83R24769 JTS-F
 
  By: Hinojosa S.B. No. 449
 
  (Flynn, Hilderbran)
 
  Substitute the following for S.B. No. 449:  No.
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to the issuance of certain capital appreciation bonds by
  political subdivisions.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Subchapter B, Chapter 1201, Government Code, is
  amended by adding Section 1201.0245 to read as follows:
         Sec. 1201.0245.  CAPITAL APPRECIATION BONDS BY POLITICAL
  SUBDIVISIONS.  (a)  In this section, "capital appreciation bond" 
  means a bond that accrues and compounds interest from its date of
  delivery, the interest on which by its terms is payable only upon
  maturity or prior redemption.
         (b)  A county, municipality, special district, school
  district, junior college district, or other political subdivision
  may not issue capital appreciation bonds that are secured by ad
  valorem taxes unless:
               (1)  the bonds have a scheduled maturity date that is
  not later than 20 years after the date of issuance;
               (2)  the governing body of the political subdivision
  has received a written estimate of the cost of the issuance,
  including:
                     (A)  the amount of principal and interest to be
  paid until maturity;
                     (B)  the amount of fees to be paid to outside
  vendors, including vendors who sell products to be financed by the
  bond issuance;
                     (C)  the amount of fees to be paid to each
  financing team member; and
                     (D)  the projected tax impact of the bonds and the
  assumptions on which the calculation of that impact is based;
               (3)  the governing body of the political subdivision
  has determined in writing whether any personal or financial
  relationship exists between the members of the governing body and
  any financial advisor, bond counsel, bond underwriter, or other
  professional associated with the bond issuance; and
               (4)  the governing body of the political subdivision
  posts prominently on the political subdivision's Internet website
  and enters in the minutes of the governing body:
                     (A)  the total amount of the bonds to be voted on;
                     (B)  the length of maturity of the bonds;
                     (C)  the projects proposed to be financed with
  bond proceeds;
                     (D)  the amount of the political subdivision's
  total bonded indebtedness at the time of the election, including
  the amount of principal and interest to be paid until maturity;
                     (E)  the information received under Subdivision
  (2) and determined under Subdivision (3); and
                     (F)  the political subdivision's total amount of
  outstanding bonded indebtedness, updated quarterly, including the
  amount of principal and interest to be paid until maturity.
         (c)  The total amount of capital appreciation bonds may not
  exceed 25 percent of the political subdivision's total outstanding
  bonded indebtedness at the time of the issuance, including the
  amount of principal and interest to be paid on the outstanding bonds
  until maturity.
         (d)  Except as provided by Subsection (e), a county,
  municipality, special district, school district, junior college
  district, or other political subdivision may not extend the
  maturity date of an issued capital appreciation bond, including
  through the issuance of refunding bonds that extend the maturity
  date.
         (e)  A school district may extend the maturity date of an
  issued capital appreciation bond only if:
               (1)  the maximum legally allowable tax rate for
  indebtedness has been adopted; and
               (2)  the attorney general certifies in writing that the
  solvency of the permanent school fund's bond guarantee program
  would be threatened without the extension.
         (f)  Subsection (b) does not apply to the issuance of
  refunding bonds under Chapter 1207.
         (g)  Subsection (b) does not apply to the issuance of capital
  appreciation bonds for the purpose of financing transportation
  projects.
         SECTION 2.  The change in law made by this Act does not
  affect the validity of capital appreciation bonds issued before the
  effective date of this Act.
         SECTION 3.  This Act takes effect September 1, 2013.