88R9983 KBB-F
 
  By: Goldman H.B. No. 3002
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to the authority of certain political subdivisions to
  issue certificates of obligation.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 791.023, Government Code, is amended to
  read as follows:
         Sec. 791.023.  CONTRACTS FOR STATE CRIMINAL JUSTICE
  FACILITIES.  The state or an agency of the state may contract with
  one or more entities to finance, construct, operate, maintain, or
  manage a criminal justice facility provided, in the exercise of the
  governmental power, for the benefit of the state in accordance with
  this chapter and:
               (1)  Subchapter A, Chapter 494, Government Code; or
               (2)  Subchapter D, Chapter 361, Local Government Code[;
  or
               [(3)  the Certificate of Obligation Act of 1971
  (Subchapter C, Chapter 271, Local Government Code)].
         SECTION 2.  Section 791.034(b), Government Code, is amended
  to read as follows:
         (b)  The municipality may expend municipal funds and may
  issue [certificates of obligation or] bonds to pay for expenses
  associated with a relief highway route under Subsection (a).
         SECTION 3.  Section 1202.001(3), Government Code, is amended
  to read as follows:
               (3)  "Public security" means an instrument, including a
  bond, note, [certificate of obligation,] certificate of
  participation or other instrument evidencing a proportionate
  interest in payments due to be paid by an issuer, or other type of
  obligation that:
                     (A)  is issued or incurred by an issuer under the
  issuer's borrowing power, without regard to whether it is subject
  to annual appropriation; and
                     (B)  is represented by an instrument issued in
  bearer or registered form or is not represented by an instrument but
  the transfer of which is registered on books maintained for that
  purpose by or on behalf of the issuer.
         SECTION 4.  Section 1202.007(a), Government Code, is amended
  to read as follows:
         (a)  The following are exempt from the approval and
  registration requirements of this chapter:
               (1)  a public security that is:
                     (A)  not subject to mandatory renewal or renewal
  at the option of any person, including the issuer, a holder, or a
  bearer; and
                     (B)  payable only out of:
                           (i)  current revenues or taxes collected in
  the year the public security is issued; or
                           (ii)  the proceeds of other public
  securities;
               (2)  a certificate in evidence of benefit assessments;
               (3)  [a certificate of obligation, including a claim or
  account that represents an undivided interest in a certificate of
  obligation, that under Subchapter C, Chapter 271, Local Government
  Code, an issuer is authorized to deliver to a contractor;
               [(4)]  a time warrant issued under Chapter 252 or 262,
  Local Government Code;
               (4) [(5)]  a public security authorized by Chapter
  1371;
               (5) [(6)]  a lease, lease-purchase, or installment
  sale obligation, except as provided by other law;
               (6) [(7)]  a public security that by rule the attorney
  general exempts because it is not practical to require approval
  before the public security's issuance; and
               (7) [(8)]  a nonnegotiable note issued under Section
  45.108, Education Code, in a principal amount that does not exceed
  $1 million.
         SECTION 5.  Section 1203.001(3), Government Code, is amended
  to read as follows:
               (3)  "Public security" means a bond, note, [certificate
  of obligation,] certificate of indebtedness, or other obligation
  for the payment of money lawfully issued by an issuer.
         SECTION 6.  Section 1232.003(8), Government Code, is amended
  to read as follows:
               (8)  "Obligation" means a bond, note, certificate of
  participation, [certificate of obligation,] or interest in a
  contract.
         SECTION 7.  Section 1303.001, Government Code, is amended to
  read as follows:
         Sec. 1303.001.  USE OF BOND PROCEEDS FOR OWNER-CONTROLLED
  INSURANCE PROGRAM.  A county may use the proceeds of bonds [or
  certificates of obligation] issued to pay for a county construction
  project to pay for an owner-controlled insurance program under
  which the county establishes and administers a consolidated
  insurance program for the project if the county's order authorizing
  the issuance of the bonds [or other certificates of obligation]
  authorizes the establishment of the program.
