Relating to the issuance of capital appreciation bonds by political subdivisions.
The bill mandates that any issuance of capital appreciation bonds must be approved during elections held on the November uniform election date, providing transparency requirements that include detailed disclosures on the bond's principal, estimated total costs, and the purpose of the bond issuance. Additionally, it places restrictions on the amount of debt that can be issued, limiting it to no more than 25% of the political subdivision's total bonded indebtedness, thus aiming to ensure responsible fiscal management on the part of governmental entities.
House Bill 2099, entitled the Capital Appreciation Bond Promoting Accountability Measure Act, is focused on the issuance of capital appreciation bonds by political subdivisions in Texas. The bill defines capital appreciation bonds as those that accrue and compound interest from their delivery date, with interest being payable only upon maturity or prior redemption. This type of bond could be issued by various political subdivisions, including counties, municipalities, and school districts, under specific conditions outlined in the legislation.
A notable aspect of HB2099 is its specific limitations on school districts, which can only issue these bonds if they are classified as high enrollment growth districts. The bill also restricts the use of proceeds from the bond issuance, allowing funds to be used only for purchasing long-term assets rather than renovations or technology purchases. This tight framework is designed to prevent misuse of bond funds and ensure they contribute positively to the infrastructure and financial health of the issuing political subdivisions.
The legislation emphasizes transparency by requiring political subdivisions to maintain updated information on their websites regarding outstanding capital appreciation bond debt. This includes publishing the principal cost, purpose, amortization schedule, and the total amount payable upon maturity. These requirements are intended to empower voters and taxpayers by keeping them informed about the financial commitments made by their local governments.