CHAPTER 221. HEALTH FACILITIES DEVELOPMENT ACT

Statutes > Texas Statutes > HEALTH AND SAFETY CODE > TITLE 4. HEALTH FACILITIES > CHAPTER 221. HEALTH FACILITIES DEVELOPMENT ACT

HEALTH AND SAFETY CODE

TITLE 4. HEALTH FACILITIES

SUBTITLE A. FINANCING, CONSTRUCTING, AND INSPECTING HEALTH

FACILITIES

CHAPTER 221. HEALTH FACILITIES DEVELOPMENT ACT

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 221.001. SHORT TITLE. This chapter may be cited as the

Health Facilities Development Act.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 221.002. PURPOSE; CONSTRUCTION. (a) The purpose of this

chapter is to enable a municipality, county, or hospital district

to create a corporation with the power to provide, expand, and

improve health facilities that the corporation determines are

needed to improve the adequacy, cost, and accessibility of health

care, research, and education in the state.

(b) The legislature intends that a corporation created under

this chapter be a public corporation, constituted authority, and

instrumentality authorized to issue bonds on behalf of its

sponsoring entity for the purposes of Section 103, Internal

Revenue Code of 1986 (26 U.S.C. Section 103). This chapter and

the rules and rulings issued under this chapter shall be

construed according to this intent.

intent of the legislature expressed by this section.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 221.003. DEFINITIONS. In this chapter:

(1) "Board of directors" means the board of directors of a

development corporation.

(2) "Bonds" includes notes, interim certificates, or other

evidences of indebtedness of a development corporation issued

under this chapter.

(3) "Cash management" means borrowing by a development

corporation on behalf of a user to allow the user to manage the

user's need for cash.

(4) "Cost," as applied to a health facility, includes:

(A) the cost of acquisition of land, a right-of-way, an option

to purchase land, an easement, a leasehold estate in land, or

another interest in land;

(B) the cost of acquisition, construction, repair, renovation,

remodeling, or improvement of a structure used as, or in

connection with, the health facility;

removal of a structure as necessary or incident to providing the

health facility;

(D) the cost of architectural, engineering, legal, or other

related services;

(E) preparation cost of plans, specifications, studies, surveys,

cost and revenue estimates, and other expenses necessary or

incident to planning, providing, or determining the feasibility

of the health facility;

(F) the cost of machinery, equipment, furnishings, and

facilities necessary or incident to placing the health facility

in operation;

(G) finance charges, interest, and marketing and start-up costs,

before and during construction and for not more than two years

after the date that construction is completed;

(H) costs incurred in connection with financing the health

facility, including:

(i) amounts paid under Sections 221.061(c) and (d);

(ii) financing, legal, accounting, financial advisory, and

appraisal fees, expenses, and disbursements;

(iii) the cost of a title insurance policy;

(iv) the cost of printing, engraving, and reproduction services;

and

(v) the cost of a trustee's or paying agent's initial or

acceptance fee;

(I) a cost of the development corporation incurred in connection

with providing the health facility, including reasonable amounts

to reimburse the development corporation for time spent by its

agents or employees relating to providing the health facility and

its financing; and

(J) the cost of financing, establishing, and funding a reserve

fund for a self-insurance or risk management program, including

the cost of preparation of a study, survey, or estimate of cost,

revenue, risk, or liability or other cost or expense necessary or

incident to planning, providing, or determining the feasibility

and continuing program and operating costs of a self-insurance or

risk management program.

(5) "Development corporation" means a health facilities

development corporation created under this chapter.

(6) "Director" means a member of the board of directors.

(7) "District" means a hospital district created under state

law.

(8) "Health facility" means property or an interest in property

for which the board of directors finds that financing,

refinancing, acquiring, providing, constructing, enlarging,

remodeling, renovating, improving, furnishing, or equipping is

required, necessary, or convenient for health care, research, or

education, including:

(A) land, a building, equipment, machinery, furniture, a

facility, or an improvement;

(B) a structure suitable for use as a:

(i) hospital, clinic, or health facility;

(ii) nursing home;

(iii) extended-care, outpatient, or rehabilitation facility;

(iv) pharmacy;

(v) medical or dental laboratory;

(vi) physicians' office building;

(vii) laundry, administrative, computer, communication,

fire-fighting or fire-prevention, food service and preparation,

storage, utility, or x-ray facility;

(viii) parking facility or area;

(ix) building related to a health care or health-care-related

facility or system;

(x) multiunit housing facility for medical staff, nurses,

interns, and other employees of a health care or

health-care-related facility or system, for patients of a health

care facility, or for relatives of those persons; or

(xi) medical or dental research or training facility or other

facility used in the education or training of health care

personnel;

furnishing a health care or health-care-related facility or

similar items necessary or convenient for the operation of such a

facility;

(D) an adult foster care facility, life care facility,

retirement home, retirement village, home for the aging, or other

facility that undertakes to furnish shelter, food, medical

attention, nursing services, medical services, social activities,

or other personal services or attention to an individual for more

than one year; and

(E) any other structure, facility, or equipment related to or

essential to the operation of a health care or

health-care-related facility.

(9) "Resolution" means an action, including an order or

ordinance, of a sponsoring entity's governing body.

