CHAPTER 8501. ANGELINA AND NECHES RIVER AUTHORITY - Texas Statutes

SPECIAL DISTRICT LOCAL LAWS CODE

TITLE 6. WATER AND WASTEWATER

SUBTITLE G. RIVER AUTHORITIES

CHAPTER 8501. ANGELINA AND NECHES RIVER AUTHORITY

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 8501.001. DEFINITIONS. In this chapter:

(1) "Authority" means the Angelina and Neches River Authority.

(2) "Board" means the board of directors of the authority.

Acts 2003, 78th Leg., ch. 1277, Sec. 1, eff. April 1, 2005.

Sec. 8501.002. WATER RIGHTS NOT AFFECTED. This chapter does not

affect any existing rights, or existing priorities in the rights,

to water from the source of supply. The formation of the

authority or a contract for the purchase of water with the

authority is not an abandonment or waiver of those rights or

priorities and is not an abandonment of the original point of

diversion from the source of supply. All those rights existing at

the time of the formation of the authority are preserved.

Acts 2003, 78th Leg., ch. 1277, Sec. 1, eff. April 1, 2005.

Sec. 8501.003. REGULAR OFFICE OF AUTHORITY. A regular office

shall be established and maintained for conducting authority

business within the authority's territory.

Acts 2003, 78th Leg., ch. 1277, Sec. 1, eff. April 1, 2005.

Sec. 8501.004. RECORDS. (a) The secretary-treasurer of the

board shall keep a record of all proceedings and all orders of

the board.

(b) The records of the authority are subject to public

inspection.

Acts 2003, 78th Leg., ch. 1277, Sec. 1, eff. April 1, 2005.

Sec. 8501.005. LIBERAL CONSTRUCTION. This chapter shall be

liberally construed to effectuate its purposes.

Acts 2003, 78th Leg., ch. 1277, Sec. 1, eff. April 1, 2005.

SUBCHAPTER B. NATURE AND TERRITORY

Sec. 8501.051. CREATION AND NATURE OF AUTHORITY. The Angelina

and Neches River Authority is created as a conservation and

reclamation district.

Acts 2003, 78th Leg., ch. 1277, Sec. 1, eff. April 1, 2005.

Sec. 8501.052. TERRITORY. (a) The authority is composed of the

territory described by Section 3, Chapter 97, General Laws, Acts

of the 44th Legislature, Regular Session, 1935, as amended by the

relevant part of Section 1, Chapter 394, Acts of the 65th

Legislature, Regular Session, 1977.

(b) The authority's territory also may have been modified under

other law.

Acts 2003, 78th Leg., ch. 1277, Sec. 1, eff. April 1, 2005.

SUBCHAPTER C. BOARD OF DIRECTORS AND EMPLOYEES

Sec. 8501.101. MEMBERSHIP OF BOARD. (a) The board consists of

nine directors appointed by the governor with the advice and

consent of the senate.

(b) Each director must be a freehold property taxpayer and a

qualified voter of the state.

Acts 2003, 78th Leg., ch. 1277, Sec. 1, eff. April 1, 2005.

Sec. 8501.102. TERMS. Directors are appointed for staggered

terms of six years with one-third of the directors' terms

expiring every two years.

Acts 2003, 78th Leg., ch. 1277, Sec. 1, eff. April 1, 2005.

Sec. 8501.103. VACANCY. (a) A vacancy on the board shall be

filled by appointment by the governor with the advice and consent

of the senate.

(b) A person appointed to a vacant position serves for the

unexpired part of the term.

Acts 2003, 78th Leg., ch. 1277, Sec. 1, eff. April 1, 2005.

Sec. 8501.104. OATH AND BOND REQUIREMENT FOR DIRECTOR. (a) A

director shall, within 15 days after the date of appointment,

qualify by taking the constitutional oath of office and by filing

a good and sufficient bond with the secretary of state.

(b) The bond is subject to approval by the secretary of state

and must:

(1) be in the amount of $1,000;

(2) be payable to the authority; and

(3) be conditioned on the faithful performance of the duties as

a director.

Acts 2003, 78th Leg., ch. 1277, Sec. 1, eff. April 1, 2005.

Sec. 8501.105. COMPENSATION OF DIRECTORS. Unless the board by

resolution increases the fee of office to an amount authorized by

Section 49.060, Water Code, a director shall receive as a fee of

office an amount not to exceed $10 for each day of service

necessary to discharge the director's duties, if the board votes

to authorize the service.

