CHAPTER 1501. OBLIGATIONS FOR MUNICIPAL UTILITIES

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GOVERNMENT CODE

TITLE 9. PUBLIC SECURITIES

SUBTITLE J. SPECIFIC AUTHORITY FOR MUNICIPALITIES TO ISSUE

SECURITIES

CHAPTER 1501. OBLIGATIONS FOR MUNICIPAL UTILITIES

SUBCHAPTER A. REVENUE BONDS FOR CERTAIN SEWAGE DISPOSAL

FACILITIES

Sec. 1501.001. APPLICABILITY OF SUBCHAPTER. This subchapter

applies only to a municipality that owns a sewer system and

disposal plant that serves:

(1) other municipalities; and

(2) territory and military establishments outside the municipal

boundaries.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

Sec. 1501.002. AUTHORITY TO ISSUE BONDS. A municipality by

ordinance may issue bonds to finance the purchase or construction

of an additional sewage disposal facility.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

Sec. 1501.003. PLEDGE OF REVENUE. (a) A municipality may

secure bonds issued under this subchapter by a pledge of the net

revenue from sewer service provided outside the municipal

boundaries.

(b) Bonds issued under this subchapter may be additionally

secured by a pledge of all or part of the net revenue from sewer

service provided inside the municipal boundaries.

only by the net revenue from sewer service provided outside the

municipal boundaries, the municipality may:

(1) specify each item of expense or portion of the item to be

deducted to compute that net revenue; or

(2) prescribe another formula the governing body of the

municipality considers appropriate to compute that net revenue.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

Sec. 1501.004. AUTHORITY TO ISSUE ADDITIONAL BONDS. In issuing

bonds under this subchapter, the municipality may reserve the

right to issue additional bonds to the extent and subject to any

condition included in the ordinance authorizing the bonds.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

Sec. 1501.005. CONTRACTS. A municipality may contract with

another municipality, a person or corporation, or the United

States to provide sewer service.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

Sec. 1501.006. RATES FOR SERVICE. (a) The governing body of a

municipality that issues bonds under this subchapter shall

establish rates for sewer service in amounts sufficient to:

(1) pay:

(A) maintenance and operation expenses;

(B) the bonds as they are scheduled to mature; and

(2) establish and maintain any fund provided in the ordinance

authorizing the bonds.

(b) Notwithstanding Subsection (a), the municipality may not,

during the term of a contract for sewer service, increase the

amount of the consideration for that service specified in the

contract except:

(1) as the contract provides; or

(2) as the parties to the contract agree.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

Sec. 1501.007. OTHER LAW APPLICABLE; ELECTION NOT REQUIRED. (a)

Subtitles A and C and Subchapter B, Chapter 1502, apply to the

issuance of bonds under this subchapter except as provided by

this subchapter.

(b) An election is not required to authorize the issuance of

bonds under this subchapter.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

SUBCHAPTER B. APPLICATION OF UTILITY SYSTEM REVENUE TO BONDED

DEBT ON SYSTEM

Sec. 1501.051. AUTHORITY TO USE UTILITY REVENUE FOR SINKING FUND

OR INTEREST PAYMENTS. (a) The governing body of a municipality

may appropriate the net revenue from any municipal public utility

system, service, or enterprise, in the amount that the governing

body determines is in the best interest of the municipality, to:

(1) the credit of the sinking fund for any bonded debt incurred

because of the utility system, service, or enterprise; or

(2) the payment of any interest on the bonded debt incurred

because of that utility system, service, or enterprise.

(b) A governing body that makes an appropriation under

Subsection (a) must make the appropriation:

(1) at the end of the municipality's fiscal year; and

(2) before the governing body adopts a tax rate for that fiscal

year.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

Sec. 1501.052. EFFECT ON TAXES. (a) If in any fiscal year the

amount of revenue appropriated under Section 1501.051 is at least

equal to the amount needed for the sinking fund and to pay

interest on the bonded indebtedness in that fiscal year, the

governing body of the municipality is not required to impose a

tax for that purpose.

