81R2690 NC-F
By: West S.B. No. 2124
A BILL TO BE ENTITLED
AN ACT
relating to public improvement districts designated by a county or
municipality.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 372.017(b), Local Government Code, is
amended to read as follows:
(b) After all objections have been heard and the governing
body has passed on the objections, the governing body by ordinance
or order shall levy the assessment as a special assessment on the
property. The governing body by ordinance or order shall specify
the method of payment of the assessment. The governing body may
provide that assessments be paid in periodic installments, at an
interest rate and for a period approved by the governing body. The
provision that assessments be paid in periodic installments may,
but is not required to, result in level annual installment
payments. The installments must be in amounts necessary to meet
annual costs for improvements and must continue for:
(1) the [a] period necessary to retire the
indebtedness on the improvements; or
(2) the period approved by the governing body for the
payment of the installments.
SECTION 2. Section 372.018, Local Government Code, is
amended to read as follows:
Sec. 372.018. INTEREST ON ASSESSMENT; LIEN. (a) An
assessment bears interest at the rate specified by the governing
body of the municipality or county beginning at the time or times or
on the occurrence of one or more events specified by the governing
body. If general obligation bonds, revenue bonds, time warrants,
or temporary notes are issued to finance the improvement for which
the assessment is assessed, the interest rate for that assessment
[, but] may not exceed a rate that is one-half of one percent higher
than the actual interest rate paid on the [public] debt [used to
finance the improvement]. Interest on the assessment between the
effective date of the ordinance or order levying the assessment and
the date the first installment is payable shall be added to the
first installment. The interest on any delinquent installment
shall be added to each subsequent installment until all delinquent
installments are paid.
(b) An assessment or reassessment, with interest, the
expense of collection, and reasonable attorney's fees, if incurred,
is:
(1) a first and prior lien against the property
assessed;
(2)[,] superior to all other liens and claims except
liens or claims for state, county, school district, or municipality
ad valorem taxes;[,] and
(3) [is] a personal liability of and charge against the
owners of the property regardless of whether the owners are named.
(c) The lien is effective from the date of the ordinance or
order levying the assessment until the assessment is paid.
(d) The lien runs with the land and that portion of an
assessment payment that has not yet come due is not eliminated by
foreclosure of an ad valorem tax lien.
(e) The assessment lien [and] may be enforced by the
governing body in the same manner that an ad valorem tax lien
against real property may be enforced by the governing body.
Foreclosure of accrued installments does not eliminate the
outstanding principal balance of the assessment. Any purchaser of
the property in foreclosure takes the property subject to the
assessment lien and any associated obligations.
(f) Delinquent installments of the assessment shall incur
interest, penalties, and attorney's fees in the same manner as
delinquent ad valorem taxes. The owner of assessed property may pay
at any time all or any part of the [entire] assessment, with
interest that has accrued on the assessment, on any lot or parcel.
SECTION 3. Section 372.022, Local Government Code, is
amended to read as follows:
Sec. 372.022. SEPARATE FUNDS. A separate public
improvement district fund may [shall] be created in the municipal
or county treasury for each district. Proceeds from the sale of
bonds, temporary notes, and time warrants, and other sums
appropriated to the fund by the governing body of the municipality
or county shall be credited to the fund. The fund may be used solely
to pay costs incurred in making an improvement. When an improvement
is completed, the balance of the part of the assessment that is for
improvements shall be transferred to the fund established for the
retirement of bonds.
SECTION 4. Section 372.023, Local Government Code, is
amended by amending Subsections (d), (e), (f), and (g) and adding
Subsection (h) to read as follows:
(d) A cost payable from a special assessment that is to be
paid in installments and a cost payable by the municipality or
county as a whole but not payable from available general funds or
other available general improvement funds shall be paid:
(1) under an installment sale contract or a
reimbursement agreement with the person who contracts to install or
construct the improvement for which the costs apply;
(2) as provided by a temporary note or time warrant
issued by the municipality or county to reimburse a person for money
advanced or work performed in connection with an improvement; or
(3) by the issuance and sale of revenue or general
obligation bonds.
(e) The net effective interest rate, as computed for a
public security under Section 1204.005, Government Code, on money
owed or paid under Subsection (d) may not exceed one-half of one
percent above the highest average interest rate reported by a
newspaper in a weekly bond index in the month before the date of the
contract or agreement or the issuance of the bond, temporary note,
or time warrant. The newspaper must specialize in bonds and be
acceptable as a reliable source for bond interest rates to the
governing body of the municipality or county that enters into the
contract or agreement or that issues the bond, temporary note, or
time warrant.
