CHAPTER 362. SOLID WASTE RESOURCE RECOVERY FINANCING ACT
HEALTH AND SAFETY CODE
TITLE 5. SANITATION AND ENVIRONMENTAL QUALITY
SUBTITLE B. SOLID WASTE, TOXIC CHEMICALS, SEWAGE, LITTER, AND
WATER
CHAPTER 362. SOLID WASTE RESOURCE RECOVERY FINANCING ACT
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 362.001. SHORT TITLE. This chapter may be cited as the
Solid Waste Resource Recovery Financing Act.
Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.
Sec. 362.002. POLICY AND PURPOSE. (a) The policy of the state
is to safeguard the public health, general welfare, and physical
property from solid waste pollution by encouraging the processing
of solid waste for the purpose of extracting, converting to
energy, or otherwise separating and preparing solid waste for
reuse.
(b) It is the policy of the state that the processing of solid
waste for reuse is essential to the well-being and survival of
state inhabitants and the protection of the environment. That
processing will conserve and develop state natural resources,
within the meaning of Article XVI, Section 59(a), of the Texas
Constitution by preventing further damage to the environment.
Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.
Sec. 362.003. DEFINITIONS. In this chapter:
(1) "Bond" includes a note or other evidence of indebtedness.
(2) "Cost" means expenses related or incidental to the
acquisition, construction, or improvement of a system, including:
(A) real property acquired for a system;
(B) finance charges;
(C) interest before and during construction and for a period the
issuer finds reasonable after completion of construction;
(D) expenses incurred for architectural, engineering, and legal
services;
(E) license fees and royalties;
(F) expenses incurred for plans, specifications, surveys, and
estimates;
(G) expenses incurred in placing the system in operation; and
(H) administration expenses.
(3) "Issuer" means a district or authority that:
(A) is created under Article XVI, Section 59, or Article III,
Section 52, of the Texas Constitution;
(B) is authorized by law to own a waste disposal system; and
(C) includes within its boundaries all of at least one county.
(4) "Public agency" means:
(A) an issuer;
(B) a municipality; or
(C) another political subdivision or agency of the state
authorized to own and operate a solid waste collection,
transportation, or disposal facility or system.
(5) "Real property" means land, a structure, a franchise or
interest in land, air rights, or another thing or right
pertaining to that property, including an easement, right-of-way,
use, lease, license, or other incorporeal hereditament, or an
estate, interest, or legal or equitable right, including a term
for years or lien on that property because of a judgment,
mortgage, or other reason.
(6) "Resolution" means the action, including an order or
ordinance, that authorizes bonds and that is taken by the
issuer's governing body.
(7) "Security agreement" means a trust indenture or other
instrument securing bonds.
(8) "Solid waste" has the meaning assigned by Chapter 361 (Solid
Waste Disposal Act).
(9) "System" means real property, plants, works, facilities,
equipment, pipelines, machinery, vehicles, vessels, rolling
stock, licenses, or franchises used or useful:
(A) in connection with processing solid waste to extract,
recover, reclaim, salvage, reduce, or concentrate the solid
waste, or convert it to energy or useful matter or resources
including electricity, steam, or other form of energy, metal,
fertilizer, glass, or other form of resource; or
(B) in the transportation, receipt, storage, transfer, and
handling of solid waste, the preparation, separation, or
processing of solid waste for reuse, the handling and
transportation of recovered matter, resources, or energy, and the
handling, transportation, and disposition of nonrecoverable solid
waste residue.
Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.
Sec. 362.004. EFFECT OF OTHER LAW. (a) This chapter does not
limit the authority of the Texas Natural Resource Conservation
Commission or a local government to:
(1) perform a power or duty provided by other law; or
(2) adopt and enforce rules to carry out duties under Chapter
361 (Solid Waste Disposal Act).
(b) Chapter 361 (Solid Waste Disposal Act) shall be enforced
without regard to ownership of a system financed under this
chapter.
