By: Dale H.B. No. 2099
A BILL TO BE ENTITLED
AN ACT
relating to the issuance of capital appreciation bonds by political
subdivisions.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. This Act may be cited as the Capital Appreciation
Bond Promoting Accountability Measure Act.
SECTION 2. Subtitle C, Title 9, Government Code, is amended
by adding Chapter 1253 to read as follows:
CHAPTER 1253. ISSUANCE OF CAPITAL APPRECIATION BONDS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 1253.001. DEFINITIONS. In this chapter:
(1) "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.
(2) "Political subdivision" means a county,
municipality, special district, school district, junior college
district, or other political subdivision of this state.
Sec. 1253.002. INAPPLICABILITY TO BONDS FOR TRANSPORTATION
PROJECTS. This chapter does not apply to the issuance of capital
appreciation bonds to finance transportation infrastructure
projects.
SUBCHAPTER B. REQUIREMENTS FOR ISSUANCE
Sec. 1253.051. NOVEMBER UNIFORM ELECTION DATE REQUIRED. A
political subdivision may not issue capital appreciation bonds
unless:
(1) the bonds were approved at an election held on the
November uniform election date; and
(2) the ballot proposition includes:
(A) the principal amount of the bond issuance;
(B) an estimated amount, based on current
interest rates at the time the decision is made to place the bonds
on the ballot, of the amortized cost of the bonds if the bonds are
not paid off early;
(C) a statement that the bonds issued may be
capital appreciation bonds; and
(D) a short description of capital appreciation
bonds.
Sec. 1253.052. LIMITATION ON AMOUNT OF OUTSTANDING CAPITAL
APPRECIATION BOND DEBT. A political subdivision may not issue
capital appreciation bonds in an amount that would cause its
capital appreciation bond debt to exceed 25 percent of the
political subdivision's total outstanding bonded indebtedness.
Sec. 1253.053. LIMITATION ON MATURITY DATE. A political
subdivision may not issue capital appreciation bonds with a
scheduled maturity date more than
25 years after the date of
issuance.
Sec. 1253.054. EARLY REPAYMENT OPTION REQUIRED. A
political subdivision may not issue capital appreciation bonds
unless the bond agreement allows early repayment of the bonds by the
political subdivision without penalties or additional fees.
Sec. 1253.055. LIMITATIONS ON SCHOOL DISTRICTS. (a) A
school district may not issue capital appreciation bonds unless:
(1) the district is a high enrollment growth district
for the purposes of Section 31.0214, Education Code; and
(2) before an election is ordered, the governing body
of the district:
(A) adopts, by record vote, a resolution stating
that the district is considering issuing capital appreciation
bonds;
(B) attaches a record of the vote under Paragraph
(A) to the resolution; and
(C) posts the resolution on the district's
Internet website not later than the 90th day before the date of the
bond election.
(b) Bonds issued by a school district on or after September
1, 2025, are not eligible for guarantee by the permanent school fund
under Section 45.052, Education Code, if the district's outstanding
capital appreciation bond debt exceeds 25 percent of its total
outstanding bonded indebtedness.
SUBCHAPTER C. USE OF PROCEEDS
Sec. 1253.101. USE OF PROCEEDS. (a) A political
subdivision may use proceeds from the issuance of capital
appreciation bonds only to purchase assets, including real estate
and new construction, that have an expected use, to be determined
based on the depreciable life of the asset under the Internal
Revenue Code of 1986, that extends beyond the bonds' maturity date.
(b) A political subdivision may not use proceeds from the
issuance of capital appreciation bonds for:
(1) renovations to existing structures;
(2) technology purchases, including computers; or
(3) school buses or other vehicles.
SUBCHAPTER D. TRANSPARENCY
Sec. 1253.151. BOND INFORMATION ON INTERNET WEBSITE. (a) A
political subdivision that has outstanding capital appreciation
bond debt shall post prominently on the political subdivision's
Internet website for each outstanding issuance of capital
appreciation bonds:
(1) the principal cost of the bonds;
(2) the purpose for which the bonds were issued;
(3) the full amortization schedule for the bonds;
(4) the total amount to be paid for the bonds if the
bonds are not repaid before maturity; and
(5) the bond counsel, underwriter, and financial
institution for the issuance.
(b) The information under Subsection (a) must be updated
annually, not later than the 60th day before the November uniform
election date.
SECTION 3. 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, 2015.