Relating to the financing of water supply projects included in the state water plan; authorizing the issuance of obligations.

89(R) HB 2815 - Introduced version - Bill Text

89R5056 JAM-F

By: Gerdes

H.B. No. 2815

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.