Acts 2003, 78th Leg., ch. 1277, Sec. 1, eff. April 1, 2005.

Sec. 8501.106. QUORUM RELATING TO CONSTRUCTION MATTERS. The

concurrence of five directors is required for entering into a

construction contract or for authorizing the issuance of a

warrant to pay for a construction contract.

Acts 2003, 78th Leg., ch. 1277, Sec. 1, eff. April 1, 2005.

Sec. 8501.107. OFFICERS. (a) The board shall elect one of the

directors as president of the board, one as vice president, and

one as secretary-treasurer.

(b) The president is the chief executive officer of the

authority.

(c) The vice president shall act as president if the president

is absent or disabled.

(d) The secretary-treasurer shall act as a secretary of the

board. The board shall select a secretary pro tem if the

secretary-treasurer is absent or unable to act.

Acts 2003, 78th Leg., ch. 1277, Sec. 1, eff. April 1, 2005.

Sec. 8501.108. MEETINGS. (a) The president shall preside at

all meetings of the board.

(b) The board shall set, by order entered in the minutes of its

proceedings, a specified time for the regular meetings of the

board. The board shall meet for a specific occasion if called by

order of the president, vice president, or a majority of the

directors.

(c) The board shall hold its meetings at its office and

principal place of business unless the board directs otherwise

for a specific occasion.

Acts 2003, 78th Leg., ch. 1277, Sec. 1, eff. April 1, 2005.

Sec. 8501.109. EMPLOYMENT PREFERENCE. (a) The authority and

each contractor who employs labor for the construction of an

improvement for the authority shall give a preference to the

employment of:

(1) persons who are on relief rolls or otherwise unemployed and

who are able to efficiently provide the proper service in the

various classifications of labor under which they are to be

employed; and

(2) if there are not sufficient persons who are qualified under

Subdivision (1), qualified workers who reside in the locality

where the improvement is to be constructed.

(b) The persons to whom the preference applies include persons

required for office or clerical work but do not include the key

workers of the authority or contractor.

(c) Each contract expressly entered into under this chapter by

the authority with a contractor must expressly impose on the

contractor the duty to give the preference provided by this

section.

(d) To the extent this section conflicts with the requirements

of a federal agency providing funds for the authority, the

requirements of the federal agency control.

Acts 2003, 78th Leg., ch. 1277, Sec. 1, eff. April 1, 2005.

Sec. 8501.110. REMOVAL OF EMPLOYEE. An employee of the

authority may be removed by the board.

Acts 2003, 78th Leg., ch. 1277, Sec. 1, eff. April 1, 2005.

Sec. 8501.111. COMPENSATION OF EMPLOYEES. The board shall set

the reasonable compensation to be paid to the general manager and

other employees of the authority.

Acts 2003, 78th Leg., ch. 1277, Sec. 1, eff. April 1, 2005.

Sec. 8501.112. DIRECTOR'S, OFFICER'S, OR EMPLOYEE'S SURETY BOND.

A bond required to be given by a director, officer, or employee

of the authority must be executed by a surety company authorized

to do business in this state, as surety on the bond.

Acts 2003, 78th Leg., ch. 1277, Sec. 1, eff. April 1, 2005.

Sec. 8501.113. CONFLICT OF INTEREST; CRIMINAL PENALTY. (a) A

director or an engineer or employee of the authority may not be

directly or indirectly interested, personally or as an agent for

another person, in a contract for the purchase or construction of

any work by the authority.

(b) A person commits an offense if the person violates this

section. An offense under this subsection is a misdemeanor

punishable by a fine not to exceed $1,000, by confinement in the

county jail for not less than six months or more than one year,

or by both the fine and confinement.

Acts 2003, 78th Leg., ch. 1277, Sec. 1, eff. April 1, 2005.

SUBCHAPTER D. POWERS AND DUTIES

Sec. 8501.151. POWERS UNDER CONSTITUTION AND OTHER LAW. The

authority has the powers of a conservation and reclamation

district under the constitution and other laws of this state,

including the powers:

(1) expressly authorized in Section 59, Article XVI, Texas

Constitution, for a district created to conserve, store, control,

preserve, use, and distribute the storm water and floodwater and

the water of the rivers and streams of the state;

(2) implied by the purposes of that section of the constitution;

and

(3) given by general law.

Acts 2003, 78th Leg., ch. 1277, Sec. 1, eff. April 1, 2005.