(c) This chapter does not affect the right of a private person
to pursue, against a person who contracts with an issuer under
this chapter, a common-law remedy to abate, or recover damages
for, a condition of pollution or other nuisance. A person
purchasing or leasing a system under contract with an issuer may
not assert the defense of sovereign immunity because of the
issuer's ownership of the system.
(d) An issuer or public agency may use other law not in conflict
with this chapter to the extent convenient or necessary to carry
out any authority expressly or impliedly granted by this chapter.
Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.
Amended by Acts 1991, 72nd Leg., 1st C.S., ch. 3, Sec. 1.031,
eff. Aug. 12, 1991.
Sec. 362.005. EXCEPTION FOR CERTAIN MATERIAL PRESORTED TO BE
RECYCLED. This chapter does not authorize a public agency to
compel burning of material presorted to be recycled.
Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.
SUBCHAPTER B. OPERATION OF SYSTEM
Sec. 362.011. AUTHORITY TO ACQUIRE AND TRANSFER PROPERTY. (a)
An issuer may acquire, construct, and improve a system for lease
or sale as provided by this chapter and may acquire real property
as the issuer considers appropriate for the system.
(b) An issuer may lease its system to another person.
(c) An issuer may sell a system, by installment payments or
other method of payment, to any person on conditions the issuer
considers desirable.
(d) A lease or sales contract entered into under this chapter
may be for the term agreed to by the parties, and must provide
that it continues in effect until the bonds specified in the
lease or contract, or refunding bonds issued in place of those
bonds, are fully paid.
Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.
Sec. 362.012. LOCATION OF SYSTEM. A system may be located on
the property of any person.
Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.
Sec. 362.013. CONTRACT TERMS AND PROCEDURES. (a) The
provisions of Chapter 2253, Government Code, that relate to
performance and payment bonds apply to a contract entered into by
an issuer.
(b) An issuer may contract for the acquisition, construction,
and improvement of a system on the terms and under the conditions
that the governing body of the issuer considers appropriate,
including a contract under which a person agrees to perform and
supply all services and materials required in connection with the
design, construction, and placing into operation of a system.
(c) The issuer shall publish notice of the time and place the
contract will be let in a newspaper of general circulation within
the boundaries of the issuer once a week for two consecutive
weeks, with the first publication occurring not later than the
15th day before the date the contract will be let.
(d) The issuer shall analyze competitive proposals received in
response to the notice and let the contract to the responsible
party making the proposal that is most advantageous to the issuer
and that will result in the most economical completion of the
system.
Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.
Amended by Acts 1995, 74th Leg., ch. 76, Sec. 5.95(17), eff.
Sept. 1, 1995.
Sec. 362.014. PUBLIC AGENCY CONTRACT. (a) A public agency, on
terms it considers appropriate, may contract with an issuer or
other person who finances, constructs, or improves a system to
sell, lease, or dedicate the use of real property or all or part
of a solid waste disposal facility for use as part of the system.
(b) A public agency may contract with any person for the supply,
collection, or transportation of solid waste for disposal at a
system. The public agency may agree in the contract to supply
minimum amounts of solid waste and to pay minimum fees for the
right to dispose of the solid waste at the system during the term
of the contract. The contract may continue in effect for the term
of years that the public agency's governing body determines to be
desirable.
Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.
Sec. 362.015. PAYMENT OF CONTRACT FROM SOURCES OTHER THAN TAXES.
(a) A public agency may use any available revenue or resource
for, or pledge the revenue or resource to, payment of all or part
of the amount due under a contract under Section 362.014. The
public agency may agree in the contract to assure availability of
payment when required.
(b) The public agency may agree to make sufficient provision in
its annual budget to make all payments under the contract.