(10) "Sponsoring entity" means a municipality, county, or

district.

(11) "User" means a person who, as owner, lessee, or manager or

through other authority, will occupy, operate, manage, or employ

a health facility after the facility is financed, acquired, or

constructed.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 221.004. ADOPTION OF ALTERNATE PROCEDURE. If a court holds

that a procedure under this chapter violates the federal or state

constitution, a development corporation by resolution may provide

an alternate procedure that conforms to the constitution.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 221.005. EFFECT OF CHAPTER ON OTHER LAW. (a) This chapter

does not limit the police powers provided by law to the state, a

municipality, or other political subdivision of the state or an

official or agency of the state, a municipality, or other

political subdivision of the state over property of a

corporation.

(b) This chapter does not exempt a corporation or user from

compliance with Chapter 104 or 225.

law not in conflict with this chapter to the extent convenient or

necessary to carry out a power or authority expressly or

impliedly granted by this chapter.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

SUBCHAPTER B. CREATION AND OPERATION OF DEVELOPMENT CORPORATION

Sec. 221.011. AUTHORITY TO CREATE. (a) A sponsoring entity may

create one or more nonmember, nonstock development corporations

for the sole public purpose of acquiring, constructing,

providing, improving, financing, and refinancing a health

facility to assist the maintenance of public health.

(b) The sponsoring entity may use the development corporation

to:

(1) provide a health facility to promote and develop health

care, research, and education for the public purpose of promoting

the health and welfare of state citizens; and

(2) issue bonds on the sponsoring entity's behalf to finance the

cost of the health facility.

public money or other thing of value in aid of a development

corporation.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 221.012. PROCEDURE. (a) If the governing body of a

sponsoring entity determines that it is in the public interest

and to the benefit of the sponsoring entity's residents and the

citizens of this state that a development corporation be created

to promote and develop new, expanded, or improved health

facilities to assist the maintenance of the public health and

welfare, the governing body, by resolution stating that

determination, may authorize and approve creation of a

development corporation, and shall approve proposed articles of

incorporation for the development corporation.

(b) No fewer than three residents of the sponsoring entity who

are each at least 18 years of age may act as incorporators of the

development corporation by signing and verifying the articles of

incorporation and delivering the original and two copies of the

articles of incorporation to the secretary of state.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 221.013. ARTICLES OF INCORPORATION. (a) The articles of

incorporation of a development corporation must include:

(1) the corporation's name;

(2) a statement that the corporation is a nonprofit public

corporation;

(3) the duration of the corporation, which may be perpetual;

(4) a statement that the purpose of the corporation is to

acquire, construct, provide, improve, finance, and refinance a

health facility to assist the maintenance of the public health;

(5) a statement that the corporation has no members and is a

nonstock corporation;

(6) the street address of the corporation's initial registered

office and the name of its initial registered agent at that

address;

(7) the number of directors on the initial board of directors

and those directors' names and addresses;

(8) each incorporator's name and street address;

(9) the sponsoring entity's name and address; and

(10) a statement that the sponsoring entity by resolution has

specifically authorized the corporation to act on its behalf to

further the public purpose set forth in the articles of

incorporation, and has approved the articles of incorporation.

(b) The corporate powers enumerated in this chapter are not

required to be included in the articles of incorporation.

regulation of the internal affairs of the development

corporation, including a provision required or permitted by this

chapter to be in the bylaws.

(d) Except as provided by Subsection (e), if a bylaw conflicts

with the articles of incorporation, the articles of incorporation

control.

(e) Unless the articles of incorporation provide that a change

in the number of directors may be made only by amendment to those

articles, the change may be made by amendment to the bylaws.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 221.014. CERTIFICATE OF INCORPORATION. (a) The

incorporators shall deliver to the secretary of state the

original and two copies of the articles of incorporation and a

certified copy of the resolution by the sponsoring entity's

governing body approving the articles of incorporation.

(b) If the secretary of state finds that the articles of

incorporation comply with this chapter and have been approved by

the sponsoring entity's governing body, the secretary of state,

on payment of all fees required by this chapter, shall:

(1) write "filed" on the original and each copy of the articles

of incorporation and the month, day, and year of the filing;

(2) file the original in the office of the secretary of state;

and

(3) issue two certificates of incorporation with a copy of the

articles of incorporation attached to each.

incorporation, with a copy of the articles of incorporation

attached, to the incorporators or their representative and to the

sponsoring entity's governing body.

(d) The development corporation's existence begins on issuance

of the certificate of incorporation. The certificate of

incorporation is conclusive evidence that all conditions

precedent required to be performed by the incorporators and by

the sponsoring entity have been performed and that the

corporation has been incorporated under this chapter.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 221.015. ORGANIZATIONAL MEETING. (a) After issuance of

the certificate of incorporation and at the call of a majority of

the incorporators, the board of directors named in the articles

of incorporation shall hold an organizational meeting in this

state to adopt bylaws and elect officers and for any other

purposes.

(b) Not later than the sixth day before the date of the meeting,

the incorporators shall mail notice, postage prepaid, to each

director of the time and place of the meeting.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 221.016. AMENDMENT OF ARTICLES OF INCORPORATION. (a)

Articles of incorporation may be amended to contain any provision

that is lawful under this chapter if the sponsoring entity's

governing body by appropriate resolution determines that the

amendment is advisable and authorizes or directs that an

amendment be made.

