Bill Text: TX HB3002 | 2023-2024 | 88th Legislature | Introduced

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Bill Title: Relating to the authority of certain political subdivisions to issue certificates of obligation.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced - Dead) 2023-04-05 - Withdrawn from schedule [HB3002 Detail]

Download: Texas-2023-HB3002-Introduced.html

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88R9983 KBB-F
By: Goldman H.B. No. 3002

A BILL TO BE ENTITLED
AN ACT
relating to the authority of certain political subdivisions to
issue certificates of obligation.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 791.023, Government Code, is amended to
read as follows:
Sec. 791.023. CONTRACTS FOR STATE CRIMINAL JUSTICE
FACILITIES. The state or an agency of the state may contract with
one or more entities to finance, construct, operate, maintain, or
manage a criminal justice facility provided, in the exercise of the
governmental power, for the benefit of the state in accordance with
this chapter and:
(1) Subchapter A, Chapter 494, Government Code; or
(2) Subchapter D, Chapter 361, Local Government Code[;
or
[(3) the Certificate of Obligation Act of 1971
(Subchapter C, Chapter 271, Local Government Code)].
SECTION 2. Section 791.034(b), Government Code, is amended
to read as follows:
(b) The municipality may expend municipal funds and may
issue [certificates of obligation or] bonds to pay for expenses
associated with a relief highway route under Subsection (a).
SECTION 3. Section 1202.001(3), Government Code, is amended
to read as follows:
(3) "Public security" means an instrument, including a
bond, note, [certificate of obligation,] certificate of
participation or other instrument evidencing a proportionate
interest in payments due to be paid by an issuer, or other type of
obligation that:
(A) is issued or incurred by an issuer under the
issuer's borrowing power, without regard to whether it is subject
to annual appropriation; and
(B) is represented by an instrument issued in
bearer or registered form or is not represented by an instrument but
the transfer of which is registered on books maintained for that
purpose by or on behalf of the issuer.
SECTION 4. Section 1202.007(a), Government Code, is amended
to read as follows:
(a) The following are exempt from the approval and
registration requirements of this chapter:
(1) a public security that is:
(A) not subject to mandatory renewal or renewal
at the option of any person, including the issuer, a holder, or a
bearer; and
(B) payable only out of:
(i) current revenues or taxes collected in
the year the public security is issued; or
(ii) the proceeds of other public
securities;
(2) a certificate in evidence of benefit assessments;
(3) [a certificate of obligation, including a claim or
account that represents an undivided interest in a certificate of
obligation, that under Subchapter C, Chapter 271, Local Government
Code, an issuer is authorized to deliver to a contractor;
[(4)] a time warrant issued under Chapter 252 or 262,
Local Government Code;
(4) [(5)] a public security authorized by Chapter
1371;
(5) [(6)] a lease, lease-purchase, or installment
sale obligation, except as provided by other law;
(6) [(7)] a public security that by rule the attorney
general exempts because it is not practical to require approval
before the public security's issuance; and
(7) [(8)] a nonnegotiable note issued under Section
45.108, Education Code, in a principal amount that does not exceed
$1 million.
SECTION 5. Section 1203.001(3), Government Code, is amended
to read as follows:
(3) "Public security" means a bond, note, [certificate
of obligation,] certificate of indebtedness, or other obligation
for the payment of money lawfully issued by an issuer.
SECTION 6. Section 1232.003(8), Government Code, is amended
to read as follows:
(8) "Obligation" means a bond, note, certificate of
participation, [certificate of obligation,] or interest in a
contract.
SECTION 7. Section 1303.001, Government Code, is amended to
read as follows:
Sec. 1303.001. USE OF BOND PROCEEDS FOR OWNER-CONTROLLED
INSURANCE PROGRAM. A county may use the proceeds of bonds [or
certificates of obligation] issued to pay for a county construction
project to pay for an owner-controlled insurance program under
which the county establishes and administers a consolidated
insurance program for the project if the county's order authorizing
the issuance of the bonds [or other certificates of obligation]
authorizes the establishment of the program.
