CHAPTER 264. COUNTY HOSPITAL AUTHORITIES
HEALTH AND SAFETY CODE
TITLE 4. HEALTH FACILITIES
SUBTITLE C. LOCAL HOSPITALS
CHAPTER 264. COUNTY HOSPITAL AUTHORITIES
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 264.001. SHORT TITLE. This chapter may be cited as the
County Hospital Authority Act.
Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.
Sec. 264.002. DEFINITIONS. In this chapter:
(1) "Authority" means a county hospital authority created under
this chapter.
(2) "Board" means the board of directors of an authority.
(3) "Bond" includes a note.
(4) "Bond resolution" means the resolution authorizing the
issuance of revenue bonds.
(5) "Hospital" means a hospital project as defined under Section
223.002.
(6) "Trust indenture" means the mortgage, deed of trust, or
other instrument pledging revenues of or creating a mortgage lien
on properties to secure revenue bonds issued by an authority.
(7) "Trustee" means the trustee under a trust indenture.
Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.
Sec. 264.003. CREATION. (a) The commissioners court of a
county by order may create a county hospital authority and
designate the name of the authority if the commissioners court
finds that creation of the authority is in the best interest of
the county and its residents.
(b) The authority is composed only of the territory in the
county.
(c) The authority is a body politic and corporate and a
political subdivision of the state.
(d) The authority does not have taxing power.
Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.
SUBCHAPTER B. BOARD OF DIRECTORS
Sec. 264.011. BOARD OF DIRECTORS. (a) The authority is
governed by a board of directors with at least seven and not more
than 11 members.
(b) The number of directors shall be determined at the time the
authority is created. The number may be changed by amendment of
the order creating the authority unless prohibited by the
resolution authorizing the issuance of bonds or by the trust
indenture securing the bonds. However, a reduction in the number
of directors may not shorten the term of an incumbent director.
Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.
Sec. 264.012. APPOINTMENT OF BOARD; TERMS OF OFFICE. (a) The
commissioners court shall appoint the directors of the authority
for terms not to exceed three years except as otherwise provided
by this section.
(b) The resolution authorizing the issuance of revenue bonds or
the trust indenture securing the bonds may prescribe the method
of selecting a majority of the directors and the term of office
of those directors, and the terms of directors appointed before
the issuance of the bonds are subject to the resolution or trust
indenture. The commissioners court shall appoint the remaining
directors.
(c) The trust indenture may provide that in the event of a
default, as defined in the trust indenture, the trustee may
appoint all directors. On that appointment, the terms of the
directors in office terminate.
(d) If the authority purchases an existing hospital or a
hospital under construction from a nonprofit corporation, the
directors shall be determined as provided in the contract of
purchase.
(e) An officer or employee of the county is not eligible for
appointment as a director.
Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.
Sec. 264.013. OFFICERS. (a) The board shall elect:
(1) a president and a vice-president, who must be directors;
(2) a secretary and a treasurer, who are not required to be
directors; and
(3) any other officers authorized by the authority's bylaws.
(b) The offices of secretary and treasurer may be combined.
Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.
Sec. 264.014. AUTHORITY OF BOARD. (a) Action may be taken by a
majority of the directors present if a quorum is present.
(b) The president has the same right to vote as other directors.
Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.
Sec. 264.015. COMPENSATION. A director may not receive
compensation for services but is entitled to reimbursement for
expenses incurred in performing services.
Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.
SUBCHAPTER C. POWERS AND DUTIES
Sec. 264.021. GENERAL POWERS. (a) The authority has the power
of perpetual succession.
(b) The authority may:
(1) have a seal;
(2) sue and be sued; and
(3) make, amend, and repeal its bylaws.
Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.
Sec. 264.022. ACQUISITION, OPERATION, AND LEASE OF HOSPITALS.
(a) The authority may construct, purchase, enlarge, furnish, or
equip one or more hospitals located in the county.