(b) The development corporation's president or vice-president

and secretary or assistant secretary, or the presiding officer

and the secretary or clerk of the sponsoring entity's governing

body, shall execute articles of amendment on behalf of the

development corporation. An officer signing the articles of

amendment shall verify those articles.

(1) the name of the development corporation;

(2) if the amendment alters a provision of the original or

amended articles of incorporation, an identification by reference

or description of the altered provision and a statement of its

text as amended;

(3) if the amendment is an addition to the original or amended

articles of incorporation, a statement of that fact and the full

text of each added provision;

(4) the name and current address of the sponsoring entity;

(5) a statement that the amendment was authorized by the

governing body of the sponsoring entity; and

(6) the date of the meeting at which the governing body adopted

or approved the amendment.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 221.017. CERTIFICATE OF AMENDMENT. (a) The original and

two copies of the articles of amendment and a certified copy of

the resolution of the sponsoring entity's governing body

authorizing the articles shall be delivered to the secretary of

state.

(b) If the secretary of state finds that the articles of

amendment comply with this chapter and are authorized by the

sponsoring entity's governing body, the secretary of state, on

payment of all fees required by this chapter, shall:

(1) write "filed" on the original and each copy of the articles

of amendment and the month, day, and year of the filing;

(2) file the original in the office of the secretary of state;

and

(3) issue two certificates of amendment with a copy of the

articles of amendment attached to each.

corporation or its representative and to the sponsoring entity's

governing body a certificate of amendment with a copy of the

articles of amendment attached.

(d) The amendment to the articles of incorporation takes effect

on issuance of the certificate of amendment.

(e) An amendment does not affect an existing cause of action in

favor of or against the development corporation, a pending suit

to which the corporation is a party, or an existing right of any

person. Change of the corporate name by amendment does not abate

a suit brought by or against the corporation under its former

name.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 221.018. RESTATED ARTICLES OF INCORPORATION. (a) A

development corporation may authorize, execute, and file restated

articles of incorporation by following the procedure to amend

articles of incorporation, including obtaining authorization from

the sponsoring entity's governing body.

(b) The restated articles of incorporation must restate the

entire text of the articles of incorporation as amended or

supplemented by all previous certificates of amendment. The

restated articles of incorporation may also contain further

amendments to the articles of incorporation.

amendments that were not previously in the articles of

incorporation and previous certificates of amendment, the

introductory paragraph of the restated articles of amendment must

contain a statement that the instrument accurately copies the

articles of incorporation and all amendments that are in effect

on the date of the filing without further changes, except that

the number of directors then constituting the board of directors

and those directors' names and addresses may be inserted in place

of the similar information concerning the initial board of

directors, and the incorporators' names and addresses may be

omitted.

(d) If the restated articles of incorporation contain further

amendments not included in the articles of incorporation and

previous certificates of amendment, the instrument containing the

restated articles of incorporation must:

(1) include for each further amendment a statement that the

amendment has been made in conformity with this chapter;

(2) include the statements required by this chapter to be

contained in articles of amendment, except that the full text of

the amendment need not be included except in the restated

articles of incorporation as amended;

(3) contain a statement that the instrument accurately copies

the articles of incorporation and all previous amendments in

effect on the date of the filing, as further amended by the

restated articles of incorporation, and that the instrument does

not contain any other change, except that the number of directors

then constituting the board of directors and those directors'

names and addresses may be inserted in place of the similar

information concerning the initial board of directors, and the

incorporators' names and addresses may be omitted; and

(4) restate the entire text of the articles of incorporation as

amended and supplemented by all previous certificates of

amendment and as further amended by the restated articles of

incorporation.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 221.019. RESTATED CERTIFICATE OF INCORPORATION. (a) The

original and two copies of the restated articles of incorporation

and a certified copy of the resolution of the sponsoring entity's

governing body authorizing the articles shall be delivered to the

secretary of state.

(b) If the secretary of state finds that the restated articles

of incorporation comply with this chapter and have been

authorized by the sponsoring entity's governing body, the

secretary of state, on payment of all fees required by this

chapter, shall:

(1) write "filed" on the original and each copy of the restated

articles of incorporation and the month, day, and year of the

filing;

(2) file the original in the office of the secretary of state;

and

(3) issue two restated certificates of incorporation with a copy

of the restated articles of incorporation attached to each.

of incorporation, with a copy of the restated articles of

incorporation attached, to the development corporation or its

representative and to the sponsoring entity's governing body.

(d) On issuance by the secretary of state of the restated

certificate of incorporation, the original articles of

incorporation and all amendments are superseded and the restated

articles of incorporation become the development corporation's

articles of incorporation.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 221.020. REGISTERED OFFICE AND AGENT. (a) A development

corporation shall continuously maintain a registered office and

registered agent in this state.

(b) The registered office may be, but need not be, the same as

the development corporation's principal office. The registered

agent may be:

(1) an individual resident of this state whose business office

is the same as the registered office; or

(2) a domestic or foreign profit or nonprofit corporation that

is authorized to transact business or conduct affairs in this

state and that has a principal or business office that is the

same as the registered office.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 221.021. CHANGE OF REGISTERED OFFICE OR AGENT. (a) A

development corporation may change its registered office,

registered agent, or both, by filing the original and a copy of a

statement in the office of the secretary of state. The president

or vice-president of the corporation shall execute and verify the

statement.

