CHAPTER 1433. BONDS FOR DEVELOPMENT OF EMPLOYMENT, INDUSTRIAL, AND HEALTH RESOURCES
GOVERNMENT CODE
TITLE 9. PUBLIC SECURITIES
SUBTITLE H. SPECIFIC AUTHORITY FOR MORE THAN ONE TYPE OF LOCAL
GOVERNMENT TO ISSUE SECURITIES
CHAPTER 1433. BONDS FOR DEVELOPMENT OF EMPLOYMENT, INDUSTRIAL,
AND HEALTH RESOURCES
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 1433.001. SHORT TITLE. This chapter may be cited as the
Act for Development of Employment, Industrial, and Health
Resources.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
Sec. 1433.002. DEFINITIONS. In this chapter:
(1) "Department" means the Texas Department of Economic
Development.
(2) "District" means a conservation and reclamation district
established under Section 59, Article XVI, or Section 52, Article
III, Texas Constitution.
(3) "Governing body" means the commissioners court of a county
or the governing body of a municipality or district.
(4) "Industrial project" means the land, buildings, equipment,
facilities, and improvements found by the governing body to be
required or suitable for the promotion of industrial development
and for use by manufacturing or industrial enterprise, regardless
of whether the land, buildings, equipment, facilities, and
improvements are in existence when or are to be acquired or
constructed after the finding is made.
(5) "Issuer" means a municipality, county, or district.
(6) "Medical project" means the land, buildings, equipment,
facilities, and improvements found by the governing body to be
required for public health, research, and medical facilities
located in this state, regardless of whether the land, buildings,
equipment, facilities, and improvements are in existence when or
are to be acquired or constructed after the finding is made.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
Sec. 1433.003. APPLICABILITY OF CHAPTER TO MUNICIPALITIES. This
chapter applies to a municipality only if the municipality:
(1) has the power to impose an ad valorem tax of not less than
$1.50 on each $100 valuation of taxable property in the
municipality; or
(2) is a home-rule municipality.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
Sec. 1433.004. COST OF PROJECT. For purposes of this chapter,
the cost of an industrial project or medical project is:
(1) the cost of acquisitions for the project, including the cost
of the acquisition of all land, rights-of-way, property rights,
easements, and interests acquired for the construction;
(2) the cost of all machinery and equipment;
(3) financing charges;
(4) interest accruing before and during construction and until
the first anniversary of the date on which the construction is
completed;
(5) the cost of estimates, including estimates of revenue,
engineering and legal services, plans, specifications, surveys,
and other expenses necessary or incident to determining the
feasibility and practicability of constructing the project;
(6) administrative expenses; and
(7) other expenses that are necessary or incident to the
acquisition of the project, the financing of the acquisition, and
the placing of the project in operation.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
Sec. 1433.005. ULTIMATE LESSEE. For purposes of this chapter,
an ultimate lessee is the person, firm, corporation, or company
that leases an industrial project or medical project from the
lessee of the project.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
Sec. 1433.006. CORRECTION OF INVALID PROCEDURES. If a court
holds that any procedure under this chapter violates the
constitution of this state or the United States, the issuer by
resolution may provide an alternative procedure that conforms
with the constitution.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
Sec. 1433.007. RELOCATION OR ALTERATION EXPENSE. If a
municipality, county, district, or other political subdivision,
in the exercise of a power under this chapter, including the
power of relocation, makes necessary the relocation or rerouting
of, or alteration of the construction of, a highway, railroad,
electric transmission line, telegraph or telephone property or
facility, or pipeline, the relocation or rerouting or alteration
of construction must be accomplished at the sole expense of the
political subdivision. In this section, "sole expense" means the
actual cost of the relocation or rerouting or alteration of
construction to provide comparable replacement without
enhancement of the facility, after deduction of the net salvage
value derived from the old facility.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
Sec. 1433.008. USE OF STATE MONEY. (a) The legislature may not
appropriate money to pay all or a part of the obligation of an
issuer under this chapter.
