H.B. No. 2518
AN ACT
relating to required lease terms for public property leased to a
nongovernmental entity; creating a criminal offense.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter Z, Chapter 2252, Government Code, is
amended by adding Section 2252.909 to read as follows:
Sec. 2252.909. REQUIRED LEASE TERMS FOR LEASE OF PUBLIC
PROPERTY. (a) In this section, "governmental entity" has the
meaning assigned by Section 2253.001.
(b) A lease between a governmental entity and another person
regarding public property must contain lease terms requiring the
person to:
(1) include in each contract for the construction,
alteration, or repair of an improvement to the leased property a
condition that the contractor:
(A) execute a payment bond that conforms to
Subchapter I, Chapter 53, Property Code; and
(B) execute a performance bond in an amount equal
to the amount of the contract for the protection of the governmental
entity and conditioned on the faithful performance of the
contractor's work in accordance with the plans, specifications, and
contract documents; and
(2) provide to the governmental entity a notice of
commencement consistent with this section at least 90 days before
the date the construction, alteration, or repair of any improvement
to the leased property begins.
(c) A notice of commencement under Subsection (b) must:
(1) identify the public property where the work will
be performed;
(2) describe the work to be performed;
(3) state the total cost of the work to be performed;
(4) include copies of the performance and payment
bonds required under Subsection (b); and
(5) include a written acknowledgment signed by the
contractor stating that copies of the required performance and
payment bonds will be provided to all subcontractors not later than
the fifth day after the date a subcontract is executed.
(d) On or before the 10th day after the date a governmental
entity receives a notice of commencement for the construction,
alteration, or repair of an improvement to leased property required
under Subsection (b)(2), the governmental entity may notify the
leaseholder that the construction, alteration, or repair may not
proceed.
(e) A person commits an offense if the person materially
misrepresents information in a notice of commencement. An offense
under this subsection is a Class A misdemeanor.
SECTION 2. Section 2253.027, Government Code, is amended by
amending Subsection (a) and adding Subsection (c) to read as
follows:
(a) If a governmental entity fails to obtain from a prime
contractor a payment bond as required by Section 2253.021 or fails
to include in a lease the lease terms required by Section 2252.909:
(1) the entity is subject to the same liability that a
surety would have if the surety had issued a payment bond and if the
entity had obtained the bond; and
(2) a payment bond beneficiary is entitled to a lien on
money due to the prime contractor in the same manner and to the same
extent as if the public work contract were subject to Subchapter J,
Chapter 53, Property Code.
(c) A governmental entity is not liable as a surety under
Subsection (a)(1) if a person leasing property from the entity
fails to submit to the entity the notice of commencement required by
Section 2252.909.
SECTION 3. The changes in law made by this Act apply only to
a lease for public property entered into or renewed by a
governmental entity on or after the effective date of this Act.
SECTION 4. This Act takes effect September 1, 2023.
______________________________ ______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 2518 was passed by the House on April
27, 2023, by the following vote: Yeas 147, Nays 0, 1 present, not
voting.
______________________________
Chief Clerk of the House
I certify that H.B. No. 2518 was passed by the Senate on May
16, 2023, by the following vote: Yeas 31, Nays 0.
______________________________
Secretary of the Senate
APPROVED: _____________________
Date
_____________________
Governor