By: Carona, Shapiro S.B. No. 1350

A BILL TO BE ENTITLED

AN ACT

relating to the creation, administration, financing, and use of a Texas Transportation Revolving Fund; granting the authority to issue bonds.

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

SECTION 1. Chapter 222, Transportation Code, is amended by adding Subchapter F to read as follows:

SUBCHAPTER F. TEXAS TRANSPORTATION REVOLVING FUND

Sec. 222.131. DEFINITIONS. In this subchapter:

(1) "Bonds" means bonds, notes, and other public securities.

(2) "Credit agreement" has the meaning assigned by Section 1371.001, Government Code.

(3) "Fund" means the Texas Transportation Revolving Fund.

(4) "Fund revenue bonds" means bonds issued under Section 222.135.

(5) "Highway improvement project" includes acquisition of the highway, construction, reconstruction, and major maintenance, including any necessary design, and the acquisition of rights-of-way.

(6) "Transit provider" has the meaning assigned by Section 370.003.

(7) "Transportation project" means a tolled or nontolled highway improvement project.

Sec. 222.132. CREATION OF FUND. The Texas Transportation Revolving Fund is created as a fund held in the Texas Treasury Safekeeping Trust Company.

Sec. 222.133. ADMINISTRATION OF FUND. (a) The commission, through the department, shall manage, invest, use, administer, and provide financial assistance from the fund as provided by this subchapter.

(b) The commission may create within the fund one or more accounts or subaccounts as determined appropriate and necessary by the commission.

(c) The commission shall prepare and file annually with the governor, the lieutenant governor, and the Legislative Budget Board a report providing information on the operation of the fund, including:

(1) the amounts and sources of money deposited in the fund during the year;

(2) investments and returns on investments of money in the fund;

(3) loans made from the fund;

(4) other financial assistance provided from the fund;

(5) the status of any defaults on repayment of loans or other financial assistance provided from the fund; and

(6) the details of any transportation project for which financial assistance is received from the fund, including the identity of any highway directly affected by the project, and the degree to which the project is designed to reduce congestion, improve traffic safety, and enhance connectivity.

Sec. 222.134. SOURCES OF MONEY DEPOSITED IN FUND. The commission may deposit in the fund money derived from any source available to the commission, including:

(1) if appropriated by the legislature for that purpose:

(A) the proceeds of bonds issued under Section 222.003;

(B) the proceeds of bonds authorized by Section 49-p, Article III, Texas Constitution, if the law providing for the issuance of the bonds does not prohibit the deposit of the proceeds in the fund;

(C) money provided by the commission from the state highway fund;

(D) money provided by the commission from the Texas Mobility Fund that is in excess of the money required to be on deposit in the Texas Mobility Fund by the proceedings authorizing Texas Mobility Fund bonds and credit agreements; and

(E) other direct appropriations;

(2) repayments of principal and interest on loans made under Section 222.137;

(3) the proceeds from the sale of loans under Section 222.140;

(4) the proceeds from the sale of fund revenue bonds; and

(5) gifts and grants.

Sec. 222.135. FUND REVENUE BONDS. (a) The commission may issue, sell, and deliver fund revenue bonds for the purpose of providing money for the fund.

(b) Fund revenue bonds are special obligations of the commission payable from the repayment of loans from the fund and other money on deposit in the fund as the commission may designate.

(c) Fund revenue bonds do not constitute a debt of the state or a pledge of the faith and credit of the state.

(d) The commission by order or resolution may issue fund revenue bonds in the name and on behalf of the state and the department and may enter into credit agreements related to the bonds. The bonds may be issued in multiple series and issues from time to time and may be issued on the terms and with the provisions the commission determines appropriate and in the interests of the state.

(e) The commission has all powers necessary or appropriate to carry out this section, including the powers granted to other bond-issuing governmental agencies and units and to nonprofit corporations by Chapters 1201, 1207, and 1371, Government Code.