         SECTION 8.  Section 1371.059(b), Government Code, is amended
  to read as follows:
         (b)  Notwithstanding Subsection (a) and Section 1371.003,
  and except as provided by this subsection, an obligation authorized
  by this chapter is not valid, binding, or enforceable unless the
  obligation is approved by the attorney general and registered by
  the comptroller in accordance with Chapter 1202. The attorney
  general's approval and registration by the comptroller is not
  required for an obligation:
               (1)  to which Chapter 1202 does not apply or that is
  exempt from approval and registration as provided by Section
  1202.007(a)(1), (2), (3), (4), or (6)[, or (7)]; or
               (2)  that matures within one year after the issuer
  receives payment for the obligation, regardless of whether the
  obligation is evidenced by an instrument with a nominal term of
  longer than one year.
         SECTION 9.  Section 1431.012(a), Government Code, is amended
  to read as follows:
         (a)  Except as provided by Subsection (b), a county must
  comply with the competitive bidding requirements of Subchapter C,
  Chapter 262 [271], Local Government Code, in connection with a
  contract to be paid from the proceeds of anticipation notes issued
  for a purpose described by Section 1431.004(a)(1)(A).
         SECTION 10.  Section 1434.051, Government Code, is amended
  to read as follows:
         Sec. 1434.051.  FINANCING OF PERMANENT IMPROVEMENTS BY
  COUNTY OR MUNICIPALITY.  (a)  A county or a municipality may:
               (1)  issue public securities[, including certificates
  of obligation,] to acquire, construct, or improve land, buildings,
  or other permanent improvements for use by an institution of higher
  education located within a county to which this chapter applies;
  and
               (2)  impose ad valorem taxes to pay the principal of and
  interest on those securities and to provide a sinking fund.
         (a-1)  A municipality that has entered into an agreement
  described by Section 1434.001(1) may:
               (1)  issue public securities[, including certificates
  of obligation,] to acquire, construct, or improve land, buildings,
  or other permanent improvements for use by an institution of higher
  education;
               (2)  impose ad valorem taxes to pay and secure payment
  of the principal of and interest on those securities and to provide
  a sinking fund; and
               (3)  pledge those taxes, any portion of the revenues
  received in connection with the agreement, or any combination of
  the taxes and revenue to secure payment of any portion of the public
  securities issued to acquire, construct, or improve the land,
  buildings, or other permanent improvements for use by the
  institution of higher education.
         (b)  The county or municipality shall[:
               [(1)]  issue any public securities and impose the taxes
  in accordance with the applicable provisions of Subtitles A, C, D,
  and E[; and
               [(2)  if the securities are certificates of obligation,
  issue any certificates and impose the taxes in accordance with
  Subchapter C, Chapter 271, Local Government Code].
         SECTION 11.  Section 1434.053, Government Code, is amended
  to read as follows:
         Sec. 1434.053.  LIMIT ON TAXES.  The only limits on the
  amount of taxes that may be imposed to pay the principal of and
  interest on public securities[, including certificates of
  obligation,] issued under this chapter are those provided by the
  Texas Constitution.
         SECTION 12.  Section 1502.058(a), Government Code, is
  amended to read as follows:
         (a)  Except as provided by Subsection (b) or (c) of this
  section or[,] by Section 1502.059, [or by Section 271.052, Local
  Government Code,] a municipality may not use the revenue of a
  utility system, park, or swimming pool to pay any other debt,
  expense, or obligation of the municipality until the debt secured
  by the revenue is finally paid.
         SECTION 13.  The heading to Subchapter F, Chapter 281,
  Health and Safety Code, is amended to read as follows:
  SUBCHAPTER F. DISTRICT BONDS [AND CERTIFICATES OF OBLIGATION]
         SECTION 14.  Sections 281.121(a) and (c), Health and Safety
  Code, are amended to read as follows:
         (a)  When the district issues bonds [or certificates of
  obligation] payable from and secured by taxes under this chapter,
  the commissioners court shall impose a tax for the benefit of the
  district on all property subject to district taxation.  The
  commissioners court may impose the tax for the entire year in which
  the district is created in order to finance initial district
  operation and to pay bonds assumed by the district.