(b) The statement must include:

(1) the development corporation's name;

(2) the post office address of the corporation's current

registered office;

(3) if the registered office is to be changed, the post office

address of the corporation's new registered office;

(4) the name of the corporation's registered agent;

(5) if the registered agent is to be changed, the name of the

successor registered agent;

(6) a statement that, after the change, the post office address

of the registered office will be the same as the post office

address of the business office of the registered agent; and

(7) a statement that the change was authorized by the board of

directors or by a corporate officer authorized by the board of

directors to make the change.

with this chapter, the secretary of state, when all fees have

been paid as required by this chapter, shall:

(1) write "filed" on the original and each copy of the statement

and the month, day, and year of the filing;

(2) file the original statement in the office of the secretary

of state; and

(3) return the copy of the statement to the corporation or its

representative.

(d) The change made by the statement takes effect on the filing

of the statement.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 221.022. RESIGNATION OF REGISTERED AGENT. (a) A

registered agent of a development corporation may resign by:

(1) mailing or delivering written notice to the corporation; and

(2) filing the original and two copies of the notice in the

office of the secretary of state not later than the 10th day

after the date the notice is mailed or delivered to the

corporation.

(b) The notice must include the development corporation's last

known address, a statement that written notice was given to the

corporation, and the date the written notice was given to the

corporation.

with this chapter, the secretary of state, on payment of all fees

required by this chapter, shall:

(1) write "filed" on the original notice and both copies and the

month, day, and year of the filing;

(2) file the original notice in the office of the secretary of

state;

(3) return one copy of the notice to the resigning registered

agent; and

(4) deliver one copy of the notice to the development

corporation at the address shown in the notice.

(d) The resignation takes effect on the 31st day after the date

the notice is received by the secretary of state.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 221.023. AGENTS FOR SERVICE. (a) The president, each

vice-president, and the registered agent of a development

corporation are the corporation's agents on whom may be served a

process, notice, or demand required or permitted by law to be

served on the corporation.

(b) If a development corporation fails to appoint or maintain a

registered agent in this state, or if the registered agent cannot

with reasonable diligence be found at the registered office, the

secretary of state is an agent of the corporation on whom a

process, notice, or demand may be served.

copies of the process, notice, or demand to the secretary of

state, the deputy secretary of state, or a clerk in charge of the

corporation department of the secretary of state's office. The

secretary of state shall immediately forward one copy of the

process, notice, or demand by registered mail to the development

corporation at its registered office.

(d) Service on the secretary of state is returnable not earlier

than the 30th day after the date of the service.

(e) The secretary of state shall keep a record of each process,

notice, and demand served, including the time of the service and

the action of the secretary of state in reference to the process,

notice, or demand.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Amended by:

Acts 2005, 79th Leg., Ch.

41, Sec. 2, eff. September 1, 2005.

Sec. 221.024. BOARD. (a) A development corporation's affairs

are governed by a board of directors composed of at least three

individuals appointed by the sponsoring entity's governing body.

Directors may be divided into classes.

(b) A director serves for a term of not more than six years. The

terms of directors of different classes may be of different

lengths.

is appointed and until a successor is appointed and has

qualified.

(d) The sponsoring entity's governing body may remove a director

for cause or at any time without cause.

(e) A director serves without compensation but is entitled to

reimbursement for actual expenses incurred in the performance of

duties under this chapter.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 221.025. OFFICERS. (a) The officers of a development

corporation are:

(1) the president, vice-president, and secretary; and

(2) other officers, including a treasurer, and assistant

officers considered necessary.

(b) An officer is elected or appointed at the time, in the

manner, and for the term provided by the articles of

incorporation or bylaws, except that an officer's term may not

exceed three years. If the articles of incorporation or bylaws do

not contain those requirements, the board of directors shall

elect or appoint each officer annually.

except that the same person may not simultaneously hold the

offices of president and secretary.

(d) An officer may be removed by the persons authorized to elect

or appoint that officer if those persons believe the best

interests of the corporation will be served by the removal.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 221.026. INDEMNIFICATION. (a) Except as provided by

Subsection (c), a development corporation may indemnify a

director or officer or a former director or officer for expenses

and costs, including attorney's fees, actually or necessarily

incurred by the person in connection with a claim asserted

against the person, by action in court or other forum, because of

the person's being or having been a director or officer.

(b) If a development corporation has not fully indemnified a

director or officer under Subsection (a), the court in a

proceeding in which a claim is asserted against the director or

officer, or a court having jurisdiction over an action brought by

the director or officer on a claim for indemnity, may assess

indemnity against the corporation or its receiver or trustee. The

assessment must equal:

(1) the amount that the director or officer paid to satisfy the

judgment or compromise the claim, not including any amount paid

the corporation; and

(2) to the extent the court considers reasonable and equitable,

the expenses and costs, including attorney's fees, actually and

necessarily incurred by the director or officer in connection

with the claim.

matter if the director or officer is guilty of negligence or

misconduct in relation to the matter. A court may not assess

indemnity unless it finds that the director or officer was not

guilty of negligence or misconduct in relation to the matter in

which indemnity is sought.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 221.027. BYLAWS. (a) The board of directors shall adopt a

development corporation's initial bylaws and may amend or repeal

the bylaws or adopt new bylaws. The bylaws and each amendment and

repeal of the bylaws must be approved by the sponsoring entity's

governing body by resolution.