Sec. 8501.152. APPLICABILITY OF WATER CODE. The rights, powers,

privileges, and functions granted to the authority, and the

authority itself, are expressly subject to Chapters 11, 12, 26,

and 49, Water Code, as applicable.

Acts 2003, 78th Leg., ch. 1277, Sec. 1, eff. April 1, 2005.

Sec. 8501.153. STATE SUPERVISION AND APPROVAL. (a) The Texas

Commission on Environmental Quality shall consider the adequacy

of, and decide whether to approve, any flood control or

conservation improvement plan that:

(1) is devised by the authority to achieve a plan or purpose for

which the authority is created; and

(2) contemplates improvements that are to be supervised by the

commission under general law.

(b) Before the authority establishes a diversion point or

constructs a canal, pumping plant, or other work under this

chapter, the authority must:

(1) present the plans and specifications for the project to the

Texas Commission on Environmental Quality; and

(2) obtain the approval of the commission.

Acts 2003, 78th Leg., ch. 1277, Sec. 1, eff. April 1, 2005.

Sec. 8501.154. GENERAL POWERS RELATING TO WATER. (a) The

authority has the rights and powers of an independent

conservation and reclamation district to construct, maintain, and

operate in the valleys of the Neches River and its tributaries,

inside or outside the authority, any work considered essential:

(1) to the operation of the authority; and

(2) for the authority's administration in the control, storage,

preservation, and distribution to all useful purposes of the

water, including storm water and floodwater, of the Neches River

and its tributaries.

(b) The authority has the same power of control and regulation

over the waters of the Neches River and its tributaries that the

state has, subject to the constitution and statutes of this

state.

Acts 2003, 78th Leg., ch. 1277, Sec. 1, eff. April 1, 2005.

Sec. 8501.155. POWERS RELATING TO PARTICULAR PURPOSES. For the

conservation and beneficial use of the water of the Neches River

and its tributaries, including storm water and floodwater, the

authority may control and use the water in the manner and for a

particular purpose described by Section 8501.156, 8501.157,

8501.158, 8501.159, 8501.160, or 8501.161.

Acts 2003, 78th Leg., ch. 1277, Sec. 1, eff. April 1, 2005.

Sec. 8501.156. POWERS RELATING TO FLOODING. In acting under

Section 8501.155, the authority may:

(1) prevent the devastation of land from recurrent overflows;

(2) protect life and property in the authority from uncontrolled

floodwater; and

(3) encourage the conservation of soil to prevent destructive

erosion and to prevent the increased flood menace related to that

erosion.

Acts 2003, 78th Leg., ch. 1277, Sec. 1, eff. April 1, 2005.

Sec. 8501.157. POWERS RELATING TO USE OF WATER IN GENERAL. In

acting under Section 8501.155, the authority may:

(1) through practical means, provide for the control and

coordination of the regulation of the water of the Neches River

and its tributaries;

(2) by adequate organization and administration, provide for

preserving the equitable rights of the people of different

sections of the watershed area in the beneficial use of the water

of the Neches River and its tributaries;

(3) store, control, and conserve the water of the Neches River

and its tributaries inside or outside the authority and prevent

the escape of that water without the maximum of public service;

(4) equitably distribute the water of the Neches River and its

tributaries to meet the regional potential requirements for all

uses, including domestic, manufacturing, and irrigation uses; and

(5) use controlled and conserved floodwater and storm water for

any purpose that results in the performance of a useful service

authorized by the constitution of this state.

Acts 2003, 78th Leg., ch. 1277, Sec. 1, eff. April 1, 2005.

Sec. 8501.158. POWERS RELATING TO DOMESTIC, COMMERCIAL, OR

INDUSTRIAL USE OF WATER. In acting under Section 8501.155, the

authority may:

(1) conserve the water of the Neches River and its tributaries

essential for the domestic uses of the people of the authority,

including all necessary water supplies for cities and towns;

(2) control the water of the Neches River and its tributaries

and make the water available for use in the development of

commercial and industrial enterprises in the entire watershed

area of the authority; and

(3) control, store, and use the water of the Neches River and

its tributaries in the development and distribution of

hydroelectric power, if that use is economically coordinated with

other superior uses and subordinated to the uses declared by law

to be superior.

Acts 2003, 78th Leg., ch. 1277, Sec. 1, eff. April 1, 2005.

Sec. 8501.159. POWERS RELATING TO USE OF WATER FOR IRRIGATION.