         (c)  The proceeds of the tax may be used:
               (1)  to pay the interest on and create a sinking fund
  for bonds that may be assumed or issued by the district for hospital
  purposes in accordance with this chapter;
               (2)  to provide for the operation and maintenance of
  the hospital or hospital system; and
               (3)  if requested by the board and approved by the
  commissioners court, to make further improvements and additions to
  the hospital system, including acquiring necessary sites by
  purchase, lease, or condemnation[; and
               [(4)  to pay for certificates of obligation issued
  under Section 281.106 that are payable from and secured by taxes].
         SECTION 15.  Section 361.0855(a)(1), Health and Safety Code,
  is amended to read as follows:
               (1)  "Bonds" means financial obligations issued by a
  local government, including general obligation bonds and[,]
  revenue bonds[, and certificates of obligation].
         SECTION 16.  Section 262.023(b), Local Government Code, is
  amended to read as follows:
         (b)  The requirements established by Subsection (a) apply to
  contracts for which payment will be made from current funds or bond
  funds or through anticipation notes authorized by Chapter 1431,
  Government Code, or time warrants.  [Contracts for which payments
  will be made through certificates of obligation are governed by The
  Certificate of Obligation Act of 1971 (Subchapter C, Chapter 271).]
         SECTION 17.  Section 271.091(4), Local Government Code, is
  amended to read as follows:
               (4)  "Obligation" means bonds, notes, [certificates of
  obligation,] and other obligations authorized to be issued by the
  local government.
         SECTION 18.  Section 303.003(12), Local Government Code, is
  amended to read as follows:
               (12)  "Sponsor obligation" means an evidence of
  indebtedness or obligation that a sponsor issues or incurs to
  finance, refinance, or provide a public facility, including bonds,
  notes, warrants, [certificates of obligation,] leases, and
  contracts authorized by Section 303.041 and Subchapter C.
         SECTION 19.  Sections 361.003(b) and (c), Local Government
  Code, are amended to read as follows:
         (b)  The municipality and county may specify in the contract
  that the money required to meet the costs of providing the center
  shall be derived:
               (1)  from current income and funds on hand that are
  budgeted by the municipality and county for that purpose;
               (2)  through the issuance of bonds by either or both of
  them under the procedures prescribed for the issuance of general
  obligation bonds for other public buildings and purposes; or
               (3)  [by the issuance by either or both of them of
  certificates of obligation under the Certificate of Obligation Act
  of 1971 (Subchapter C, Chapter 271); or
               [(4)]  through a combination of those methods.
         (c)  Instead of or in combination with the use of taxing
  power in the payment of bonds [or certificates of obligation]
  issued under Subsection (b), those bonds [or certificates] may be
  payable from and secured by income derived from the facilities of
  the criminal justice center, including income from leases and from
  the proceeds of parking or other fees.
         SECTION 20.  Section 361.051(5), Local Government Code, is
  amended to read as follows:
               (5)  "Obligations" means:
                     (A)  [certificates of obligation of an entity
  issued pursuant to this subchapter in the manner prescribed by the
  Certificate of Obligation Act of 1971 (Subchapter C, Chapter 271);
                     [(B)]  certificates of participation representing
  an undivided interest in a lease obligation;
                     (B) [(C)]  revenue bonds of an entity issued
  pursuant to this subchapter; or
                     (C) [(D)]  contractual obligations incurred by an
  entity under a lease agreement, lease-purchase agreement, purchase
  on an installment contract, or other agreement providing for the
  lease, lease-purchase, installment purchase, or other acquisition
  of title to an eligible project.
         SECTION 21.  Section 361.052(b), Local Government Code, is
  amended to read as follows:
         (b)  Money to be paid pursuant to a lease obligation and
  revenues derived by an entity from the operation of an eligible
  project constitute revenues to an entity that may be pledged to
  secure or pay any obligations, and the entity's obligations may be
  made payable from and secured by, in whole or in part, those
  revenues.  An entity may apply the provisions of Chapter 1371,
  Government Code, Section [271.052 or] 361.053, or any combination
  of those laws to the issuance of obligations and the execution of
  credit agreements to satisfy the purposes of this subchapter,
  except that an entity's obligations may be refunded by the issuance
  of public securities, as defined by Section 1201.002, Government
  Code, that are payable from a pledge of ad valorem tax receipts only
  if the issuance of the public securities is approved by a majority
  of votes cast at an election conducted in accordance with the bond
  election procedures established by Chapter 1251, Government Code.