(b) The bylaws may contain any provision for the regulation and

management of the development corporation's affairs consistent

with law and the articles of incorporation.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 221.028. COMMITTEES. (a) If permitted by the articles of

incorporation or bylaws, the board of directors, by resolution

adopted by a majority of directors in office, may designate one

or more committees consisting of two or more directors to

exercise the board's authority in the management of the

development corporation to the extent provided by the resolution,

articles of incorporation, or bylaws. The designation of a

committee or delegation of authority to a committee does not

relieve the board of directors or an individual director of a

responsibility imposed by law.

(b) Other committees not exercising the authority of the board

of directors in the management of the development corporation may

be designated. Those committees may be, but need not be, limited

to directors, and shall be designated and appointed by:

(1) the board of directors by resolution of a majority of

directors adopted at a meeting at which a quorum is present; or

(2) the president, if authorized by the articles of

incorporation, bylaws, or a resolution of a majority of the board

of directors adopted at a meeting at which a quorum is present.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 221.029. MEETINGS; ACTION WITHOUT MEETING. (a) A regular

board of directors meeting may be called and held, with or

without notice, as provided by the bylaws. A special board of

directors meeting may be held on notice as provided by the

bylaws. A regular or special meeting may be held at any location

in the state.

(b) Notice or waiver of notice of a regular or special board of

directors meeting need not specify the business to be transacted

or the meeting's purpose, unless required by the bylaws.

director of the meeting, unless the attendance is for the express

purpose of objecting to the transaction of any business on the

ground that the meeting is not lawfully called or convened.

(d) A quorum is the lesser of:

(1) a majority of the number of directors established by the

bylaws, or if the bylaws do not establish a number of directors,

a majority of the number of directors stated in the articles of

incorporation; or

(2) the number of directors, which number may not be smaller

than three, established as a quorum by the articles of

incorporation or bylaws.

(e) The act of a majority of the directors present at a meeting

at which a quorum is present is an act of the board of directors,

unless the act of a larger number is required by the articles of

incorporation or bylaws. The articles of incorporation control

if, with respect to an action to be taken by the board of

directors, the articles of incorporation require the vote or

concurrence of a greater proportion of directors than required by

this chapter with respect to the action.

(f) An action required or permitted to be taken at a board of

directors meeting may be taken without a meeting if a consent is

signed by all directors. An action permitted to be taken at a

committee meeting may be taken without a meeting if a consent is

signed by all members of the committee. A consent under this

subsection must be in writing and must set forth the action to be

taken. The consent has the effect of a unanimous vote and may be

stated as a unanimous vote in articles or other documents filed

with the secretary of state under this chapter.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 221.030. CORPORATION'S GENERAL POWERS. (a) Subject to

Section 221.035, a development corporation has the rights and

powers necessary or convenient to accomplish the corporation's

purposes, including the power to:

(1) acquire, by purchase, devise, gift, lease, or a combination

of those methods, construct, or improve, or cause a user to

acquire, construct, or improve, one or more health facilities

located in the state and located:

(A) wholly or partly within the limits of the sponsoring entity;

(B) outside the limits of the sponsoring entity, with the

consent of each other sponsoring entity in which the health

facility is or is to be located;

(2) lease as lessor all or part of a health facility for the

rental amount and on the terms and conditions that the

corporation considers advisable;

(3) sell for installment payments or other method of payment,

option or contract for sale, and convey all or part of a health

facility for the price and on the terms and conditions that the

corporation considers advisable;

(4) make a contract, incur a liability, borrow money at a rate

of interest the corporation determines, and secure bonds or

obligations by mortgage or pledge of all or part of the

corporation's property, franchises, and income;

(5) make a secured or unsecured loan to provide temporary or

permanent financing or refinancing of all or part of the cost of

a health facility, including refunding of an outstanding

obligation, mortgage, or advance issued, made, or given by a

person for the cost of a health facility;

(6) charge and collect interest on a loan for the loan payments

and on the terms that the board of directors considers advisable;

(7) lend money for its corporate purposes, invest and reinvest

corporate funds, and take and hold property as security for the

payment of the money loaned or invested;

(8) purchase, receive, lease, or acquire in another manner, own,

hold, improve, or use property or an interest in property, or

deal in any other manner in or with that property, regardless of

location, as the purposes of the corporation require or, if the

property is donated, subject to the terms of the donation;

(9) sell, convey, mortgage, pledge, lease, exchange, transfer,

and otherwise dispose of all or part of the corporation's

property and assets;

(10) appoint agents of the corporation for the period the

corporation determines, and determine their duties;

(11) sue, be sued, complain, and defend in its corporate name;

and

(12) have a corporate seal, which the corporation may alter as

it considers necessary, and use the seal by having it or a

facsimile of it impressed on, affixed to, or reproduced on an

instrument required or authorized to be executed by the

corporation's proper officers.

