CHAPTER 284. SPECIAL PROVISIONS RELATING TO HOSPITAL DISTRICT BONDS

HEALTH AND SAFETY CODE

TITLE 4. HEALTH FACILITIES

SUBTITLE D. HOSPITAL DISTRICTS

CHAPTER 284. SPECIAL PROVISIONS RELATING TO HOSPITAL DISTRICT

BONDS

SUBCHAPTER A. ISSUANCE OF REVENUE BONDS IN COUNTIES WITH

POPULATION OF AT LEAST 200,000

Sec. 284.001. AUTHORITY TO ISSUE; FORM OF BONDS. (a) The

commissioners court of a county with a population of at least

200,000 in which a hospital district has been created in

accordance with Article IX of the Texas Constitution may issue

revenue bonds to provide funds to:

(1) acquire, construct, repair, renovate, improve, enlarge, and

equip a hospital facility; and

(2) acquire any real or personal property on behalf of the

district for those purposes.

(b) The commissioners court may not issue revenue bonds under

this subchapter on behalf of a hospital district to purchase a

nursing home for long-term care.

(c) The bonds and bond interest coupons are negotiable

instruments.

(d) The bonds may be issued in the form, denomination, and

manner and under the terms and conditions determined and provided

by the commissioners court in the order authorizing the issuance

of the bonds.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 284.002. TERMS. (a) The bonds must mature serially or

otherwise not more than 40 years after the date they are issued.

(b) The bonds may be:

(1) made redeemable before maturity; and

(2) issued registrable as to principal or as to principal and

interest.

(c) The bonds shall be executed in the manner and bear interest

at the rate provided by the commissioners court in the order

authorizing the bonds.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 284.003. APPROVAL AND REGISTRATION OF BONDS. (a) The

commissioners court shall submit the bonds and the proceedings

authorizing their issuance to the attorney general for

examination. If the attorney general finds that the bonds are

authorized in accordance with law, the attorney general shall

approve the bonds and the comptroller shall register the bonds.

(b) After approval and registration, the bonds are incontestable

and are binding obligations according to their terms.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 284.004. SECURITY. (a) The commissioners court may make

bonds issued under this subchapter payable from and secured by a

lien on or pledge of all or part of the hospital district revenue

from operation or ownership of hospital facilities, except ad

valorem taxes.

(b) The commissioners court may also secure the bonds by:

(1) a pledge of all or part of a grant, a donation, or other

income received from a public or private source, whether in

accordance with an agreement or otherwise; and

(2) a mortgage or deed of trust on real property on which a

district hospital facility is or will be located and any real or

personal property incident or appurtenant to that facility.

(c) The commissioners court may authorize the execution and

delivery of a trust indenture, mortgage, deed of trust, or other

form of encumbrance to evidence a security agreement under

Subsection (b)(2).

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 284.005. SALE OF BONDS; USE OF PROCEEDS. (a) The bonds

may be sold in the manner, at the price, and under the terms

determined and provided by the commissioners court in the order

authorizing the issuance of the bonds.

(b) If permitted by the bond order, a required part of the

proceeds from the bond sale may be used for:

(1) the payment of interest on the bonds during the construction

of hospital facilities financed with bond proceeds;

(2) the payment of operation and maintenance expenses of those

facilities to the extent and for the period specified by the bond

order; and

(3) the creation of reserves for the payment of bond principal

and interest.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 284.006. INVESTMENT OF BOND PROCEEDS. Proceeds from the

sale of bonds may be invested until needed to the extent and in

the manner provided by the bond order.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 284.007. LEGAL INVESTMENTS. The bonds are legal and

authorized investments for:

(1) a bank;

(2) a trust company;

(3) a savings and loan association;

(4) an insurance company;

(5) a small business investment corporation;

(6) a fiduciary;

(7) a trustee;

(8) a guardian; or

(9) an interest or sinking fund or other public funds of the

state or a municipality, county, school district, or other

political subdivision of the state.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 284.008. SECURITY FOR DEPOSITS. The bonds are eligible to

secure deposits of public funds of the state or of a

municipality, county, school district, or other political

subdivision of the state. The bonds are lawful and sufficient

security for deposits to the extent of their market value if

accompanied by all appurtenant unmatured coupons, if any.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 284.009. AUTHORITY TO ISSUE SUBSEQUENT BONDS. In the

authorization of bonds under Section 284.001, the commissioners

court may provide for the subsequent issuance of additional

parity, subordinate lien, or other bonds, under the terms or

conditions stated in the order authorizing the issuance of the

original bonds.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 284.010. REFUNDING BONDS AND REFINANCING. (a) Revenue

bonds issued by the commissioners court under this subchapter or

under any other statute of this state and payable from hospital

facility revenue may be refunded or otherwise refinanced by the

commissioners court.

(b) The provisions of this subchapter pertinent and appropriate

to the issuance of revenue bonds generally apply to the refunding

bonds.

