bill tightening certificates of obligation and anticipation notes

The text as introduced · 1,741 words

89R6 ATP-F

By: Tepper
H.B. No. 1453

A BILL TO BE ENTITLED

AN ACT

relating to the issuance of anticipation notes and certificates of

obligation by certain local governments.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 1431.001(2), Government Code, is amended

to read as follows:

(2) "Eligible countywide district" means a flood

control district [ or a hospital district ] the boundaries of which

are substantially coterminous with the boundaries of a county with

a population of three million or more [ or a hospital district

created in a county with a population of more than 1.2 million that

was not included in the boundaries of a hospital district before

September 1, 2003 ].

SECTION 2. Section 1431.002, Government Code, is amended by

adding Subsection (d) to read as follows:

(d) Except as provided by this subsection, the governing

body of an issuer may not authorize an anticipation note to pay a

contractual obligation to be incurred if a bond proposition to

authorize the issuance of bonds for the same purpose was submitted

to the voters during the preceding five years and failed to be

approved. The governing body of an issuer may authorize an

anticipation note that the governing body is otherwise prohibited

from authorizing under this subsection in a case described by

Section 271.045(a)(1)(B) or (C), Local Government Code.

SECTION 3. Sections 271.043(7) and (7-a), Local Government

Code, are amended to read as follows:

(7) "Issuer" means a municipality or [ , ] county[ , or

hospital district established under Chapter 281, Health and Safety

Code ].

(7-a) "Public work" [ for an issuer that is a

municipality or county:

[ (A) ] means any of the following public

improvements as authorized by law:

(A) [ (i) ] a street, road, highway, bridge,

sidewalk, or parking structure;

(B) [ (ii) ] a landfill;

(C) [ (iii) ] an airport;

(D) [ (iv) ] a utility system, water supply

project, water treatment plant, wastewater treatment plant, or

water or wastewater conveyance facility;

(E) [ (v) ] a wharf or dock; or

(F) [ (vi) ] a flood control and drainage

project[ ;

[ (vii) a public safety facility, including

a police station, fire station, emergency shelter, jail, or

juvenile detention facility;

[ (viii) a judicial facility;

[ (ix) an administrative office building

housing the governmental functions of the municipality or county;

[ (x) an animal shelter;

[ (xi) a library; or

[ (xii) a park or recreation facility that

is generally accessible to the public and is part of the municipal

or county park system;

[ (B) means the rehabilitation, expansion,

reconstruction, or maintenance of an existing stadium, arena, civic

center, convention center, or coliseum that is owned and operated

by the municipality or county or by an entity created to act on

behalf of the municipality or county; and

[ (C) does not include:

[ (i) a facility for which more than 50

percent of the average annual usage is or is intended to be for

professional or semi-professional sports;

[ (ii) a new stadium, arena, civic center,

convention center, or coliseum that is or is intended to be leased

by a single for-profit tenant for more than 180 days in a single

calendar year; or

[ (iii) a hotel ].

SECTION 4. Section 271.045, Local Government Code, is

amended by amending Subsections (a) and (b) and adding Subsections

(f) and (g) to read as follows:

(a) The governing body of an issuer may authorize

certificates only as necessary to pay a contractual obligation :

(1) to be incurred for the construction, renovation,

repair, or improvement of a public work that the governing body

determines is necessary :

(A) to comply with a state or federal law or rule,

but only if the issuer has been officially notified of

noncompliance with the law or rule [ (1) construction of any public

work ];

(B) to mitigate the impact of a public health

emergency in the jurisdiction of the issuer that poses an imminent

danger to the physical health or safety of the residents of the

issuer;

(C) to finance the cleanup, mitigation, or

remediation of a natural disaster in the jurisdiction of the issuer

subject to a state of disaster declared by:

(i) the governor under Section 418.014,

Government Code, in the fiscal year that the certificates are

authorized; or

(ii) the presiding officer of the governing

body of the issuer under Section 418.108, Government Code, in the

fiscal year that the certificates are authorized; or

(D) to comply with a court order [ (2) purchase

of materials, supplies, equipment, machinery, buildings, land, and

rights-of-way for authorized needs and purposes ]; or

(2) for professional services necessary for a public

work described by Subdivision (1) [ (3) payment of contractual

obligations for professional services, including services provided

by tax appraisers, engineers, architects, attorneys, map makers,

auditors, financial advisors, and fiscal agents ].