SECTION 8. Section 1371.059(b), Government Code, is amended
to read as follows:
(b) Notwithstanding Subsection (a) and Section 1371.003,
and except as provided by this subsection, an obligation authorized
by this chapter is not valid, binding, or enforceable unless the
obligation is approved by the attorney general and registered by
the comptroller in accordance with Chapter 1202. The attorney
general's approval and registration by the comptroller is not
required for an obligation:
(1) to which Chapter 1202 does not apply or that is
exempt from approval and registration as provided by Section
1202.007(a)(1), (2), (3), (4), or (6)[, or (7)]; or
(2) that matures within one year after the issuer
receives payment for the obligation, regardless of whether the
obligation is evidenced by an instrument with a nominal term of
longer than one year.
SECTION 9. Section 1431.012(a), Government Code, is amended
to read as follows:
(a) Except as provided by Subsection (b), a county must
comply with the competitive bidding requirements of Subchapter C,
Chapter 262 [271], Local Government Code, in connection with a
contract to be paid from the proceeds of anticipation notes issued
for a purpose described by Section 1431.004(a)(1)(A).
SECTION 10. Section 1434.051, Government Code, is amended
to read as follows:
Sec. 1434.051. FINANCING OF PERMANENT IMPROVEMENTS BY
COUNTY OR MUNICIPALITY. (a) A county or a municipality may:
(1) issue public securities[, including certificates
of obligation,] to acquire, construct, or improve land, buildings,
or other permanent improvements for use by an institution of higher
education located within a county to which this chapter applies;
and
(2) impose ad valorem taxes to pay the principal of and
interest on those securities and to provide a sinking fund.
(a-1) A municipality that has entered into an agreement
described by Section 1434.001(1) may:
(1) issue public securities[, including certificates
of obligation,] to acquire, construct, or improve land, buildings,
or other permanent improvements for use by an institution of higher
education;
(2) impose ad valorem taxes to pay and secure payment
of the principal of and interest on those securities and to provide
a sinking fund; and
(3) pledge those taxes, any portion of the revenues
received in connection with the agreement, or any combination of
the taxes and revenue to secure payment of any portion of the public
securities issued to acquire, construct, or improve the land,
buildings, or other permanent improvements for use by the
institution of higher education.
(b) The county or municipality shall[:
[(1)] issue any public securities and impose the taxes
in accordance with the applicable provisions of Subtitles A, C, D,
and E[; and
[(2) if the securities are certificates of obligation,
issue any certificates and impose the taxes in accordance with
Subchapter C, Chapter 271, Local Government Code].
SECTION 11. Section 1434.053, Government Code, is amended
to read as follows:
Sec. 1434.053. LIMIT ON TAXES. The only limits on the
amount of taxes that may be imposed to pay the principal of and
interest on public securities[, including certificates of
obligation,] issued under this chapter are those provided by the
Texas Constitution.
SECTION 12. Section 1502.058(a), Government Code, is
amended to read as follows:
(a) Except as provided by Subsection (b) or (c) of this
section or[,] by Section 1502.059, [or by Section 271.052, Local
Government Code,] a municipality may not use the revenue of a
utility system, park, or swimming pool to pay any other debt,
expense, or obligation of the municipality until the debt secured
by the revenue is finally paid.
SECTION 13. The heading to Subchapter F, Chapter 281,
Health and Safety Code, is amended to read as follows:
SUBCHAPTER F. DISTRICT BONDS [AND CERTIFICATES OF OBLIGATION]
SECTION 14. Sections 281.121(a) and (c), Health and Safety
Code, are amended to read as follows:
(a) When the district issues bonds [or certificates of
obligation] payable from and secured by taxes under this chapter,
the commissioners court shall impose a tax for the benefit of the
district on all property subject to district taxation. The
commissioners court may impose the tax for the entire year in which
the district is created in order to finance initial district
operation and to pay bonds assumed by the district.
