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A BILL TO BE ENTITLED
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AN ACT
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relating to the issuance of capital appreciation bonds by political |
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subdivisions. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. This Act may be cited as the Capital Appreciation |
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Bond Promoting Accountability Measure Act. |
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SECTION 2. Subtitle C, Title 9, Government Code, is amended |
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by adding Chapter 1253 to read as follows: |
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CHAPTER 1253. ISSUANCE OF CAPITAL APPRECIATION BONDS |
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SUBCHAPTER A. GENERAL PROVISIONS |
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Sec. 1253.001. DEFINITIONS. In this chapter: |
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(1) "Capital appreciation bond" means a bond that |
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accrues and compounds interest from its date of delivery, the |
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interest on which by its terms is payable only upon maturity or |
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prior redemption. |
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(2) "Political subdivision" means a county, |
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municipality, special district, school district, junior college |
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district, or other political subdivision of this state. |
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Sec. 1253.002. INAPPLICABILITY TO BONDS FOR TRANSPORTATION |
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PROJECTS. This chapter does not apply to the issuance of capital |
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appreciation bonds to finance transportation infrastructure |
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projects. |
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SUBCHAPTER B. REQUIREMENTS FOR ISSUANCE |
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Sec. 1253.051. NOVEMBER UNIFORM ELECTION DATE REQUIRED. A |
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political subdivision may not issue capital appreciation bonds |
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unless: |
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(1) the bonds were approved at an election held on the |
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November uniform election date; and |
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(2) the ballot proposition includes: |
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(A) the principal amount of the bond issuance; |
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(B) an estimated amount, based on current |
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interest rates at the time the decision is made to place the bonds |
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on the ballot, of the amortized cost of the bonds if the bonds are |
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not paid off early; |
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(C) a statement that the bonds issued may be |
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capital appreciation bonds; and |
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(D) a short description of capital appreciation |
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bonds. |
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Sec. 1253.052. LIMITATION ON AMOUNT OF OUTSTANDING CAPITAL |
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APPRECIATION BOND DEBT. A political subdivision may not issue |
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capital appreciation bonds in an amount that would cause its |
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capital appreciation bond debt to exceed 25 percent of the |
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political subdivision's total outstanding bonded indebtedness. |
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Sec. 1253.053. LIMITATION ON MATURITY DATE. A political |
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subdivision may not issue capital appreciation bonds with a |
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scheduled maturity date more than |
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25 years after the date of |
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issuance. |
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Sec. 1253.054. EARLY REPAYMENT OPTION REQUIRED. A |
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political subdivision may not issue capital appreciation bonds |
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unless the bond agreement allows early repayment of the bonds by the |
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political subdivision without penalties or additional fees. |
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Sec. 1253.055. LIMITATIONS ON SCHOOL DISTRICTS. (a) A |
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school district may not issue capital appreciation bonds unless: |
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(1) the district is a high enrollment growth district |
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for the purposes of Section 31.0214, Education Code; and |
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(2) before an election is ordered, the governing body |
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of the district: |
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(A) adopts, by record vote, a resolution stating |
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that the district is considering issuing capital appreciation |
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bonds; |
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(B) attaches a record of the vote under Paragraph |
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(A) to the resolution; and |
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(C) posts the resolution on the district's |
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Internet website not later than the 90th day before the date of the |
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bond election. |
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(b) Bonds issued by a school district on or after September |
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1, 2025, are not eligible for guarantee by the permanent school fund |
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under Section 45.052, Education Code, if the district's outstanding |
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capital appreciation bond debt exceeds 25 percent of its total |
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outstanding bonded indebtedness. |
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SUBCHAPTER C. USE OF PROCEEDS |
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Sec. 1253.101. USE OF PROCEEDS. (a) A political |
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subdivision may use proceeds from the issuance of capital |
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appreciation bonds only to purchase assets, including real estate |
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and new construction, that have an expected use, to be determined |
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based on the depreciable life of the asset under the Internal |
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Revenue Code of 1986, that extends beyond the bonds' maturity date. |
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(b) A political subdivision may not use proceeds from the |
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issuance of capital appreciation bonds for: |
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(1) renovations to existing structures; |
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(2) technology purchases, including computers; or |
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(3) school buses or other vehicles. |
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SUBCHAPTER D. TRANSPARENCY |
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Sec. 1253.151. BOND INFORMATION ON INTERNET WEBSITE. (a) A |
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political subdivision that has outstanding capital appreciation |
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bond debt shall post prominently on the political subdivision's |
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Internet website for each outstanding issuance of capital |
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appreciation bonds: |
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(1) the principal cost of the bonds; |
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(2) the purpose for which the bonds were issued; |
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(3) the full amortization schedule for the bonds; |
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(4) the total amount to be paid for the bonds if the |
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bonds are not repaid before maturity; and |
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(5) the bond counsel, underwriter, and financial |
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institution for the issuance. |
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(b) The information under Subsection (a) must be updated |
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annually, not later than the 60th day before the November uniform |
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election date. |
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SECTION 3. 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, 2015. |