89R5056 JAM-F
By: Perry S.B. No. 1261
A BILL TO BE ENTITLED
AN ACT
relating to the financing of water supply projects included in the
state water plan; authorizing the issuance of obligations.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subtitle F, Title 9, Government Code, is amended
by adding Chapter 1373 to read as follows:
CHAPTER 1373. ISSUANCE OF BONDS BY POLITICAL SUBDIVISIONS FOR
WATER PROJECTS
Sec. 1373.001. DEFINITIONS. In this chapter:
(1) "Board" means the Texas Water Development Board.
(2) "Eligible project" means one or more water supply
projects:
(A) that are identified as recommended water
management strategies in the state water plan; and
(B) the cumulative costs of which are not less
than $750 million.
(3) "Indebtedness" means a bond, note, certificate of
participation, contract, or loan agreement of an issuer issued or
incurred pursuant to any statutory authority other than this
chapter.
(4) "Issuer" means a political subdivision as that
term is defined by Section 16.001, Water Code.
(5) "Obligation" means a bond, note, certificate of
participation, contract, or loan agreement, whether payable or
secured by taxes, revenues, or a combination thereof.
(6) "Obligation authorization" means the order,
ordinance, or resolution of the issuer authorizing the obligation.
(7) "State water plan" means the comprehensive water
plan for the state adopted under Section 16.051, Water Code.
Sec. 1373.002. CONSTRUCTION. This chapter shall be
liberally construed to achieve the legislative intent and purposes
of this chapter. A power granted by this chapter shall be broadly
interpreted to achieve the intent and purposes.
Sec. 1373.003. RELATIONSHIP TO OTHER LAW. (a) To the
extent of any conflict or inconsistency between this chapter and
another law or a municipal charter, this chapter controls.
(b) An issuer may use any provision of another law that does
not conflict with this chapter to the extent convenient or
necessary as determined by the issuer to carry out any power or
authority, express or implied, granted by this chapter, without
reference to any other laws or any restrictions or limitations
contained in those laws.
(c) Chapter 1207 applies to the refunding of obligations
issued or incurred under this chapter.
Sec. 1373.004. AUTHORITY TO ISSUE OBLIGATIONS.
Notwithstanding any other law, as authorized and approved by the
governing body of an issuer, obligations may be issued, sold,
incurred, and delivered to:
(1) finance or refinance an eligible project;
(2) refund obligations, other indebtedness, or
contractual obligations of the issuer issued or incurred in
connection with an eligible project; and
(3) pay the costs of issuance or delivery of the
obligations.
Sec. 1373.005. SECURITY FOR OBLIGATION. (a) An obligation
may be secured by:
(1) the proceeds from the sale of other obligations or
indebtedness of the issuer, including proceeds from the sale of
revenue bonds payable from the revenue to be received from an
eligible project or a specified user of an eligible project;
(2) any revenue that the issuer is authorized by the
constitution, a statute, or the charter of a home-rule municipality
to pledge or pay any kind of general or special indebtedness by or
from those revenues;
(3) water supply contracts or water treatment
contracts or other similar contracts or the revenue received from
those contracts; or
(4) any combination of the sources described by this
subsection.
(b) The governing body of an issuer may secure an obligation
and pay the cost of a contract or other agreement executed and
delivered in connection with the financing of an eligible project
with a pledge of the sources permitted by this chapter.
(c) Notwithstanding any other law, if an issuer secures an
obligation with contracts or the revenue from those contracts, the
term of the contracts may not be less than the final maturity or
term of such obligations pursuant to Section 1373.008.
(d) Any obligations payable wholly or partly from a pledge
of ad valorem taxes to finance or refinance an eligible project must
be approved by the voters of the issuer at an election held for that
purpose.
Sec. 1373.006. USE OF PROCEEDS. An issuer may use the
proceeds from the issuance or incurrence of an obligation to
finance and refinance an eligible project, including costs
authorized by Section 1201.042(a).
Sec. 1373.007. TEXAS WATER DEVELOPMENT BOARD FINANCING OR
FUNDING OF ELIGIBLE PROJECTS. (a) Any financing or funding
provided by the board for an eligible project may not exceed the
maturity or term of an obligation pledged to the project.
(b) If the design, construction, and placing into service of
an eligible project is estimated to take more than four years, as
certified by a licensed professional engineer selected by the
issuer, the board shall make a multiyear commitment of any
financing or funding provided by the board of the eligible project
at the request of the issuer.
Sec. 1373.008. MATURITY OR TERM OF OBLIGATIONS. (a) The
maximum maturity or term of an obligation issued pursuant to this
chapter may not exceed the lesser of:
(1) the reasonably expected weighted average useful
life of the eligible project as certified by a licensed
professional engineer selected by the issuer; or
(2) 40 years from the date of issuance of the
obligation.
(b) The determination of reasonably expected weighted
average useful life of an eligible project made under Subsection
(a) may not be contested for any reason.
Sec. 1373.009. OBLIGATION AUTHORIZATION. (a) The
governing body of an issuer must adopt or approve an obligation
authorization before an obligation may be issued or incurred.