(c) The proceeds of the tax may be used:
(1) to pay the interest on and create a sinking fund
for bonds that may be assumed or issued by the district for hospital
purposes in accordance with this chapter;
(2) to provide for the operation and maintenance of
the hospital or hospital system; and
(3) if requested by the board and approved by the
commissioners court, to make further improvements and additions to
the hospital system, including acquiring necessary sites by
purchase, lease, or condemnation[; and
[(4) to pay for certificates of obligation issued
under Section 281.106 that are payable from and secured by taxes].
SECTION 15. Section 361.0855(a)(1), Health and Safety Code,
is amended to read as follows:
(1) "Bonds" means financial obligations issued by a
local government, including general obligation bonds and[,]
revenue bonds[, and certificates of obligation].
SECTION 16. Section 262.023(b), Local Government Code, is
amended to read as follows:
(b) The requirements established by Subsection (a) apply to
contracts for which payment will be made from current funds or bond
funds or through anticipation notes authorized by Chapter 1431,
Government Code, or time warrants. [Contracts for which payments
will be made through certificates of obligation are governed by The
Certificate of Obligation Act of 1971 (Subchapter C, Chapter 271).]
SECTION 17. Section 271.091(4), Local Government Code, is
amended to read as follows:
(4) "Obligation" means bonds, notes, [certificates of
obligation,] and other obligations authorized to be issued by the
local government.
SECTION 18. Section 303.003(12), Local Government Code, is
amended to read as follows:
(12) "Sponsor obligation" means an evidence of
indebtedness or obligation that a sponsor issues or incurs to
finance, refinance, or provide a public facility, including bonds,
notes, warrants, [certificates of obligation,] leases, and
contracts authorized by Section 303.041 and Subchapter C.
SECTION 19. Sections 361.003(b) and (c), Local Government
Code, are amended to read as follows:
(b) The municipality and county may specify in the contract
that the money required to meet the costs of providing the center
shall be derived:
(1) from current income and funds on hand that are
budgeted by the municipality and county for that purpose;
(2) through the issuance of bonds by either or both of
them under the procedures prescribed for the issuance of general
obligation bonds for other public buildings and purposes; or
(3) [by the issuance by either or both of them of
certificates of obligation under the Certificate of Obligation Act
of 1971 (Subchapter C, Chapter 271); or
[(4)] through a combination of those methods.
(c) Instead of or in combination with the use of taxing
power in the payment of bonds [or certificates of obligation]
issued under Subsection (b), those bonds [or certificates] may be
payable from and secured by income derived from the facilities of
the criminal justice center, including income from leases and from
the proceeds of parking or other fees.
SECTION 20. Section 361.051(5), Local Government Code, is
amended to read as follows:
(5) "Obligations" means:
(A) [certificates of obligation of an entity
issued pursuant to this subchapter in the manner prescribed by the
Certificate of Obligation Act of 1971 (Subchapter C, Chapter 271);
[(B)] certificates of participation representing
an undivided interest in a lease obligation;
(B) [(C)] revenue bonds of an entity issued
pursuant to this subchapter; or
(C) [(D)] contractual obligations incurred by an
entity under a lease agreement, lease-purchase agreement, purchase
on an installment contract, or other agreement providing for the
lease, lease-purchase, installment purchase, or other acquisition
of title to an eligible project.
SECTION 21. Section 361.052(b), Local Government Code, is
amended to read as follows:
(b) Money to be paid pursuant to a lease obligation and
revenues derived by an entity from the operation of an eligible
project constitute revenues to an entity that may be pledged to
secure or pay any obligations, and the entity's obligations may be
made payable from and secured by, in whole or in part, those
revenues. An entity may apply the provisions of Chapter 1371,
Government Code, Section [271.052 or] 361.053, or any combination
of those laws to the issuance of obligations and the execution of
credit agreements to satisfy the purposes of this subchapter,
except that an entity's obligations may be refunded by the issuance
of public securities, as defined by Section 1201.002, Government
Code, that are payable from a pledge of ad valorem tax receipts only
if the issuance of the public securities is approved by a majority
of votes cast at an election conducted in accordance with the bond
election procedures established by Chapter 1251, Government Code.