In acting under Section 8501.155, the authority may provide for

the irrigation of all land in the authority or land outside the

authority but inside the authority's watershed area where the

irrigation is required for agricultural purposes or is considered

helpful to more profitable agricultural production.

Acts 2003, 78th Leg., ch. 1277, Sec. 1, eff. April 1, 2005.

Sec. 8501.160. POWERS RELATING TO DRAINAGE OF WATER. In acting

under Section 8501.155, the authority may:

(1) provide for the better encouragement and development of

drainage systems for, and provide for the drainage of, lands in

the valleys of the Neches River and its tributaries as needed for

profitable agricultural production; and

(2) provide for drainage for other land in the watershed area of

the authority as required for the most advantageous use of the

land.

Acts 2003, 78th Leg., ch. 1277, Sec. 1, eff. April 1, 2005.

Sec. 8501.161. POWERS RELATING TO ACQUISITION OR OPERATION OF

WORKS, LAND, OR OTHER PROPERTY. (a) In acting under Section

8501.155, the authority may:

(1) purchase or construct any work necessary or convenient for

the exercise of the authority's powers under this chapter and to

accomplish the purposes of this chapter; and

(2) purchase or otherwise acquire land or other property

necessary or convenient for carrying out the purposes of this

chapter.

(b) The plans and works provided by the authority, and the works

provided under the power of the authority, shall regard primarily

the necessary and potential needs for water by or within the area

in the authority constituting the watershed of the Neches River

and its tributaries.

Acts 2003, 78th Leg., ch. 1277, Sec. 1, eff. April 1, 2005.

Sec. 8501.162. ADDITIONAL POWERS RELATING TO ACQUISITION OR

OPERATION OF PROPERTY. (a) In this section, "property" includes

a right, including a water right, and includes land and a

tenement, easement, improvement, reservoir, dam, canal, lateral,

plant, work, and facility.

(b) The authority may investigate, plan, acquire, construct,

maintain, or operate any property the authority considers

necessary or proper for the accomplishment of the purposes of the

authority.

(c) The power described by Subsection (b) includes the power to

acquire property inside or outside the authority that is

incidental or helpful to carrying out the authority's purposes

under this chapter.

Acts 2003, 78th Leg., ch. 1277, Sec. 1, eff. April 1, 2005.

Sec. 8501.163. POWERS RELATING TO CONTRACT, LEASE, AGREEMENT, OR

CONVEYANCE. (a) The authority may enter into a contract, lease,

or other agreement necessary or convenient to carry out a power

given to the authority by this chapter.

(b) The authority may enter into the contract, lease, or

agreement with any person, including:

(1) an individual or artificial entity;

(2) a corporation, including a municipal corporation and a

public or private corporation; and

(3) a government or governmental agency, including the United

States and this state.

(c) The authority may:

(1) convey or cause to be conveyed any of its property to the

United States; and

(2) enter into a lease, regardless of whether it includes a

privilege of purchase, with the United States relating to any

property and obligate the authority to pay rent under the lease

from the income or other revenue of the property.

(d) A contract, lease, or agreement under this section must be

approved by resolution of the board and must be executed by the

president and attested by the secretary-treasurer.

(e) This section does not authorize the assumption by the

authority of any obligation requiring a payment from taxes.

(f) The property to which Subsection (c) applies includes a

right, land, tenement, easement, improvement, reservoir, dam,

canal, plant, lateral, work, and facility.

Acts 2003, 78th Leg., ch. 1277, Sec. 1, eff. April 1, 2005.

Sec. 8501.164. RIGHT OF EMINENT DOMAIN. (a) The authority may

exercise the power of eminent domain to acquire fee simple title

to, or an easement over or through, any land, water, or land

under water that is necessary or convenient for carrying out any

purpose or power given to the authority by this chapter. The

power applies to private or public property inside or outside the

authority.

(b) A condemnation proceeding is under the direction of the

board and must be in the name of the authority.

(c) The assessment of damages and all procedures related to

condemnation, appeal, and payment must conform to Chapter 21,

Property Code.

Acts 2003, 78th Leg., ch. 1277, Sec. 1, eff. April 1, 2005.

Sec. 8501.165. COORDINATION AND JOINT UNDERTAKINGS AMONG

DISTRICTS. (a) A drainage, conservation, reclamation, or other

district created by this state with powers provided in Section

59, Article XVI, Texas Constitution, may:

(1) coordinate its plans with the authority; and

(2) enter into joint undertakings with the authority for the

purposes for which the entities are created.

