83R22850 JTS-F

By: Darby H.B. No. 1134

Substitute the following for H.B. No. 1134:

By: Phillips C.S.H.B. No. 1134

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 surety 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) contractors, subcontractors, and suppliers [payment bond beneficiaries] who have a direct contractual relationship with the private entity or with a subcontractor of the private entity to supply labor or material for the project.

(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 price exceeds $250 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 shall set the amount of [the bonds or the alternative forms of] security at not less than $250 million.

(c-1) The department may require an additional amount of security or other form of guaranty acceptable to the department in addition to the amount set by the department under Subsection (c) if the department determines that additional security or guaranty is required to achieve the objectives of Subsection (a).

(d) The performance [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 preliminary design or planning services, the performance of preliminary studies, or the acquisition of real property.

(e) The amount of the payment security is separate from and in addition to the performance security and must not be less than the amount of the performance security.

(f) In addition to or instead of a performance and payment bond issued by a corporate surety authorized to issue surety bonds in this state, 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 financial institution acceptable to the department that has an office in this state at which the letter of credit may be presented for payment [; 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.

(h) If the department authorizes payment security to be provided by a means other than a payment bond issued by a corporate surety authorized to issue surety bonds in this state, the comprehensive development agreement must include provisions specifying how a claimant may submit a claim and how the claim process will be administered. The department shall post the claims procedures for the project on its website.

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 surety 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) contractors, subcontractors, and suppliers [payment bond beneficiaries] who have a direct contractual relationship with the private entity or with a subcontractor of the private entity to supply labor or material for the project.

(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 price exceeds $250 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 shall set the amount of [the bonds or the alternative forms of] security at not less than $250 million.

(c-1) The authority may require an additional amount of security or other form of guaranty acceptable to the authority in addition to the amount set by the authority under Subsection (c) if the authority determines that additional security or guaranty is required to achieve the objectives of Subsection (a).

(d) The performance [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 preliminary design or planning services, the performance of preliminary studies, or the acquisition of real property.

(e) The amount of the payment security is separate from and in addition to the performance security and must not be less than the amount of the performance security.

(f) In addition to, or instead of, performance and payment bonds issued by a corporate surety authorized to issue surety bonds in this state, 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 financial institution acceptable to the authority that has an office in this state at which the letter of credit may be presented for payment [; 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.

(h) If the authority authorizes payment security to be provided by a means other than a payment bond issued by a corporate surety authorized to issue surety bonds in this state, the comprehensive development agreement must include provisions specifying how a claimant may submit a claim and how the claim process will be administered. The authority shall post the claims procedures for the project on its website.

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 surety 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) contractors, subcontractors, and suppliers [payment bond beneficiaries] who have a direct contractual relationship with the private entity or with a subcontractor of the private entity to supply labor or material for the project.

(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 price exceeds $250 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 shall set the amount of [the bonds or the alternative forms of] security at not less than $250 million.

(c-1) The authority may require an additional amount of security or other form of guaranty acceptable to the authority in addition to the amount set by the authority under Subsection (c) if the authority determines that additional security or guaranty is required to achieve the objectives of Subsection (a).

(d) The performance [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 preliminary design or planning services, the performance of preliminary studies, or the acquisition of real property.

(e) The amount of the payment security is separate from and in addition to the performance security and must not be less than the amount of the performance security.

(f) In addition to performance and payment bonds issued by a corporate surety authorized to issue surety bonds in this state, 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 financial institution acceptable to the authority that has an office in this state at which the letter of credit may be presented for payment [; 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.

(h) If the authority authorizes payment security to be provided by a means other than a payment bond issued by a corporate surety authorized to issue surety bonds in this state, the comprehensive development agreement must include provisions specifying how a claimant may submit a claim and how the claim process will be administered. The authority shall post the claims procedures for the project on its website.

SECTION 4. The changes in law made by this Act apply only to a comprehensive development agreement for which a best value proposer is selected on or after the effective date of this Act. A comprehensive development agreement for which a best value proposer was selected before that date is governed by the law as it existed at the time the best value proposer was selected, and the former law is continued in effect for that purpose.

SECTION 5. This Act takes effect September 1, 2013.