BILL ANALYSIS

C.S.H.B. 4820

By: Lopez, Janie

Pensions, Investments & Financial Services

Committee Report (Substituted)

BACKGROUND AND PURPOSE

The bill author has informed the committee that several water districts whose territory is located wholly within the Texas Windstorm Insurance Association's first tier coastal counties are undertaking major infrastructure projects to diversify their water sources, including the construction of seawater desalination plants, and that the significant financial investments required for desalination infrastructure also carry a high degree of risk, particularly because of the region's vulnerability to hurricanes and other natural disasters. The bill author has further informed the committee that these districts may need immediate funding during disasters to repair or reinforce infrastructure and to maintain water service delivery and that current legal and financial mechanisms may delay timely access to emergency funding. C.S.H.B. 4820 seeks to improve the financial flexibility of eligible water districts to quickly raise funds for response and recovery efforts due to declared disaster events by expanding the ability of qualifying districts to issue specific types of financial instruments, such as long-term notes and commercial paper notes.

CRIMINAL JUSTICE IMPACT

It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.

ANALYSIS

C.S.H.B. 4820 amends the Water Code to except from the prohibition against certain water districts executing a revenue note for a term longer than three years, unless the Texas Commission on Environmental Quality (TCEQ) issues an order approving the note, districts whose territory is located wholly within first tier coastal counties, as defined by the Texas Windstorm Insurance Association Act, subject to the bill's requirements. With respect to the issuance of revenue notes by such a district, the bill does the following:

· authorizes the district to issue notes during or prior to a disaster pursuant to the terms of a note authorization provided that a certified copy of the note authorization and all proceedings related to the issuance of notes have been sent to the attorney general for approval in accordance with applicable state law;

· authorizes the district, if a disaster declaration is made, to issue notes pursuant to provisions relating to revenue notes beginning on the date of the disaster declaration and continuing for the duration specified in the note authorization or until the disaster declaration expires, whichever is later;

· requires any issued notes to be incontestable in any court or other forum, for any reason, and to be valid and binding obligations in accordance with their terms for all purposes; and

· requires the term note, for purposes of provisions relating to revenue notes, to include commercial paper notes if the terms of such notes have a stated maturity of 365 days or fewer from the date of issuance.

The bill defines "disaster declaration" as a declaration of a state of disaster or emergency made by the president of the United States for the state or any portion of the district's territory, or a declaration of a state of disaster is made pursuant to the Texas Disaster Act of 1975 for the entire state or any portion of the district's territory, and any amendment, modification, or extension of the declaration.

C.S.H.B. 4820 requires a water district that is required to seek TCEQ approval of bonds to have an application for such approval on file with the TCEQ prior to the issuance of tax anticipation notes. The bill authorizes a water district whose territory is located wholly within first tier coastal counties, if a disaster declaration is made, to issue bond anticipation notes or tax anticipation notes beginning on the date of the disaster declaration and continuing for the duration of the disaster declaration.

C.S.H.B. 4820 excepts from provisions relating to the authority of the TCEQ over the issuance of district bonds a water district whose territory is located wholly within first tier coastal counties under the following circumstances:

· a declaration of a state of disaster or emergency, and any amendment, modification, or extension of said declaration, made by the president of the United States for the state or any portion of the district's territory, is in effect; or

· a declaration of a state of disaster, and any amendment, modification, or extension of said declaration, made pursuant to provisions relating to the Texas Disaster Act of 1975 for the entire state or any portion of the district's territory, is in effect.

EFFECTIVE DATE

On passage, or, if the bill does not receive the necessary vote, September 1, 2025.

COMPARISON OF INTRODUCED AND SUBSTITUTE

While C.S.H.B. 4820 may differ from the introduced in minor or nonsubstantive ways, the following summarizes the substantial differences between the introduced and committee substitute versions of the bill.

Whereas the introduced made the following bill provisions applicable to a district entirely within a county bordering both the Gulf of America and an international border subject to the requirements of certain bill provisions regarding the issuance of revenue notes during or prior to a disaster, the substitute makes the following bill provisions applicable to districts whose territory is located wholly within first tier coastal counties subject to such requirements:

· an exception from the prohibition against certain water districts executing a revenue note for a term longer than three years;

· authorizations for the applicable district, subject to certain conditions, to issue notes during or prior to a disaster pursuant to the terms of a note authorization and to issue bond anticipation notes or tax anticipation notes beginning on the date of the disaster declaration and continuing for the duration of the disaster declaration; and

· an exception from provisions relating to the TCEQ's authority over the issuance of district bonds.