         SECTION 22.  Section 373.005(d), Local Government Code, is
  amended to read as follows:
         (d)  A municipality may issue notes or other obligations
  guaranteed by the secretary of housing and urban development under
  Section 108, Housing and Community Development Act of 1974 (42
  U.S.C. Section 5308), as amended, for the purpose of providing
  financing for those activities described in Section 108, Housing
  and Community Development Act (42 U.S.C. Section 5308), as amended,
  in furtherance of an approved community development program.  [The
  Section 108 guaranteed notes additionally may be secured by and
  made payable from the same sources as obligations issued under
  Subchapter C, Chapter 271, Local Government Code, subject to the
  notice provisions set forth therein.]  The Section 108 guaranteed
  notes or other obligations may be issued in such form,
  denominations, manner, terms, and conditions, bear interest at such
  rates, be interim or permanent notes or obligations, be subject to
  transfer, exchange, change, conversion, or replacement, and be sold
  in such manner, at such price, and under such terms, all as provided
  in the ordinance or resolution authorizing the issuance of such
  Section 108 guaranteed notes or obligations.
         SECTION 23.  Section 183.006(a), Natural Resources Code, is
  amended to read as follows:
         (a)  In addition to other methods of financing, including the
  use of the county's general fund, a county may finance the
  acquisition of a conservation easement under this chapter in the
  same manner as permitted for that county under[:
               [(1)]  Section 331.004, Local Government Code, for the
  acquisition or improvement of land, buildings, or historically
  significant objects for park purposes or for historic or
  prehistoric preservation purposes[; or
               [(2)  Section 271.045, Local Government Code, for land
  and rights-of-way].
         SECTION 24.  Section 1063.206(a), Special District Local
  Laws Code, is amended to read as follows:
         (a)  The district may issue revenue bonds [or certificates of
  obligation] or may incur or assume any other debt only if authorized
  by a majority of the district voters voting in an election held for
  that purpose.  This subsection does not apply to refunding bonds or
  other debt incurred solely to refinance an outstanding debt.
         SECTION 25.  Section 1064.110(b), Special District Local
  Laws Code, is amended to read as follows:
         (b)  The successful bidder for a [Section 271.059, Local
  Government Code, relating to performance and payment bonds, applies
  to] construction contract [contracts] let by the district must
  execute a good and sufficient payment bond and performance bond.  
  The bonds must each be:
               (1)  in the full amount of the contract price;  and
               (2)  executed, in accordance with Chapter 2253,
  Government Code, with a surety company authorized to do business in
  this state.
         SECTION 26.  Section 1064.251, Special District Local Laws
  Code, is amended to read as follows:
         Sec. 1064.251.  GENERAL OBLIGATION BONDS[, CERTIFICATES OF
  OBLIGATION,] AND OTHER FINANCING.  The board may issue and sell
  general obligation bonds[, certificates of obligation,] or any
  other type of financing authorized by the laws of this state[,
  including that type of financing authorized by Chapter 271, Local
  Government Code,] in the name and on the faith and credit of the
  district for any purpose relating to:
               (1)  the purchase, construction, acquisition, repair,
  or renovation of buildings or improvements; and
               (2)  equipping buildings or improvements for hospital
  purposes.
         SECTION 27.  Section 1103.207, Special District Local Laws
  Code, is amended to read as follows:
         Sec. 1103.207.  ANTICIPATION NOTES [AND CERTIFICATES OF
  OBLIGATION].  The board may issue[:
               [(1)]  anticipation notes under Chapter 1431,
  Government Code[; and
               [(2)  certificates of obligation under Subchapter C,
  Chapter 271, Local Government Code].
