CHAPTER 1231. BOND REVIEW BOARD
GOVERNMENT CODE
TITLE 9. PUBLIC SECURITIES
SUBTITLE B. PROVISIONS APPLICABLE TO SECURITIES ISSUED BY STATE
GOVERNMENT
CHAPTER 1231. BOND REVIEW BOARD
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 1231.001. DEFINITIONS. In this chapter:
(1) "Board" means the Bond Review Board.
(1-a) "Interest rate management agreement" means an agreement
that provides for an interest rate transaction, including a swap,
basis, forward, option, cap, collar, floor, lock, or hedge
transaction, for a transaction similar to those types of
transactions, or for a combination of any of those types of
transactions. The term includes:
(A) a master agreement that provides standard terms for
transactions;
(B) an agreement to transfer collateral as security for
transactions; and
(C) a confirmation of transactions.
(2) "State security" means:
(A) an obligation, including a bond, issued by:
(i) a state agency;
(ii) an entity that is expressly created by statute and has
statewide jurisdiction; or
(iii) an entity issuing the obligation on behalf of this state
or on behalf of an entity described by Subparagraph (i) or (ii);
(B) an installment sale or lease-purchase obligation that is
issued by or on behalf of an entity described by Paragraph (A)
and that has:
(i) a stated term of more than five years; or
(ii) an initial principal amount of more than $250,000; or
(C) an obligation, including a bond, that is issued under
Chapter 53, Education Code, at the request of or for the benefit
of an institution of higher education as defined by Section
61.003, Education Code, other than a public junior college.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
991, Sec. 2, eff. September 1, 2007.
Acts 2007, 80th Leg., R.S., Ch.
991, Sec. 3, eff. September 1, 2007.
Sec. 1231.002. CERTAIN RIGHTS OF ISSUERS NOT AFFECTED. This
chapter does not affect the right of an issuer of state
securities to select its own bond counsel, underwriter, financial
advisor, or other service provider in connection with the
issuance of state securities.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
SUBCHAPTER B. BOND REVIEW BOARD
Sec. 1231.021. BOND REVIEW BOARD; PRESIDING OFFICER. (a) The
board is composed of:
(1) the governor;
(2) the lieutenant governor;
(3) the speaker of the house of representatives; and
(4) the comptroller.
(b) The governor is the presiding officer of the board.
(c) A member of the board may designate another person to act on
the member's behalf.
(d) If the speaker of the house of representatives is prohibited
by the constitution of this state from serving as a voting
member, the speaker serves as a nonvoting member.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999. Amended by Acts 2001, 77th Leg., ch. 1420, Sec. 8.0031,
eff. Sept. 1, 2001.
Sec. 1231.022. RULES. The board may adopt rules:
(1) relating to applications for review, the review process, and
reporting requirements;
(2) exempting certain state securities from the application of
Subchapter C if the board finds that review of the securities is
unnecessary or impractical; and
(3) delegating to the director of the bond finance office the
authority to approve a state security on behalf of the board.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
Sec. 1231.023. DEBT ISSUANCE POLICIES AND GUIDELINES. (a) The
board shall adopt debt issuance policies to guide issuers of
state securities and to ensure that state debt is prudently
managed. The policies must be sufficiently flexible to allow the
state and issuers of state securities to respond to changing
economic conditions.
(b) The board shall consult with issuers of state securities in
developing the policies.
(c) The board shall adopt policies that:
(1) provide a mechanism for evaluating the amount of state debt
that can be managed prudently;
(2) address opportunities to consolidate debt authority;
(3) include guidelines for:
(A) appropriate levels of reserves;
(B) the types of state security that should be issued under
various circumstances; and
(C) the terms or structure of a state security;
(4) help the board and issuers of state securities to evaluate:
(A) the potential risks involved in the issuance of a state
security or in the execution of an interest rate management
agreement; and
(B) the effect that the issuance of a state security or that the
execution of an interest rate management agreement will have on
the finances and on the overall debt position of the issuer and
of the state; and
(5) recommend other advisable practices related to the issuance
of a state security.
Added by Acts 2001, 77th Leg., ch. 530, Sec. 1, eff. June 11,
2001.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
991, Sec. 4, eff. September 1, 2007.
SUBCHAPTER C. BOARD APPROVAL OF ISSUANCE OF STATE SECURITY
Sec. 1231.041. APPROVAL OF STATE SECURITY. An entity, including
a state agency, may not issue a state security unless:
(1) the board approves the issuance; or
(2) the security is exempted under Section 1231.022(2).