(b) The acts taken under Subsection (a) must be approved by a

majority of the boards of directors of all the districts

involved.

Acts 2003, 78th Leg., ch. 1277, Sec. 1, eff. April 1, 2005.

Sec. 8501.166. NO AUTHORITY FOR TAX OR SPECIAL ASSESSMENT. This

chapter does not authorize the authority to impose a tax or

special assessment or to create any debt payable from taxes.

Acts 2003, 78th Leg., ch. 1277, Sec. 1, eff. April 1, 2005.

SUBCHAPTER E. GENERAL FINANCIAL MATTERS

Sec. 8501.201. PROCEDURE FOR PAYMENT. A warrant for the payment

of money by the authority may be drawn and signed by the

president and the secretary-treasurer if the account under which

the payment is to be made results from a contract made by the

board and is ordered paid by the board.

Acts 2003, 78th Leg., ch. 1277, Sec. 1, eff. April 1, 2005.

Sec. 8501.202. RECORDS RELATING TO MONEY. The

secretary-treasurer shall:

(1) receive and give a receipt for all money received by the

authority; and

(2) keep records of all money received and spent by the

authority.

Acts 2003, 78th Leg., ch. 1277, Sec. 1, eff. April 1, 2005.

Sec. 8501.203. FILING OF AUDIT. In addition to copies of the

annual audit of the authority that are filed as required by

Section 49.194, Water Code, a copy shall be filed with the

depository of the authority and the office of the auditor.

Acts 2003, 78th Leg., ch. 1277, Sec. 1, eff. April 1, 2005.

Sec. 8501.204. FEES. (a) The board shall prescribe fees to be

collected for:

(1) the use of water;

(2) a water connection; or

(3) another service.

(b) The board shall set the fees in amounts that are reasonable

and equitable and sufficient to produce revenue adequate to pay

the items described by Subsection (c). The fees may not exceed

what may be reasonably necessary to fulfill the obligations

imposed on the authority by this chapter.

(c) The board shall pay the following items from the fees:

(1) all expenses necessary to the operation and maintenance of

the improvements and facilities of the authority, including:

(A) the cost of the acquisition of materials and other property

necessary to maintain the improvements and facilities in good

condition and to operate them efficiently;

(B) necessary wages and salaries of the authority; and

(C) other expenses reasonably necessary to the efficient

operation of the improvements and facilities;

(2) the interest on any obligation issued under this chapter and

payable from the revenue from the improvements and facilities;

and

(3) the amount required to be paid annually into the sinking

fund for the payment of an obligation issued under this chapter

and payable from the revenue of the improvements and facilities.

Acts 2003, 78th Leg., ch. 1277, Sec. 1, eff. April 1, 2005.

Sec. 8501.205. LIMITATION ON USE OF REVENUE. (a) A charge on

the revenue derived from the improvements and facilities of the

authority may not be made if the principal or interest of any

obligation issued under this chapter is unpaid.

(b) If the revenue derived from the improvements and facilities

of the authority exceed the amount required for the payment of

items under Section 8501.204(c), the board may pay the cost of

improvements and replacements not covered by Section

8501.204(c)(1) and may establish a reasonable depreciation and

emergency fund.

Acts 2003, 78th Leg., ch. 1277, Sec. 1, eff. April 1, 2005.

SUBCHAPTER F. OBLIGATIONS RELATING TO BORROWED MONEY

Sec. 8501.251. POWER TO BORROW MONEY; EVIDENCE OF OBLIGATION.

The authority may:

(1) borrow money from any source, including an agency of the

United States; and

(2) issue a note, warrant, certificate of indebtedness, or other

form of obligation of the authority as evidence of the borrowed

money.

Acts 2003, 78th Leg., ch. 1277, Sec. 1, eff. April 1, 2005.

Sec. 8501.252. OBLIGATION PAYABLE FROM REVENUE. (a) An

obligation issued under this chapter by the authority may be made

payable from and secured by a pledge of:

(1) all the revenue derived from the operations and devices of

the authority's improvements and facilities, excluding any

revenue derived from a tax or assessment;

(2) only the revenue derived from the operation of the

authority's improvements and facilities acquired with the

proceeds from the sale of the obligation; or

(3) a specific part of the revenue derived from the operation of

the authority's improvements and facilities.

(b) The proceedings authorizing the issuance of the obligation

must identify the method described by Subsection (a) that is to

be used to pay and secure the obligation.