(b) A development corporation may not incur a financial

obligation under this chapter unless it is payable solely from:

(1) bond proceeds;

(2) revenue derived from the lease or sale of a health facility

or from a loan made by a corporation to finance or refinance a

health facility in whole or part;

(3) revenue derived from operating a health facility; or

(4) other revenue provided by a user of a health facility.

corporation the power of taxation or eminent domain, police

power, or an equivalent sovereign power of the state or the

sponsoring entity.

(d) This section does not authorize a corporate director or

officer to exercise a power enumerated by this section in a

manner inconsistent with the development corporation's articles

of incorporation or bylaws or beyond the scope of the

corporation's purposes.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 221.031. CONVEYANCE OF LAND. (a) A development

corporation may convey land by deed if the conveyance is

authorized by an appropriate resolution of the board of

directors. The deed may be with or without the corporation's seal

and must be signed by the corporation's president,

vice-president, or attorney.

(b) If the deed is acknowledged by the signing officer or

attorney to be the act of the development corporation, or if the

deed is proved in the manner prescribed for other conveyances of

land, it may be recorded in the same manner and with the same

effect as other deeds.

president or vice-president and recorded is prima facie evidence

that the board of directors adopted the appropriate resolution.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 221.032. PERFECTION OF SECURITY INTEREST. A security

interest granted by a corporation may be perfected in the manner

and with the effect provided by Chapter 9, Business &

Commerce Code.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Amended by Acts 1999, 76th Leg., ch. 414, Sec. 2.32, eff. July 1,

2001.

Sec. 221.033. TAXATION. (a) A health facility, including a

leasehold estate in a health facility, that is owned by a

development corporation and that, except for the purposes and

nonprofit nature of the corporation, would be taxable to the

corporation under Title 1, Tax Code, shall be assessed to the

user of the health facility to the same extent and subject to the

same exemptions from taxation as if the user owned the health

facility. If there is more than one user of the health facility,

the health facility shall be assessed to the users in proportion

to the value of the rights of each user to occupy, operate,

manage, or employ the health facility.

(b) The user of a health facility is considered the owner of the

health facility for purposes of the application of:

(1) sales and use taxes in construction, sale, lease, or rental

of the health facility; and

(2) other taxes levied or imposed by the state or a political

subdivision of the state.

performance of charitable functions and is exempt from taxation

by the state, a municipality, or other political subdivision of

the state. Bonds issued by a corporation under this chapter, a

transfer of the bonds, interest on the bonds, and a profit from

the sale or exchange of the bonds are exempt from taxation by the

state, a municipality, or other political subdivision of the

state.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 221.034. NET EARNINGS. A development corporation is a

nonprofit corporation, and no part of its net earnings remaining

after payment of its bonds and expenses of accomplishing its

public purpose may benefit a person other than the sponsoring

entity.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 221.035. ALTERATION OF DEVELOPMENT CORPORATION OR

ACTIVITIES. The sponsoring entity, in its sole discretion, may

alter the development corporation's structure, organization,

programs, or activities, subject only to limitations provided by

law relating to the impairment of contracts entered into by the

corporation.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 221.036. EXAMINATION OF BOOKS AND RECORDS. A

representative of the sponsoring entity may examine all books and

records of the development corporation at any time.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 221.037. WAIVER OF NOTICE. If a notice is required to be

given to a director by this chapter, the articles of

incorporation, or bylaws, a waiver of the notice signed by the

person entitled to the notice, before or after the time that

would have been stated in the notice, is equivalent to giving the

notice.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

SUBCHAPTER C. BONDS

Sec. 221.061. AUTHORITY TO ISSUE; USE OF PROCEEDS. (a) A

development corporation may issue bonds to pay all or part of the

cost of a health facility or for cash management.

(b) Before preparation and issuance of definitive bonds, the

development corporation may issue interim receipts or temporary

bonds, with or without coupons, that may be exchanged for

definitive bonds after the definitive bonds are executed and

available for delivery. The term of the interim receipts or

temporary bonds may not exceed three years.

the cost of a health facility for which the bonds have been

issued, for making a loan in the amount of all or part of the

cost of that health facility, or for deposit to a reserve fund

for the bonds. The proceeds shall be disbursed in the manner and

under the restrictions determined by the development corporation.

(d) From the bond proceeds, the development corporation shall be

paid an amount equal to:

(1) the corporation's expenses and costs in issuing, selling,

and delivering the bonds, including financing, legal, financial

advisory, and printing expenses; and

(2) the compensation paid to employees of the corporation for

the time the employees spend on activities relating to issuing,

selling, and delivering the bonds.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 221.062. INFORMATION FILED WITH SPONSORING ENTITY. (a)

Not later than the 15th day before the date on which bonds are

issued, the proceeds of which are to be used to pay all or part

of the cost of a health facility, the development corporation

shall file with the sponsoring entity's governing body a full and

complete description of the health facility, including:

(1) an explanation of the projected costs and of the necessity

for the proposed health facility; and

(2) the name of the proposed user of the health facility.

