CHAPTER 254. ACQUISITION AND DEVELOPMENT OF ISLAND PROPERTY
LOCAL GOVERNMENT CODE
TITLE 8. ACQUISITION, SALE, OR LEASE OF PROPERTY
SUBTITLE A. MUNICIPAL ACQUISITION, SALE, OR LEASE OF PROPERTY
CHAPTER 254. ACQUISITION AND DEVELOPMENT OF ISLAND PROPERTY
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 254.001. APPLICABILITY OF CHAPTER. This chapter applies
only to a municipality located on a channel, canal, bay, inlet,
or lake connected to the Gulf of Mexico.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 9, eff. Sept. 1,
1999.
Sec. 254.002. DEFINITIONS. In this chapter:
(1) "Board" means a board of trustees established under Section
254.021.
(2) "Island property" means:
(A) land located on an island in the channel, canal, bay, inlet,
or lake on which the municipality is located; and
(B) facilities and improvements related to land described by
Paragraph (A).
(3) "Obligation" includes a bond.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 9, eff. Sept. 1,
1999.
Sec. 254.003. AUTHORITY REGARDING ISLAND PROPERTY. A
municipality may construct, acquire, lease as lessor or lessee,
improve, enlarge, extend, repair, maintain, replace, develop, or
operate facilities and improvements necessary or convenient for
the proper administration of island property owned by the
municipality.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 9, eff. Sept. 1,
1999.
Sec. 254.004. APPLICABILITY OF OTHER LAW. Except to the extent
that it conflicts with this chapter, Subchapter B, Chapter 1502,
Government Code, applies to revenue obligations issued under this
chapter, and a municipality to which this chapter applies has,
with respect to a revenue obligation issued under this chapter,
each power granted by that subchapter.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 9, eff. Sept. 1,
1999.
SUBCHAPTER B. MANAGEMENT AND CONTROL OF ISLAND PROPERTY; BOARD OF
TRUSTEES
Sec. 254.021. MANAGEMENT AND CONTROL BY GOVERNING BODY OR BOARD
OF TRUSTEES. (a) An ordinance authorizing the issuance of
obligations under this chapter may provide that, while the
principal of or interest on the obligations is outstanding,
management and control of island property owned by the
municipality and of the revenue generated by the island property
is in:
(1) the governing body of the municipality; or
(2) a board of trustees named in the ordinance.
(b) A board may consist of not more than nine members.
(c) Notwithstanding Subsection (a), if the municipality is
operating under a home-rule charter that requires that island
property be managed or controlled by a board of trustees or
commission, the charter controls and a reference in this chapter
to a board of trustees is a reference to the board or commission
provided in the charter.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 9, eff. Sept. 1,
1999.
Sec. 254.022. ORGANIZATION AND DUTIES OF BOARD. (a) Except as
otherwise provided by a charter provision described by Section
254.021(c), an ordinance under Section 254.021(a) that places
management and control of island property in a board may:
(1) specify the board members' compensation;
(2) specify the members' terms of office;
(3) specify the members' powers and duties;
(4) provide for the election or appointment of the members'
successors; and
(5) specify any other matter relating to the members'
organization and duties.
(b) On any matter not covered by the ordinance or the municipal
charter, the board is governed by the laws and rules governing
the governing body of the municipality.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 9, eff. Sept. 1,
1999.
Sec. 254.023. CHARACTER OF BOARD; GENERAL POWERS. (a) A board
is a body politic and corporate.
(b) The board may:
(1) manage, control, maintain, and operate the island property;
(2) employ a general manager and any other officer, employee, or
representative the board considers appropriate;
(3) prepare and adopt a budget, set charges for a service or
facility, authorize an expenditure, and manage and control the
income and revenue of the island property;
(4) determine policies and adopt rules and procedures for the
operation of the island property;
(5) acquire property or an interest in property to accomplish
the purposes of this chapter and construct an improvement or
facility on the property;
(6) contract in its own name, but not in the name of the
municipality;
(7) sue and be sued in its own name;
(8) adopt, use, and alter a corporate seal; and
(9) establish a security force and commission as a peace officer
an employee of the force who is licensed by the Commission on Law
Enforcement Officer Standards and Education.
(c) A person commissioned as a peace officer under this chapter
has each right, privilege, obligation, and duty of other peace
officers in this state while on the property under control of the
board or in the actual course and scope of the person's
employment.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 9, eff. Sept. 1,
1999.
Sec. 254.024. COMPETITIVE BIDDING. (a) The board may award a
contract involving the expenditure of more than $15,000 only by
competitive bidding.
(b) Competitive bidding is not required:
(1) for a contract for:
(A) personal or professional services;
(B) a real estate transaction;
(C) operation of an improvement or facility under a specific
agreement for a limited term; or
(D) insurance; or
(2) if the board determines that the delay posed by the
competitive bidding procedure would prevent or substantially
impair the operation of island property.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 9, eff. Sept. 1,
1999.
SUBCHAPTER C. OBLIGATIONS
Sec. 254.051. AUTHORITY OF MUNICIPALITY TO ISSUE OBLIGATIONS.
The governing body of a municipality by ordinance may issue in
the name of the municipality obligations payable from taxes,
revenue, or both to provide money for a facility or improvement
under this chapter.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 9, eff. Sept. 1,
1999.
Sec. 254.052. ELECTION. (a) Obligations payable from ad
valorem taxes, other than refunding obligations, may be issued
only if authorized at an election held under Chapter 1251,
Government Code.
