Bill Text: TX HB114 | 2015-2016 | 84th Legislature | Introduced
NOTE: There are more recent revisions of this legislation. Read Latest Draft
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-Introduced.html
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-Introduced.html
84R1295 JTS-F | ||
By: Flynn | 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 that 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 bonds to be voted on; | ||
(B) the length of maturity of the bonds; | ||
(C) the projects proposed to be financed with | ||
bond proceeds; | ||
(D) the total amount of the political | ||
subdivision's outstanding bonded indebtedness at the time of the | ||
election, including the amount of principal and interest to be paid | ||
until maturity; | ||
(E) the total amount of the political | ||
subdivision's outstanding bonded indebtedness, updated quarterly, | ||
including the amount of principal and interest to be paid until | ||
maturity; and | ||
(F) the information received under Subdivision | ||
(2) and determined under Subdivision (3). | ||
(c) 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. | ||
(d) Except as provided by Subsection (e), 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. | ||
(e) A school district may extend the maturity date of an | ||
issued capital appreciation bond only if: | ||
(1) the maximum legally allowable tax rate for | ||
indebtedness has been adopted; and | ||
(2) the attorney general certifies in writing that the | ||
solvency of the permanent school fund's bond guarantee program | ||
would be threatened without the extension. | ||
(f) 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. |