(c) In issuing refunding bonds or in refinancing revenue bonds,

the commissioners court in the same authorizing proceedings may:

(1) refund or refinance bonds issued under this subchapter and

bonds issued under another statute of this state and combine the

refunding bonds with other new bonds to be issued under those

laws into one or more issues or series of bonds; and

(2) provide for the subsequent issuance of additional parity,

subordinate lien, or other bonds.

(d) Refunding bonds shall be issued and delivered under the

terms and conditions stated in the authorizing proceedings.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 284.011. TAXES TO PAY OPERATING AND MAINTENANCE EXPENSES.

(a) Ad valorem taxes of the hospital district shall be used to

pay hospital facility operation and maintenance expenses to the

extent that hospital facility revenue and income are not

available at any time to pay all those expenses.

(b) The proceeds of an annual ad valorem tax may be pledged to

pay hospital facility operation and maintenance expenses in the

order authorizing the issuance of bonds under this subchapter.

(c) During each year that any of the bonds are outstanding, the

commissioners court shall compute and determine the rate and

amount of ad valorem tax that is sufficient to raise and produce

the funds required to pay required hospital facility operation

and maintenance expenses if the annual ad valorem tax is pledged

as security for the payment of those expenses. In determining the

tax rate, the commissioners court may allow for tax delinquencies

and the cost of tax collection.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 284.012. AUTHORITY OF DISTRICT GOVERNING BODY IN ABSENCE OF

AD VALOREM TAX. If a hospital district created under Article IX

of the Texas Constitution does not have ad valorem taxes levied

on behalf of the district by the commissioners court of the

county in which the hospital district is located, the district

board of directors or other governing body has all of the powers

and duties otherwise provided to a commissioners court under this

subchapter.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 284.013. ANNUAL BUDGET. (a) The commissioners court,

board of hospital managers, or hospital district board of

directors shall provide in each annual hospital district budget

for the payment of all operation and maintenance expenses of the

hospital district.

(b) In preparing the budget, the commissioners court or board

may consider the estimated revenue and income from hospital

facilities that will be available for paying operation and

maintenance expenses after providing for all principal, interest,

and reserve requirements in connection with the bonds.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 284.014. AUTHORITY TO CHARGE FOR HOSPITAL SERVICES. (a)

The commissioners court, board of hospital managers, or hospital

district board of directors may fix and collect charges for the

occupancy or use of hospital facilities and hospital services in

the amount and manner determined by the commissioners court or

board.

(b) The charges shall be fixed and collected in an amount:

(1) sufficient, with other pledged resources, to provide for all

payments of principal, interest, and any other amounts required

in connection with the bonds; and

(2) required by the bond order to provide for payment of all or

part of the operation, maintenance, and other expenses of the

hospital facilities.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Sec. 284.015. USE OF OTHER LAW. A commissioners court may use

other law not in conflict with this chapter to the extent

convenient or necessary to carry out any power expressly or

impliedly granted by this chapter.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

SUBCHAPTER B. ISSUING AND REFUNDING REVENUE BONDS BY HOSPITAL

DISTRICTS CREATED UNDER ARTICLE IX, SECTION 9, OF THE TEXAS

CONSTITUTION

Sec. 284.031. AUTHORITY TO ISSUE. (a) A hospital district

created in accordance with Article IX, Section 9, of the Texas

Constitution may issue revenue bonds to:

(1) acquire, construct, repair, renovate, or equip buildings and

improvements for hospital purposes; and

(2) acquire sites for hospital purposes.

(b) The hospital district may refund revenue bonds previously

issued for the purposes specified by Subsection (a).

(c) The bonds must be payable from and secured by a pledge of

all or part of district revenues from operation of a hospital.

The bonds may also be secured by a mortgage or deed of trust lien

on all or part of the district's property.

(d) The bonds must be issued in accordance with Sections

264.042-264.047(a), 264.048, and 264.049, and with the effect

specified by Section 264.050.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

SUBCHAPTER C. BOND ELECTIONS IN HOSPITAL DISTRICTS

Sec. 284.041. BOND ELECTIONS FOR REVENUE BONDS. (a) The

commissioners court of a county authorized by law to issue

revenue bonds on behalf of a hospital district in the county may,

on its own motion, order an advisory election to determine

whether a majority of the qualified voters of the hospital

district voting at the election favor the issuance of revenue

bonds. The order must contain the same information contained in

the notice of the election.

(b) In addition to the contents of the notice required by the

Election Code, the notice must state any other matters that the

commissioners court considers necessary or advisable.

(c) Subject to any additional notice requirements under Section

4.003, Election Code, the commissioners court shall publish

notice of the election one time, at least 10 days before the date

set for the election, in a newspaper of general circulation in

the hospital district.

(d) The election is advisory only and does not affect the

authority of the commissioners court to issue revenue bonds on

behalf of the hospital district under an applicable law that does

not require an election.

(e) The expenses of holding the election shall be paid from

hospital district funds.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.