(b) The department shall pay any expense it incurs under this
chapter from money appropriated to the department.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
SUBCHAPTER B. POWERS OF ISSUER
Sec. 1433.021. ACQUISITION OF PROJECT; DISPOSITION. (a) An
issuer may acquire, by construction, purchase, devise, gift, or
lease or by more than one of those methods, an industrial project
or medical project that is located in this state and at least a
part of which is located within the issuer's territorial limits.
(b) For an issuer that is a municipality, an industrial project
or medical project may be located outside the municipality's
territorial limits if the project is within the municipality's
extraterritorial jurisdiction as determined under Subchapter B,
Chapter 42, Local Government Code.
(c) An issuer may sell and convey all or any part of property
acquired under this section and make an order relating to the
sale or conveyance that the issuer considers conducive to the
best interest of the issuer.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
Sec. 1433.022. LIMITATIONS ON ACQUISITIONS. (a) An issuer may
not acquire an industrial project, or any part of an industrial
project, by eminent domain.
(b) Land previously acquired by an issuer by eminent domain may
be sold, leased, or otherwise used in accordance with this
chapter, if the governing body determines that:
(1) the use will not interfere with the purpose for which that
land was originally acquired or that the land is no longer needed
for that purpose;
(2) at least seven years have elapsed since the land was
acquired by eminent domain; and
(3) the land was not acquired for park purposes unless the sale
or lease of that land has been approved at an election held under
Section 1502.055.
(c) An issuer may not acquire or construct an industrial project
or medical project for an individual, firm, partnership, or
corporation, or make or authorize a lease to an individual, firm,
partnership, or corporation if the effect of the lease of that
project is to remove the lessee's business from existing
facilities in this state.
(d) An issuer may not issue bonds to acquire existing facilities
for the purpose of leasing those facilities to the industrial
concern from which the facilities are acquired or to another
person controlled by the industrial concern.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999. Amended by Acts 1999, 76th Leg., ch. 1064, Sec. 31, eff.
Sept. 1, 1999.
Sec. 1433.023. AUTHORITY TO ISSUE REVENUE BONDS. (a) Except as
provided by Subsection (b), an issuer may issue revenue bonds to
pay all or a part of the cost of acquiring, constructing,
enlarging, or improving an industrial project, including a
project in an enterprise zone designated under Chapter 2303, or a
medical project.
(b) A district may not authorize revenue bonds for a medical
project.
(c) An issuer may secure the payment of the bonds as provided by
this chapter.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
Sec. 1433.024. LEASE OF PROJECT. (a) An issuer may, in
accordance with this chapter, lease any or all of the issuer's
industrial projects and medical projects.
(b) An issuer may lease property under this chapter only to a
corporation organized under the Texas Non-Profit Corporation Act
(Article 1396-1.01 et seq., Vernon's Texas Civil Statutes).
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
Sec. 1433.025. ADVERTISING FOR CERTAIN CONTRACTS; PERFORMANCE
AND PAYMENT BONDS. (a) A contract for construction or purchase
under this chapter involving the expenditure of more than $2,000
may be made only after advertising in the manner provided by
Chapter 252, Local Government Code, or Subchapter C, Chapter 262,
Local Government Code, as applicable.
(b) The provisions of Chapter 2253 relating to performance and
payment bonds apply to construction contracts let by the issuer.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
Sec. 1433.026. PROHIBITED OPERATIONS. An issuer may not operate
an industrial project as a business or in any manner other than
as the lessor of the project.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
SUBCHAPTER C. PROCEDURE FOR ISSUING BONDS
Sec. 1433.041. DEPARTMENT APPROVAL OF LEASE; APPEAL. (a) An
issuer may not begin proceedings to authorize bonds under Section
1433.044 or 1433.061 until the department has given tentative
approval to the suggested contents of the lease agreement, and if
a lessee is allowed to sublease, the department has tentatively
approved the financial responsibility of the ultimate lessee. The
department shall investigate a proposed acquisition of existing
facilities for compliance with Section 1433.022(d) before
tentatively approving an industrial project or medical project.