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
Sec. 1231.042. APPLICATION FOR APPROVAL OF ISSUANCE OF STATE
SECURITY. To obtain the approval of the board to issue a state
security, a state agency or other entity must:
(1) apply to the board, in the manner prescribed by the board;
and
(2) file with the application any information, including
documents, required by the board.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
Sec. 1231.043. APPROVAL OF ISSUANCE. The board shall approve
the issuance of a state security if, after examining the
application and documents or items of information required by the
board, the board determines that the issuance is advisable.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
Sec. 1231.044. STATE AUDITOR REVIEW OF STATE SECURITY PROCEEDS;
REPORT. (a) On the board's request, the state auditor shall
review the disposition of state security proceeds.
(b) The state auditor shall prepare a report of the review and
file a copy of the report with:
(1) the board;
(2) the governor;
(3) the lieutenant governor;
(4) the speaker of the house of representatives;
(5) the secretary of state; and
(6) each member of the legislature.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999. Amended by Acts 1999, 76th Leg., ch. 1064, Sec. 12, eff.
Sept. 1, 1999.
SUBCHAPTER D. REPORTS TO LEGISLATURE
Sec. 1231.061. REVIEW OF CERTAIN UNISSUED STATE SECURITIES;
BIENNIAL REPORT TO LEGISLATURE. (a) The board shall review all
state securities, including general obligation and revenue bonds,
that have been authorized but are unissued.
(b) Not later than October 31 of each even-numbered year, the
board shall submit to the legislature a report that recommends
whether the authorization for a state security should be revoked.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999. Amended by Acts 2001, 77th Leg., ch. 1420, Sec. 8.004, eff.
Sept. 1, 2001.
Sec. 1231.062. BIENNIAL DEBT STATISTICS REPORT. (a) Not later
than December 31 of each even-numbered year, the board shall
submit to the legislature a statistical report relating to:
(1) state securities; and
(2) bonds and other debt obligations issued by local
governments.
(b) A report must include:
(1) total debt service as a percentage of total expenditures;
(2) tax-supported debt service as a percentage of general
revenue expenditure;
(3) per capita total debt;
(4) per capita tax-supported debt;
(5) total debt and tax-supported debt as a percentage of
personal income;
(6) total personal income per capita;
(7) total debt per capita as a percentage of total personal
income per capita;
(8) total debt and tax-supported debt as a percentage of real
property valuations;
(9) total debt and tax-supported debt as a percentage of annual
revenues and expenditures;
(10) principal required to be repaid in five years and principal
required to be repaid in 10 years;
(11) growth rates of total debt per capita and total debt per
dollar of personal income;
(12) recent trends in the issuance of short-term notes;
(13) recent trends in issuance costs;
(14) savings from recent refundings;
(15) recent trends in capitalized interest use;
(16) debt service coverage ratios, if applicable; and
(17) other information the board considers relevant.
(c) The attorney general, each state agency, and each local
government shall provide to the board, at the times required by
the board, information that the board determines to be necessary
to prepare the statistical report.
(d) The board may enter into a contract for the procurement of
services related to the collection and maintenance of information
on the indebtedness of local governments and state agencies
necessary to prepare the statistical report.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
Amended by:
Acts 2009, 81st Leg., R.S., Ch.
1416, Sec. 1, eff. June 19, 2009.
Sec. 1231.063. DEBT AFFORDABILITY STUDY. (a) The board, in
consultation with the Legislative Budget Board, shall annually
prepare a study regarding the state's current debt burden by:
(1) analyzing the state's historical debt use and financial and
economic resources to determine the amount of additional not
self-supporting debt the state can accommodate; and
(2) monitoring how annual changes and new debt authorizations
affect the mechanism described in Subsection (b).
(b) The study must include a mechanism that can be used to
determine, at a minimum, the state's debt affordability and serve
as a guideline for debt authorizations and debt service
appropriations. The mechanism must be designed to calculate:
(1) the not self-supporting debt service as a percentage of
unrestricted revenues;
(2) the ratio of not self-supporting debt to personal income;
(3) the amount of not self-supporting debt per capita;
(4) the rate of debt retirement; and
(5) the ratio of not self-supporting debt service to budgeted or
expended general revenue.