(b) If the bond proceeds are to be used for cash management, the

user shall file with the sponsoring entity's governing body a

forecast of the user's need for cash based on the user's most

recent revenue estimate. The forecast must contain a detailed

report of estimated revenues and expenditures for each month for

a period of not more than one year.

proceeds, the development corporation may amend the filing

required by this section and use the proceeds as provided by the

amended filing if the sponsoring entity's governing body

determines that the use according to the amended filing furthers

the purposes of this chapter.

(d) Information filed under this section is public information

open to public inspection.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 221.063. TERMS. (a) Bonds issued under this chapter must

be dated and bear interest at a fixed or variable rate determined

by the development corporation. The bonds must mature at the time

determined by the corporation, but may not mature later than 40

years after their date of issuance. Bonds issued for cash

management may not mature later than 24 months after their date

of issuance.

(b) The bonds may be made redeemable before maturity at the

price and on the terms determined by the development corporation.

attached, must be in the form and denomination, payable at the

place, and executed or authenticated in the manner that the

development corporation determines.

(d) The bonds may be issued in coupon or registered form or be

payable to a specific person, as the development corporation

determines. The corporation may provide for the registration of

coupon bonds as to principal only, for the conversion of coupon

bonds into fully registered bonds without coupons, and for

reconversion into coupon bonds of fully registered bonds without

coupons. The duty of conversion or reconversion may be imposed on

a trustee in a trust agreement.

(e) The signature or facsimile of the signature of an officer

that appears on the bonds or coupons remains valid and sufficient

for all purposes regardless of whether the person ceases to be an

officer before delivery of and payment for the bonds.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 221.064. SALE. (a) A development corporation shall sell

at a public or private sale the bonds at the price it determines.

(b) The net effective interest rate on the bonds, computed

according to Chapter 1204, Government Code, may not exceed the

maximum annual interest rate established for business loans of

$250,000 or more in this state.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Amended by Acts 2001, 77th Leg., ch. 1420, Sec. 8.249, eff. Sept.

1, 2001.

Sec. 221.065. REFUNDING BONDS. (a) A development corporation

may issue bonds to refund any of its valid outstanding bonds,

including any bonds issued for unspecified projects and including

any redemption premium on the bonds and interest accrued to the

date of redemption, on a finding by the board of directors of the

development corporation that there is a public benefit and a

public purpose for the refunding.

(b) The provisions of this chapter generally applicable to bonds

apply to the issuance, maturity, terms, and holder's rights in

the refunding bonds, and to the development corporation's rights,

duties, and obligations in relation to the refunding bonds.

exchange or substitution for outstanding bonds or may sell the

refunding bonds and use the proceeds to pay or redeem outstanding

bonds.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Amended by Acts 1993, 73rd Leg., ch. 829, Sec. 2, eff. June 19,

1993.

Sec. 221.066. SOURCE OF PAYMENT; BONDS NOT GENERAL OBLIGATION.

(a) The principal of, interest on, and any redemption penalty on

bonds issued under this chapter are payable solely from, and may

be secured by a pledge of all or part of, one or more of the

following:

(1) the bond proceeds;

(2) revenue derived from the lease or sale of a health facility

or from a loan made by a development corporation to finance or

refinance all or part of a health facility;

(3) revenue derived from the operation of a health facility; or

(4) other revenue provided by a user of a health facility.

(b) The bonds are not an obligation or a pledge of the faith and

credit of the state, a sponsoring entity, or other political

subdivision or agency of the state.

(1) neither the state nor a political subdivision or agency of

the state, including the sponsoring entity, is obligated to pay

the bonds or interest on the bonds; and

(2) neither the faith and credit nor the taxing power of the

state, the sponsoring entity, or other political subdivision or

agency of the state is pledged to the payment of the principal of

or interest or any redemption premium on the bonds.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 221.067. EXEMPT SECURITIES. (a) Bonds issued under this

chapter and any interest coupons are exempt securities under The

Securities Act (Article 581-1 et seq., Vernon's Texas Civil

Statutes).

(b) If the bonds are secured by an agreement by a user to pay to

the development corporation amounts sufficient to pay the

principal of and interest and any redemption premium on the

bonds, the agreement, for the purposes of The Securities Act

(Article 581-1 et seq., Vernon's Texas Civil Statutes), is a

separate security issued to purchasers of the bonds by the user,

and not by the corporation. The agreement is exempt from that Act

only if:

(1) that Act exempts the agreement; or

(2) the bonds or the payments to be made under the agreement are

guaranteed by any person and the guarantee is an exempt security

under that Act.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 221.068. LEGAL INVESTMENTS; SECURITY FOR DEPOSITS. (a)

Unless made ineligible under other law, rules, or rulings, bonds

are legal and authorized investments for:

(1) a bank;

(2) a savings bank;

(3) a trust company;

(4) a savings and loan association;

(5) an insurance company;

(6) a fiduciary, trustee, or guardian; and

(7) a sinking fund of a municipality, county, school district,

or other political corporation or subdivision of the state.

