By: Flynn, Dale, Shaheen, Parker,	H.B. No. 114
	Capriglione, et al.

	A BILL TO BE ENTITLED
	AN ACT
	relati
	ng 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 25 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, 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.