(b) The obligation authorization must establish:
(1) the maximum amount of the obligation to be issued
or incurred or, if applicable, the maximum principal amount that
may be outstanding at any time;
(2) subject to Section 1373.008, the maximum term for
which the obligation issued or incurred under the authorization may
be outstanding;
(3) the maximum interest rate the obligation may bear;
(4) subject to Subsection (c)(2), the manner of sale
of the obligation, which may be by public or private sale, the price
of the obligation, the form of the obligation, and the terms,
representations, and covenants of the issuer made in connection
with the issuance of the obligation, if applicable; and
(5) each source pledged or to be pledged to the payment
of the obligation.
(c) The obligation authorization may:
(1) provide for the designation of a paying agent and
registrar for the obligation; and
(2) authorize one or more designated officers or
employees of the issuer to act on behalf of the issuer from time to
time in selling, incurring, and delivering obligations and setting
the dates, price, interest rates, interest payment periods,
redemption features, and other procedures relating to the issuance,
sale, incurrence, and delivery of obligations, as specified in the
obligation authorization.
Sec. 1373.010. EFFECT OF FINDING OR DETERMINATION UNDER
DELEGATION OF AUTHORITY. A finding or determination made by an
officer or employee acting under the authority delegated to the
officer or employee by an obligation authorization adopted or
approved under this chapter has the same force and effect as a
finding or determination made by the governing body.
Sec. 1373.011. REVIEW AND APPROVAL OF OBLIGATION AND
CONTRACT BY ATTORNEY GENERAL. (a) Before an obligation may be
issued or incurred, a record of the proceedings of the issuer
authorizing the issuance, execution, incurrence, and delivery of
the obligation and any contract providing revenue or security
pledged to the payment of the obligation must be submitted to the
attorney general for review.
(b) If the attorney general finds that the proceedings
authorizing an obligation conform to the requirements of the Texas
Constitution and this chapter, the attorney general shall approve
it and deliver to the comptroller a copy of the attorney general's
legal opinion stating that approval and the record of proceedings.
After approval, the obligation may be executed and delivered,
exchanged, or refinanced from time to time in accordance with those
authorizing proceedings.
Sec. 1373.012. REGISTRATION. On receipt of the documents
required by Section 1373.011(b), the comptroller shall register the
record of the proceedings relating to the issuance of an
obligation.
Sec. 1373.013. VALIDITY AND INCONTESTABILITY. (a) If
proceedings to authorize an obligation are approved by the attorney
general and registered by the comptroller, each obligation and any
contract that provides revenue or security included in or executed
and delivered according to the authorizing proceedings and pledged
to the payment of the obligation is incontestable in a court or
other forum and is valid, binding, and enforceable according to its
terms.
(b) Notwithstanding Subsection (a) and except as provided
by this subsection, an obligation authorized by this chapter is not
valid, binding, or enforceable unless the obligation is approved by
the attorney general and registered by the comptroller in
accordance with Chapter 1202.
SECTION 2. Section 15.432(b), Water Code, is amended to
read as follows:
(b) Money deposited to the credit of the fund may be used:
(1) only as provided by this subchapter; and
(2) for eligible projects authorized under Chapter
1373, Government Code.
SECTION 3. Section 15.435(c), Water Code, is amended to
read as follows:
(c) If the trust company enters into a bond enhancement
agreement under Subsection (b), the board may direct the trust
company to make disbursements from the fund to another fund or
account for the support of bonds the proceeds of which are used to
provide financial assistance in the form of:
(1) a loan bearing an interest rate of not less than 50
percent of the then-current market rate of interest available to
the board;
(2) a loan to finance a facility under repayment terms
similar to the terms of debt customarily issued by the entity
requesting assistance but not to exceed the lesser of:
(A) the expected useful life of the facility; or
(B) 30 years or, for an eligible project
authorized by Chapter 1373, Government Code, 40 years;
(3) a deferral of loan repayment, including deferral
of the repayment of:
(A) principal and interest; or
(B) accrued interest;
(4) incremental repurchase terms for an acquired
facility, including terms for no initial repurchase payment
followed by progressively increasing incremental levels of
interest payment, repurchase of principal and interest, and
ultimate repurchase of the entire state interest in the facility
using simple interest calculations; or
(5) a combination of the methods of financing
described by Subdivisions (1)-(4).
SECTION 4. Section 15.474(a), Water Code, is amended to
read as follows:
(a) Except as provided by Subsection (c), money in the fund
may be used by the board only to provide financing or refinancing,
under terms specified by the board, for an eligible project
authorized under Chapter 1373, Government Code, or for projects
included in the state water plan that are authorized under
Subchapter C-1, Q, or R of this chapter, Subchapter E or F, Chapter
16, or Subchapter J or L, Chapter 17, including water conservation
or reuse projects designed to reduce the need for this state or
political subdivisions of this state to develop additional water
resources.
SECTION 5. Section 17.852(5), Water Code, is amended to
read as follows:
(5) "Project" includes water supply projects,
treatment works, [and] flood projects, as defined by Section 15.531
or 16.451, and eligible projects as defined by Section 1373.001,
Government Code.
SECTION 6. Section 17.957(c), Water Code, is amended to
read as follows:
(c) Money on deposit in the state participation account may
be used by the board, in the manner that the board determines
necessary for the administration of the fund, for:
(1) eligible projects, as defined by Section 1373.001,
Government Code; and
(2) projects described in Sections 16.131 and 16.146
[in the manner that the board determines necessary for the
administration of the fund].
SECTION 7. This Act takes effect September 1, 2025.