(c) Not later than February 15 of each year, the board shall
submit the annual study to:
(1) the governor;
(2) the comptroller;
(3) the presiding officer of each house of the legislature; and
(4) the Senate Committee on Finance and House Appropriations
Committee.
(d) The annual study submitted under Subsection (c) must include
a target and limit ratio for not self-supporting debt service as
a percentage of unrestricted revenues.
Added by Acts 2007, 80th Leg., R.S., Ch.
991, Sec. 5, eff. September 1, 2007.
Amended by:
Acts 2009, 81st Leg., R.S., Ch.
1416, Sec. 2, eff. June 19, 2009.
SUBCHAPTER E. SECURITY TRANSACTION REPORTS
Sec. 1231.081. GENERAL REQUIREMENTS. (a) Each entity that
issues a state security shall report to the board its security
transactions.
(b) A report must:
(1) be itemized;
(2) state in dollars the information required by Subsection (c)
or Sections 1231.082-1231.085 for money paid to each business and
classify each of the businesses that money was paid to according
to:
(A) the race, ethnicity, and gender of the controlling ownership
of each business; and
(B) whether the business is domestic or foreign; and
(3) be made in compliance with board rule.
(c) For any security transaction, the report must state each
issuance cost, including the cost of:
(1) bond counsel;
(2) financial advisor;
(3) rating agencies;
(4) official statement preparation;
(5) official statement printing;
(6) bond printing;
(7) paying agent or registrar;
(8) escrow agent;
(9) escrow verification agent;
(10) trustee;
(11) attorney general;
(12) dealer fee;
(13) remarketing fee; and
(14) credit enhancement.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
Sec. 1231.082. REPORT OF STATE SECURITY SOLD COMPETITIVELY. A
report concerning a state security that is sold competitively
must state:
(1) the components of the gross spread, including:
(A) gross takedown;
(B) expenses; and
(C) syndicate profit and loss;
(2) a summary of obligation orders and allotments by maturity,
firm, and order type; and
(3) each syndicate firm's gross takedown and share of syndicate
profit or loss.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
Sec. 1231.083. REPORT OF STATE SECURITY SOLD THROUGH
NEGOTIATION. A report concerning a state security sold through
negotiation must state:
(1) the components of the spread, including:
(A) management fee;
(B) structuring fee;
(C) underwriting risk;
(D) takedown; and
(E) spread expenses;
(2) each firm's share of underwriting risk;
(3) the underwriter's counsel;
(4) a summary of obligation orders and allotments by maturity,
firm, and order type; and
(5) each syndicate firm's share of management fee, structuring
fee, underwriting risk fee, and takedown.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
Sec. 1231.084. REPORT OF STATE SECURITY SOLD THROUGH PRIVATE
PLACEMENT. A report concerning a state security sold through
private placement must state:
(1) each component of the private placement fee, including the:
(A) management fee;
(B) placement agent fee; and
(C) expenses; and
(2) the placement agent's counsel's fee.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
Sec. 1231.085. REPORT OF REFUNDING OR ESCROW-RELATED
TRANSACTION. A report concerning a refunding or escrow-related
transaction must state the spread paid on the purchase or sale of
an escrow security.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
Sec. 1231.086. ANNUAL BOARD REPORTS. (a) On May 15 of each
year, the board shall send to the joint committee charged with
monitoring the implementation of goals for participation by
historically underutilized businesses a report of the information
received under this subchapter for the six months preceding March
1 of that year.
(b) On November 15 of each year, the board shall send to the
lieutenant governor, the speaker of the house, each member of the
legislature, and the joint committee a report of the information
received under this subchapter for the fiscal year ending August
31 of that year.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
SUBCHAPTER F. BOND FINANCE OFFICE
Sec. 1231.101. BOND FINANCE OFFICE. (a) The board shall
appoint a director to:
(1) manage the bond finance office; and
(2) select the staff of the office.
(b) When practical, the office shall make use of:
(1) the resources of the Legislative Budget Board; and
(2) the offices of the governor and the comptroller.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
Sec. 1231.102. ANNUAL REPORT. Not later than 90 days after the
end of each state fiscal year, the bond finance office shall
publish a report listing:
(1) the amount of state securities outstanding;
(2) applicable repayment schedules; and
(3) other information the office considers relevant.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
Sec. 1231.103. PROVISION OF INFORMATION RELATING TO OTHER BONDS.
The bond finance office may provide information for inclusion in
a prospectus related to any bond issued under authority of state
law or municipal ordinance.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.