(f) [(e)] While an improvement is in progress, the governing
body of the municipality or county, to pay the costs of the
improvement, may issue temporary notes for money advanced or time
warrants to pay for work performed in connection with [the costs of]
the improvement and, on completion of the improvement, issue
revenue or general obligation bonds. The bond proceeds may be used
to repay the obligations incurred under this subsection.
(g) [(f)] The cost of more than one improvement may be paid:
(1) from a single issue and sale of bonds without other
consolidation proceedings before the bond issue; or
(2) under an agreement with a person who contracts to
install or construct the improvement and who sells the improvement
to the municipality or county.
(h) [(g)] The costs of any improvement include interest
payable on a temporary note or time warrant and all costs incurred
in connection with the issuance of bonds under Section 372.024 and
may be included in the assessments against the property in the
improvement district as provided by this subchapter.
SECTION 5. Section 372.026, Local Government Code, is
amended to read as follows:
Sec. 372.026. PLEDGES. (a) In this section, "obligation"
means bonds, temporary notes, time warrants, or an obligation under
an installment sale contract or reimbursement agreement.
(b) For the payment of obligations [bonds] issued or agreed
to under this subchapter and the payment of principal, interest,
and any other amounts required or permitted in connection with the
obligations [bonds], the governing body of the municipality or
county may pledge all or part of the income from improvements
financed under this subchapter, including income received in
installment payments under Section 372.023.
(c) [(b)] Pledged income must be fixed and collected in
amounts sufficient, with other pledged resources, to pay principal,
interest, and other expenses related to the obligations [bonds],
and to the extent required by the ordinance, [or] order, or
agreement authorizing the obligations [bonds], to pay for the
operation, maintenance, and other expenses related to improvements
authorized by this subchapter.
(d) [(c)] The obligations [bonds] may also be secured by
mortgages or deeds of trust on any real property related to the
facilities authorized under this subchapter that are owned or are
to be acquired by the municipality or county and by chattel
mortgages, liens, or security interests on any personal property
appurtenant to that real property. The governing body may
authorize the execution of trust indentures, mortgages, deeds of
trust, or other forms of encumbrance [encumbrances] as evidence of
the indebtedness.
(e) [(d)] The governing body may pledge to the payment of
obligations [bonds] all or part of a grant, donation, revenue, or
income received or to be received from the government of the United
States or any other public or private source, whether or not it is
received pursuant to an agreement or otherwise.
(f) The governing body may enter into an agreement with a
corporation created by the municipality or county under the Texas
Constitution or other law that provides for payment of amounts
pledged under this section to the corporation to secure
indebtedness issued by the corporation to finance an improvement
project, including indebtedness to pay capitalized interest and a
reserve fund permitted by this subchapter for revenue or general
obligation bonds issued under this subchapter and indebtedness
issued to pay the corporation's costs of issuance. In addition, the
agreement may provide that:
(1) the corporation is responsible for managing the
district; or
(2) title to one or more improvements will be held by
the corporation.
SECTION 6. (a) All acts and proceedings related to the
authorization of any taxes or bonds, including acts and proceedings
related to an election, by a district created under Subchapter C,
Chapter 372, Local Government Code, before the effective date of
this Act are validated, ratified, and confirmed in all respects as
if the acts and proceedings occurred as authorized by law.
(b) This section does not apply to any matter that on the
effective date of this Act:
(1) is involved in litigation if the litigation
ultimately results in the matter being held invalid by a final court
judgment; or
(2) has been held invalid by a final court judgment.
SECTION 7. (a) An installment sales contract made or
attempted to be made by a county or municipality with the party
constructing an improvement relating to an improvement district is
validated as of the date the contract was made or attempted to be
made if the contract:
(1) was made or attempted to be made before the
effective date of this Act; and
(2) complies with Section 372.023, Local Government
Code, as amended by this Act.
(b) This section does not apply to any matter that on the
effective date of this Act:
(1) is involved in litigation if the litigation
ultimately results in the matter being held invalid by a final court
judgment; or
(2) has been held invalid by a final court judgment.
SECTION 8. This Act takes effect immediately if it receives
a vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect September 1, 2009.