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                                                                  H.B. No. 1546




AN ACT
relating to the administration and use of the Texas rail relocation and improvement fund and the issuance of obligations for financing the relocation, construction, reconstruction, acquisition, improvement, rehabilitation, and expansion of certain rail facilities. BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: SECTION 1. Chapter 201, Transportation Code, is amended by adding Subchapter O to read as follows:
SUBCHAPTER O. RAIL RELOCATION AND IMPROVEMENT
Sec. 201.971. DEFINITIONS. In this subchapter: (1) "Comptroller's certification" means: (A) as to long-term obligations, the certification made under Section 201.973(e); and (B) as to short-term obligations, the certification made under Section 201.973(f). (2) "Credit agreement" has the meaning assigned by Section 1371.001, Government Code. (3) "Fund" means the Texas rail relocation and improvement fund. (4) "Long-term obligations" means an issue or series of obligations the latest scheduled maturity of which is more than five years. (5) "Maximum obligation amount" means the maximum aggregate principal amount of long-term obligations and short-term obligations that the commission may issue from time to time after receipt of the applicable comptroller's certification. (6) "Obligations" means bonds, notes, and other public securities. (7) "Rail facility" means real or personal property, or any interest in that property, that is determined to be necessary or convenient for the provision of a freight or passenger rail facility, including commuter rail, intercity rail, and high-speed rail. The term includes all property or interests necessary or convenient for the acquiring, providing, using, or equipping of a rail facility or system, including rights-of-way, trackwork, train controls, stations, and maintenance facilities. (8) "Short-term obligations" means an issue or series of obligations the latest scheduled maturity of which is five years or less. (9) "Station" means a passenger or freight service building, terminal, station, ticketing facility, waiting area, platform, concession, elevator, escalator, facility for handicapped access, access road, parking facility for passengers, baggage handling facility, or local maintenance facility, together with any interest in real property necessary or convenient for those items. Sec. 201.972. ADMINISTRATION OF FUND. The comptroller shall hold the fund, and the commission, through the department, shall manage, invest, use, and administer the fund as provided by this subchapter. Sec. 201.973. AUTHORITY TO ISSUE OBLIGATIONS; PURPOSES; LIMITATIONS. (a) Subject to Subsections (e), (f), and (g), the commission by order or resolution may issue obligations in the name and on behalf of the state and the department and may enter into credit agreements related to the obligations. The obligations may be issued in multiple series and issues from time to time in an aggregate amount not exceeding the maximum obligation amount. The obligations may be issued on and may have the terms and provisions the commission determines appropriate and in the interests of the state. The obligations may be issued as long-term obligations, short-term obligations, or both. The latest scheduled maturity of an issue or series of obligations may not exceed 30 years. (b) Obligations must be secured by and payable from a pledge of and lien on all or part of the money in the fund, including the revenues of the state dedicated or appropriated for deposit to the fund. Obligations may be additionally secured by and payable from credit agreements. The commission may pay amounts due on the obligations from discretionary money available to it that is not dedicated to or appropriated for other specific purposes. (c) The commission may create within the fund accounts, reserves, and subfunds for purposes the commission finds appropriate and necessary. (c-1) If proceeds of obligations are to be used for a project located in the planning area of a metropolitan planning organization, the project must first be approved by the policy board of the metropolitan planning organization. (d) Obligations may be issued for one or more of the following purposes: (1) to pay all or part of the costs of relocating, constructing, reconstructing, acquiring, improving, rehabilitating, or expanding rail facilities owned or to be owned by the department, including any necessary design, in the manner and locations determined by the commission that according to conclusive findings of the commission have an expected useful life, without material repair, of not less than 10 years; (2) to provide participation by the state in the payment of part of the costs of relocating, constructing, reconstructing, acquiring, improving, rehabilitating, or expanding publicly or privately owned rail facilities, including any necessary design, if the commission determines that the project will be in the best interests of the state in its major goal of improving the mobility of the residents of the state and will: (A) relieve congestion on public highways; (B) enhance public safety; (C) improve air quality; or (D) expand economic opportunity; (3) to create debt service reserve accounts; (4) to pay interest on obligations for a period of not longer than two years; (5) to refund or cancel outstanding obligations; and (6) to pay the commission's costs of issuance. (d-1) The fund may also be used to provide a method of financing the construction of railroad underpasses and overpasses, if the construction is part of the relocation of a rail facility. (d-2) Proceeds of obligations may not be used to relocate an existing rail line unless the governing bodies of a majority of the total number of counties and municipalities in which the relocated rail line will be located have first approved the relocation. (e) Long-term obligations in the amount proposed to be issued by the commission may not be issued unless the comptroller projects in a comptroller's certification that the amount of money dedicated to the fund pursuant to Section 49-o(d), Article III, Texas Constitution, and required to be on deposit in the fund pursuant to Section 49-o(e), Article III, Texas Constitution, and the investment earnings on that money, during each year of the period during which the proposed obligations are scheduled to be outstanding will be equal to at least 110 percent of the requirements to pay the principal of and interest on the proposed long-term obligations during that year. (f) Short-term obligations in the amount proposed by the commission may not be issued unless the comptroller, in a comptroller's certification: (1) assumes that the short-term obligations will be refunded and refinanced to mature over a 20-year period with level debt service requirements and bearing interest at then current market rates, as