84R21672 JTS-F
 
  By: Flynn, Dale, Shaheen H.B. No. 114
 
  Substitute the following for H.B. No. 114:
 
  By:  Parker C.S.H.B. No. 114
 
 
 
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 25 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 the projected tax 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 proposed bonds;
                     (B)  the length of maturity of the proposed bonds;
                     (C)  the projects to be financed with bond
  proceeds;
                     (D)  the intended use of bond proceeds not spent
  after completion of the projects identified in Paragraph (C);
                     (E)  the total amount of the political
  subdivision's outstanding bonded indebtedness at the time of the
  election, including the amount of principal and interest to be paid
  on existing bond indebtedness until maturity;
                     (F)  the total amount of the political
  subdivision's outstanding bonded indebtedness, including the
  amount of principal and interest to be paid until maturity; and
                     (G)  the information received under Subdivision
  (2) and determined under Subdivision (3).
         (c)  The governing body of a political subdivision that makes
  a determination that a personal or financial relationship described
  by Subsection (b)(3) exists shall submit the determination to the
  Texas Ethics Commission.
         (d)  The governing body of a political subdivision shall
  regularly update the debt information posted on the political
  subdivision's Internet website under Subsection (b)(4)(F) to
  ensure that the information is current and accurate.
         (e)  Capital appreciation bond proceeds may not be used to
  purchase:
               (1)  items more regularly considered maintenance
  items, including replacement HVAC units, upgraded plumbing, or
  similar items; or
               (2)  transportation-related items, including buses.
         (f)  Capital appreciation bond proceeds unspent after
  completion of the project identified as the proceeds' intended use
  may be used only for a use identified on the political subdivision's
  website under Subsection (b)(4)(D), unless another use is approved
  by the voters of the political subdivision at an election held for
  that purpose.
         (g)  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.
         (h)  Except as provided by Subsection (i), 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.
         (i)  A political subdivision may extend the maturity date of
  an issued capital appreciation bond only if:
               (1)  the extension of the maturity date will decrease
  the total amount of projected principal and interest to maturity;
  or
               (2)  the political subdivision is a school district
  and:
                     (A)  the maximum legally allowable tax rate for
  indebtedness has been adopted; and
                     (B)  the Texas Education Agency certifies in
  writing that the solvency of the permanent school fund's bond
  guarantee program would be threatened without the extension.
         (j)  Subsection (b) does not apply to the issuance of:
               (1)  refunding bonds under Chapter 1207; or
               (2)  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, 2015.