SECTION 22. Section 373.005(d), Local Government Code, is
amended to read as follows:
(d) A municipality may issue notes or other obligations
guaranteed by the secretary of housing and urban development under
Section 108, Housing and Community Development Act of 1974 (42
U.S.C. Section 5308), as amended, for the purpose of providing
financing for those activities described in Section 108, Housing
and Community Development Act (42 U.S.C. Section 5308), as amended,
in furtherance of an approved community development program. [The
Section 108 guaranteed notes additionally may be secured by and
made payable from the same sources as obligations issued under
Subchapter C, Chapter 271, Local Government Code, subject to the
notice provisions set forth therein.] The Section 108 guaranteed
notes or other obligations may be issued in such form,
denominations, manner, terms, and conditions, bear interest at such
rates, be interim or permanent notes or obligations, be subject to
transfer, exchange, change, conversion, or replacement, and be sold
in such manner, at such price, and under such terms, all as provided
in the ordinance or resolution authorizing the issuance of such
Section 108 guaranteed notes or obligations.
SECTION 23. Section 183.006(a), Natural Resources Code, is
amended to read as follows:
(a) In addition to other methods of financing, including the
use of the county's general fund, a county may finance the
acquisition of a conservation easement under this chapter in the
same manner as permitted for that county under[:
[(1)] Section 331.004, Local Government Code, for the
acquisition or improvement of land, buildings, or historically
significant objects for park purposes or for historic or
prehistoric preservation purposes[; or
[(2) Section 271.045, Local Government Code, for land
and rights-of-way].
SECTION 24. Section 1063.206(a), Special District Local
Laws Code, is amended to read as follows:
(a) The district may issue revenue bonds [or certificates of
obligation] or may incur or assume any other debt only if authorized
by a majority of the district voters voting in an election held for
that purpose. This subsection does not apply to refunding bonds or
other debt incurred solely to refinance an outstanding debt.
SECTION 25. Section 1064.110(b), Special District Local
Laws Code, is amended to read as follows:
(b) The successful bidder for a [Section 271.059, Local
Government Code, relating to performance and payment bonds, applies
to] construction contract [contracts] let by the district must
execute a good and sufficient payment bond and performance bond.
The bonds must each be:
(1) in the full amount of the contract price; and
(2) executed, in accordance with Chapter 2253,
Government Code, with a surety company authorized to do business in
this state.
SECTION 26. Section 1064.251, Special District Local Laws
Code, is amended to read as follows:
Sec. 1064.251. GENERAL OBLIGATION BONDS[, CERTIFICATES OF
OBLIGATION,] AND OTHER FINANCING. The board may issue and sell
general obligation bonds[, certificates of obligation,] or any
other type of financing authorized by the laws of this state[,
including that type of financing authorized by Chapter 271, Local
Government Code,] in the name and on the faith and credit of the
district for any purpose relating to:
(1) the purchase, construction, acquisition, repair,
or renovation of buildings or improvements; and
(2) equipping buildings or improvements for hospital
purposes.
SECTION 27. Section 1103.207, Special District Local Laws
Code, is amended to read as follows:
Sec. 1103.207. ANTICIPATION NOTES [AND CERTIFICATES OF
OBLIGATION]. The board may issue[:
[(1)] anticipation notes under Chapter 1431,
Government Code[; and
[(2) certificates of obligation under Subchapter C,
Chapter 271, Local Government Code].
