82R7984 JTS-F
 
  By: Darby H.B. No. 2032
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to performance and payment security for certain
  comprehensive development agreements.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 223.205, Transportation Code, is amended
  to read as follows:
         Sec. 223.205.  PERFORMANCE AND PAYMENT SECURITY.
  (a)  Notwithstanding Section 223.006 and the requirements of
  Subchapter B, Chapter 2253, Government Code, the department shall
  require a private entity entering into a comprehensive development
  agreement under this subchapter to provide a performance and
  payment bond issued by a corporate surety authorized to issue bonds
  in this state or an alternative form of security in an amount
  sufficient to:
               (1)  ensure the proper performance of the agreement;
  and
               (2)  protect:
                     (A)  the department; and
                     (B)  security [payment bond] beneficiaries who
  have a direct contractual relationship with the private entity or a
  subcontractor of the private entity to supply labor or material.
         (b)  Except as provided by Subsection (c), the [A
  performance and payment bond or alternative form of] security shall
  be in an amount equal to the cost of constructing or maintaining the
  project.
         (c)  If the contract amount exceeds $500 million in
  construction costs, and the department determines that it is
  impracticable for a private entity to provide security in the
  amount described by Subsection (b), the department may [shall] set
  the amount of the [bonds or the alternative forms of] security at or
  above $500 million, as determined by the department to be in the
  best interest of this state.
         (d)  The [A payment or performance bond or alternative form
  of] security is not required for and may not cover the portion of an
  agreement that includes only design or planning services, the
  performance of preliminary studies, or the acquisition of real
  property.
         (e)  The amount of the payment security must not be less than
  the amount of the performance security.
         (f)  In addition to or instead of a performance and payment
  bond, the department may require one or more of the following
  alternative forms of security:
               (1)  a cashier's check drawn on a financial entity
  specified by the department;
               (2)  a United States bond or note; or
               (3)  an irrevocable bank letter of credit from a United
  States domiciled bank acceptable to the department [; or
               [(4)     any other form of security determined suitable by
  the department].
         [(g)     The department by rule shall prescribe requirements
  for an alternative form of security provided under this section.]
         SECTION 2.  Section 366.404, Transportation Code, is amended
  to read as follows:
         Sec. 366.404.  PERFORMANCE AND PAYMENT SECURITY.
  (a)  Notwithstanding the requirements of Subchapter B, Chapter
  2253, Government Code, an authority shall require a private entity
  entering into a comprehensive development agreement under this
  subchapter to provide a performance and payment bond issued by a
  corporate surety authorized to issue bonds in this state or an
  alternative form of security in an amount sufficient to:
               (1)  ensure the proper performance of the agreement;
  and
               (2)  protect:
                     (A)  the authority; and
                     (B)  security [payment bond] beneficiaries who
  have a direct contractual relationship with the private entity or a
  subcontractor of the private entity to supply labor or material.
         (b)  Except as provided by Subsection (c), the [A performance
  and payment bond or alternative form of] security shall be in an
  amount equal to the cost of constructing or maintaining the
  project.
         (c)  If the contract amount exceeds $500 million in
  construction costs, and the [an] authority determines that it is
  impracticable for a private entity to provide security in the
  amount described by Subsection (b), the authority may [shall] set
  the amount of the [bonds or the alternative forms of] security at or
  above $500 million, as determined by the authority to be in the
  authority's best interest.
         (d)  The [A payment or performance bond or alternative form
  of] security is not required for and may not cover the portion of an
  agreement that includes only design or planning services, the
  performance of preliminary studies, or the acquisition of real
  property.
         (e)  The amount of the payment security must not be less than
  the amount of the performance security.
         (f)  In addition to, or instead of, performance and payment
  bonds, an authority may require the following alternative forms of
  security:
               (1)  a cashier's check drawn on a financial entity
  specified by the authority;
               (2)  a United States bond or note; or
               (3)  an irrevocable bank letter of credit from a United
  States domiciled bank acceptable to the authority [; or
               [(4)     any other form of security determined suitable by
  the authority].
         [(g)     An authority by rule shall prescribe requirements for
  alternative forms of security provided under this section.]
         SECTION 3.  Section 370.308, Transportation Code, is amended
  to read as follows:
         Sec. 370.308.  PERFORMANCE AND PAYMENT SECURITY.
  (a)  Notwithstanding Section 223.006 and the requirements of
  Subchapter B, Chapter 2253, Government Code, an authority shall
  require a private entity entering into a comprehensive development
  agreement under Section 370.305 to provide a performance and
  payment bond issued by a corporate surety authorized to issue bonds
  in this state or an alternative form of security in an amount
  sufficient to:
               (1)  ensure the proper performance of the agreement;
  and
               (2)  protect:
                     (A)  the authority; and
                     (B)  security [payment bond] beneficiaries who
  have a direct contractual relationship with the private entity or a
  subcontractor of the private entity to supply labor or material.
         (b)  Except as provided by Subsection (c), the [A performance
  and payment bond or alternative form of] security shall be in an
  amount equal to the cost of constructing or maintaining the
  project.
         (c)  If the contract amount exceeds $500 million in
  construction costs, and the [an] authority determines that it is
  impracticable for a private entity to provide security in the
  amount described by Subsection (b), the authority may [shall] set
  the amount of the [bonds or the alternative forms of] security at or
  above $500 million, as determined by the authority to be in the
  authority's best interest.
         (d)  The [A payment or performance bond or alternative form
  of] security is not required for and may not cover the portion of an
  agreement that includes only design or planning services, the
  performance of preliminary studies, or the acquisition of real
  property.
         (e)  The amount of the payment security must not be less than
  the amount of the performance security.
         (f)  In addition to performance and payment bonds, an
  authority may require the following alternative forms of security:
               (1)  a cashier's check drawn on a financial entity
  specified by the authority;
               (2)  a United States bond or note; or
               (3)  an irrevocable bank letter of credit from a United
  States domiciled bank acceptable to the authority [; or
               [(4)     any other form of security determined suitable by
  the authority].
         [(g)     An authority by rule shall prescribe requirements for
  alternative forms of security provided under this section.]
         SECTION 4.  The changes in law made by this Act apply only to
  a comprehensive development agreement entered into on or after the
  effective date of this Act. A comprehensive development agreement
  entered into before that date is governed by the law as it existed
  at the time the agreement was entered into, and the former law is
  continued in effect for that purpose.
         SECTION 5.  This Act takes effect September 1, 2011.