(b) The bonds may secure the deposit of public funds of the

state or a municipality, county, school district, or other

political corporation or subdivision of the state. The bonds are

lawful and sufficient security for those deposits at their face

value if accompanied by all appurtenant unmatured coupons, if

any.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

SUBCHAPTER D. DISSOLUTION OF CORPORATION

Sec. 221.081. DISSOLUTION AUTHORIZED. After a development

corporation's bonds and other obligations are paid and

discharged, or adequate provision is made for their payment and

discharge, the sponsoring entity's governing body by written

resolution shall authorize and direct the dissolution of the

corporation.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 221.082. ARTICLES OF DISSOLUTION. (a) Articles of

dissolution on behalf of the corporation shall be executed by:

(1) the president or vice-president and the secretary or

assistant secretary; or

(2) the presiding officer of the sponsoring entity's governing

body and the secretary or clerk of that body.

(b) An officer signing the articles of dissolution shall verify

them.

(1) the name of the development corporation;

(2) the name and address of the sponsoring entity;

(3) a statement that the dissolution was authorized by the

governing body of the sponsoring entity;

(4) the date of the meeting at which the dissolution was

authorized;

(5) a statement that all of the corporation's bonds and

obligations have been paid and discharged or that adequate

provision has been made for their payment and discharge; and

(6) a statement that no suit is pending in a court against the

corporation or that adequate provision has been made for the

satisfaction of any judgment, order, or decree that may be

entered against the corporation in each pending suit.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 221.083. CERTIFICATE OF DISSOLUTION. (a) The original and

two copies of the articles of dissolution shall be delivered to

the secretary of state.

(b) If the secretary of state finds that the articles of

dissolution comply with this chapter and have been authorized by

the sponsoring entity's governing body, the secretary of state,

on payment of all fees required by this chapter, shall:

(1) write "filed" on the original and each copy of the articles

of dissolution and the month, day, and year of the filing;

(2) file the original in the office of the secretary of state;

and

(3) issue two certificates of dissolution with a copy of the

articles of dissolution attached to each.

dissolution with a copy of the articles of dissolution attached

to the representative of the dissolved development corporation

and to the sponsoring entity's governing body.

(d) The existence of the development corporation ceases on

issuance of the certificates of dissolution, except for the

purpose of suits, other proceedings, and appropriate corporate

action by the directors and officers of the corporation as

provided by this chapter.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 221.084. EXTENSION OF DURATION. If a corporation is

dissolved by expiration of its duration, the corporation may

amend its articles of incorporation to extend its duration within

three years after the date of dissolution.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 221.085. VESTING PROPERTY IN SPONSORING ENTITY. The title

to all funds and other property owned by a development

corporation when it dissolves automatically vests in the

sponsoring entity without further conveyance, transfer, or other

act.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 221.086. RIGHTS, CLAIMS, AND LIABILITIES BEFORE

DISSOLUTION. The dissolution of a development corporation by

issuance of a certificate of dissolution or expiration of its

duration does not impair a remedy available to or against the

corporation or a director or officer of the corporation for a

right or claim existing or a liability incurred before the

dissolution, if action or other proceeding on the remedy is begun

within three years after the date of the dissolution. The action

may be prosecuted or defended by the corporation in its corporate

name. The directors and officers may take corporate or other

action as appropriate to protect the remedy, right, or claim.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

SUBCHAPTER E. ADMINISTRATION BY SECRETARY OF STATE

Sec. 221.101. ADMINISTRATION OF CHAPTER. The secretary of state

may act as reasonably necessary to efficiently administer this

chapter and to perform the duties imposed by this chapter.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 221.102. FEES. (a) The secretary of state shall charge

and collect fees for:

(1) filing articles of incorporation and issuing two

certificates of incorporation;

(2) filing articles of amendment and issuing two certificates of

amendment;

(3) filing a statement of change of address of registered office

or change of registered agent, or both;

(4) filing restated articles of incorporation and issuing two

restated articles of incorporation; and

(5) filing articles of dissolution.

(b) The fees are in the amounts charged by the secretary of

state for the respective filings and issuances under the Texas

Non-Profit Corporation Act (Article 1396-1.01 et seq., Vernon's

Texas Civil Statutes).

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 221.103. NOTICE AND APPEAL OF DISAPPROVAL. (a) If the

secretary of state fails to approve a document required by this

chapter to be approved by the secretary of state, the secretary

of state, not later than the 10th day after the date the document

is delivered to the secretary of state, shall give written notice

of the disapproval to the person who delivered the document. The

notice must state the reasons for the disapproval.

(b) The person may appeal the disapproval to a district court of

Travis County by filing with the clerk of the court a petition

including a copy of the disapproved document and a copy of the

disapproval notice.

the secretary of state's action or direct the secretary of state

to take action the court considers proper.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 221.104. DOCUMENTS AS PRIMA FACIE EVIDENCE. The following

documents shall be received by a court, public office, or

official body as prima facie evidence of the facts, or the

existence or nonexistence of the facts, stated in the document:

(1) a certificate issued by the secretary of state under this

chapter;

(2) a copy, certified by the secretary of state, of a document

filed in the office of the secretary of state under this chapter;

and

(3) a certificate of the secretary of state under the state seal

as to the existence or nonexistence of a fact relating to a

development corporation that would not appear from a document or

certificate under Subdivision (1) or (2).

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Amended by Acts 1993, 73rd Leg., ch. 300, Sec. 33, eff. Aug. 30,

1993.

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Texas Codes and Statutes

CHAPTER 221. HEALTH FACILITIES DEVELOPMENT ACT