Acts 2003, 78th Leg., ch. 1277, Sec. 1, eff. April 1, 2005.

Sec. 8501.253. NO CREATION OF DEBT; NO PAYMENT FROM TAXES. (a)

An obligation issued under this chapter is not a debt or a pledge

of credit of the authority.

(b) The obligation:

(1) may not be paid in whole or part from any money raised by

taxation; and

(2) must contain a recital to that effect.

Acts 2003, 78th Leg., ch. 1277, Sec. 1, eff. April 1, 2005.

Sec. 8501.254. TIME OF SALE. An obligation issued under this

chapter shall be sold at the time determined by the board to be

expedient and necessary to the interest of the authority.

Acts 2003, 78th Leg., ch. 1277, Sec. 1, eff. April 1, 2005.

Sec. 8501.255. MATURITY. An obligation issued under this

chapter must mature not more than 50 years after its date in the

manner provided by the board.

Acts 2003, 78th Leg., ch. 1277, Sec. 1, eff. April 1, 2005.

Sec. 8501.256. SIGNATURES. (a) An obligation issued under this

chapter must be signed by the president and secretary-treasurer

of the board. An interest coupon attached to an obligation may be

executed with the facsimile signature of the president and

secretary-treasurer.

(b) If an officer whose signature is on an obligation or coupon

ceases to be an officer before the delivery of the obligation to

the purchaser, the signature remains valid for all purposes.

Acts 2003, 78th Leg., ch. 1277, Sec. 1, eff. April 1, 2005.

Sec. 8501.257. LIEN ON REVENUE. (a) If more than one series of

obligations is issued under this chapter payable from and secured

by identical revenue, the priority of a lien against that revenue

depends on the time of delivery of the obligations. A lien for a

series of obligations is prior and superior to a lien for another

series of obligations subsequently delivered.

(b) For an issue or series of obligations that are authorized as

a unit but delivered periodically in blocks, the board may, in

the proceedings authorizing the issuance of the obligations,

provide that all the obligations of the issue or series are

coequal as to lien regardless of the time of delivery.

Acts 2003, 78th Leg., ch. 1277, Sec. 1, eff. April 1, 2005.

Sec. 8501.258. SINKING FUND: IN GENERAL. (a) A resolution or

order authorizing the issuance of obligations under this chapter

must provide for the creation of a sinking fund. Amounts

sufficient to pay the principal of and interest on the

obligations shall be paid into the fund from the revenue pledged

to the payment of the obligations. The payments into the fund

shall be made monthly as the revenue is collected.

(b) In the manner provided by this chapter, the money in the

sinking fund shall be applied, at or before maturity of the

obligations, solely to:

(1) the payment of interest on the obligations for the payment

of which the fund is created; and

(2) the retirement of the obligations.

(c) A resolution or order authorizing the issuance of

obligations under this chapter must provide that the revenue from

which the obligations are to be paid and that is pledged to the

payment of the obligations shall be:

(1) set apart and paid into the sinking fund monthly as the

revenue accrues and is received; and

(2) disbursed in the manner provided by this chapter.

(d) In determining the amount of revenue to be set apart, the

board shall provide that the amount to be set apart and paid into

the sinking fund in any year shall be not less than a fixed

amount. The fixed amount must be at least sufficient to:

(1) provide for the payment of the principal of and interest on

all obligations maturing and becoming payable in the year; and

(2) create a surplus or margin of 10 percent in excess of the

amount needed under Subdivision (1).

Acts 2003, 78th Leg., ch. 1277, Sec. 1, eff. April 1, 2005.

Sec. 8501.259. SINKING FUND: EXCESS MONEY. (a) At the time

obligations are authorized under this chapter, the board may

provide that all money in the sinking fund in excess of the

amount required for the payment of the principal of and interest

on the outstanding obligations, for a period the board

determines, shall be spent once each year under the board's order

to purchase obligations for the account of which the sinking fund

has been accumulated, if the obligations can be purchased at a

price the board considers reasonable.

(b) The board may provide that, if the obligations contain an

option permitting retirement before maturity, the excess amount

shall be paid out as provided by this chapter for the purchase of

the obligations. If the board is unable to purchase sufficient

obligations of the issue to absorb all the surplus, the board

shall call for redemption of a sufficient amount of the

obligations to absorb, so far as practicable, the entire surplus

remaining in the sinking fund.