(c) The public agency may fix, charge, and collect, from its
inhabitants or other users or beneficiaries of a service or
facility provided in connection with the contract, a fee, rate,
charge, rental, or other amount for the service or facility,
including a water charge, sewage charge, solid waste disposal fee
or charge, garbage collection or handling fee, or other fee or
charge. The public agency may use those amounts for, or pledge
them to, payments required under the contract, and may agree in
the contract to make that use or pledge in an amount sufficient
to make all or part of the payments when due.
Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.
Sec. 362.016. PAYMENT OF CONTRACT FROM TAXES. (a) A public
agency that has taxing power and that, when it enters into a
contract under Section 362.014, is using its general funds,
including tax revenue, to pay all or part of the cost of
providing solid waste collection, transportation, and disposal
services may agree that the payments under the contract are an
obligation against the public agency's taxing power.
(b) Except as provided by Subsection (c), a person is not
entitled to demand payment from taxes during any period unless
the contracting person is willing and able to receive and dispose
of solid waste during the period as provided by the contract.
(c) A public agency that has taxing power may hold an election
substantially in accordance with Chapter 1251, Government Code,
applicable to issuance of bonds by a municipality to determine
whether a contract may be an obligation secured by the taxing
power of the public agency to an extent not permitted by
Subsection (b). If it is determined by a favorable vote at the
election that the public agency is authorized to levy an ad
valorem tax to make all or part of the payments under the
contract, and that the payments are to be made unconditionally
regardless of whether the contracting person is willing and able
to receive and dispose of solid waste as provided by the
contract, the contract is an obligation secured by the public
agency's taxing power to the extent provided. The ballot
proposition at the election must plainly state that ad valorem
tax funds may be used to make contract payments if the contractor
cannot receive or dispose of solid waste because of mechanical
failure of the facility financed by the bonds or for other
reasons.
Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.
Amended by Acts 2001, 77th Leg., ch. 1420, Sec. 8.269, eff. Sept.
1, 2001.
Sec. 362.017. INDUSTRIAL DEVELOPMENT CORPORATION. (a) A public
agency that has entered into a contract under Section 362.014 may
sponsor the creation of an industrial development corporation
under the Development Corporation Act (Subtitle C1, Title 12,
Local Government Code).
(b) The corporation may issue bonds, notes, or other evidences
of indebtedness under the Development Corporation Act (Subtitle
C1, Title 12, Local Government Code) to finance the cost of a
system under the contract regardless of whether the system is
located within the boundaries of the public agency.
Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
885, Sec. 3.15, eff. April 1, 2009.
Sec. 362.018. COST OF CERTAIN REQUIRED ALTERATIONS. The
relocation, raising, lowering, rerouting, changing of grade, or
altering of construction of a highway, railroad, electric
transmission line, telegraph or telephone property or facility,
or pipeline made necessary by the actions of an issuer shall be
accomplished at the sole expense of the issuer, who shall pay the
cost of the required activity as necessary to provide comparable
replacement, minus the net salvage value of any replaced
facility. The issuer shall pay that amount from the proceeds of
bonds issued to finance a system.
Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.
Sec. 362.019. TAXATION. (a) Bonds issued under this chapter,
the transfer of the bonds, and income from the bonds are exempt
from taxation in this state.
(b) A system purchased or leased under this chapter is subject
to ad valorem taxation payable by the person contracting with the
issuer according to state law. An item purchased or leased as
part of a system is subject to all applicable state taxation.
Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.
SUBCHAPTER C. BONDS
Sec. 362.031. AUTHORITY TO ISSUE BONDS AND BOND ANTICIPATION
NOTES. (a) An issuer may issue bonds, payable from revenues of
the issuer, to finance or refinance the cost of acquiring,
constructing, or improving a system.
(b) The bonds may be issued in more than one series and from
time to time as required to carry out the purposes of this
chapter.