(b) If the amount of revenue appropriated under Section 1501.051

is less than the amount needed for the sinking fund and to pay

interest in the fiscal year, the governing body shall adopt a tax

rate for that year sufficient to generate the amount of taxes

necessary to credit or pay the deficiency in that year.

limitation on taxes.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

SUBCHAPTER C. REVENUE BONDS TO FINANCE CERTAIN TEXAS-NEW MEXICO

ELECTRIC PROPERTIES

Sec. 1501.101. AUTHORITY TO ACQUIRE AND OPERATE TEXAS-NEW MEXICO

ELECTRIC PLANT AND SYSTEM. A municipality that receives

electricity from a privately owned electric plant and system,

part of which is located in New Mexico, including a facility for

the generation or transmission of electricity distributed in part

to residents of the municipality, may acquire, own, and operate

all or any part of that electric plant and system.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

Sec. 1501.102. AUTHORITY TO ISSUE REVENUE BONDS. A municipality

may issue revenue bonds in the manner provided by general law to

finance the acquisition of any part of the electric plant and

system under Section 1501.101.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

Sec. 1501.103. AUTHORITY TO SELL ELECTRICITY OF PLANT AND

SYSTEM. A municipality that acquires an electric plant and

system under Section 1501.101 may:

(1) sell electricity either at retail or wholesale for

distribution in New Mexico; and

(2) enter into a sales agreement for the electricity as the

governing body of the municipality provides.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

SUBCHAPTER D. CERTIFICATES OF INDEBTEDNESS TO FINANCE JUDGMENTS

OR SETTLEMENTS RELATED TO MUNICIPAL NATURAL GAS SYSTEM

Sec. 1501.151. AUTHORITY TO ISSUE CERTIFICATES OF INDEBTEDNESS.

The governing body of a general-law municipality may authorize

the issuance of certificates of indebtedness to pay:

(1) a final judgment of a court in a lawsuit arising from the

municipality's operation of a natural gas system the municipality

owns; or

(2) a settlement of such a lawsuit.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

Sec. 1501.152. NOTICE OF INTENTION TO ISSUE CERTIFICATES OF

INDEBTEDNESS. (a) The governing body of the municipality may

not authorize the issuance of certificates of indebtedness under

this subchapter until the municipality gives notice of the

municipality's intention to issue the certificates.

(b) The notice must:

(1) be published in a newspaper of general circulation in the

municipality once each week for two consecutive weeks, with the

first publication being before the 14th day before the date the

governing body proposes to adopt the ordinance authorizing the

issuance of the certificates of indebtedness; and

(2) state:

(A) the time and place the governing body of the municipality

proposes to authorize the issuance;

(B) the maximum amount of the certificates to be issued; and

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

Sec. 1501.153. PETITION; ELECTION. (a) If, before the

certificates of indebtedness are authorized, a petition is filed

with the secretary or clerk of the municipality protesting the

issuance of the certificates that is signed by at least five

percent of the registered voters of the municipality, the

municipality may not issue the certificates unless a proposition

for the issuance of the certificates is approved at an election

held for that purpose.

(b) The governing body shall hold the election in the manner

provided by Chapter 1251 for a bond election.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

Sec. 1501.154. MATURITY. A certificate of indebtedness issued

under this subchapter must mature not later than 20 years after

its date.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

Sec. 1501.155. SIGNATURES; SEAL. A certificate of indebtedness

issued under this subchapter must:

(1) be signed by the mayor and the secretary or clerk of the

municipality; and

(2) bear the seal of the municipality.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

Sec. 1501.156. SALE OF CERTIFICATES. (a) A municipality may

sell certificates of indebtedness issued under this subchapter:

(1) at a public or private sale;

(2) on terms the governing body of the municipality determines;

and

(3) with an option to prepay principal as the governing body of

the municipality considers advisable.

