CHAPTER 454. MUNICIPAL MASS TRANSPORTATION SYSTEMS
TRANSPORTATION CODE
TITLE 6. ROADWAYS
SUBTITLE K. MASS TRANSPORTATION
CHAPTER 454. MUNICIPAL MASS TRANSPORTATION SYSTEMS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 454.001. AUTHORITY. (a) A municipality may own, purchase,
construct, improve, extend, and operate a mass transportation
system to carry passengers for hire within the municipality, its
suburbs, and adjacent areas.
(b) A municipality, individually or in cooperation with the
United States, may:
(1) undertake research, development, and demonstration projects
for a mass transportation system in the municipality, its
suburbs, and adjacent areas; and
(2) acquire, construct, and improve a facility or equipment for
use, by operation, lease, or otherwise, in mass transportation
service in those areas on, under, over, along, or across a public
street or highway and on real property, an easement, or a
right-of-way acquired for that purpose.
Acts 1995, 74th Leg., ch. 165, Sec. 1, eff. Sept. 1, 1995.
Sec. 454.002. ESSENTIAL GOVERNMENTAL FUNCTIONS. (a) Mass
transportation service provided by a municipality directly or
through another entity by lease, contract, or other manner is an
essential governmental function and not a proprietary function
for all purposes, including the application of Chapter 101, Civil
Practice and Remedies Code, if the service is provided:
(1) on a fixed rail or other designated and dedicated route;
(2) over a distance of less than 20 miles; and
(3) primarily for travel through or to an area of historical,
architectural, recreational, or cultural interest.
(b) An independent contractor that on behalf of a municipality
provides mass transportation service that is an essential
governmental function under Subsection (a) is liable for damages
only to the extent that the municipality would be liable if the
municipality were performing the function.
(c) This section does not apply to taxicab transportation
service.
Acts 1995, 74th Leg., ch. 165, Sec. 1, eff. Sept. 1, 1995.
Sec. 454.003. FEDERAL GRANTS AND LOANS. (a) A municipality may
accept a grant or loan from the United States to finance all or
part of the cost of acquiring, constructing, or improving a
facility or equipment for use, by operation, lease, or otherwise,
in mass transportation service in the municipality, its suburbs,
and adjacent areas and in coordinating mass transportation
service with highway and other transportation in those areas.
(b) Ratification by referendum of a regional authority under
Chapter 451 by less than all municipalities in the metropolitan
area as defined in that chapter does not affect the eligibility
of an excepted municipality to receive federal transit grants
under the National Mass Transportation Assistance Act of 1974 or
subsequent federal statute.
(c) Ratification by referendum of an authority under Chapter 452
by less than all municipalities in the metropolitan area as
defined in that chapter does not affect the eligibility of an
excepted municipality to receive federal transit grants under the
Surface Transportation Assistance Act of 1978 or subsequent
federal statute.
Acts 1995, 74th Leg., ch. 165, Sec. 1, eff. Sept. 1, 1995.
Sec. 454.004. MANAGEMENT. (a) By the terms of an instrument
evidencing an encumbrance of a mass transportation system or the
terms of an ordinance, a municipality may place the management of
a mass transportation system with the governing body of the
municipality or a board of trustees named in the instrument or
ordinance.
(b) A board of trustees of a mass transportation system must
consist of three to nine members, one of whom must be the mayor
of the municipality. The instrument or ordinance must set the
trustees' compensation, which may not exceed two percent of the
gross annual receipts of the system. The instrument or ordinance
may specify:
(1) the term of office of the board of trustees;
(2) the board's powers and duties;
(3) the manner in which the board may exercise its powers and
duties;
(4) the election of the trustees' successors; and
(5) any matter relating to the board's organization.
(c) On any matter not covered by the instrument or ordinance,
the board is governed by the laws and rules controlling the
governing body of the municipality to the extent applicable.
Acts 1995, 74th Leg., ch. 165, Sec. 1, eff. Sept. 1, 1995.