(c) The board may provide that any excess amount in the sinking

fund that cannot be applied to the purchase or redemption of

obligations shall remain in the sinking fund to be used for

payment of principal or interest, when due, or for the subsequent

call of obligations for purchase or redemption in the manner

provided by this section.

Acts 2003, 78th Leg., ch. 1277, Sec. 1, eff. April 1, 2005.

Sec. 8501.260. COVENANTS FOR MARKETABILITY. (a) A resolution

or order authorizing the issuance of obligations under this

chapter may contain covenants with the holders of the obligations

on the following subjects as considered necessary to ensure the

marketability of the obligations:

(1) management and operation of the improvements and facilities

of the authority;

(2) collection of fees for the use of the improvements and

facilities;

(3) disposition of the fees;

(4) issuance of future obligations and creation of future liens,

mortgages, and encumbrances against the improvements and

facilities and the revenue of the improvements and facilities;

and

(5) other pertinent matters.

(b) The covenants may not be inconsistent with this chapter.

Acts 2003, 78th Leg., ch. 1277, Sec. 1, eff. April 1, 2005.

Sec. 8501.261. HOLDER OF OBLIGATION MAY COMPEL PERFORMANCE. (a)

A holder of obligations issued under this chapter or of coupons

originally attached to the obligations may enforce and compel the

performance by the board of all duties required of the board by

this chapter, including:

(1) setting and collecting reasonable and sufficient fees for

the use of the improvements and facilities of the authority;

(2) segregating the income and revenue of the improvements and

facilities; and

(3) applying the income and revenue under this chapter.

(b) The holder of the obligations or coupons may act under

Subsection (a):

(1) at law or in equity; and

(2) by a suit, action, mandamus, or other proceeding.

Acts 2003, 78th Leg., ch. 1277, Sec. 1, eff. April 1, 2005.

Sec. 8501.262. HOLDER OF OBLIGATION ENTITLED TO ADMINISTRATOR OR

RECEIVER. (a) If there is a default in the payment of the

principal of or interest on an obligation issued under this

chapter, any holder of the obligation is entitled to have an

administrator or receiver appointed by a court to administer and

operate, on behalf of the authority and the holders of the

obligation, the improvements and facilities the revenue of which

is pledged to the payment of the obligation.

(b) The administrator or receiver may:

(1) set and collect fees sufficient to:

(A) provide for the payment of operation and maintenance

expenses as described by this chapter; and

(B) pay any outstanding obligations or interest coupons payable

from the revenue of the improvements and facilities; and

(2) apply the income and revenue of the improvements and

facilities in accordance with this chapter and the proceedings

authorizing the issuance of the obligation.

Acts 2003, 78th Leg., ch. 1277, Sec. 1, eff. April 1, 2005.

Sec. 8501.263. ADDITIONAL SECURITY FOR OBLIGATION: MORTGAGE AND

ENCUMBRANCE. (a) As additional security for the payment of an

obligation issued under this chapter, the board may have executed

in favor of the holders of the obligations an indenture

mortgaging and encumbering:

(1) the improvements, facilities, and other property acquired

with the proceeds of the sale of the obligation; or

(2) all the improvements, facilities, and other property of the

authority.

(b) In the encumbrance, the board may provide for granting to

any purchaser at a foreclosure sale under the encumbrance a

franchise to operate the improvements, facilities, and other

property for a term not to exceed 50 years after the date of the

purchase, subject to the laws regulating the matter.

(c) The indenture:

(1) may contain the provisions the board considers proper; and

(2) is enforceable in the manner provided by the laws of this

state for the enforcement of other mortgages and encumbrances.

Acts 2003, 78th Leg., ch. 1277, Sec. 1, eff. April 1, 2005.

Sec. 8501.264. SALE UNDER MORTGAGE OR ENCUMBRANCE. (a) Under a

sale ordered under a mortgage or encumbrance described by Section

8501.263, a purchaser of the improvements, facilities, and other

property at the sale, and the purchaser's successors or assigns,

are vested with a permit and franchise to maintain and operate

the improvements, facilities, and other property with powers and

privileges like those held by the authority in the operation of

the improvements, facilities, and other property.

(b) Instead of operating the improvements, facilities, and other

property as provided by Subsection (a), the purchaser and the

purchaser's successors or assigns may remove all or part of the

improvements, facilities, and other property for diversion to

other purposes.

Acts 2003, 78th Leg., ch. 1277, Sec. 1, eff. April 1, 2005.