(b) A municipality shall sell the certificates for cash.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

Sec. 1501.157. USE OF PROCEEDS. A municipality shall use the

proceeds from the sale of certificates of indebtedness issued

under this subchapter for a purpose authorized by this

subchapter.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

Sec. 1501.158. IMPOSITION OF AD VALOREM TAX. The governing body

of the municipality shall impose an annual ad valorem tax

sufficient to pay when due the principal of and interest on each

certificate of indebtedness issued under this subchapter.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

SUBCHAPTER E. BONDS FOR IMPROVEMENT OF WATER AND SEWER SYSTEMS IN

MUNICIPALITIES WITH POPULATION OF MORE THAN 275,000

Sec. 1501.201. APPLICABILITY OF SUBCHAPTER. This subchapter

applies only to:

(1) a municipality that has:

(A) a population of more than 275,000; and

(B) a municipal water and sewer system operated by a water

board; and

(2) a water control and improvement district that:

(A) is located in whole or in part within the boundaries of a

municipality described by Subdivision (1); and

(B) owns district property that is operated, under a contract

between a municipality described by Subdivision (1) and the

district, by a water board established by the charter of the

municipality or by ordinance.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

Sec. 1501.202. DEFINITIONS. In this subchapter:

(1) "District property" means water or sewer property owned by a

water control and improvement district that a municipality can

use as, or use as an improvement or extension of, the water and

sewer system of the municipality.

(2) "Water board" means a board of trustees or public service

board.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

Sec. 1501.203. AUTHORITY TO ISSUE BONDS. A municipality may

issue bonds to pay for the purchase of district property to

improve or extend the municipal water and sewer system.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

Sec. 1501.204. PLEDGE OF REVENUE. Bonds issued under this

subchapter must be secured by a pledge of and be payable from the

net revenue of the municipal water and sewer system, including

any district property purchased with the bond proceeds.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

Sec. 1501.205. NOTICE OF INTENTION TO ISSUE BONDS. (a) A

municipality may not issue bonds under this subchapter until the

mayor of the municipality gives notice of the municipality's

intention to issue the bonds.

(b) The notice must:

(1) be published in a newspaper of general circulation in the

municipality once each week for two consecutive weeks, with the

first publication being before the 14th day before the date the

governing body of the municipality proposes to adopt an ordinance

authorizing the issuance of the bonds; and

(2) state the maximum:

(A) amount of bonds to be issued;

(B) interest rate of the bonds; and

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

Sec. 1501.206. PETITION; ELECTION. (a) If, before the date the

governing body of the municipality proposes to adopt the

ordinance authorizing the issuance of the bonds, a petition is

filed with the secretary or clerk of the municipality requesting

an election on the issuance of the bonds that is signed by at

least 10 percent of the registered voters of the municipality,

the municipality may not issue the bonds unless a proposition for

the issuance of the bonds is approved by a majority of the

qualified voters of the municipality voting at an election held

for that purpose.

(b) The governing body shall hold the election in the manner

provided by Chapter 1251.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

Sec. 1501.207. SALE OF DISTRICT PROPERTY. A district may sell

to a municipality, and the municipality may buy, district

property only if the purchase price paid, when added to other

applicable money of the district, is sufficient to provide for

the payment of:

(1) all outstanding district bonds, including interest on the

bonds to:

(A) the maturity dates of the bonds; or

(B) the dates the district sets for redemption of the bonds;

(2) any required redemption premium; and

(3) any applicable fee of the bank of payment.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

Sec. 1501.208. INTEREST AND SINKING FUND OF DISTRICT. (a) The

interest and sinking fund of a district must be permanently

maintained in the bank where bonds of the district are payable.

(b) A district to which money is paid under Section 1501.207

shall promptly deposit that money, as well as other applicable

money and investments of the district, to the credit of the

interest and sinking fund of the district.

investment shall hold that money or investment in trust for the

benefit of the holders of outstanding bonds of the district.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

Sec. 1501.209. INVESTMENT OF MONEY IN INTEREST AND SINKING FUND.