Sec. 454.005. LEASE OF SYSTEM. (a) In lieu of operating a mass
transportation system, the governing body of a municipality or a
board of trustees managing the system, with the approval of the
municipality's governing body by resolution, may enter into a
lease or other contractual arrangement for the operation of the
system by a privately owned and operated corporation.
(b) The guaranteed or contingent payment of rentals, computed on
revenue or gross or net profits or determined by any other method
of compensation the governing body or board of trustees
determines to be reasonable, may be the consideration for a lease
or other contract under this section.
(c) The municipality must give public notice and make a request
for the submission of bids in the manner required by law for the
taking of bids for a public construction contract before entering
into a lease or other contract under this section. The
municipality shall accept the best bid submitted, considering the
rentals to be paid and the experience and financial
responsibility of the corporations submitting the bids.
Acts 1995, 74th Leg., ch. 165, Sec. 1, eff. Sept. 1, 1995.
Sec. 454.006. FARES. (a) Fares charged by a mass
transportation system may be set according to a zone system or
other classification that the municipality determines to be
reasonable.
(b) Unless otherwise considered necessary by the governing body
of the municipality to maintain the level and quality of service
desired, a mass transportation system shall charge and collect
fares that are sufficient to:
(1) pay all operating, maintenance, depreciation, and
replacement charges;
(2) provide for extensions to the extent permitted by this
chapter; and
(3) provide and maintain in the time and manner prescribed by
the applicable ordinances, deeds of trust, and indentures money
sufficient to pay for debt service and reserves for the security
and orderly payment of bonds or notes.
Acts 1995, 74th Leg., ch. 165, Sec. 1, eff. Sept. 1, 1995.
Sec. 454.007. USE OF REVENUE TO PAY OTHER MUNICIPAL DEBTS
PROHIBITED. (a) Except as permitted by the ordinance
authorizing the bonds or notes or the deed of trust or indenture
securing the bonds or notes or as provided by Subsection (b), the
revenue of a mass transportation system may not be used to pay
any other debt, expense, or obligation of the municipality.
(b) An acquired mass transportation system may pay the
municipality that acquired the system for the loss of ad valorem
taxes previously paid by the owners of the system until the
indebtedness secured by the taxes is paid.
Acts 1995, 74th Leg., ch. 165, Sec. 1, eff. Sept. 1, 1995.
Sec. 454.008. RECORDS AND ACCOUNTS. (a) The mayor of a
municipality shall install and maintain a complete system of
records and accounts showing the revenue collected and showing
separately the amount spent or set aside for operation, salaries,
labor, materials, repairs, maintenance, depreciation,
replacements, extensions, and debt service on bonds or notes
issued under this chapter.
(b) A mayor commits an offense if the mayor fails to install and
maintain a system of records and accounts as required by
Subsection (a) on or before the 90th day after the date the mass
transportation system is completed. An offense under this section
is a misdemeanor punishable by a fine of not less than $100 or
more than $1,000.
Acts 1995, 74th Leg., ch. 165, Sec. 1, eff. Sept. 1, 1995.
Sec. 454.009. ANNUAL REPORT. (a) Not later than February 1 of
each year, the superintendent or manager of a mass transportation
system shall file with the mayor of the municipality a detailed
report of the operations for the year ending the preceding
January 1, showing the total sums collected, the balance due, the
total disbursements made, and amounts remaining unpaid as a
result of the operation of the system during the year.
(b) A superintendent or manager commits an offense if the
superintendent or manager fails to file as required by Subsection
(a). An offense under this section is a misdemeanor punishable by
a fine of not less than $100 or more than $1,000.
Acts 1995, 74th Leg., ch. 165, Sec. 1, eff. Sept. 1, 1995.
Sec. 454.010. ENFORCEMENT. A taxpayer or holder of indebtedness
of a mass transportation system residing within the municipality
may enforce this chapter by appropriate civil action in a
district court of the county in which the municipality is
located.
Acts 1995, 74th Leg., ch. 165, Sec. 1, eff. Sept. 1, 1995.