(b) The authority may operate and maintain one or more
hospitals. The authority shall operate a hospital without the
intervention of private profit for the use and benefit of the
public unless the authority leases the hospital.
(c) The board may lease a hospital or part of a hospital owned
by the authority for operation by the lessee as a hospital under
terms that are satisfactory to the board and the lessee. The
lease must:
(1) be authorized by resolution of the board;
(2) be executed on behalf of the authority by the president and
secretary of the board; and
(3) have the seal of the authority impressed on the lease.
(d) The bond resolution or trust indenture may prescribe
procedures and policies for the operation of a hospital. If a
hospital is used, operated, or acquired by a nonprofit
corporation or is leased, the authority may delegate to the
nonprofit corporation or lessee the duty to establish the
procedures and policies.
Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.
Sec. 264.023. EMPLOYEES. (a) The board may employ a manager or
executive director of a hospital and other employees, experts,
and agents.
(b) The board may delegate to the manager or executive director
the power to manage the hospital and to employ and discharge
employees.
(c) The board may employ legal counsel.
Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.
Sec. 264.024. MANAGEMENT AGREEMENT. (a) The board may enter
into an agreement with any person for the management or operation
of a hospital or part of a hospital owned by the authority under
terms that are satisfactory to the board and the contracting
party.
(b) The agreement must:
(1) be authorized by resolution of the board;
(2) be executed on behalf of the authority by the president and
secretary of the board; and
(3) have the seal of the authority impressed on the agreement.
(c) The board may delegate to the manager the power to manage
the hospital and to employ and discharge employees.
Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.
Sec. 264.025. COMMITTEES. (a) The board, by a resolution
adopted by a majority of the directors in office, may designate
one or more committees if authorized to do so by the authority's
bylaws.
(b) At least two directors must serve on each committee. Each
committee may have additional nonvoting members who are not
directors if authorized by the resolution or the bylaws.
(c) A committee may exercise the board's power to manage the
authority to the extent and in the manner provided by the
resolution or the bylaws. However, the board may not delegate to
a committee the power to:
(1) issue bonds;
(2) make or amend a lease of a hospital or a management
agreement relating to a hospital; or
(3) employ or discharge a manager or executive director.
Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.
Sec. 264.026. RATES FOR HOSPITAL SERVICES. (a) Except as
provided by Subsection (b), through charging sufficient rates for
services provided by a hospital and through its other revenue
sources, the board shall produce revenue sufficient to:
(1) pay the expenses of owning, operating, and maintaining the
hospital;
(2) pay the interest on the bonds as it becomes due;
(3) create a sinking fund to pay the bonds as they become due;
and
(4) create and maintain a bond reserve fund and other funds as
provided in the bond resolution or trust indenture.
(b) If the hospital is used, operated, or acquired by a
nonprofit corporation under Chapter 223 or is leased, the board
shall require the nonprofit corporation or the lessee to charge
rates for services provided by the hospital that are sufficient,
with the nonprofit corporation's or lessee's other sources of
revenue, to:
(1) pay the expenses of operating and maintaining the hospital;
and
(2) make payments or pay rentals to the authority that are
sufficient, with the authority's other pledged sources of
estimated revenue, to:
(A) pay the interest on the bonds as it becomes due;
(B) create a sinking fund to pay the bonds as they become due;
and
(C) create and maintain a bond reserve fund and other funds as
provided in the bond resolution or trust indenture.
Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.
Sec. 264.027. DEPOSITORY. The authority may:
(1) select a depository in the same manner that a county may
select a depository under Chapter 116, Local Government Code; or
(2) award its depository contract to the depository or
depositories of the county on the same terms as the terms of the
county depository agreement.
Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.
Sec. 264.028. EMINENT DOMAIN. (a) To carry out a power granted
by this chapter, the authority may acquire the fee simple title
to land, other property, and easements by condemnation under
Chapter 21, Property Code.
(b) The authority is considered to be a municipal corporation
for the purposes of Section 21.021(c), Property Code.