SECTION 28. Section 3503.101(b), Special District Local
Laws Code, is amended to read as follows:
(b) The authority may exercise any power or duty necessary
or appropriate to carry out a project described by Section
3503.003(a)(3) and the purposes of this chapter, including the
power to:
(1) sue and be sued, and plead and be impleaded, in its
own name;
(2) adopt an official seal;
(3) adopt, enforce, and amend rules for the conduct of
its affairs;
(4) acquire, hold, own, pledge, and dispose of its
revenue, income, receipts, and money from any source;
(5) select its depository;
(6) acquire, own, rent, lease, accept, hold, or
dispose of any property, or any interest in property, including
rights or easements, in performing its duties and exercising its
powers under this chapter, by purchase, exchange, gift, assignment,
sale, lease, or other method;
(7) hold, manage, operate, or improve the property;
(8) sell, assign, lease, encumber, mortgage, or
otherwise dispose of property, or any interest in property, and
relinquish a property right, title, claim, lien, interest,
easement, or demand, however acquired;
(9) perform an activity authorized by Subdivision (8)
by public or private sale, with or without public bidding,
notwithstanding any other law;
(10) lease or rent any land and building, structure,
or facility from or to any person to carry out a chapter purpose;
(11) request and accept an appropriation, grant,
allocation, subsidy, guarantee, aid, service, labor, material, or
gift, from the federal government, the state, a public agency or
political subdivision, or any other source;
(12) operate and maintain an office and appoint and
determine the duties, tenure, qualifications, and compensation of
officers, employees, agents, professional advisors and counselors,
including financial consultants, accountants, attorneys,
architects, engineers, appraisers, and financing experts, as
considered necessary or advisable by the board;
(13) borrow money and issue bonds, payable solely from
all or a portion of any authority revenue, by resolution or order of
the board and without the necessity of an election;
(14) set and collect rents, rates, fees, and charges
regarding the property and any services provided by the authority;
(15) exercise the powers Chapters 373 and 380, Local
Government Code, grant to a municipality for the development of
housing and expansion of economic development and commercial
activity;
(16) exercise the powers Chapter 49, Water Code,
grants to a general-law district;
(17) exercise the powers Chapter 54, Water Code,
grants to a municipal utility district;
(18) exercise the powers Chapter 552, Transportation
Code, grants to a road utility district;
(19) [exercise the powers Subchapter C, Chapter 271,
Local Government Code, grants to a municipality or county;
[(20)] exercise the powers Chapter 552, Local
Government Code, grants to a municipality for the provision of
municipal utilities;
(20) [(21)] contract and be contracted with, in the
authority's own name, another person in the performance of the
authority's powers or duties to carry out a project described by
Section 3503.003(a)(3), or to accomplish the purposes of this
chapter for a period of years, on the terms, and by competitive
bidding or by negotiated contract, all as the board considers
appropriate, desirable, and in the best interests of the authority
and the accomplishment of chapter purposes;
(21) [(22)] acquire, hold, own, sell, assign, lease,
encumber, mortgage, or otherwise dispose of any real, personal, or
mixed property located outside the perimeter of the property
described by Section 3503.004 if the other property enhances or
facilitates the development, redevelopment, maintenance, or
expansion of new and existing businesses, industry, or commercial
activity on the property;
(22) [(23)] exercise the powers Chapter 22,
Transportation Code, grants to a municipality or county;
(23) [(24)] exercise the powers Chapter 379B, Local
Government Code, grants to a defense base development authority;
(24) [(25)] exercise the powers of a municipality
under Chapters 211 and 212, Local Government Code, in the territory
of the authority, including an area of the authority that is in the
boundaries of a municipality's limited purpose jurisdiction and
extraterritorial jurisdiction. On annexation of an area of the
authority for full purposes by a municipality, the authority's
power to regulate the area under Chapters 211 and 212 expires. The
authority regains the power in an area if the municipality
disannexes the area;
(25) [(26)] fund and carry out a project the board
determines will promote or support an active military base located
in the same county as the authority to prevent closure or
realignment of the base and attract new military missions to the
base, including a project to create jobs, retain jobs, grant or loan
money to a federal entity, make improvements to infrastructure,
buildings, or land, or acquire land; and
(26) [(27)] for a fee, provide services or operate
facilities inside or outside the boundaries of the authority and
this state to promote, enhance, develop, or assist a person in the
creation of a new business, industry, or commercial activity in the
boundaries of the authority.