SUBCHAPTER B. REVENUE BONDS AND NOTES
Sec. 454.021. AUTHORITY TO ISSUE. (a) A municipality may issue
bonds and notes from time to time and in the amounts it considers
necessary or appropriate for acquiring, constructing, improving,
or extending a mass transportation system.
(b) Bonds or notes issued under this chapter are fully
negotiable and may be made redeemable before maturity, at the
option of the issuing municipality, at the price and under the
terms fixed by the issuing municipality in the ordinance
authorizing the bonds or notes.
(c) Bonds or notes issued under this chapter shall be sold for
the price the governing body of the municipality determines to be
in the best interest of the municipality.
(d) Subject to the restrictions in this chapter, the governing
body of a municipality may fix the form, conditions, and details
of bonds and notes issued under this chapter.
Acts 1995, 74th Leg., ch. 165, Sec. 1, eff. Sept. 1, 1995.
Sec. 454.022. NOTICE OF ORDINANCE AUTHORIZING ISSUANCE. Before
adopting an ordinance authorizing the issuance of bonds or notes
under this chapter, the governing body of a municipality shall
give notice of the time when the ordinance is to be adopted. The
notice shall be published in a newspaper of general circulation
in the municipality, in at least two issues, with the first
publication occurring at least 14 days before the date on which
the ordinance is to be adopted.
Acts 1995, 74th Leg., ch. 165, Sec. 1, eff. Sept. 1, 1995.
Sec. 454.023. PETITION FOR ELECTION. (a) The governing body of
a municipality may issue bonds or notes under this chapter
without an election unless a petition requesting an election on
the question is filed with the municipal secretary before the
scheduled time for adopting the ordinance authorizing the
issuance of the bonds or notes.
(b) A petition under this section must be signed by at least 10
percent of the registered voters of the municipality who have
rendered their property for taxation.
Acts 1995, 74th Leg., ch. 165, Sec. 1, eff. Sept. 1, 1995.
Sec. 454.024. ELECTION. (a) If a petition meeting the
requirements of Section 454.023 is filed:
(1) the governing body of the municipality shall hold an
election on the question as provided by Chapter 1251, Government
Code; and
(2) the bonds or notes may not be issued unless a majority of
the votes received at the election favor the question.
(b) The governing body of a municipality may call an election
for the issuance of bonds or notes under this chapter without a
petition under Section 454.023.
Acts 1995, 74th Leg., ch. 165, Sec. 1, eff. Sept. 1, 1995.
Amended by Acts 2001, 77th Leg., ch. 1420, Sec. 8.398, eff. Sept.
1, 2001.
Sec. 454.025. ENCUMBRANCE OF TRANSPORTATION SYSTEM. (a) To
secure the payment of bonds or notes issued under this chapter, a
municipality may encumber:
(1) all or any part of the mass transportation system;
(2) the property of the system, including a bus or other
vehicle, machinery, and equipment of any kind used in the
operation of the system;
(3) the revenue of the system;
(4) the franchise of the system; or
(5) any other thing relating to the system that is acquired or
is to be acquired.
(b) A municipality may:
(1) encumber separately any property, including a bus or other
vehicle, machinery, or equipment of any kind; or
(2) acquire, hold, use, or contract for any property, including
a bus or other vehicle, machinery, or equipment of any kind,
under a lease arrangement, chattel mortgage, or conditional sale,
including an equipment trust transaction.
(c) This chapter does not prohibit a municipality from
encumbering a transportation system for the purposes of
purchasing, building, mortgaging, extending, or repairing, or
reconstructing another system and purchasing necessary property
in connection with the system.
Acts 1995, 74th Leg., ch. 165, Sec. 1, eff. Sept. 1, 1995.
Sec. 454.026. TRANSPORTATION SYSTEM FRANCHISE. In addition to
encumbering the property of a mass transportation system under
Section 454.025, a municipality, by the terms of an instrument
evidencing that encumbrance, may grant to the purchaser under the
power of sale in the instrument a franchise to operate the system
and the system's property. A franchise under this section may not
exceed 25 years.
Acts 1995, 74th Leg., ch. 165, Sec. 1, eff. Sept. 1, 1995.
