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A BILL TO BE ENTITLED
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AN ACT
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relating to the authority of an independent school district to |
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invest in local water projects. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 2256.0204, Government Code, is amended |
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by amending Subsections (a), (d), (e), (f), and (g) and adding |
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Subsection (c-1) to read as follows: |
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(a) In this section: |
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(1) "Corporate[, "corporate] bond" means a senior |
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secured debt obligation issued by a domestic business entity and |
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rated not lower than "AA-" or the equivalent by a nationally |
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recognized investment rating firm. The term does not include a debt |
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obligation that: |
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(A) [(1)] on conversion, would result in the |
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holder becoming a stockholder or shareholder in the entity, or any |
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affiliate or subsidiary of the entity, that issued the debt |
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obligation; or |
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(B) [(2)] is an unsecured debt obligation. |
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(2) "Governing body" means the commissioners court of |
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a county or the governing body of a municipality. |
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(3) "Local water bond" means a secured debt obligation |
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issued by a municipality or county in which the investing school |
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district is located and that is: |
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(A) rated not lower than "AA-" or the equivalent |
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by a nationally recognized investment rating firm; and |
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(B) issued to finance a local water project. |
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(4) "Local water project" means the acquisition, |
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design, construction, improvement, repair, or maintenance of land, |
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buildings, equipment, facilities, or improvements found by the |
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governing body to be required or suitable for the promotion of water |
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development, including water supply facilities, wastewater |
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treatment facilities, water distribution and wastewater conveyance |
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facilities, and storm drainage, flood control, watershed |
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protection, and water conservation projects, regardless of whether |
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the land, buildings, equipment, facilities, or improvements are in |
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existence or are to be acquired or constructed after the finding is |
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made. |
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(c-1) In addition to authorized investments permitted by |
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this subchapter, an independent school district subject to this |
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section may purchase, sell, and invest its funds and funds under its |
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control in local water bonds that, at the time of purchase, are |
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rated by a nationally recognized investment rating firm "AA-" or |
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the equivalent and have a stated final maturity date that is not |
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later than the 10th anniversary of the date the local water bonds |
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were purchased. |
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(d) An independent school district subject to this section |
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is not authorized by this section to: |
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(1) invest in the aggregate more than 15 percent of its |
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monthly average fund balance, excluding bond proceeds, reserves, |
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and other funds held for the payment of debt service, in corporate |
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bonds or local water bonds; or |
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(2) invest more than 25 percent of the funds invested |
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in corporate bonds in any one domestic business entity, including |
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subsidiaries and affiliates of the entity. |
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(e) An independent school district subject to this section |
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may purchase, sell, and invest its funds and funds under its control |
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in corporate bonds or local water bonds if the governing body of the |
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district: |
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(1) amends its investment policy to authorize |
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corporate bonds or local water bonds as an eligible investment; |
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(2) adopts procedures to provide for: |
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(A) monitoring rating changes in corporate bonds |
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or local water bonds acquired with public funds; and |
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(B) liquidating the investment in corporate |
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bonds or local water bonds; and |
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(3) identifies the funds eligible to be invested in |
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corporate bonds or local water bonds. |
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(f) The investment officer of an independent school |
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district, acting on behalf of the district, shall sell corporate |
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bonds or local water bonds in which the district has invested its |
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funds not later than the seventh day after the date a nationally |
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recognized investment rating firm: |
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(1) issues a release that places the corporate bonds |
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or the domestic business entity that issued the corporate bonds, or |
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the local water bonds or the municipality or county that issued the |
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local water bonds, on negative credit watch or the equivalent, if |
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the corporate bonds or local water bonds are rated "AA-" or the |
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equivalent at the time the release is issued; or |
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(2) changes the rating on the corporate bonds or local |
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water bonds to a rating lower than "AA-" or the equivalent. |
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(g) Corporate bonds or local water bonds are not an eligible |
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investment for a public funds investment pool. |
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SECTION 2. This Act takes effect immediately if it receives |
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a vote of two-thirds of all the members elected to each house, as |
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provided by Section 39, Article III, Texas Constitution. If this |
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Act does not receive the vote necessary for immediate effect, this |
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Act takes effect September 1, 2013. |