         SECTION 28.  Section 3503.101(b), Special District Local
  Laws Code, is amended to read as follows:
         (b)  The authority may exercise any power or duty necessary
  or appropriate to carry out a project described by Section
  3503.003(a)(3) and the purposes of this chapter, including the
  power to:
               (1)  sue and be sued, and plead and be impleaded, in its
  own name;
               (2)  adopt an official seal;
               (3)  adopt, enforce, and amend rules for the conduct of
  its affairs;
               (4)  acquire, hold, own, pledge, and dispose of its
  revenue, income, receipts, and money from any source;
               (5)  select its depository;
               (6)  acquire, own, rent, lease, accept, hold, or
  dispose of any property, or any interest in property, including
  rights or easements, in performing its duties and exercising its
  powers under this chapter, by purchase, exchange, gift, assignment,
  sale, lease, or other method;
               (7)  hold, manage, operate, or improve the property;
               (8)  sell, assign, lease, encumber, mortgage, or
  otherwise dispose of property, or any interest in property, and
  relinquish a property right, title, claim, lien, interest,
  easement, or demand, however acquired;
               (9)  perform an activity authorized by Subdivision (8)
  by public or private sale, with or without public bidding,
  notwithstanding any other law;
               (10)  lease or rent any land and building, structure,
  or facility from or to any person to carry out a chapter purpose;
               (11)  request and accept an appropriation, grant,
  allocation, subsidy, guarantee, aid, service, labor, material, or
  gift, from the federal government, the state, a public agency or
  political subdivision, or any other source;
               (12)  operate and maintain an office and appoint and
  determine the duties, tenure, qualifications, and compensation of
  officers, employees, agents, professional advisors and counselors,
  including financial consultants, accountants, attorneys,
  architects, engineers, appraisers, and financing experts, as
  considered necessary or advisable by the board;
               (13)  borrow money and issue bonds, payable solely from
  all or a portion of any authority revenue, by resolution or order of
  the board and without the necessity of an election;
               (14)  set and collect rents, rates, fees, and charges
  regarding the property and any services provided by the authority;
               (15)  exercise the powers Chapters 373 and 380, Local
  Government Code, grant to a municipality for the development of
  housing and expansion of economic development and commercial
  activity;
               (16)  exercise the powers Chapter 49, Water Code,
  grants to a general-law district;
               (17)  exercise the powers Chapter 54, Water Code,
  grants to a municipal utility district;
               (18)  exercise the powers Chapter 552, Transportation
  Code, grants to a road utility district;
               (19)  [exercise the powers Subchapter C, Chapter 271,
  Local Government Code, grants to a municipality or county;
               [(20)]  exercise the powers Chapter 552, Local
  Government Code, grants to a municipality for the provision of
  municipal utilities;
               (20) [(21)]  contract and be contracted with, in the
  authority's own name, another person in the performance of the
  authority's powers or duties to carry out a project described by
  Section 3503.003(a)(3), or to accomplish the purposes of this
  chapter for a period of years, on the terms, and by competitive
  bidding or by negotiated contract, all as the board considers
  appropriate, desirable, and in the best interests of the authority
  and the accomplishment of chapter purposes;
               (21) [(22)]  acquire, hold, own, sell, assign, lease,
  encumber, mortgage, or otherwise dispose of any real, personal, or
  mixed property located outside the perimeter of the property
  described by Section 3503.004 if the other property enhances or
  facilitates the development, redevelopment, maintenance, or
  expansion of new and existing businesses, industry, or commercial
  activity on the property;
               (22) [(23)]  exercise the powers Chapter 22,
  Transportation Code, grants to a municipality or county;
               (23) [(24)]  exercise the powers Chapter 379B, Local
  Government Code, grants to a defense base development authority;
               (24) [(25)]  exercise the powers of a municipality
  under Chapters 211 and 212, Local Government Code, in the territory
  of the authority, including an area of the authority that is in the
  boundaries of a municipality's limited purpose jurisdiction and
  extraterritorial jurisdiction.  On annexation of an area of the
  authority for full purposes by a municipality, the authority's
  power to regulate the area under Chapters 211 and 212 expires.  The
  authority regains the power in an area if the municipality
  disannexes the area;
               (25) [(26)]  fund and carry out a project the board
  determines will promote or support an active military base located
  in the same county as the authority to prevent closure or
  realignment of the base and attract new military missions to the
  base, including a project to create jobs, retain jobs, grant or loan
  money to a federal entity, make improvements to infrastructure,
  buildings, or land, or acquire land; and
               (26) [(27)]  for a fee, provide services or operate
  facilities inside or outside the boundaries of the authority and
  this state to promote, enhance, develop, or assist a person in the
  creation of a new business, industry, or commercial activity in the
  boundaries of the authority.