(b) The department may not give final approval to any agreement
unless the department affirmatively finds that the lessee and
ultimate lessee have the business experience, financial
resources, and responsibility to provide reasonable assurance
that all bonds and interest on the bonds to be paid from or
because of that agreement will be paid as they become due.
(c) The attorney general may not approve bonds to be issued
under this chapter until the department has given final approval
to the lease agreement and may not approve the bonds if the
provisions for security and payment of lease payments do not
conform with this chapter.
(d) An issuer may appeal any adverse ruling or decision of the
department under this section to a district court in Travis
County. The substantial evidence rule applies to an appeal under
this subsection.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
Sec. 1433.042. REGULATION OF LEASES. The department by rule
shall adopt minimum standards for lease agreements and guidelines
relating to financial responsibilities of the lessee and any
ultimate lessee.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
Sec. 1433.043. ISSUER'S AUTHORITY. (a) An issuer may issue
bonds under this chapter without obtaining the consent of any
department, division, commission, board, bureau, or agency of the
state, other than the attorney general under Chapter 1202 or the
department, and without any proceedings or satisfying any
condition precedent other than the proceedings and conditions
required by:
(1) this chapter;
(2) Subchapter B or D, Chapter 1201; or
(3) Chapter 1204.
(b) Except as provided by this chapter or by department rule,
each governing body has complete authority with respect to bonds
and lease agreements governed by this chapter.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
Sec. 1433.044. BOND RESOLUTION; CALLING ELECTION; PUBLICATION OF
RESOLUTION. (a) Before issuing bonds under this chapter, a
governing body shall adopt a resolution declaring its intention
to issue the bonds.
(b) The resolution must specify:
(1) the amount of bonds proposed to be issued;
(2) the purpose for which the bonds are to be issued; and
(3) the date on which the governing body proposes to authorize
the issuance of the bonds.
(c) The governing body may call an election on the issuance of
the bonds.
(d) If an election is not called under Subsection (c), the
governing body shall publish the resolution once a week for at
least two consecutive weeks in at least one newspaper of general
circulation in the territorial limits of the issuer. The first
publication must be not less than 14 days before the date
specified in the resolution for the authorization of the bonds.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
Sec. 1433.045. PROTEST. (a) If at least 10 percent of the
registered voters of the issuer file a written protest against
the issuance of the bonds on or before the date specified for the
authorization of the bonds, the governing body shall hold an
election on the issuance of the bonds.
(b) If a written protest is not filed, the bonds may be issued
without an election at any time before the second anniversary of
the date specified in the resolution.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
Sec. 1433.046. ELECTION ORDER. In addition to the requirements
provided by Chapter 3, Election Code, an order calling an
election under this subchapter must include the location of each
polling place and the election judges and clerks appointed for
each polling place.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
Sec. 1433.047. NOTICE OF ELECTION. Notice of an election under
this subchapter shall be published once a week for at least two
consecutive weeks, in at least one newspaper of general
circulation within the territorial limits of the issuer. The
first publication must be not less than 14 days before the date
of the election.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
Sec. 1433.048. BALLOT PROPOSITION; ELECTION PROCEDURES. (a)
The ballot for an election held under this subchapter shall be
printed to permit voting for or against the proposition: "The
issuance of revenue bonds for the (medical project or industrial
project)."
(b) The election shall be conducted in accordance with the
general laws of this state relating to general elections, except
as modified by this chapter.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
Sec. 1433.049. RESULTS OF ELECTION. (a) Within 10 days after
the election, or as soon after that as possible, the governing
body of the issuer shall convene and canvass the returns of the
election.