(c) The issuer may declare an emergency because funds are not
available to pay the principal of and interest on its bonds or to
meet other needs of the issuer and may issue bond anticipation
notes to borrow the needed money. The bond anticipation notes may
bear interest at any fixed, floating, or other type of rate, and
must mature within one year of their date. The bond anticipation
notes shall be paid with the proceeds of bonds, or bonds may be
issued and delivered in exchange for and in substitution of the
notes.
Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.
Sec. 362.032. FORM AND PROCEDURE. (a) Bonds under this chapter
must be authorized by resolution. The bonds must:
(1) be signed by the presiding officer or assistant presiding
officer of the issuer's governing body;
(2) be attested by the secretary of the issuer's governing body;
and
(3) have the seal of the issuer impressed, printed, or
lithographed on the bonds.
(b) The bonds may have the characteristics and bear the
designation determined by the issuer's governing body, except
that the designation must include:
(1) the name of each person guaranteeing the contractual
obligation of each person leasing or purchasing the system; or
(2) a statement, if applicable, that a group of persons will be
leasing or purchasing the system.
(c) The governing body may authorize a required signature to be
printed or lithographed on the bonds. The issuer may adopt or use
the signature of a person who has been an officer, regardless of
whether the person is an officer when the bonds are delivered to
a purchaser.
Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.
Sec. 362.033. TERMS. Bonds issued under this chapter must
mature serially or in another manner not more than 40 years after
they are issued. The bonds may:
(1) bear interest at a fixed, floating, or other type of rate,
and be sold at public or private sale at a price or under terms
that the issuer's governing body determines to be the most
advantageous reasonably obtainable;
(2) be made callable before maturity at times and prices
prescribed by the issuer's governing body;
(3) be in coupon form; and
(4) be registrable as to principal or as to principal and
interest.
Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.
Sec. 362.034. APPROVAL AND REGISTRATION. (a) An issuer shall
submit bonds that have been authorized by its governing body,
including refunding bonds and the record relating to the bond
issuance, to the attorney general for examination as to their
validity. If the bonds state that they are secured by a pledge of
proceeds of a lease or contract of sale previously entered into
by the issuer, the issuer may submit the contract with the bonds.
(b) If the bonds have been authorized in accordance with state
law and any contract has been made in accordance with state law,
the attorney general shall approve the bonds and contract and the
comptroller shall register the bonds.
(c) Following approval and registration, the bonds and contract
are incontestable.
Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.
Sec. 362.035. PLEDGE OF REVENUE AND OTHER AMOUNTS AS SECURITY.
(a) Bonds are payable solely from and shall be secured by a
pledge of:
(1) revenues of the issuer derived from the lease or sale of a
system;
(2) amounts attributable to bond proceeds; or
(3) amounts obtained through the exercise of a remedy provided
by the governing body's resolution or a security agreement
securing the bonds in the manner specified in the resolution or
security agreement.
(b) The governing body shall fix and periodically revise
payments under a lease or contract for sale of a system so that
the payments and other pledged revenue will be sufficient to pay
the bonds and interest on the bonds as they mature and become due
and to maintain reserve or other funds as provided by the
resolution or security agreement.
(c) The governing body may direct the investment of money in the
funds created by the resolution or security agreement, and may
delegate this authority to its authorized agent.
Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.
Sec. 362.036. SECURITY MAY APPLY TO ADDITIONAL BONDS. (a) A
pledge under Section 362.035 may reserve the right, under
conditions specified by the pledge, to issue additional bonds to
be on a parity with or subordinate to the bonds secured by the
pledge.
(b) Bonds issued under this chapter may be combined in the same
issue with bonds issued for other purposes authorized by law.
Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.
Sec. 362.037. TRUST AS SECURITY. (a) The issuer's governing
body may additionally secure bonds, including refunding bonds, by
a trust indenture under which the trustee may be a bank that has
trust powers and that is located inside or outside the state.