SECTION 29. Sections 26.012(7) and (18-b), Tax Code, are
amended to read as follows:
(7) "Debt" means:
(A) a bond, warrant, [certificate of
obligation,] or other evidence of indebtedness owed by a taxing
unit that:
(i) is payable from property taxes in
installments over a period of more than one year, not budgeted for
payment from maintenance and operations funds, and secured by a
pledge of property taxes; and
(ii) meets one of the following
requirements:
(a) has been approved at an election;
(b) includes self-supporting debt;
(c) evidences a loan under a state or
federal financial assistance program;
(d) is issued for designated
infrastructure;
(e) is a refunding bond;
(f) is issued in response to an
emergency under Section 1431.015, Government Code;
(g) is issued for renovating,
improving, or equipping existing buildings or facilities;
(h) is issued for vehicles or
equipment; or
(i) is issued for a project under
Chapter 311, Tax Code, or Chapter 222, Transportation Code, that is
located in a reinvestment zone created under one of those chapters;
or
(B) a payment made under contract to secure
indebtedness of a similar nature issued by another political
subdivision on behalf of the taxing unit.
(18-b) "Self-supporting debt" means the portion of a
bond, warrant, [certificate of obligation,] or other evidence of
indebtedness described by Subdivision (7)(A)(i) designated by the
governing body of a political subdivision as being repaid from a
source other than property taxes.
SECTION 30. Section 172.001(2), Transportation Code, is
amended to read as follows:
(2) "Bonds" means:
(A) bonds;
(B) notes, including bond anticipation notes,
revenue anticipation notes, and grant anticipation notes;
(C) warrants;
(D) [certificates of obligation;
[(E)] interest-bearing contracts;
(E) [(F)] interest-bearing leases of property;
(F) [(G)] equipment trust certificates;
(G) [(H)] commercial paper; and
(H) [(I)] any obligation issued to refund any
type of bond.
SECTION 31. Section 311.054(c), Transportation Code, is
amended to read as follows:
(c) A general-law municipality may expend municipal funds
and may issue [certificates of obligation or] bonds to pay for
expenses associated with a railroad quiet zone under Subsection
(b), including expenses related to feasibility, engineering, and
traffic studies and improvements related to the railroad quiet
zone.
SECTION 32. Section 365.039, Transportation Code, is
amended to read as follows:
Sec. 365.039. COUNTY BONDS [AND CERTIFICATES OF
OBLIGATION]. A county may authorize, issue, and sell its bonds [or
certificates of obligation] and use the proceeds to:
(1) call, redeem, and retire a district's outstanding
bonds;
(2) remove the pledge of the revenue from a district's
toll road project or other road, street, or highway project and the
district's covenants [convenants] in connection with the bonds and
toll road project; and
(3) make the toll road project available for use of the
public free from tolls and charges.
SECTION 33. The following laws are repealed:
(1) Section 1371.056(f), Government Code;
(2) Section 2259.036, Government Code;
(3) Section 281.106, Health and Safety Code;
(4) Subchapter C, Chapter 271, Local Government Code;
and
(5) Section 1063.210, Special District Local Laws
Code.
SECTION 34. The repeal of authority to issue certificates
of obligation under Subchapter C, Chapter 271, Local Government
Code, by this Act, does not affect the validity of certificates of
obligation issued under that authority before the effective date of
this Act. Certificates of obligation issued before the effective
date of this Act are governed by the law in effect when the
certificates of obligation were issued, and that law is continued
in effect for purposes of the validity of those certificates.
SECTION 35. This Act takes effect September 1, 2023.