By: Perry  S.B. No. 1261          (In the Senate - Filed February 13, 2025;   February 28, 2025, read first time and referred to Committee on   Water, Agriculture and Rural Affairs; April 9, 2025, reported   adversely, with favorable Committee Substitute by the following   vote:  Yeas 9, Nays 0; April 9, 2025, sent to printer.)Click here to see the committee vote     COMMITTEE SUBSTITUTE FOR S.B. No. 1261 By:  Perry     A BILL TO BE ENTITLED   AN ACT     relating to the financing of water supply projects included in the   state water plan; authorizing the issuance of obligations.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Subtitle F, Title 9, Government Code, is amended   by adding Chapter 1373 to read as follows:   CHAPTER 1373. OBLIGATIONS FOR WATER PROJECTS          Sec. 1373.001.  DEFINITIONS. In this chapter:                (1)  "Eligible project" means one or more related water   supply projects:                      (A)  that are identified as recommended water   management strategies in the state water plan; and                      (B)  the cumulative capital costs of which are not   less than $750 million.                (2)  "Indebtedness" means a bond, note, or other   obligation of an issuer issued or incurred pursuant to any   statutory authority other than this chapter.                (3)  "Issuer" means an agency, authority, board, body   politic, department, district, instrumentality, municipal   corporation, political subdivision, public corporation, or   subdivision of this state.                (4)  "Obligation" means a bond, note, or other   obligation, whether payable or secured by taxes other than ad   valorem taxes, revenues, or a combination thereof.                (5)  "Obligation authorization" means the order,   ordinance, or resolution of the issuer authorizing the obligation.                (6)  "State water plan" means the comprehensive water   plan for the state adopted under Section 16.051, Water Code.          Sec. 1373.002.  APPLICABILITY.  This chapter does not apply   to financial assistance provided by the Texas Water Development   Board.          Sec. 1373.003.  CONSTRUCTION. This chapter shall be   liberally construed to achieve the legislative intent and purposes   of this chapter. A power granted by this chapter shall be broadly   interpreted to achieve the intent and purposes.          Sec. 1373.004.  RELATIONSHIP TO OTHER LAW. (a) To the   extent of any conflict or inconsistency between this chapter and   another law or a municipal charter, this chapter controls.          (b)  An issuer may use any provision of another law that does   not conflict with this chapter to the extent convenient or   necessary as determined by the issuer to carry out any power or   authority, express or implied, granted by this chapter, without   reference to any other laws or any restrictions or limitations   contained in those laws.          (c)  Chapter 1207 applies to the refunding of obligations   issued or incurred under this chapter.          Sec. 1373.005.  AUTHORITY TO ISSUE OBLIGATIONS.   Notwithstanding any other law, as authorized and approved by the   governing body of an issuer, obligations may be issued, sold,   incurred, and delivered to:                (1)  finance or refinance an eligible project;                (2)  refund obligations, other indebtedness, or   contractual obligations of the issuer issued or incurred in   connection with an eligible project; and                (3)  pay the costs of issuance or delivery of the   obligations.          Sec. 1373.006.  SECURITY FOR OBLIGATION. (a) An obligation   may be secured by:                (1)  the proceeds from the sale of other obligations or   indebtedness of the issuer, including proceeds from the sale of   revenue bonds payable from the revenue to be received from an   eligible project or a specified user of an eligible project;                (2)  subject to Subsection (d), any revenue that the   issuer is authorized by the constitution, a statute, or the charter   of a home-rule municipality to pledge or pay any kind of general or   special indebtedness by or from those revenues;                (3)  water supply contracts or water treatment   contracts or other similar contracts or the revenue received from   those contracts; or                (4)  any combination of the sources described by this   subsection.          (b)  The governing body of an issuer may secure an obligation   and pay the cost of a contract or other agreement executed and   delivered in connection with the financing of an eligible project   with a pledge of the sources permitted by this chapter.          (c)  Notwithstanding any other law, if an issuer secures an   obligation with contracts or the revenue from those contracts, the   term of the contracts may not be less than the final maturity or   term of such obligations pursuant to Section 1373.008.          (d)  An obligation may not be secured wholly or partly by a   pledge of ad valorem taxes.          Sec. 1373.007.  USE OF PROCEEDS. An issuer may use the   proceeds from the issuance or incurrence of an obligation to   finance and refinance an eligible project, including costs   authorized by Section 1201.042(a).          Sec. 1373.008.  MATURITY OR TERM OF OBLIGATIONS.  (a)  The   maximum maturity or term of an obligation issued or incurred   pursuant to this chapter may not exceed the lesser of:                (1)  the reasonably expected weighted average useful   life of the eligible project as certified by a licensed   professional engineer selected by the issuer; or                (2)  50 years from the date of issuance or incurrence of   the obligation.          (b)  The determination of reasonably expected weighted   average useful life of an eligible project made under Subsection   (a) may not be contested for any reason.          Sec. 1373.009.  OBLIGATION AUTHORIZATION. (a) The   governing body of an issuer must adopt or approve an obligation   authorization before an obligation may be issued or incurred.          (b)  The obligation authorization must establish:                (1)  the maximum amount of the obligation to be issued   or incurred or, if applicable, the maximum principal amount that   may be outstanding at any time;                (2)  subject to Section 1373.008, the maximum term for   which the obligation issued or incurred under the authorization may   be outstanding;                (3)  the maximum interest rate the obligation may bear;                (4)  subject to Subsection (c)(2), the manner of sale   of the obligation, which may be by public or private sale, the price   of the obligation, the form of the obligation, and the terms,   representations, and covenants of the issuer made in connection   with the issuance or incurrence of the obligation, if applicable;   and                (5)  each source pledged or to be pledged to the payment   of the obligation.          (c)  The obligation authorization may:                (1)  provide for the designation of a paying agent and   registrar for the obligation; and                (2)  authorize one or more designated officers or   employees of the issuer to act on behalf of the issuer from time to   time in selling, incurring, and delivering obligations and setting   the dates, price, interest rates, interest payment periods,   redemption features, and other procedures relating to the issuance,   sale, incurrence, and delivery of obligations, as specified in the   obligation authorization.          Sec. 1373.010.  EFFECT OF FINDING OR DETERMINATION UNDER   DELEGATION OF AUTHORITY. A finding or determination made by an   officer or employee acting under the authority delegated to the   officer or employee by an obligation authorization adopted or   approved under this chapter has the same force and effect as a   finding or determination made by the governing body.          Sec. 1373.011.  REVIEW AND APPROVAL OF OBLIGATION AND   CONTRACT BY ATTORNEY GENERAL. (a)  Before an obligation may be   issued or incurred, a record of the proceedings of the issuer   authorizing the issuance, execution, incurrence, and delivery of   the obligation and any contract providing revenue or security   pledged to the payment of the obligation must be submitted to the   attorney general for review.          (b)  If the attorney general finds that the proceedings   authorizing an obligation conform to the requirements of the Texas   Constitution and this chapter, the attorney general shall approve   it and deliver to the comptroller a copy of the attorney general's   legal opinion stating that approval and the record of proceedings.     After approval, the obligation may be executed and delivered,   exchanged, or refinanced from time to time in accordance with those   authorizing proceedings.          Sec. 1373.012.  REGISTRATION. On receipt of the documents   required by Section 1373.011(b), the comptroller shall register the   record of the proceedings relating to the issuance of an   obligation.          Sec. 1373.013.  VALIDITY AND INCONTESTABILITY. (a) If   proceedings to authorize an obligation are approved by the attorney   general and registered by the comptroller, each obligation and any   contract that provides revenue or security included in or executed   and delivered according to the authorizing proceedings and pledged   to the payment of the obligation is incontestable in a court or   other forum and is valid, binding, and enforceable according to its   terms.          (b)  Notwithstanding Subsection (a) and except as provided   by this subsection, an obligation authorized by this chapter is not   valid, binding, or enforceable unless the obligation is approved by   the attorney general and registered by the comptroller in   accordance with Chapter 1202.          SECTION 2.  Section 15.432(b), Water Code, is amended to   read as follows:          (b)  Money deposited to the credit of the fund may be used:                (1)  only as provided by this subchapter; and                (2)  for eligible projects, as defined by Section   1373.001, Government Code.          SECTION 3.  Section 15.435(c), Water Code, is amended to   read as follows:          (c)  If the trust company enters into a bond enhancement   agreement under Subsection (b), the board may direct the trust   company to make disbursements from the fund to another fund or   account for the support of bonds the proceeds of which are used to   provide financial assistance in the form of:                (1)  a loan bearing an interest rate of not less than 50   percent of the then-current market rate of interest available to   the board;                (2)  a loan to finance a facility under repayment terms   similar to the terms of debt customarily issued by the entity   requesting assistance but not to exceed the lesser of:                      (A)  the expected useful life of the facility; or                      (B)  30 years or, for an eligible project, as   defined by Section 1373.001, Government Code, 40 years;                (3)  a deferral of loan repayment, including deferral   of the repayment of:                      (A)  principal and interest; or                      (B)  accrued interest;                (4)  incremental repurchase terms for an acquired   facility, including terms for no initial repurchase payment   followed by progressively increasing incremental levels of   interest payment, repurchase of principal and interest, and   ultimate repurchase of the entire state interest in the facility   using simple interest calculations; or                (5)  a combination of the methods of financing   described by Subdivisions (1)-(4).          SECTION 4.  Section 15.474(a), Water Code, is amended to   read as follows:          (a)  Except as provided by Subsection (c), money in the fund   may be used by the board only to provide financing or refinancing,   under terms specified by the board, for an eligible project, as   defined by Section 1373.001, Government Code, or for projects   included in the state water plan that are authorized under   Subchapter C-1, Q, or R of this chapter, Subchapter E or F, Chapter   16, or Subchapter J or L, Chapter 17, including water conservation   or reuse projects designed to reduce the need for this state or   political subdivisions of this state to develop additional water   resources.          SECTION 5.  Section 17.852(5), Water Code, is amended to   read as follows:                (5)  "Project" includes water supply projects,   treatment works, [and] flood projects, as defined by Section 15.531   or 16.451, and eligible projects as defined by Section 1373.001,   Government Code.          SECTION 6.  Section 17.957(c), Water Code, is amended to   read as follows:          (c)  Money on deposit in the state participation account may   be used by the board, in the manner that the board determines   necessary for the administration of the fund, for:                (1)  eligible projects, as defined by Section 1373.001,   Government Code; and                (2)  projects described in Sections 16.131 and 16.146   [in the manner that the board determines necessary for the   administration of the fund].          SECTION 7.  This Act takes effect September 1, 2025.     * * * * *