(c) The board shall determine the amount and character of the
interest in land, other property, and easements to be acquired
under this section.
Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.
Sec. 264.029. GIFTS AND ENDOWMENTS. The board may accept gifts
and endowments to hold and administer as required by the
respective donors.
Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.
Sec. 264.030. SALE OF PROPERTY; GENERAL PROVISIONS. (a) The
board may sell, through sealed bids or at a public auction, real
property acquired by gift or purchase that the board determines
is not needed for hospital purposes if the sale does not violate:
(1) a trust indenture or bond resolution relating to outstanding
bonds of the authority; or
(2) an agreement between the authority and a nonprofit
corporation under Chapter 223.
(b) If the board conducts the sale by sealed bids, the board
must provide notice of the sale under Section 272.001, Local
Government Code.
(c) If the board conducts the sale by public auction, the board
must publish a notice of the sale once a week for three
consecutive weeks in a newspaper of general circulation in the
county. The notice must include a description of the property and
the date, time, and place of the auction. The first notice must
be published not later than the 21st day before the date of the
auction.
(d) This section does not affect the authority's powers under
Chapter 223.
(e) This section does not apply to the sale or closing of a
hospital as provided in Section 264.031.
Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.
Amended by Acts 1997, 75th Leg., ch. 1011, Sec. 2, eff. Sept. 1,
1997.
Sec. 264.031. SALE OR CLOSING OF HOSPITAL. (a) The board may
sell all or part of a hospital owned by the authority or close
all or part of a hospital owned or operated by the authority. The
sale or closing must:
(1) be authorized by resolution of the board;
(2) be executed on behalf of the authority by the president and
secretary of the board; and
(3) be made by a document having the seal of the authority
impressed on it.
(b) The sale or closing of a hospital may not take effect before
the expiration of the time in which a petition may be filed under
Subsection (c).
(c) The board shall order and conduct an election on the sale or
closing if, before the 31st day after the date the governing body
authorizes the sale or closing, the board receives a petition
requesting the election signed by at least 10 percent of the
qualified voters of the county. The number of qualified voters is
determined by the most recent official list of registered voters.
(d) If a petition is filed under Subsection (c), the hospital
may be sold or closed only if a majority of the qualified voters
voting on the question approve the sale or closing.
Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.
Sec. 264.032. EMERGENCY BORROWING. (a) If the board declares
that funds are not available to meet lawfully authorized
obligations of the authority and that an emergency exists, the
board may borrow money at a rate of interest not to exceed the
maximum annual percentage rate allowed by law for authority
obligations at the time the loan is made.
(b) To secure a loan, the board may pledge:
(1) revenues of the authority that are not pledged to pay bonded
indebtedness of the authority;
(2) authority bonds that have been authorized but not sold; or
(3) revenues of the authority if the pledge is subordinate to
any pledge securing outstanding bonds of the authority.
(c) A loan for which bonds are pledged must mature not later
than the first anniversary of the date on which the loan is made.
A loan for which authority revenues are pledged must mature not
later than the fifth anniversary of the date on which the loan is
made.
(d) The board may not spend money obtained from a loan under
this section for any purpose other than the purpose for which the
board declared an emergency and, if bonds are pledged to pay the
loan, for any purpose other than the purposes for which the
pledged bonds were authorized.
Added by Acts 1997, 75th Leg., ch. 1011, Sec. 1, eff. Sept. 1,
1997.
Sec. 264.033. TIME WARRANTS. The authority may issue time
warrants in the manner in which a commissioners court may issue
time warrants under Subchapter C, Chapter 262, Local Government
Code.
Added by Acts 1997, 75th Leg., ch. 1011, Sec. 1, eff. Sept. 1,
1997. Amended by Acts 1999, 76th Leg., ch. 1064, Sec. 33, eff.
Sept. 1, 1999.
