimbursement for reasonable expenses incurred while serving as a director.

Sec. 175.105. RULES FOR PROCEEDINGS. The board shall adopt rules for its proceedings and appoint an executive committee.

Sec. 175.106. EMPLOYEES. The board may employ and compensate persons to carry out the powers and duties of the authority.

Sec. 175.107. CONFLICTS OF INTEREST. Chapter 171, Local Government Code, applies to a director.

[Sections 175.108-175.150 reserved for expansion]

SUBCHAPTER D. POWERS AND DUTIES OF AUTHORITY

Sec. 175.151. NATURE OF AUTHORITY. (a) An authority is a public body and a political subdivision of the state exercising public and essential governmental functions.

(b) An authority, in the exercise of powers under this chapter, is performing only governmental functions and is a governmental unit within the meaning of Chapter 101, Civil Practice and Remedies Code.

Sec. 175.152. GENERAL POWERS OF AUTHORITY. An authority has all the powers necessary or convenient to carry out the purposes of this chapter, including authority to:

(1) plan and develop a high-speed rail facility under the authority in this chapter;

(2) solicit federal funding to be allocated to the authority for the purposes of this chapter;

(3) coordinate with federal planners and representatives from adjacent states for the interconnectivity of high-speed rail systems in this state with systems developed in federally designated high-speed rail corridors in other states;

(4) represent and negotiate on behalf of the authority for the interconnectivity of high-speed rail with existing and planned transportation systems, including airports, seaports, transit systems, commuter rail systems, and highways; and

(5) coordinate with federal transportation planners and officials at the United States Department of Defense or its successor agency regarding issues related to the provision of connectivity to military installations in this state.

Sec. 175.153. SUNSET REVIEW. An authority is subject every 12th year to review under Chapter 325, Government Code (Texas Sunset Act).

Sec. 175.154. SUITS. (a) An authority may:

(1) sue and be sued;

(2) institute and prosecute suits without giving security for costs; and

(3) appeal from a judgment without giving a supersedeas or cost bond.

(b) An action at law or in equity against an authority must be brought in the county in which a principal office of the authority is located, except that in an eminent domain proceeding involving an interest in land, suit must be brought in the county in which the land is located.

Sec. 175.155. POWERS RELATED TO DISTRICT PROPERTY. An authority may acquire by grant, purchase, gift, devise, lease, or otherwise and may hold, use, sell, lease, or dispose of real and personal property, licenses, patents, rights, and interests necessary, convenient, or useful for the full exercise of its powers.

Sec. 175.156. GENERAL AUTHORITY OVER HIGHER-SPEED RAIL FACILITIES. An authority may acquire, construct, develop, own, operate, maintain, and improve intermodal and higher-speed rail facilities to connect political subdivisions in the applicable border region.

Sec. 175.157. USE AND ALTERATION OF PROPERTY OF ANOTHER POLITICAL SUBDIVISION. (a) For a purpose described by Section 175.156, as necessary or useful in the construction, reconstruction, repair, maintenance, operation, and improvement of the system, and with the consent of a municipality, county, or other political subdivision, an authority may:

(1) use streets, alleys, roads, highways, and other public ways of the municipality, county, or other political subdivision; and

(2) relocate, raise, reroute, change the grade of, or alter, at the authority's expense, the construction of any publicly owned or privately owned street, alley, highway, road, railroad, electric line or facility, telegraph or telephone property and facility, pipeline or facility, conduit or facility, and other property.

(b) An authority may not use or alter:

(1) a road or highway that is part of the state highway system without the permission of the commission; or

(2) a railroad without permission of the railroad.

Sec. 175.158. ACQUISITION OF PROPERTY. (a) An authority may purchase any interest in real property to acquire, construct, operate, or improve a higher-speed rail facility on terms and at a price to which the authority and the owner agree.

(b) The governing body of a municipality, a county, any other political subdivision, or a public agency may convey the title or the rights and easements to any property needed by an authority for its purposes in connection with the acquisition, construction, operation, or improvement of the system.

Sec. 175.159. EMINENT DOMAIN. (a) An authority may exercise the power of eminent domain to acquire:

(1) real property in fee simple; or

(2) an interest in real property less than fee simple in, on, under, or above land, including an easement, right-of-way, or right of use of airspace or subsurface space.

(b) The power of eminent domain under this section does not apply to:

(1) land under the jurisdiction of the department; or

(2) a rail line owned by a common carrier or municipality.