(f) Before the issuance of fund revenue bonds or credit agreements, the commission shall submit the record of proceedings of the commission authorizing the issuance, execution, and delivery of the bonds or credit agreement and any contract providing revenue or security to pay the bonds or credit agreement to the attorney general for review. If the attorney general finds that the proceedings authorizing a bond or credit agreement and any bonds authorized in the proceedings conform to the requirements of the Texas Constitution and this subchapter, the attorney general shall approve the proceedings and the bonds and deliver to the comptroller for registration a copy of the attorney general's legal opinion stating that approval and the record of proceedings. After approval, the bonds or credit agreement may be executed and delivered, exchanged, or refinanced from time to time in accordance with those authorizing proceedings.

(g) If the proceedings and any bonds authorized in the proceedings are approved by the attorney general and registered by the comptroller as provided above, the bonds or credit agreement, as applicable, or a contract providing revenue or security included in or executed and delivered according to the authorizing proceedings are incontestable in a court or other forum and are valid, binding, and enforceable according to their terms.

(h) The proceeds from the sale of fund revenue bonds may be used to finance other funds or accounts relating to the bonds or credit agreement, including a debt service reserve fund, and to pay the costs of issuance. All remaining proceeds received from the sale of the bonds shall be deposited in the fund and invested and used as provided by this subchapter.

Sec. 222.136. INVESTMENT OF MONEY IN THE FUND. (a) Money in the fund may be invested as provided by Chapter 2256, Government Code, except that the proceeds of bonds deposited in the fund under Section 222.134 shall be subject to any limitations contained in the documents authorizing the issuance of the bonds.

(b) Income received from the investment of money in the fund shall be deposited in the fund, subject to requirements that may be imposed by the proceedings authorizing bonds issued to provide money for deposit in the fund that are necessary to protect the tax-exempt status of interest payable on the bonds in accordance with applicable law of the United States concerning federal income taxation of interest on the bonds. Investment income shall be deposited in an account or subaccount in the fund as determined by the department.

Sec. 222.137. USES OF MONEY IN THE FUND. (a) Except as otherwise provided by this section, the commission may use money held in the fund to provide financial assistance to a public entity, including the department, for the costs of a transportation project by:

(1) making loans, including through the purchase of obligations of the public entity;

(2) providing liquidity or credit enhancement, including through the agreement to loan to or purchase bonds, notes, or other obligations from a public entity;

(3) serving as a reserve fund established in connection with debt financing by the public entity;

(4) providing capitalized interest for debt financing by the public entity; or

(5) providing a guarantee of the payment of the costs of operations and maintenance of a transportation project.

(b) The proceeds of bonds authorized by Section 49-p, Article III, Texas Constitution, or issued under Section 222.003 may only be used to provide financial assistance for highway improvement projects, subject to any limitations provided by law.

(c) Money from the state highway fund may only be used for the purposes for which revenues are dedicated under Section 7-a, Article VIII, Texas Constitution.

(d) Money from the Texas Mobility Fund may only be used to provide financial assistance for state highway improvement projects, publicly owned toll roads, and public transportation projects, whether on or off of the state highway system, subject to any limitations provided by law.

(e) Money in the fund may be used to pay debt service on fund revenue bonds.

(f) The commission may require the payment of reasonable fees and other amounts by a public entity for all forms of financial assistance provided under this section.

(g) The department shall monitor the use of financial assistance provided to a public entity to ensure the financial assistance is used for purposes authorized by law and may audit the books and records of a public entity for this purpose.

Sec. 222.138. BORROWING FROM THE FUND BY PUBLIC ENTITY. (a) A public entity, including a municipality, county, district, authority, agency, department, board, or commission, that is authorized by law to construct, maintain, or finance a transportation project may borrow money from the fund, including by direct loan or other financial assistance from the fund, and may enter into any agreement relating to receiving financial assistance from the fund.

(b) Money received by a public entity under this subchapter must be segregated from other funds under the control of the public entity and may only be used for purposes authorized by this subchapter.