(b) If a majority of the voters voting in a bond election vote
in favor of the proposition, the governing body shall find and
declare that the results favor the proposition, and subject to
Section 1433.041, the governing body may proceed with the
authorization of the bonds.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
SUBCHAPTER D. BONDS
Sec. 1433.061. ISSUANCE OF BONDS. (a) A series of bonds may be
issued for each industrial project or medical project. Any
projects may be combined in a single series of bonds if the
governing body considers the combination to be in the best
interest of the issuer, but each project shall be considered
separately with respect to this subsection and Subchapter C.
(b) Bonds must be issued and delivered before the third
anniversary of the later of the date of the tentative approval of
the department or the date of the final judgment of any
litigation affecting the validity of the bonds or the provision
made for their payment. This subsection does not prohibit the
department from conditioning its approval of an industrial
project or medical project on the completion of the financing of
the project within a shorter period.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
Sec. 1433.062. MONEY USED TO PAY BONDS; PROHIBITION ON CERTAIN
OBLIGATIONS. (a) The principal of and the interest on bonds
authorized under this chapter are payable only from the money
provided for that payment and from the revenue of the industrial
project or medical project for which the bonds were authorized.
(b) An issuer may not incur financial obligations that cannot be
paid from revenue from the lease of an industrial project or
medical project.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
Sec. 1433.063. BONDS NOT DEBT OF STATE OR ISSUER. (a) A bond
issued under this chapter is not a debt or a pledge of the faith
and credit of this state, the issuer, or any other political
subdivision or agency of this state.
(b) A bond issued under this chapter must contain on its face a
statement that:
(1) this state, the issuer, or any other political subdivision
or agency of this state is not obligated to pay the principal of
or the interest on the bond except from revenue of the industrial
project or medical project for which the bond is issued; and
(2) the faith and credit and the taxing power of this state, the
issuer, or any other political subdivision or agency of this
state are not pledged to the payment of the principal of or the
interest on the bond.
(c) Each bond issued under this chapter must contain
substantially the following language: "No pecuniary obligation is
or may be imposed on the issuer of this bond in the event of a
failure to pay all or part of the principal or interest on the
bond, except that the issuer is obligated to apply rental income
it receives from the (industrial project or medical project) to
those purposes."
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
Sec. 1433.064. MATURITY. A bond issued under this chapter must
mature not later than 40 years after its date.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
Sec. 1433.065. SALE OF BONDS. Bonds issued under this chapter
shall be sold to the highest bidder for cash and may not be
exchanged for property.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
Sec. 1433.066. INTERIM RECEIPTS; TEMPORARY BONDS. Before the
preparation of definitive bonds, an issuer may, under the
restrictions applicable to the definitive bonds, issue interim
receipts or temporary bonds, with or without coupons,
exchangeable for definitive bonds when the definitive bonds are
executed and available for delivery.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
Sec. 1433.067. USE OF BOND PROCEEDS. The proceeds of the bonds
of each issue may be used only for the payment of the cost of the
industrial project or medical project for which the bonds were
issued, and shall be disbursed in the manner and under any
restrictions provided in the resolution authorizing the issuance
of the bonds or in the trust agreement securing the bonds. Any
proceeds of the bonds of an issue that exceed the cost of the
project for which the bonds were issued shall be deposited to the
credit of the sinking fund for those bonds.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
Sec. 1433.068. REFUNDING BONDS. (a) An issuer by resolution
may provide for the issuance of revenue refunding bonds to:
(1) refund any outstanding bonds issued under this chapter; and
(2) construct improvements, extensions, or enlargements to the
industrial project or medical project in connection with which
the bonds being refunded were issued.
(b) An issuer may issue revenue refunding bonds in exchange for
outstanding bonds, notwithstanding Section 1433.065, or the
issuer may use the proceeds from the sale of the revenue
refunding bonds to redeem outstanding bonds.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
Sec. 1433.069. EXEMPTIONS FROM TAXATION AND SECURITIES ACT. (a)
A bond issued under this chapter and the issuance and transfer
of the bond, including any profit made in the sale of the bond,
are exempt from taxation by this state or by a political
subdivision of this state.