(b) Regardless of any mortgage, deed of trust lien, or security
interest under Section 362.038, the trust indenture may:
(1) contain any provision that the governing body prescribes for
the security of the bonds and the preservation of the trust
estate;
(2) provide for amendment or modification of the trust
indenture;
(3) condition the right to spend the issuer's money or sell an
issuer's system as provided by the trust indenture;
(4) provide in other manners for protection and enforcement of
bondholders' rights and remedies as is reasonable and proper; and
(5) provide for the issuance of replacement bonds for lost,
stolen, or mutilated bonds.
Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.
Sec. 362.038. OTHER SECURITY. (a) The bonds may be
additionally secured by a mortgage, deed of trust lien, or
security interest in a designated system of the issuer's
governing body and all property and rights appurtenant to the
system.
(b) The mortgage, deed of trust lien, or security interest may
give the trustee the power to operate the system, sell the system
to pay the debt, or take any other action to secure the bonds.
(c) A purchaser at a sale under a mortgage or deed of trust lien
is the absolute owner of the system and rights purchased.
Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.
Sec. 362.039. ACTION BY BONDHOLDERS. (a) The resolution or a
security agreement may provide that on default in the payment of
principal of or interest on the bonds, or threatened default
under conditions stated in the resolution or security agreement,
and on petition of the holders of outstanding bonds, a court of
competent jurisdiction may appoint a receiver to collect and
receive pledged income.
(b) The resolution or security agreement may limit or qualify
the rights of less than all of the holders of outstanding bonds
payable from the same source to institute or prosecute litigation
affecting the issuer's property or income.
Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.
Sec. 362.040. INVESTMENT AND USE OF PROCEEDS. (a) The
governing body of the issuer may set aside amounts from the
proceeds of the sale of bonds for payment into an interest and
sinking fund and reserve funds and may provide for this in the
resolution or a security agreement. All expenses of issuing and
selling the bonds shall be paid from the proceeds of the sale of
the bonds.
(b) Proceeds from the sale of bonds shall be invested in the
manner provided by the resolution or security agreement.
(c) A bank or trust company with trust powers may be designated
as depository for proceeds of bonds or of sales contract or lease
revenue. The bank or trust company shall furnish indemnifying
bonds or pledge securities as required by the issuer to secure
the deposits.
Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.
Sec. 362.041. REFUNDING BONDS. (a) The governing body of an
issuer may issue refunding bonds to refund the principal of,
interest on, and any redemption premium applicable to outstanding
bonds. The refunding bonds may:
(1) refund more than one series of outstanding bonds and combine
the revenue pledged to the outstanding bonds for the security of
the refunding bonds; and
(2) be secured by other or additional revenues and deed of trust
liens.
(b) The provisions of this chapter relating to issuance of
bonds, security for bonds, approval by the attorney general, and
remedies of bondholders apply to refunding bonds.
(c) The comptroller shall register refunding bonds:
(1) on the surrender and cancellation of the original bonds; or
(2) without surrender and cancellation of the original bonds if:
(A) the resolution authorizing the refunding bonds provides that
their proceeds be deposited in the bank where the original bonds
are payable; and
(B) the refunding bonds are issued in an amount sufficient to
pay the principal of, interest on, and any redemption premium
applicable to the original bonds up to their option date or
maturity date.
Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.
Sec. 362.042. LEGAL INVESTMENTS; SECURITY FOR DEPOSITS. (a)
Bonds issued under this chapter 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;
(7) a trustee; and
(8) a sinking fund of a municipality, county, school district,
or other political corporation or subdivision of the state.
(b) The bonds may secure the deposits 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 in an amount up
to their face value, if accompanied by all appurtenant unmatured
coupons.
Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.
Sec. 362.043. BONDS NOT GENERAL OBLIGATION. The bonds are
special obligations payable solely from revenues pledged to their
payment and are not general obligations of the governing body,
the issuer, or the state. A bondholder may not demand payment
from money obtained from a tax or other revenue of the issuer,
excluding revenues pledged to the payment of the bonds.
Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.