By: Hinojosa S.B. No. 449
A BILL TO BE ENTITLED
AN ACT
relating to a prohibition on the issuance of certain capital
appreciation bonds by local governments.
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 LOCAL
GOVERNMENTS PROHIBITED. (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
of the state may not issue capital appreciation bonds that are
secured by ad valorem taxes.
(c) Subsection (b) does not apply to the issuance of
refunding bonds under Chapter 1207, Government Code.
(d) Subsection (b) does not apply to the issuance of 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, 2013.