(c) To provide for the repayment of a loan or other financial assistance, a public entity may:

(1) pledge revenues or income from any available source;

(2) pledge, levy, and collect any taxes, subject to any constitutional limitation; or

(3) pledge any combination of revenues, income, and taxes.

(d) This section is wholly sufficient authority for a public entity to borrow or otherwise obtain financial assistance from the fund as authorized by this subchapter and to pledge revenues, income, or taxes, or any combination of revenues, income, and taxes, to the repayment of a loan or other financial assistance.

Sec. 222.139. REPAYMENT TERMS; DEPOSIT OF REPAYMENTS. (a) For financial assistance that must be repaid, the commission shall determine the terms and conditions of the repayment, including the interest rates to be charged.

(b) The commission may require the entity receiving financial assistance that must be repaid to make charges, levy and collect taxes, pledge revenues, or otherwise take such action as may be necessary to provide for money in an amount sufficient for repayment according to the terms agreed on at the time the financial assistance is provided.

(c) For a tolled highway improvement project, the commission, in lieu of requiring the repayment of financial assistance and any interest thereon, may require that revenues from the project be shared between the entity and the department, and the entity and the department may enter into an agreement specifying the terms and conditions of the revenue sharing.

(d) The department shall deposit in the fund all amounts received from repayment of the financial assistance or as a share of revenues from a tolled highway improvement project.

Sec. 222.140. SALE OF LOANS. (a) As used in this section, "loan" includes any financial assistance that must be repaid or any portion of such assistance.

(b) The commission may sell any loans made from money in the fund and shall deposit the proceeds of the sale in the fund.

(c) For any loans to be sold under this section, the commission may submit to the attorney general for review and approval the related financial assistance agreement, which shall, for the purposes of Chapter 1202, Government Code, be considered to be a public security, along with the record of proceedings of the borrowing entity relating to the agreement. If the attorney general approves the agreement, it shall be incontestable in a court or other forum and is valid, binding, and enforceable according to its terms as provided by Chapter 1202, Government Code.

(d) The commission must sell the loans using a competitive bidding process and at the price and under the terms and conditions that it determines to be reasonable.

(e) As part of the sales agreement with the purchaser of a loan, the commission may agree to perform the functions required to enforce the conditions and requirements stated in the loans, including the payment of debt service by the borrowing entity.

(f) The commission may exercise any powers necessary to carry out the authority granted by this section, including the authority to contract with any person to accomplish the purposes of this section.

(g) The commission shall not be liable for the repayment of, and may not repay, any loan sold under this section.

Sec. 222.141. WAIVER OF SOVEREIGN IMMUNITY. A public entity receiving financial assistance under this subchapter and the department may agree to waive sovereign immunity to suit for the purpose of adjudicating a claim to enforce any of their obligations brought by a party for breach of the terms of the financial assistance agreement.

Sec. 222.142. IMPLEMENTATION BY RULE. (a) The commission shall adopt rules to implement this subchapter, including rules:

(1) establishing eligibility and prioritization criteria for entities applying for financial assistance from the fund and for transportation projects that may receive financial assistance from the fund;

(2) specifying the method for setting the terms and conditions for providing financial assistance from the fund and for the repayment of financial assistance from the fund; and

(3) establishing procedures for the sale of loans originated from amounts on deposit in the fund.

(b) The eligibility and prioritization criteria described in Subsection (a)(1) shall provide that financial assistance made available for the delivery of a transportation project by the department may not be in a larger amount or on more favorable terms than the financial assistance requested and previously offered for the delivery of that transportation project by a public entity, if any.

(c) The commission shall appoint a rules advisory committee to advise the department and the commission on the development of the commission's initial rules required by this section. The committee must include one or more members representing a local toll project entity, as defined in Section 228.0111. Chapter 2110, Government Code, does not apply to the committee. This subsection expires on the date the commission adopts initial rules under this section.

SECTION 2. This Act takes effect immediately if it receives a vote of two-thirds of all the members elected to each house, as provided by Section 39, Article III, Texas Constitution. If this Act does not receive the vote necessary for immediate effect, this Act takes effect September 1, 2009.