Bill Text: TX HB114 | 2015-2016 | 84th Legislature | Enrolled
Bill Title: Relating to the issuance of certain capital appreciation bonds by political subdivisions.
Spectrum: Strong Partisan Bill (Republican 19-1)
Status: (Passed) 2015-06-19 - Effective on 9/1/15 [HB114 Detail]
Download: Texas-2015-HB114-Enrolled.html
H.B. No. 114 |
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relating to the issuance of certain capital appreciation bonds by | ||
political subdivisions. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Subchapter B, Chapter 1201, Government Code, is | ||
amended by adding Section 1201.0245 to read as follows: | ||
Sec. 1201.0245. CAPITAL APPRECIATION BONDS BY POLITICAL | ||
SUBDIVISIONS. (a) In this section, "capital appreciation bond" | ||
means a bond that accrues and compounds interest from its date of | ||
delivery, the interest on which by its terms is payable only upon | ||
maturity or prior redemption. | ||
(b) A county, municipality, special district, school | ||
district, junior college district, or other political subdivision | ||
may not issue capital appreciation bonds that are secured by ad | ||
valorem taxes unless: | ||
(1) the bonds have a scheduled maturity date that is | ||
not later than 20 years after the date of issuance; | ||
(2) the governing body of the political subdivision | ||
has received a written estimate of the cost of the issuance, | ||
including: | ||
(A) the amount of principal and interest to be | ||
paid until maturity; | ||
(B) the amount of fees to be paid to outside | ||
vendors, including vendors who sell products to be financed by the | ||
bond issuance; | ||
(C) the amount of fees to be paid to each | ||
financing team member; and | ||
(D) the projected tax impact of the bonds and the | ||
assumptions on which the calculation of the projected tax impact is | ||
based; | ||
(3) the governing body of the political subdivision | ||
has determined in writing whether any personal or financial | ||
relationship exists between the members of the governing body and | ||
any financial advisor, bond counsel, bond underwriter, or other | ||
professional associated with the bond issuance; and | ||
(4) the governing body of the political subdivision | ||
posts prominently on the political subdivision's Internet website | ||
and enters in the minutes of the governing body: | ||
(A) the total amount of the proposed bonds; | ||
(B) the length of maturity of the proposed bonds; | ||
(C) the projects to be financed with bond | ||
proceeds; | ||
(D) the intended use of bond proceeds not spent | ||
after completion of the projects identified in Paragraph (C); | ||
(E) the total amount of the political | ||
subdivision's outstanding bonded indebtedness at the time of the | ||
election on the bonds, including the amount of principal and | ||
interest to be paid on existing bond indebtedness until maturity; | ||
(F) the total amount of the political | ||
subdivision's outstanding bonded indebtedness, including the | ||
amount of principal and interest to be paid until maturity; and | ||
(G) the information received under Subdivision | ||
(2) and determined under Subdivision (3). | ||
(c) The governing body of a political subdivision that makes | ||
a determination that a personal or financial relationship described | ||
by Subsection (b)(3) exists shall submit the determination to the | ||
Texas Ethics Commission. | ||
(d) The governing body of a political subdivision shall | ||
regularly update the debt information posted on the political | ||
subdivision's Internet website under Subsection (b)(4)(F) to | ||
ensure that the information is current and accurate. | ||
(e) Capital appreciation bond proceeds may not be used to | ||
purchase the following items, unless an item has an expected useful | ||
life, determined based on the depreciable life of the asset under | ||
the Internal Revenue Code of 1986, that exceeds the bond's maturity | ||
date: | ||
(1) items more regularly considered maintenance | ||
items, including replacement HVAC units, upgraded plumbing, or | ||
similar items; or | ||
(2) transportation-related items, including buses. | ||
(f) Capital appreciation bond proceeds unspent after | ||
completion of the project identified as the proceeds' intended use | ||
may be used only for a use identified on the political subdivision's | ||
website under Subsection (b)(4)(D), unless another use is approved | ||
by the voters of the political subdivision at an election held for | ||
that purpose. | ||
(g) The total amount of capital appreciation bonds may not | ||
exceed 25 percent of the political subdivision's total outstanding | ||
bonded indebtedness at the time of the issuance, including the | ||
amount of principal and interest to be paid on the outstanding bonds | ||
until maturity. | ||
(h) Except as provided by Subsection (i), a county, | ||
municipality, special district, school district, junior college | ||
district, or other political subdivision may not extend the | ||
maturity date of an issued capital appreciation bond, including | ||
through the issuance of refunding bonds that extend the maturity | ||
date. | ||
(i) A political subdivision may extend the maturity date of | ||
an issued capital appreciation bond only if: | ||
(1) the extension of the maturity date will decrease | ||
the total amount of projected principal and interest to maturity; | ||
or | ||
(2) the political subdivision is a school district | ||
and: | ||
(A) the maximum legally allowable tax rate for | ||
indebtedness has been adopted; and | ||
(B) the Texas Education Agency certifies in | ||
writing that the solvency of the permanent school fund's bond | ||
guarantee program would be threatened without the extension. | ||
(j) Subsection (b) does not apply to the issuance of: | ||
(1) refunding bonds under Chapter 1207; or | ||
(2) capital appreciation bonds for the purpose of | ||
financing transportation projects. | ||
SECTION 2. The change in law made by this Act does not | ||
affect the validity of capital appreciation bonds issued before the | ||
effective date of this Act. | ||
SECTION 3. This Act takes effect September 1, 2015. | ||
______________________________ | ______________________________ | |
President of the Senate | Speaker of the House | |
I certify that H.B. No. 114 was passed by the House on May 13, | ||
2015, by the following vote: Yeas 143, Nays 0, 2 present, not | ||
voting; and that the House concurred in Senate amendments to H.B. | ||
No. 114 on May 28, 2015, by the following vote: Yeas 138, Nays 2, 3 | ||
present, not voting. | ||
______________________________ | ||
Chief Clerk of the House | ||
I certify that H.B. No. 114 was passed by the Senate, with | ||
amendments, on May 26, 2015, by the following vote: Yeas 31, Nays | ||
0. | ||
______________________________ | ||
Secretary of the Senate | ||
APPROVED: __________________ | ||
Date | ||
__________________ | ||
Governor |