Sec. 264.034. FACILITIES AND SERVICES FOR THE DISABLED OR THE
ELDERLY. (a) The authority may construct, acquire, own,
operate, enlarge, improve, furnish, equip, or provide the
following facilities and services to care for the disabled or the
elderly:
(1) a nursing home or similar long-term care facility;
(2) elderly housing;
(3) assisted living services;
(4) home health care;
(5) personal care;
(6) special care;
(7) continuing care; or
(8) durable medical equipment.
(b) The authority may lease or enter into an operations or
management agreement to care for the disabled or the elderly
under Subsection (a).
(c) The authority may sell, transfer, otherwise convey, or close
all or part of a facility described by Subsection (a) and
discontinue a service described by Subsection (a).
(d) The authority may issue revenue bonds, notes, and time
warrants as provided by this chapter to acquire, construct, or
improve a facility described by Subsection (a).
(e) For purposes of Chapter 223, a facility or service described
by Subsection (a) is a hospital project.
Added by Acts 1997, 75th Leg., ch. 1011, Sec. 1, eff. Sept. 1,
1997.
Sec. 264.035. ESTABLISHMENT OF NONPROFIT CORPORATION. (a) The
authority may form and sponsor a nonprofit corporation under the
Texas Nonprofit Corporation Law, as described by Section 1.008,
Business Organizations Code, to own and operate all or part of
one or more ancillary health care facilities consistent with the
purposes of an authority under this chapter.
(b) The board shall appoint the board of directors of a
nonprofit corporation formed under this section.
(c) The authority may contribute money to or solicit money for
the nonprofit corporation. If the authority contributes money to
or solicits money for the corporation, the authority shall
establish procedures and controls sufficient to ensure that the
money is used by the corporation for public purposes.
(d) A nonprofit corporation formed under this section has the
same powers as a development corporation under Section 221.030.
(e) A nonprofit corporation formed under this section shall
comply with Chapter 2258, Government Code, in the same manner and
to the same extent that the authority is required to comply with
that chapter.
Added by Acts 2007, 80th Leg., R.S., Ch.
470, Sec. 2, eff. June 16, 2007.
Sec. 264.036. HOSPITAL AUTHORITY CONTRACTS, COLLABORATIONS, AND
JOINT VENTURES. The authority may, directly or through any
nonprofit corporation formed by the authority, contract,
collaborate, or enter into a joint venture with any public or
private entity as necessary to carry out the functions of or
provide services to the authority.
Added by Acts 2007, 80th Leg., R.S., Ch.
470, Sec. 2, eff. June 16, 2007.
SUBCHAPTER D. BONDS
Sec. 264.041. REVENUE BONDS. (a) The authority may issue
revenue bonds to provide funds for any of the authority's
purposes.
(b) Revenue bonds must be payable from, and secured by a pledge
of, revenues from the operation of one or more hospitals and any
other revenues from owning hospital property. Additionally,
revenue bonds may be secured by a mortgage or deed of trust on
real property owned by the authority or by a chattel mortgage on
the authority's personal property.
Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.
Sec. 264.042. FORM AND PROCEDURE. (a) Revenue bonds must be
authorized by a resolution adopted by a majority vote of a quorum
of the board. The bonds must:
(1) be signed by the president or vice-president of the board;
(2) be countersigned by the secretary of the board; and
(3) have the seal of the authority impressed or printed on the
bonds.
(b) Printed facsimile signatures may be substituted for the
actual signatures of the president, vice-president, or secretary.
Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.
Sec. 264.043. TERMS. (a) Revenue bonds must mature serially or
otherwise not more than 40 years after they are issued.
(b) Revenue bonds may:
(1) be sold at a price and under terms that the board considers
the most advantageous reasonably obtainable, except that the net
effective interest rate computed according to Chapter 1204,
Government Code, may not exceed 10 percent a year;
(2) be made callable before maturity at times and prices
prescribed in the resolution authorizing the bonds; and
(3) be made registrable as to principal or as to principal and
interest.
Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.
Amended by Acts 2001, 77th Leg., ch. 1420, Sec. 8.255, eff. Sept.
1, 2001.
Sec. 264.044. NOTICE. (a) Before the board adopts a resolution
authorizing the issuance of bonds other than refunding bonds, the
board must publish a notice of its intention to adopt the
resolution and of the maximum amount and maximum maturity of the
bonds.
(b) The notice must be published once a week for two consecutive
weeks in one or more newspapers of general circulation in the
authority. The first notice must be published not later than the
15th day before the date set for adoption of the resolution.
Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.
Sec. 264.045. REFERENDUM. (a) A petition requesting an
election on the proposition for the issuance of the revenue bonds
may be presented to the secretary or president of the board
before the date set for the adoption of the bond resolution. The
petition must be signed by at least 10 percent of the qualified
voters residing in the county who own taxable property in the
authority.
(b) The election shall be ordered and held as provided by
Chapter 1251, Government Code. The board, president, and
secretary shall perform the functions assigned under that chapter
respectively to the commissioners court, county judge, and county
clerk.
(c) If a majority of voters who vote at the election approve the
issuance of the bonds, the board may issue the bonds. If a
petition is not filed, the board may issue the bonds without an
election. However, the board may order the election on its own
motion if a petition is not filed.
Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.
Amended by Acts 2001, 77th Leg., ch. 1420, Sec. 8.256, eff. Sept.
1, 2001.
Sec. 264.046. JUNIOR LIEN BONDS; PARITY BONDS. (a) Bonds
constituting a junior lien on the revenues or properties may be
issued unless prohibited by the bond resolution or the trust
indenture.
(b) Parity bonds may be issued under conditions specified by the
bond resolution or trust indenture.
Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.
Sec. 264.047. BOND PROCEEDS; INVESTMENT OF FUNDS. (a) The
board may set aside from the proceeds from the sale of bonds:
(1) an amount for payment of not more than two years' interest
on the bonds;
(2) the amount required for operating expenses during the first
year of operation as estimated by the board; and
(3) an amount to fund any bond reserve fund or other reserve
funds provided for in the bond resolution or trust indenture.
(b) The bond proceeds may be deposited in banks and paid out
under terms as provided in the bond resolution or trust
indenture.
(c) The law relating to the security for and the investment of
county funds controls, to the extent applicable, the investment
of the authority's funds. The bond resolution or trust indenture
may further restrict those investments. Additionally, the
authority may invest its bond proceeds, until that money is
needed, as authorized by the bond resolution or trust indenture.
Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.
Sec. 264.048. REFUNDING BONDS. (a) The authority may issue
bonds to refund outstanding bonds in the same manner that other
bonds are issued under this chapter.
(b) Bonds issued under this section may be exchanged by the
comptroller or sold. The proceeds shall be applied as provided by
Subchapters B and C, Chapter 1207, Government Code, or other
applicable law.
Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.
Amended by Acts 2001, 77th Leg., ch. 1420, Sec. 8.257, eff. Sept.
1, 2001.
Sec. 264.049. APPROVAL AND REGISTRATION OF BONDS. (a) The
authority shall submit to the attorney general the bonds issued
under this chapter and the record relating to the issuance of
those bonds.
(b) If the attorney general finds that the bonds were issued in
accordance with this chapter, are valid and binding obligations
of the authority, and are secured as recited in the bonds:
(1) the attorney general shall approve the bonds; and
(2) the comptroller shall register the bonds and certify the
registration on the bonds.
(c) Following approval and registration, the bonds are
incontestable.
(d) The bonds are negotiable and must contain the following
provision: "The holder hereof shall never have the right to
demand payment thereof out of money raised or to be raised by
taxation."
Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.
Sec. 264.050. LEGAL INVESTMENTS. Bonds of the authority 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; or
(6) the sinking fund of a political corporation or subdivision
of the state, including a municipality, county, or school
district.
Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.