determined by the comptroller; and (2) projects that the amount of money dedicated to the fund pursuant to Section 49-o(d), Article III, Texas Constitution, and required to be on deposit in the fund pursuant to Section 49-o(e), Article III, Texas Constitution, and the investment earnings on that money, during each year of the assumed 20-year period will be equal to at least 110 percent of the requirements to pay the principal of and interest on the proposed refunding obligations during that year. (g) The commission may agree to further restrictions in connection with the issuance of obligations and may retain independent professional consultants to make projections in addition to, but not instead of, those of the comptroller if required as a prerequisite to the issuance of the obligations. (h) The commission has all powers necessary or appropriate to carry out this subchapter and to implement Section 49-o, Article III, Texas Constitution, including the powers granted to other bond-issuing governmental agencies and units and to nonprofit corporations by Chapters 1201, 1207, and 1371, Government Code. (i) As required by Section 49-o(g), Article III, Texas Constitution, proceedings authorizing obligations and related credit agreements to be issued and executed under this subchapter shall be submitted to the attorney general for approval as to their legality. If the attorney general finds that they will be issued in accordance with this subchapter and other applicable law, the attorney general shall approve them, and, after payment by the purchasers of the obligations in accordance with the terms of sale and after execution and delivery of the related credit agreements, the obligations and related credit agreements are incontestable for any cause. (j) A comptroller's certification under this section must be based on economic data, forecasting methods, and projections that the comptroller determines are reliable. In determining the principal and interest requirements on outstanding and proposed obligations, and subject to the express limitations of this subchapter and Section 49-o, Article III, Texas Constitution, the comptroller shall rely on the assumptions included in the resolutions authorizing the obligations for the computation of debt service. (k) The holders of obligations and the counterparties to credit agreements have the rights granted in Section 49-o(i), Article III, Texas Constitution. Sec. 201.974. PLEDGE OF STATE'S FULL FAITH AND CREDIT. (a) The commission may guarantee on behalf of the state the payment of any obligations and credit agreements issued under Section 201.973 by pledging the full faith and credit of the state to the payment of the obligations and credit agreements in the event the revenue and money dedicated to the fund pursuant to Section 49-o(d), Article III, Texas Constitution, and on deposit in the fund pursuant to Section 49-o(e), Article III, Texas Constitution, are insufficient for that purpose. (b) The exercise of the authority granted by Subsection (a) does not modify or relieve the commission from complying with Section 201.973(e) or (f) and does not permit the issuance of aggregate obligations in an amount exceeding the maximum obligation amount. (c) If the commission exercises the authority granted by Subsection (a), the constitutional appropriation contained in Section 49-o(f), Article III, Texas Constitution, shall be implemented and observed by all officers of the state during any period during which obligations and credit agreements are outstanding and unpaid. Sec. 201.975. DEDICATION OF REVENUE TO FUND. Annually, the revenue of the state that is dedicated or appropriated to the fund pursuant to Section 49-o(d), Article III, Texas Constitution, shall be deposited to the fund in accordance with Section 49-o(e), Article III, Texas Constitution. Sec. 201.976. INVESTMENT AND USES OF MONEY IN FUND. (a) Money in the fund may be invested in the investments permitted by law for the investment of money on deposit in the state highway fund. (b) As a part of its covenants and commitments made in connection with the issuance of obligations and the execution of credit agreements, the commission may limit the types of investments eligible for investment of money in the fund but may not expand the types of investments to include any investments that are not authorized by Subsection (a). (c) Income received from the investment of money in the fund shall be deposited in the fund, subject to requirements that may be imposed by the proceedings authorizing obligations to protect the tax-exempt status of interest payable on the obligations under the Internal Revenue Code of 1986. (d) To the extent money is on deposit in the fund in amounts that are in excess of the money required by the proceedings authorizing the obligations and credit agreements to be retained on deposit, the commission may use the money for any purpose for which obligations may be issued under this subchapter. Sec. 201.977. STRATEGIC PLAN. The commission may not issue obligations under this subchapter before the department has developed a strategic plan that outlines how the money will be used and the benefit the state will derive from use of money in the fund. Sec. 201.978. ACQUISITION AND DISPOSAL OF PROPERTY. (a) The department may acquire by purchase property or an interest in property necessary or convenient for one or more of the purposes for which obligations may be issued under Section 201.973(d). (b) Property acquired under Subsection (a) may be used for any transportation purpose. (c) Notwithstanding Chapter 202, the department may sell or lease property acquired under Subsection (a) that is no longer needed for a transportation purpose. Revenue from a sale or lease shall be deposited in the fund. SECTION 2. This Act takes effect on the date on which the constitutional amendment proposed by the 79th Legislature, Regular Session, 2005, creating the Texas rail relocation and improvement fund and authorizing grants of money and issuance of obligations for financing the relocation, construction, reconstruction, acquisition, improvement, rehabilitation, and expansion of rail facilities takes effect. If that amendment is not approved by the voters, this Act has no effect. ______________________________ ______________________________ President of the Senate Speaker of the House I certify that H.B. No. 1546 was passed by the House on April 27, 2005, by the following vote: Yeas 137, Nays 5, 2 present, not voting; and that the House concurred in Senate amendments to H.B. No. 1546 on May 27, 2005, by the following vote: Yeas 142, Nays 0, 2 present, not voting. ______________________________ Chief Clerk of the House I certify that H.B. No. 1546 was passed by the Senate, with amendments, on May 25, 2005, by the following vote: Yeas 31, Nays 0. ______________________________ Secretary of the Senate APPROVED: __________________ Date __________________ Governor