(a) The district's interest and sinking fund must be:

(1) immediately invested in direct obligations of the United

States;

(2) deposited in a bank or savings and loan association, to the

extent that the deposit is insured by an agency of the United

States; or

(3) placed in a combination of investments described by

Subdivision (1) and deposits described by Subdivision (2).

(b) An investment of the district's interest and sinking fund

must mature and produce income, without reinvestment, at times

and in amounts sufficient to pay:

(1) the principal of the district's bonds as it becomes due;

(2) interest on the district's bonds as it becomes due;

(3) any redemption premium on the redemption date; and

(4) any applicable fee of the bank of payment.

needed under Subsection (b) to the payment of other debts of the

district.

(d) On request of the water board that operates property

purchased under this subchapter, the bank in which the interest

and sinking fund of the district is maintained shall pay to the

water board any money or investment in that fund that exceeds the

amount needed under Subsection (b).

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

Sec. 1501.210. PAYMENT OF OUTSTANDING BONDS. After money has

been deposited with the bank where the outstanding district bonds

are payable, the district or the municipality may pay off any

outstanding district bonds if the money and investments that

would remain to the credit of the interest and sinking fund are

sufficient to provide for the payment of:

(1) all of the remaining outstanding bonds of the district;

(2) the interest on the remaining outstanding bonds of the

district to:

(A) the maturity dates of the bonds; or

(B) the date set by the district for redemption of its bonds;

and

(3) any required redemption premium.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

Sec. 1501.211. ORDINANCE SPECIFYING DATE OF PASSAGE OF TITLE;

ABOLITION OF DISTRICT. (a) After a municipality pays the

purchase money for district property and that money is invested

in compliance with Section 1501.209, the governing body of the

municipality by ordinance shall specify the date on which title

to that property passed or will pass to the municipality. The

date specified may be the first day of the fiscal year in which

the municipality purchases the district property.

(b) Title to the district property vests in the municipality for

all purposes on the date specified in the ordinance.

district by the ordinance required by Subsection (a) or a

subsequent ordinance.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

Sec. 1501.212. OPERATION AND MANAGEMENT OF PROPERTIES. After

the governing body of a municipality abolishes a district under

Section 1501.211, the water board that manages the other water

and sewer properties of the municipality:

(1) shall operate and manage the district property purchased

under this subchapter; and

(2) may integrate that property into the municipal water and

sewer system to any extent.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

Sec. 1501.213. SEGREGATION OF PROPERTIES. (a) Notwithstanding

Section 1501.212(2), the payment or security of the district's

outstanding bonds may not be impaired.

(b) If money is not available at the bank of payment for the

district's bonds to pay the principal of or the interest on the

bonds as it becomes due, the water board shall segregate from the

municipal water and sewer system all district property purchased

under this subchapter, including any replacement, renewal, or

improvements of that property.

district property:

(1) is a complete and operating system; and

(2) serves substantially the same area as the district property

served when title to the property vested in the municipality.

(d) After segregation, the water board:

(1) shall maintain and operate the district system separately;

(2) shall comply with the resolutions authorizing the district's

outstanding bonds; and

(3) has each power, duty, and obligation previously held by the

district's board of directors regarding the:

(A) maintenance and operation of the system;

(B) handling of the district's funds; and

(e) For purposes of Subsection (d), the water board is a body

corporate and occupies the same position as the district's board

of directors.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

SUBCHAPTER F. ALTERNATIVE WATER SUPPLY FINANCING PROCEDURE FOR

MUNICIPALITIES WITH POPULATION OF MORE THAN 275,000

Sec. 1501.251. APPLICABILITY OF SUBCHAPTER. This subchapter

applies only to a municipality:

(1) that has a population of more than 275,000;

(2) in which a majority of the qualified voters voting in an

election have voted to authorize the municipality to contract

with a river authority created under Section 59, Article XVI,

Texas Constitution, to acquire a water supply project from that

authority; and

(3) that holds a permit issued by the Texas Natural Resource

Conservation Commission for the municipality to use the water

supply.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

Sec. 1501.252. ALTERNATIVE FINANCING PROCEDURE. (a) This

subchapter does not affect the right of a municipality or a river

authority to finance all of the cost of a water supply project,

or any part of the cost of the project that is not payable by the

municipality, by revenue bonds issued by the river authority and

based on the contract described by Section 1501.251(2).

