83S10245 JTS-F
By: Flynn H.B. No. 83
A BILL TO BE ENTITLED
AN ACT
relating 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 20 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 that 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 bonds to be voted on;
(B) the length of maturity of the bonds;
(C) the projects proposed to be financed with
bond proceeds;
(D) the amount of the political subdivision's
total bonded indebtedness at the time of the election, including
the amount of principal and interest to be paid until maturity;
(E) the information received under Subdivision
(2) and determined under Subdivision (3); and
(F) the political subdivision's total amount of
outstanding bonded indebtedness, updated quarterly, including the
amount of principal and interest to be paid until maturity.
(c) 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.
(d) Except as provided by Subsection (e), 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.
(e) A school district may extend the maturity date of an
issued capital appreciation bond only if:
(1) the maximum legally allowable tax rate for
indebtedness has been adopted; and
(2) the attorney general certifies in writing that the
solvency of the permanent school fund's bond guarantee program
would be threatened without the extension.
(f) Subsection (b) does not apply to the issuance of
refunding bonds under Chapter 1207.
(g) 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 on the 91st day after the
last day of the legislative session.