BILL ANALYSIS

Senate Research Center	H.B. 3788
89R9961 SRA-F	By: Spiller; Harless (Parker)
	Local Government
	5/18/2025
	Engrossed

AUTHOR'S / SPONSOR'S STATEMENT OF INTENT

Under current law, municipal hospital authorities that no longer own or operate a hospital have limited flexibility in using their assets for public health initiatives. The bill author has informed the committee that these hospital authorities play a crucial role in providing health care services, but these limitations and a lack of clear statutory authority may cause these entities to struggle to fund or support public health initiatives that could benefit their communities. H.B. 3788 seeks to address this issue by providing for certain municipal hospital authorities to use their assets for public health and general welfare initiatives and to issue revenue bonds for these purposes.

H.B. 3788 amends current law relating to the operations of municipal hospital authorities.

RULEMAKING AUTHORITY

This bill does not expressly grant any additional rulemaking authority to a state officer, institution, or agency.

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Section 262.011(b), Health and Safety Code, as follows:

(b) Authorizes the number of members of the board of directors of a development corporation (directors; board of directors) to be changed by amendment of the ordinance or ordinances creating the hospital authority (authority) created under Chapter 262 (Municipal Hospital Authorities) unless prohibited by a resolution or trust indenture described by Section 262.012 (Appointment of Board; Terms of Office), rather than by the resolution authorizing the issuance of bonds or by the trust indenture securing the bonds. Makes a nonsubstantive change.

SECTION 2. Amends Sections 262.012(a), (b), and (f), Health and Safety Code, as follows:

(a) Requires the governing body or governing bodies to appoint the initial directors of the authority for terms not to exceed two years except as otherwise provided by this section.

(b) Authorizes the board of directors of an authority (board) to prescribe in the resolution authorizing the issuance of revenue bonds or the trust indenture securing the bonds, in an agreement securing notes of any kind issued by the authority, or in another resolution the method of selecting the directors, rather than a majority of the directors, and the term of office of those directors. Prohibits the method of selecting the directors and the term of office of those directors prescribed by the board, except as provided by certain subsections, to require the board to submit nominees for appointment to the board), from being changed except by a subsequent resolution adopted by the board. Requires the governing body or governing bodies to appoint any remaining directors, rather than the remaining directors. Makes nonsubstantive changes.

(f) Provides that certain persons, including an employee of the authority, are not eligible for appointment as a director.

SECTION 3. Amends Section 262.0331, Health and Safety Code, by amending Subsection (a) and adding Subsection (c), as follows:

(a) Authorizes the board, if, after the sale or closing of a hospital under Section 262.033 (Sale of Closing of Hospital), the authority does not own or operate a hospital, to use the authority's available assets to promote public health and general welfare initiatives that the board determines will benefit the residents served by the authority, including owning, operating, or funding certain facilities, including an administrative office or fitness or physical health center or education facility. Makes nonsubstantive changes.

(c) Authorizes the authority to issue revenue bonds and other notes in accordance with this chapter to undertake any initiative authorized by Section 262.0331 (Expenditure of Funds for Public Health Initiatives After Sale or Closing of Hospital).

SECTION 4. Amends Section 262.039(a), Health and Safety Code, by providing that Section 262.039 (Investment of Authority Funds) applies only to an authority that meets certain criteria, including that it is located in a county with a population of 2.4 million or more or a municipality with a population of less than 30,000, rather than less than 15,000.

SECTION 5. Amends Section 262.041, Health and Safety Code, as follows:

Sec. 262.041. REVENUE BONDS. (a) Authorizes the authority to issue revenue bonds to provide funds for any of the authority's purposes, including the purposes described by Sections 262.0331 and 262.034 (Facilities and Services for Elderly and Disabled), regardless of whether the authority owns or operates a hospital.

(b) Requires that revenue bonds be payable from, and secured by a pledge of, revenues from the operation of one or more hospitals and any other revenues from the ownership or investment of hospital property, rather than owning hospital property, or any initiative described by Section 262.0331 or any facility or service described by Section 262.034.

SECTION 6. Repealers: Sections 262.034(d) (relating to providing that certain facilities or services are considered to be a hospital project under Chapter 223) and (e) (relating to providing that this section applies only to an authority that owns or operates a hospital licensed under Chapter 241 (Hospitals) and that is located in certain areas), Health and Safety Code.

Repealers: Sections 262.034(f) (relating to providing that this section does not authorize the authority to issue revenue bonds or other notes to construct, acquire, own, enlarge, improve, furnish, or equip certain facilities or services if a private provider of the facility or service is available) and (g) (relating to prohibiting a certain authority from owning or operating more than 50 licensed nursing home beds under this section), Health and Safety Code.

SECTION 7. Effective date: September 1, 2025.