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A BILL TO BE ENTITLED
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AN ACT
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relating to the issuance of certain capital appreciation bonds by |
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political subdivisions. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Subchapter B, Chapter 1201, Government Code, is |
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amended by adding Section 1201.0245 to read as follows: |
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Sec. 1201.0245. CAPITAL APPRECIATION BONDS BY POLITICAL |
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SUBDIVISIONS. (a) In this section, "capital appreciation bond" |
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means a bond that accrues and compounds interest from its date of |
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delivery, the interest on which by its terms is payable only upon |
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maturity or prior redemption. |
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(b) A county, municipality, special district, school |
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district, junior college district, or other political subdivision |
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may not issue capital appreciation bonds that are secured by ad |
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valorem taxes unless: |
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(1) the bonds have a scheduled maturity date that is |
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not later than 25 years after the date of issuance; |
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(2) the governing body of the political subdivision |
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has received a written estimate of the cost of the issuance, |
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including: |
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(A) the amount of principal and interest to be |
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paid until maturity; |
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(B) the amount of fees to be paid to outside |
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vendors, including vendors who sell products to be financed by the |
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bond issuance; |
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(C) the amount of fees to be paid to each |
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financing team member; and |
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(D) the projected tax impact of the bonds and the |
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assumptions on which the calculation of the projected tax impact is |
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based; |
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(3) the governing body of the political subdivision |
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has determined in writing whether any personal or financial |
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relationship exists between the members of the governing body and |
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any financial advisor, bond counsel, bond underwriter, or other |
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professional associated with the bond issuance; and |
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(4) the governing body of the political subdivision |
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posts prominently on the political subdivision's Internet website |
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and enters in the minutes of the governing body: |
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(A) the total amount of the proposed bonds; |
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(B) the length of maturity of the proposed bonds; |
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(C) the projects to be financed with bond |
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proceeds; |
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(D) the intended use of bond proceeds not spent |
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after completion of the projects identified in Paragraph (C); |
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(E) the total amount of the political |
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subdivision's outstanding bonded indebtedness at the time of the |
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election, including the amount of principal and interest to be paid |
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on existing bond indebtedness until maturity; |
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(F) the total amount of the political |
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subdivision's outstanding bonded indebtedness, including the |
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amount of principal and interest to be paid until maturity; and |
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(G) the information received under Subdivision |
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(2) and determined under Subdivision (3). |
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(c) The governing body of a political subdivision that makes |
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a determination that a personal or financial relationship described |
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by Subsection (b)(3) exists shall submit the determination to the |
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Texas Ethics Commission. |
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(d) The governing body of a political subdivision shall |
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regularly update the debt information posted on the political |
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subdivision's Internet website under Subsection (b)(4)(F) to |
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ensure that the information is current and accurate. |
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(e) Capital appreciation bond proceeds may not be used to |
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purchase: |
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(1) items more regularly considered maintenance |
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items, including replacement HVAC units, upgraded plumbing, or |
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similar items; or |
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(2) transportation-related items, including buses. |
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(f) Capital appreciation bond proceeds unspent after |
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completion of the project identified as the proceeds' intended use |
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may be used only for a use identified on the political subdivision's |
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website under Subsection (b)(4)(D), unless another use is approved |
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by the voters of the political subdivision at an election held for |
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that purpose. |
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(g) The total amount of capital appreciation bonds may not |
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exceed 25 percent of the political subdivision's total outstanding |
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bonded indebtedness at the time of the issuance, including the |
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amount of principal and interest to be paid on the outstanding bonds |
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until maturity. |
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(h) Except as provided by Subsection (i), a county, |
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municipality, special district, school district, junior college |
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district, or other political subdivision may not extend the |
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maturity date of an issued capital appreciation bond, including |
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through the issuance of refunding bonds that extend the maturity |
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date. |
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(i) A political subdivision may extend the maturity date of |
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an issued capital appreciation bond only if: |
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(1) the extension of the maturity date will decrease |
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the total amount of projected principal and interest to maturity; |
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or |
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(2) the political subdivision is a school district |
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and: |
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(A) the maximum legally allowable tax rate for |
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indebtedness has been adopted; and |
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(B) the Texas Education Agency certifies in |
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writing that the solvency of the permanent school fund's bond |
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guarantee program would be threatened without the extension. |
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(j) Subsection (b) does not apply to the issuance of: |
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(1) refunding bonds under Chapter 1207; or |
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(2) capital appreciation bonds for the purpose of |
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financing transportation projects. |
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SECTION 2. The change in law made by this Act does not |
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affect the validity of capital appreciation bonds issued before the |
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effective date of this Act. |
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SECTION 3. This Act takes effect September 1, 2015. |