         SECTION 29.  Sections 26.012(7) and (18-b), Tax Code, are
  amended to read as follows:
               (7)  "Debt" means:
                     (A)  a bond, warrant, [certificate of
  obligation,] or other evidence of indebtedness owed by a taxing
  unit that:
                           (i)  is payable from property taxes in
  installments over a period of more than one year, not budgeted for
  payment from maintenance and operations funds, and secured by a
  pledge of property taxes; and
                           (ii)  meets one of the following
  requirements:
                                 (a)  has been approved at an election;
                                 (b)  includes self-supporting debt;
                                 (c)  evidences a loan under a state or
  federal financial assistance program;
                                 (d)  is issued for designated
  infrastructure;
                                 (e)  is a refunding bond;
                                 (f)  is issued in response to an
  emergency under Section 1431.015, Government Code;
                                 (g)  is issued for renovating,
  improving, or equipping existing buildings or facilities;
                                 (h)  is issued for vehicles or
  equipment; or
                                 (i)  is issued for a project under
  Chapter 311, Tax Code, or Chapter 222, Transportation Code, that is
  located in a reinvestment zone created under one of those chapters;
  or
                     (B)  a payment made under contract to secure
  indebtedness of a similar nature issued by another political
  subdivision on behalf of the taxing unit.
               (18-b)  "Self-supporting debt" means the portion of a
  bond, warrant, [certificate of obligation,] or other evidence of
  indebtedness described by Subdivision (7)(A)(i) designated by the
  governing body of a political subdivision as being repaid from a
  source other than property taxes.
         SECTION 30.  Section 172.001(2), Transportation Code, is
  amended to read as follows:
               (2)  "Bonds" means:
                     (A)  bonds;
                     (B)  notes, including bond anticipation notes,
  revenue anticipation notes, and grant anticipation notes;
                     (C)  warrants;
                     (D)  [certificates of obligation;
                     [(E)]  interest-bearing contracts;
                     (E) [(F)]  interest-bearing leases of property;
                     (F) [(G)]  equipment trust certificates;
                     (G) [(H)]  commercial paper; and
                     (H) [(I)]  any obligation issued to refund any
  type of bond.
         SECTION 31.  Section 311.054(c), Transportation Code, is
  amended to read as follows:
         (c)  A general-law municipality may expend municipal funds
  and may issue [certificates of obligation or] bonds to pay for
  expenses associated with a railroad quiet zone under Subsection
  (b), including expenses related to feasibility, engineering, and
  traffic studies and improvements related to the railroad quiet
  zone.
         SECTION 32.  Section 365.039, Transportation Code, is
  amended to read as follows:
         Sec. 365.039.  COUNTY BONDS [AND CERTIFICATES OF
  OBLIGATION].  A county may authorize, issue, and sell its bonds [or
  certificates of obligation] and use the proceeds to:
               (1)  call, redeem, and retire a district's outstanding
  bonds;
               (2)  remove the pledge of the revenue from a district's
  toll road project or other road, street, or highway project and the
  district's covenants [convenants] in connection with the bonds and
  toll road project; and
               (3)  make the toll road project available for use of the
  public free from tolls and charges.
         SECTION 33.  The following laws are repealed:
               (1)  Section 1371.056(f), Government Code;
               (2)  Section 2259.036, Government Code;
               (3)  Section 281.106, Health and Safety Code;
               (4)  Subchapter C, Chapter 271, Local Government Code;
  and
               (5)  Section 1063.210, Special District Local Laws
  Code.
         SECTION 34.  The repeal of authority to issue certificates
  of obligation under Subchapter C, Chapter 271, Local Government
  Code, by this Act, does not affect the validity of certificates of
  obligation issued under that authority before the effective date of
  this Act. Certificates of obligation issued before the effective
  date of this Act are governed by the law in effect when the
  certificates of obligation were issued, and that law is continued
  in effect for purposes of the validity of those certificates.
         SECTION 35.  This Act takes effect September 1, 2023.