Sec. 8501.265. STATE FRANCHISE LAW NOT APPLICABLE. A statute of

this state relating to the granting of franchises is not

applicable to:

(1) the authorization or execution of a mortgage or encumbrance

entered into under this chapter; or

(2) the grant of a franchise under this chapter.

Acts 2003, 78th Leg., ch. 1277, Sec. 1, eff. April 1, 2005.

Sec. 8501.266. DEPOSIT OF PROCEEDS. (a) The proceeds of the

sale of an obligation issued under this chapter may be:

(1) deposited in one or more banks on which the purchaser of the

obligations and the board agree; and

(2) deposited and paid out under the conditions and other terms

to which the purchaser and board agree.

(b) The statutes of this state relating to the deposit of

authority funds in the depository of the authority do not apply

to the deposit of the proceeds of the sale of an obligation

issued under this chapter.

Acts 2003, 78th Leg., ch. 1277, Sec. 1, eff. April 1, 2005.

Sec. 8501.267. USE OF UNSPENT PROCEEDS AFTER PROJECT COMPLETION.

Any part of the proceeds of the sale of an obligation issued

under this chapter that are unspent after the project for which

the obligations were authorized is completed may be paid into the

sinking fund for the payment of the obligation and may be used

only for:

(1) the payment of the principal of the obligation; or

(2) the purpose of acquiring outstanding obligations by purchase

in the manner provided by this chapter.

Acts 2003, 78th Leg., ch. 1277, Sec. 1, eff. April 1, 2005.

Sec. 8501.268. INSURING IMPROVEMENTS AND FACILITIES. (a) The

board may enter into, under terms to which the board agrees, an

agreement with the purchaser of an obligation issued under this

chapter to:

(1) keep all the improvements and facilities, the revenue of

which is pledged to the payment of the obligation, insured with

insurers of good standing against loss or damage by fire, water

or flood, or another hazard that private companies that operate

similar property customarily cover by insurance; and

(2) carry with one or more insurers of good standing the

insurance covering the use and occupancy of the property as is

customarily carried by private companies that operate similar

property.

(b) The cost of the insurance shall be budgeted as a maintenance

and operation expense.

(c) The insurance shall be carried for the benefit of the holder

of the obligation.

Acts 2003, 78th Leg., ch. 1277, Sec. 1, eff. April 1, 2005.

Sec. 8501.269. REFUNDING OBLIGATION. (a) The authority may

authorize and issue, on terms the board considers advisable, a

refunding obligation to provide for the retirement of an

outstanding obligation issued by the authority under this

chapter. The refunding obligation:

(1) may be issued for an obligation that is due or to become

due; and

(2) is subject to the provisions of this chapter relating to the

issuance of other obligations.

(b) A refunding obligation may be:

(1) exchanged for like par amounts of the outstanding

obligation; or

(2) sold, with the proceeds being used to retire the outstanding

obligation.

(c) The refunding obligation must be:

(1) secured in all respects to the same extent as other

obligations issued under this chapter; and

(2) paid from the same revenue from which the refunded

obligation was to be paid.

Acts 2003, 78th Leg., ch. 1277, Sec. 1, eff. April 1, 2005.

Sec. 8501.270. TAX EXEMPTION. An obligation issued under this

chapter is exempt from taxation by this state or by any municipal

corporation, county, or other political subdivision or taxing

district of this state.

Acts 2003, 78th Leg., ch. 1277, Sec. 1, eff. April 1, 2005.

SUBCHAPTER Z. MISCELLANEOUS PROVISIONS

Sec. 8501.901. CHAPTER AS FULL AUTHORITY; OTHER STATUTES NOT

APPLICABLE. (a) This chapter, without reference to other

statutes of this state, is full authority for the authorization

and issuance of an obligation under this chapter and for the

accomplishment of all actions authorized by this chapter. No

other proceedings are necessary.

(b) A statute of this state does not apply to a proceeding or

other act under this chapter if the statute:

(1) relates to:

(A) the authorization or issuance of obligations;

(B) the operation or maintenance of an improvement or facility;

(C) the grant of a franchise or permit; or

(D) the right to an election or referendum petition; or

(2) in any way impedes or restricts the implementation of the

acts authorized under this chapter.

(c) Notwithstanding Subsections (a) and (b), this section does

not prevent another statute from applying to the authority if the

legislative intent is that the other statute supersede or operate

in conjunction with this chapter.

Acts 2003, 78th Leg., ch. 1277, Sec. 1, eff. April 1, 2005.