(c) To the extent possible, an authority shall use existing rail or intermodal transportation corridors for the alignment of its system.

(d) An eminent domain proceeding is begun by the board's adoption of a resolution declaring that the authority's acquisition of the property or interest described in the resolution:

(1) is a public necessity; and

(2) is necessary and proper for the construction, extension, improvement, or development of higher-speed rail facilities and is in the public interest.

(e) The resolution is conclusive evidence of the public necessity of the proposed acquisition and that the real property or interest in property is necessary for public use.

(f) With the consent of the property owner, instead of paying for real property with a single fixed payment, an authority may pay the owner in the form of:

(1) an intangible legal right to receive a percentage of identified fees related to the applicable segment of the system; or

(2) an exclusive or nonexclusive right to use or operate a part of the system.

Sec. 175.160. AGREEMENTS WITH OTHER ENTITIES FOR JOINT USE. An authority may:

(1) make agreements with a public utility, private utility, communication system, common carrier, state agency, or transportation system for the joint use of facilities, installations, or properties inside or outside the border region; and

(2) establish through routes and joint fares.

Sec. 175.161. RULES. To protect the health, safety, and general welfare of residents of the border region and people who use the authority's services, an authority may adopt rules to govern the operation of the authority, its employees, the system, service provided by the authority, and any other necessary matter concerning its purposes, including rules relating to health, safety, food service, and telephone and utility services. The acquisition, taxation, sale, and service of alcoholic beverages in or on any of the authority's system, high-speed rail facilities, rolling stock, and intermodal facilities shall comply in all respects with the provisions of the Texas Alcoholic Beverage Code, the rules of the Alcoholic Beverage Commission, and Chapter 183, Tax Code.

Sec. 175.162. JOINT OWNERSHIP AGREEMENTS. An authority may enter into a joint ownership agreement with any person.

Sec. 175.163. COMPENSATION FOR USE OF SYSTEM FACILITIES. (a) An authority shall establish and maintain reasonable and nondiscriminatory rates or other compensation for the use of the facilities of the system acquired, constructed, operated, regulated, or maintained by the authority.

(b) Together with grants received by the authority, the rates or other compensation must be sufficient to produce revenues adequate to:

(1) pay all expenses necessary for the operation and maintenance of the properties and facilities of the authority;

(2) pay the interest on and principal of bonds issued by the authority and payable in whole or in part from the revenues, as they become due and payable; and

(3) comply with the terms of an agreement made with the holders of bonds or with any person in their behalf.

Sec. 175.164. AGREEMENTS GENERALLY. An authority may make contracts, leases, and agreements with, and accept grants and loans from, the United States, this state, agencies and political subdivisions of this state or another state of the United States, the United Mexican States, or a state of the United Mexican States, and other persons and entities and may perform any act necessary for the full exercise of the powers vested in it.

Sec. 175.165. INTERLOCAL AGREEMENTS WITH COMMISSION. The commission may enter into an interlocal agreement with an authority under which the authority may exercise a power or duty of the commission for the development and efficient operation of an intermodal corridor in the applicable border region.

Sec. 175.166. ACQUISITION OF ROLLING STOCK AND OTHER PROPERTY. An authority may acquire rolling stock or other property under conditional sales contracts, leases, equipment trust certificates, or any other form of contract or trust agreement.

Sec. 175.167. LIMIT ON POWER. A revenue bond indenture may limit the exercise of the powers granted by this subchapter, and a limit applies as long as the revenue bonds issued under the indenture are outstanding and unpaid.

Sec. 175.168. RULES GOVERNING SYSTEM AND ROUTINGS. An authority by resolution may adopt rules governing the use, operation, and maintenance of the system and may determine all routings and change them as the board considers advisable.

Sec. 175.169. OPERATION OR USE CONTRACTS. (a) An authority may:

(1) lease all or part of the higher-speed rail facilities to an operator; or

(2) contract for the use or operation of all or part of the higher-speed rail facilities by an operator.

(b) To the maximum extent practicable, an authority shall encourage the participation of private enterprise in the operation of higher-speed rail facilities.

(c) The term of an operating contract under this section may not exceed 20 years.

Sec. 175.170. RAIL TRANSPORTATION SERVICES AGREEMENTS WITH OTHER POLITICAL SUBDIVISIONS. (a) Except as provided in Subsection (b), an authority may contract with a county or other political subdivision of this state for the authority to provide higher-speed rail transportation services to an area outside the border region on the terms and conditions to which the parties agree.