(b) A bond issued under this chapter and any coupon representing
interest on the bond are exempt securities under The Securities
Act (Article 581-1 et seq., Vernon's Texas Civil Statutes).
(c) A lease agreement under this chapter is not a security under
The Securities Act (Article 581-1 et seq., Vernon's Texas Civil
Statutes).
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
SUBCHAPTER E. AGREEMENTS RELATING TO BONDS
Sec. 1433.101. SECURITY FOR BOND; TRUST AGREEMENT. (a) A bond
issued under this chapter may be secured by a trust agreement
between the issuer and a trust company or a bank having the
powers of a trust company in this state.
(b) A trust agreement may:
(1) assign the lease revenue to be received from the lessee or
the ultimate lessee of the industrial project or medical project
for which the bond proceeds are used; or
(2) pledge the lease revenue for the payment of principal of and
interest on the bond as they become due and payable and may
provide for the creation and maintenance of reserves for that
purpose.
(c) A trust agreement or a resolution providing for the issuance
of the bonds may contain provisions for protecting and enforcing
the rights and remedies of the bondholders, including covenants
that state the duties of the issuer or lessee relating to:
(1) the acquisition of property for the industrial project or
medical project in connection with which the bonds were
authorized;
(2) the construction, improvement, maintenance, repair,
operation, and insurance of the project; and
(3) the custody, protection, and application of all money
related to the project.
(d) An issuer may require a bank or trust company incorporated
under the laws of this state that acts as depository of the
proceeds of the bonds or of revenue of the issuer to furnish
indemnifying bonds or to pledge securities.
(e) A trust agreement may state the rights and remedies of the
bondholders and of the trustee, and may restrict the individual
right of action by bondholders as is customary in trust
agreements or trust indentures securing bonds and debentures of
corporations. A trust agreement may contain additional provisions
for the security of the bondholders.
(f) All expenses incurred in carrying out a trust agreement may
be treated as a part of the cost of the operation of the
industrial project or medical project.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
Sec. 1433.102. DEFAULT IN LEASE AGREEMENT OR MORTGAGE;
ENFORCEMENT. (a) An agreement relating to an industrial project
or medical project between the issuer and the lessee or between a
lessee and ultimate lessee must be for the benefit of the issuer.
The agreement must provide that, in the event of a default in the
payment of the principal of or the interest on the bonds or in
the performance of any agreement contained in a proceeding,
mortgage, or instrument, the payment or performance may be
enforced by mandamus or by the appointment of a receiver with the
power to charge rents and to apply the revenue from the project
in accordance with the resolution, mortgage, or instrument.
(b) A mortgage to secure bonds issued under this chapter may
also provide that, in the event of a default in the payment of
the mortgage or a violation of an agreement contained in the
mortgage, the mortgage may be foreclosed and the property
securing the bonds may be sold in any manner permitted by law.
The mortgage may provide that a trustee under the mortgage or the
holder of any of the bonds secured by the mortgage may purchase
the property at a foreclosure sale if the person is the highest
bidder.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
Sec. 1433.103. PURCHASE OPTION. (a) An issuer may grant a
lessee or ultimate lessee an option to purchase all or a part of
an industrial project or medical project when all bonds of the
issuer delivered to provide those facilities have been paid or
provision has been made for their final payment, if, while the
bonds or interest on the bonds remains unpaid, the lease rentals
are paid in the manner required and when the rentals become due.
(b) For purposes of this section, a payment is considered to be
paid in the manner required and when it becomes due if no event
of default is declared and the payment is made within 15 calendar
days of the date it is scheduled to become due.
(c) This section is the exclusive authority to convey or grant
an option to purchase an industrial project or medical project.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.