(b) The municipality and river authority may amend the contract

described by Section 1501.251(2) to implement the financing

procedure provided by this subchapter, including amending the

contract to:

(1) define the extent of the municipality's rights in the water

supply project;

(2) prescribe arrangements for auditing the funds and accounts

used in the construction program; and

(3) provide procedures under which the municipality will make

available to the river authority proceeds from revenue bonds

issued under this subchapter, as necessary to pay construction

costs, including:

(A) the cost of the municipality's intake structures and pumping

and filtration equipment; and

(B) the portion of costs that, under the contract, the river

authority is not required to pay by the proceeds of the

authority's revenue bonds.

(1) issue its revenue bonds, payable from the revenues of the

municipality's:

(A) waterworks system; or

(B) waterworks and sanitary sewer system, if the systems are

combined in the municipality; and

(2) use the proceeds of the bonds as provided by this

subchapter.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

Sec. 1501.253. WATER SUPPLY PROJECT OWNERSHIP AND

RESPONSIBILITIES. (a) The water supply project of the river

authority may consist of:

(1) a dam;

(2) a reservoir;

(3) related outlet facilities; and

(4) land, easements, or flowage rights.

(b) The river authority shall construct and operate the water

supply project.

of the water supply project except for any part of the water

supply project property that the municipality owns under the

contract between the municipality and the river authority.

(d) Except for the water supply project and any facility the

contract between the municipality and the river authority

specifies, the municipality shall own, construct, and operate any

other facility needed to deliver to the municipality treated

water from the water supply project, including:

(1) the intake structure;

(2) pumping stations, pipelines, and equipment;

(3) treatment and filtration plants;

(4) all intermediate and terminal reservoirs, including

intermediate reservoirs used to store water from the water supply

project; and

(5) pumping and pipeline facilities to convey water to and from

intermediate reservoirs.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

Sec. 1501.254. ORDINANCE AUTHORIZING AND ISSUANCE OF BONDS. (a)

When the designs, plans, and specifications of the water supply

project of the river authority are complete to the extent that

they have been approved by the governing bodies of the authority

and the municipality, the governing body of the municipality by

ordinance may authorize the issuance of revenue bonds in the

amount estimated to be sufficient to pay:

(1) the entire cost of the water supply project to be incurred

by the river authority, including interest during construction;

(2) the portion of the cost of the water supply project the

municipality has contracted to pay.

(b) The governing body of the municipality may issue the bonds

in an amount sufficient to pay:

(1) the cost of providing the facilities described by Section

1501.253(d), including any land, easement, or right-of-way needed

for a facility; and

(2) interest during construction.

conditions under which the right may be exercised, to issue

additional revenue bonds on a parity with or subordinate to the

original bonds.

(d) The ordinance must provide that all deposits to the credit

of the interest and sinking fund, the reserve fund, or another

fund must be made from the revenue from the waterworks system of

the municipality, or the waterworks and sanitary sewer system of

the municipality if those systems are combined.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

Sec. 1501.255. NOTICE OF INTENTION TO ISSUE BONDS. (a) The

governing body of the municipality may not adopt an ordinance

authorizing the issuance of bonds under this subchapter until the

governing body gives notice of the time it proposes to adopt the

ordinance.

(b) The notice must be published in at least two issues of a

newspaper of general circulation in the municipality, with the

first publication being not less than 14 days before the date the

governing body proposes to adopt the ordinance.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999. Amended by Acts 2001, 77th Leg., ch. 1420, Sec. 8.022, eff.

Sept. 1, 2001.