(b) An authority may not undertake any project or provide any services, or contract to undertake any project or provide any services, in an area that includes a county with a population of 3.3 million or more and any county adjacent to that county if the area is served by a district created under Chapter 171, unless the district and the authority enter into a written agreement specifying the terms and conditions under which the project or services will be undertaken or provided.

[Sections 175.171-175.200 reserved for expansion]

SUBCHAPTER E. FINANCIAL PROVISIONS

Sec. 175.201. PURCHASE OF ADDITIONAL INSURED PROVISIONS. An authority may purchase an additional insured provision to any liability insurance contract.

Sec. 175.202. FISCAL YEAR. Unless the board changes the fiscal year, the fiscal year of an authority ends September 30.

Sec. 175.203. ANNUAL BUDGET. (a) Before beginning the operation of higher-speed rail facilities, the board shall adopt an annual operating budget specifying the authority's anticipated revenues and expenses for the remainder of the fiscal year. The board shall adopt an operating budget for each succeeding fiscal year.

(b) The board shall hold a public hearing before adopting a budget other than the initial budget. Notice of each hearing must be published at least seven days before the date of the hearing in a newspaper of general circulation in each county in the applicable border region.

(c) A budget may be amended at any time if notice of the proposed amendment is given in the notice of the meeting.

(d) An expenditure that is not budgeted may not be made.

Sec. 175.204. RETIREMENT BENEFITS. An authority is eligible to participate in the Texas County and District Retirement System.

Sec. 175.205. DEPOSITORY. (a) The board by resolution shall name one or more banks for the deposit of authority funds.

(b) Authority funds are public funds and may be invested in securities permitted by Chapter 2256, Government Code.

(c) To the extent funds of an authority are not insured by the Federal Deposit Insurance Corporation or its successor, they shall be collateralized in the manner provided for county funds.

Sec. 175.206. AGREEMENTS RELATED TO FOREIGN AND DOMESTIC CURRENCY. (a) To provide tax benefits to another party that are available with respect to property under the laws of a foreign country or to encourage private investment with a transportation authority in the United States, and notwithstanding any other provision of this chapter, an authority may enter into and execute, as it considers appropriate, contracts, agreements, notes, security agreements, conveyances, bills of sale, deeds, leases as lessee or lessor, and currency hedges, swap transactions, or agreements relating to foreign and domestic currency.

(b) The agreements or instruments may have the terms, maturities, duration, provisions as to governing law, indemnities, and other provisions that are approved by the board.

(c) In connection with any transaction authorized by this section, the authority shall deposit in trust, escrow, or similar arrangement cash or lawful investments or securities, or shall enter into one or more payment agreements, financial guarantees, or insurance contracts that, by their terms, including interest to be earned on any cash or securities, are sufficient in amount to pay when due all amounts required to be paid by the authority as rent over the full term of the transaction plus any optional purchase price due under the transaction. A counterparty to a payment agreement, financial guarantee, or insurance contract under this subsection must have either a corporate credit or debt rating in any form, a claims-paying ability, or a rating for financial strength of "AA" or better by Moody's Investors Service, Inc., or by Standard & Poor's Corporation or "A-" or better by BEST's rating system.

(d) A certification in advance by an independent financial expert, banker, or certified public accountant, who is not an employee of the authority, certifying compliance with this requirement constitutes conclusive evidence of compliance. Property sold, acquired, or otherwise transferred under this section is considered for all purposes to be property owned and held by the authority and used for public purposes.

[Sections 175.207-175.300 reserved for expansion]

SUBCHAPTER F. BONDS

Sec. 175.301. REVENUE BONDS. An authority may issue revenue bonds and notes in amounts the board considers necessary or appropriate for the acquisition, purchase, construction, reconstruction, repair, equipping, improvement, or extension of the authority's higher-speed rail facilities.

Sec. 175.302. SECURITY FOR PAYMENT OF BONDS. (a) To secure the payment of a bond or note, an authority may:

(1) encumber and pledge all or any part of the revenues of its higher-speed rail facilities;

(2) mortgage and encumber all or part of the property of the higher-speed rail facilities and any thing pertaining to them that is acquired or to be acquired; and

(3) prescribe the terms and provisions of the bond or note in any manner not inconsistent with this chapter.