(b) If necessary because of a change order for a contractual

obligation incurred for the construction, renovation, repair, or

improvement of a public work [ orders ], the governing body of an

issuer may authorize the issuance of certificates [ may be

authorized ] in an amount not to exceed 15 [ 25 ] percent of the [ a ]

contractual obligation [ incurred for the construction of public

works ], but certificates may be delivered only in the amount

necessary to discharge the contractual obligation [ obligations ].

(f) The governing body of an issuer that authorizes the

issuance of a certificate shall enter into a contract for the

construction, renovation, repair, or improvement of the public work

for which the issuance is authorized not later than the 180th day

after the date the governing body authorizes the issuance.

(g) The governing body of an issuer that authorizes a

certificate to pay a contractual obligation under Subsection

(a)(1)(B) shall adopt a resolution describing the conditions and

circumstances of the public health emergency and making a

determination that the emergency exists.

SECTION 5. Section 271.0461, Local Government Code, is

amended to read as follows:

Sec. 271.0461. ADDITIONAL PURPOSE FOR CERTIFICATES:

DEMOLITION OF DANGEROUS STRUCTURES [ OR RESTORATION OF HISTORIC

STRUCTURES ]. Certificates may be issued by any municipality for

the payment of contractual obligations to be incurred in

demolishing dangerous structures [ or restoring historic

structures ] and may be sold for cash, subject to the restrictions

and other conditions of Section 271.050.

SECTION 6. Sections 271.047(c) and (d), Local Government

Code, are amended to read as follows:

(c) A certificate may not mature over a period greater than

30 [ 40 ] years from the date of the certificate and may not bear

interest at a rate greater than that allowed by Chapter 1204,

Government Code.

(d) Except as provided by this subsection, the governing

body of an issuer may not authorize a certificate to pay a

contractual obligation to be incurred if a bond proposition to

authorize the issuance of bonds for the same purpose was submitted

to the voters during the preceding five [ three ] years and failed to

be approved. A governing body may authorize a certificate that the

governing body is otherwise prohibited from authorizing under this

subsection[ :

[ (1) ] in a case described by Section 271.045(a)(1)(B)

or (C) [ Sections 271.056(1)-(3); and

[ (2) to comply with a state or federal law, rule, or

regulation if the political subdivision has been officially

notified of noncompliance with the law, rule, or regulation ].

SECTION 7. Sections 271.049(c) and (d), Local Government

Code, are amended to read as follows:

(c) If before the date tentatively set for the authorization

of the issuance of the certificates or if before the authorization,

the municipal secretary or clerk if the issuer is a municipality,

or the county clerk if the issuer is a county, receives a petition

signed by at least two [ five ] percent of the registered [ qualified ]

voters of the issuer protesting the issuance of the certificates,

the issuer may not authorize the issuance of the certificates

unless the issuance is approved at an election ordered, held, and

conducted in the manner provided for bond elections under Chapter

1251, Government Code.

(d) This section does not apply to certificates issued for

the purposes described by Section 271.045(a)(1)(B) or (C) [ Sections

271.056(1)-(4) ].

SECTION 8. Section 271.0525(c), Local Government Code, is

amended to read as follows:

(c) A petition to protest the issuance of refinancing

certificates under this section must be signed by at least two

percent of the registered [ a number of qualified ] voters of the

county [ , residing in the county, equal to at least five percent of

the number of votes cast in that county for governor in the most

recent general election at which that office was filled ].

SECTION 9. Section 271.057(a), Local Government Code, is

amended to read as follows:

(a) Except as provided by Subsection (b), a contract let

under this subchapter for the construction , renovation, repair, or

improvement of public works or the purchase of materials,

equipment, supplies, or machinery and for which competitive bidding

is required by this subchapter must be let to the lowest responsible

bidder and, as the governing body determines, may be let on a

lump-sum basis or unit price basis.

SECTION 10. Section 271.059, Local Government Code, is

amended to read as follows:

Sec. 271.059. CONTRACTOR'S BONDS. If a contract is for the

construction , renovation, repair, or improvement of public works

and is required by this subchapter to be submitted to competitive

bidding, the successful bidder 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 11. Section 271.046, Local Government Code, is

repealed.

SECTION 12. The changes in law made by this Act apply only

to an anticipation note or certificate of obligation issued on or

after the effective date of this Act. An anticipation note or

certificate of obligation issued before the effective date of this

Act is governed by the law in effect on the date the anticipation

note or certificate was issued, and the former law is continued in

effect for that purpose.

SECTION 13. This Act takes effect September 1, 2025.