Sec. 454.027. OPERATING EXPENSES AS LIEN ON REVENUE. If the
revenue of a mass transportation system is encumbered under this
chapter, the expenses of operation and maintenance, including all
salaries, labor, materials, interest, repairs, and extensions
necessary to render efficient service and each proper item of
expense, are a first lien against the revenues. The expense of an
extension may be a lien prior to an existing lien only if:
(1) the governing body of the municipality considers the
extension necessary to keep the system in operation and render
adequate service to the municipality and its inhabitants; or
(2) the extension is necessary to meet a condition that would
otherwise impair the original securities.
Acts 1995, 74th Leg., ch. 165, Sec. 1, eff. Sept. 1, 1995.
Sec. 454.028. OBLIGATION OF TRANSPORTATION SYSTEM NOT MUNICIPAL
DEBT. (a) An obligation of a mass transportation system:
(1) is not a debt of the municipality;
(2) is solely a charge on the property, including the pledged
revenue, of the encumbered system; and
(3) may not be included in determining the power of the
municipality to issue any bonds or notes for any purpose
authorized by law.
(b) A municipality may make payments on bonds or notes issued
under this chapter out of any other funds that lawfully may be
used for that purpose.
Acts 1995, 74th Leg., ch. 165, Sec. 1, eff. Sept. 1, 1995.
Sec. 454.029. ADDITIONAL BONDS OR NOTES. (a) While bonds or
notes that are payable from and secured by a pledge of the
revenue of a mass transportation system are outstanding, the
municipality that issued the bonds or notes may from time to time
issue other bonds or notes for the purpose of:
(1) extending, improving, or both extending and improving the
system; or
(2) acquiring another mass transportation system.
(b) Bonds or notes issued under Subsection (a) constitute a lien
on the revenue, in the order of their issuance, inferior to the
liens securing all issues and series of bonds or notes previously
issued.
(c) Notwithstanding Subsection (b), a municipality may:
(1) adopt an ordinance or execute and issue a deed of trust,
trust indenture, or similar instrument that provides for the
subsequent issuance of additional bonds or notes on a parity with
the previously issued bonds or notes; and
(2) authorize, issue, and sell additional bonds or notes, from
time to time and in different series, payable from the revenue of
the mass transportation system and the revenue of any additional
sources, on a parity with the bonds or notes previously issued
and secured by liens on the transportation system that are on a
parity with the lien securing the previously issued bonds or
notes, subject to the conditions of the ordinance or instrument
described by Subdivision (1).
Acts 1995, 74th Leg., ch. 165, Sec. 1, eff. Sept. 1, 1995.
Sec. 454.030. REFUNDING BONDS OR NOTES. (a) A municipality may
issue refunding bonds or notes to refund one or more series or
issues of bonds or notes.
(b) Refunding bonds or notes have the same priority of lien on
the revenue pledged to their payment that the bonds or notes
being refunded have, except that if all the outstanding bonds or
notes of two or more series or issues of bonds or notes are
refunded in a single issue of refunding bonds or notes, the lien
of all refunding bonds or notes is equal. A refunding bond or
note may not have a priority of lien greater than the highest
priority of lien of the bonds or notes being refunded.
(c) Refunding bonds or notes must bear interest at the same or
lower rate than that borne by the bonds or notes being refunded
unless it is shown mathematically that:
(1) a saving will result in the total amount of interest to be
paid; and
(2) the annual principal and interest burden will not be
increased so as to impair the rights of the holders of any bonds
or notes, if any, having a prior or inferior lien.
(d) Bonds or notes may be refunded by issuing refunding bonds or
notes to be:
(1) exchanged for the bonds or notes being refunded or
cancelled; or
(2) sold, with the proceeds of the sale being used to redeem and
cancel the bonds or notes being refunded.
(e) A municipality may provide in a refunding bond or note issue
money necessary for paying:
(1) any call premium; and
(2) interest to the date set for calling for redemption the
outstanding bonds or notes.
Acts 1995, 74th Leg., ch. 165, Sec. 1, eff. Sept. 1, 1995.