Sec. 1501.256. PETITION; ELECTION. (a) If, before the

governing body of the municipality is scheduled to adopt the

ordinance authorizing the bonds, a petition is filed with the

secretary of the municipality requesting an election on the

issuance of the bonds that is signed by at least 10 percent of

the registered voters who are resident owners of taxable property

in the municipality, the municipality may not issue the bonds

unless a proposition for the issuance of the bonds is approved by

a majority of the qualified voters of the municipality voting at

an election held for that purpose.

(b) The governing body may hold an election on the issuance of

the bonds regardless of whether a petition is filed.

provided by Chapter 1251.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

Sec. 1501.257. MATURITY. Bonds issued under this subchapter

must mature within 40 years, as provided by the ordinance

authorizing the issuance of the bonds.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

Sec. 1501.258. SIGNATURES. A bond issued under this subchapter

must be signed by:

(1) the mayor; and

(2) another designated officer of the municipality.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

Sec. 1501.259. SALE OF BONDS. A municipality may sell bonds

issued under this subchapter under terms the governing body of

the municipality determines to be the most advantageous and

reasonably obtainable.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

Sec. 1501.260. INTERIM BONDS. Pending the issuance of

definitive bonds under this subchapter, the municipality may

authorize the delivery of negotiable interim bonds exchangeable

for definitive bonds.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

Sec. 1501.261. RATES, TOLLS, AND CHARGES. After bonds are

issued under this subchapter, the governing body of the

municipality shall establish the rates, tolls, and charges for

service provided by the municipality's waterworks system, or

combined waterworks and sanitary sewer system if appropriate, in

amounts sufficient to:

(1) pay the cost of operating and maintaining the system;

(2) pay when due the principal of and interest on the bonds; and

(3) establish and maintain the reserve fund and other funds

prescribed by the ordinance authorizing the bonds.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

Sec. 1501.262. DEPOSIT AND USE OF BOND PROCEEDS. (a) The

governing body of the municipality:

(1) shall provide for the deposit of money to the credit of the

interest and sinking fund, the reserve fund, and other funds as

prescribed by the ordinance authorizing the bonds; and

(2) may provide for all or part of the bond proceeds to be

deposited to the credit of those funds as necessary to pay

interest during construction and for an additional period not to

exceed two years.

(b) The municipality shall deposit the bond proceeds to the

credit of a fund to be used solely to pay:

(1) the cost of issuing and selling the bonds;

(2) the construction cost of any part of the water supply

project that the contract between the municipality and the river

authority obligates the municipality to provide; and

(3) the construction cost of any part of the facilities to be

constructed, owned, and operated by the municipality as provided

by Section 1501.253.

during the period of construction, the municipality may:

(1) invest the proceeds in bonds or other direct obligations of

the United States; and

(2) sell the investments as directed by the governing body for

construction purposes when necessary.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

Sec. 1501.263. REFUNDING BONDS. (a) A municipality may issue

refunding bonds to refund outstanding bonds issued under this

subchapter and interest on the outstanding bonds. The

municipality may issue refunding bonds without holding an

election to approve the issuance.

(b) The municipality may provide additional security for the

refunding bonds.

surrender and cancellation of the bonds to be refunded.

(d) In lieu of issuing bonds to be registered on the surrender

and cancellation of the bonds to be refunded, the municipality,

in the ordinance authorizing the issuance of the refunding bonds,

may provide for the sale of the refunding bonds and the deposit

of the proceeds in a bank at which the bonds to be refunded are

payable. In that case, the refunding bonds may be issued in an

amount sufficient to pay the interest on the bonds to be refunded

to their maturity date or redemption date and the amount of any

call premium, and the comptroller shall register the refunding

bonds without the surrender and cancellation of the bonds to be

refunded.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

Sec. 1501.264. CONFLICT WITH OTHER LAW. To the extent of a

conflict or inconsistency between this subchapter and another law

or a special or home-rule charter, this subchapter controls.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

State Codes and Statutes

State Codes and Statutes

State Codes and Statutes

State Codes and Statutes

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