(b) Unless prohibited by the resolution or indenture relating to outstanding bonds or notes, an authority may encumber separately any item of property.

Sec. 175.303. BONDS AND NOTES AS AUTHORIZED INVESTMENTS AND SECURITY FOR DEPOSITS OF PUBLIC FUNDS. (a) Bonds and notes are legal and authorized investments for:

(1) a bank;

(2) a trust company;

(3) a savings and loan association; and

(4) an insurance company.

(b) The bonds and notes are:

(1) eligible to secure the deposit of public funds of this state or a municipality, county, school district, or other political corporation or subdivision of this state; and

(2) lawful and sufficient security for the deposits to the extent of the principal amount or market value of the bonds and notes, whichever is less.

Sec. 175.304. AWARDING CONSTRUCTION OR PURCHASE CONTRACTS. (a) A contract in the amount of more than $15,000 for the construction of improvements or the purchase of material, machinery, equipment, supplies, or any other property other than real property may be let only through competitive bidding after notice is published, at least 15 days before the date set for receiving bids, in a newspaper of general circulation in each county in the applicable border region.

(b) The board may adopt rules governing the taking of bids and the awarding of contracts.

(c) This section does not apply to:

(1) personal or professional services;

(2) the acquisition of an existing rail transportation system; or

(3) a contract with a common carrier to construct lines or to operate higher-speed rail service on lines wholly or partly owned by the carrier.

[Sections 175.305-175.350 reserved for expansion]

SUBCHAPTER G. TAXES

Sec. 175.351. TAX EXEMPTION. Authority property, material purchases, revenues, and income and the interest on a bond or note issued by an authority are exempt from all taxes imposed by this state or a political subdivision of this state.

Sec. 175.352. SALES AND USE TAX IMPOSED. A sales and use tax is imposed on items sold on authority property.

Sec. 175.353. TAX RATE. The sales and use tax imposed under Section 175.352 shall be imposed at the rate of the highest combination of local sales and use taxes imposed at the time of the authority's creation in any local governmental jurisdiction in the applicable border region.

Sec. 175.354. ABOLITION OF OTHER TAXES. All other local sales and use taxes that would otherwise be imposed on authority property are abolished by the imposition of the tax under Section 175.352.

Sec. 175.355. DUTY OF COMPTROLLER. The comptroller shall:

(1) administer, collect, and enforce the tax imposed under Section 175.352; and

(2) remit to the authority the local sales and use tax collected on the authority's property.

Sec. 175.356. APPLICABILITY OF TAX CODE. Chapter 321, Tax Code, governs the computation, administration, governance, and use of the tax except as inconsistent with this chapter.

Sec. 175.357. NOTICE TO COMPTROLLER. (a) An authority shall notify the comptroller in writing by registered or certified mail of the authority's creation and of its intent to impose the sales and use tax under Section 175.352.

(b) The authority shall provide to the comptroller all information required to implement the tax, including:

(1) an adequate map showing the property boundaries of the authority; and

(2) a certified copy of the resolution of the authority board adopting the tax.

(c) Not later than the 30th day after the date the comptroller receives the notice, map, and other information, the comptroller shall inform the authority of whether the comptroller is prepared to administer the tax.

Sec. 175.358. NOTICE TO LOCAL GOVERNMENTS. At the same time an authority notifies the comptroller under Section 175.357, the authority shall:

(1) notify each affected local governmental unit of the authority's creation; and

(2) provide each with an adequate map showing the property boundaries of the authority.

Sec. 175.359. ACQUISITION OF ADDITIONAL TERRITORY SUBJECT TO TAX. (a) Not later than the 30th day after the date an authority adds territory to the authority, the authority shall notify the comptroller and each affected local governmental unit of the addition.

(b) The authority must include with each notification:

(1) an adequate map showing the new boundaries of the authority; and

(2) the date the additional territory was added.

(c) Not later than the 30th day after the date the comptroller receives the notice under this section, the comptroller shall inform the authority of whether the comptroller is prepared to administer the tax imposed under Section 175.352 in the additional territory.

Sec. 175.360. EFFECTIVE DATE OF TAX. A tax imposed under Section 175.352 or the abolition of a tax under Section 175.354 takes effect on the first day of the first complete calendar quarter that occurs after the expiration of the first complete calendar quarter that occurs after the date the comptroller receives a notice of the action as required by this subchapter.

SECTION 2. This Act takes effect September 1, 2009.

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