(b) Notwithstanding any law or charter provision to the
contrary, an election is not required to authorize the issuance
under this chapter of obligations payable solely from revenue if:
(1) the obligations are not:
(A) a debt of the municipality; or
(B) a pledge of the faith and credit of the municipality; and
(2) the owner or holder of an obligation is not entitled to
demand payment from money raised by taxation.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 9, eff. Sept. 1,
1999.
Sec. 254.053. AUTHORITY OF BOARD TO ISSUE OBLIGATIONS. A board
by resolution may issue in the name of the board, with the
consent of the governing body of the municipality:
(1) obligations payable from revenue in the manner provided by
this chapter and refund previously issued obligations;
(2) expense notes drawn against the revenues of the board to pay
expenses during the fiscal year of the board in which the notes
are issued; and
(3) certificates of participation in contractual obligations to
pay money.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 9, eff. Sept. 1,
1999.
Sec. 254.054. LIMITATION ON AGGREGATE AMOUNT OF EXPENSE NOTES.
The aggregate amount of expense notes issued under Section
254.053(2) that are outstanding at any time during a fiscal year
may not exceed 50 percent of the difference between:
(1) the revenue of the board budgeted for that fiscal year; and
(2) the principal of and interest on board obligations other
than expense notes to be paid from the revenue of the board
during that fiscal year.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 9, eff. Sept. 1,
1999.
Sec. 254.055. MATURITY OF OBLIGATION. An obligation issued
under this chapter must mature not later than 40 years after its
date of issuance.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 9, eff. Sept. 1,
1999.
Sec. 254.056. SIGNATURES; SEAL. (a) An obligation issued by a
municipality under this chapter must be:
(1) signed by the mayor or the presiding officer of the
municipality;
(2) countersigned by the municipality's secretary or clerk; and
(3) impressed with the seal of the municipality.
(b) An obligation authorized by the board under this chapter
must be:
(1) signed by the presiding officer of the board;
(2) countersigned by the secretary or assistant secretary; and
(3) impressed with the seal of the board.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 9, eff. Sept. 1,
1999.
Sec. 254.057. SALE OF OBLIGATIONS. (a) A municipality or board
may sell obligations issued under this chapter at public or
private sale under terms the governing body or the board
determines to be the most advantageous and reasonably obtainable.
(b) Subsection (a) applies to obligations payable from revenue
notwithstanding any restriction in a municipal charter to the
contrary.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 9, eff. Sept. 1,
1999.
Sec. 254.058. CONTENTS OF ORDINANCE OR RESOLUTION. (a) The
ordinance of the governing body or the resolution of the board
authorizing the issuance of revenue obligations may:
(1) provide for the flow of funds, the establishment and
maintenance of an interest and sinking fund, reserve fund, or
other fund, and the depositing of money; and
(2) contain any covenant, as considered appropriate, with
respect to the obligations, the pledged revenue, and the
operation and maintenance of the island property.
(b) The ordinance or resolution or another proceeding may:
(1) prohibit the further issuance of obligations payable from
the pledged revenue; or
(2) reserve the right to issue additional obligations to be
secured by a pledge of and payable from the net revenue on a
parity with, or subordinate to, the lien and pledge securing the
obligations being issued, subject to any condition provided by
the ordinance, resolution, or other proceeding.
(c) The ordinance, resolution, or other proceeding may:
(1) provide that surplus net revenue received from the operation
of the island property may be used for the payment of the
principal of and interest on any obligations payable from taxes
issued by the municipality under this chapter; and
(2) contain other provisions and covenants.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 9, eff. Sept. 1,
1999.
Sec. 254.059. REVIEW AND APPROVAL OF CONTRACTS RELATING TO
REVENUE OBLIGATIONS. (a) If revenue obligations issued under
this chapter state that they are secured by a pledge of the
proceeds from a contract, a copy of the contract and of the
proceedings authorizing the contract must be submitted to the
attorney general for approval.
(b) The approval by the attorney general of the obligations is
approval of the contract.
(c) After approval, the contract is incontestable except for
forgery or fraud.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 9, eff. Sept. 1,
1999.
Sec. 254.060. SECURITY FOR AND PAYMENT OF OBLIGATIONS PAYABLE
FROM REVENUE. (a) Revenue obligations issued under this chapter
may be secured solely by and paid from a pledge of the net
revenue derived from the operation of island property, including
revenue from leases, subleases, sales, or contracts for sale
entered into by the municipality or the board of trustees with
respect to the island property. For purposes of this subsection,
the net revenue is an amount equal to the gross revenue derived
from the operation of the island property less the reasonable
expenses of maintaining and operating the island property.
(b) While the principal of or interest on obligations is
outstanding, the issuer shall:
(1) impose and collect charges in an amount sufficient to pay:
(A) maintenance and operation expenses of the island property;
(B) the interest on the obligations as it accrues; and
(C) the principal of the obligations as the obligations mature;
and
(2) make any other payment prescribed by the ordinance or
resolution authorizing or other proceeding relating to the
issuance of the obligations.
(c) In addition to the security provided by Subsection (a),
obligations may be secured by a trust indenture and a mortgage or
deed of trust lien or other security interest on island property.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 9, eff. Sept. 1,
1999.
Sec. 254.061. USE OF CERTAIN PROCEEDS. From the proceeds from
the sale of obligations issued under this chapter, there may be
appropriated or set aside:
(1) an amount for the payment of interest expected to accrue
while an island property facility or improvement is under
construction;
(2) an amount necessary to pay expenses related to the issuance,
sale, and delivery of the obligations; and
(3) an amount required by the ordinance or resolution
authorizing the issuance of the obligations to be deposited to
the credit of a reserve or other fund.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 9, eff. Sept. 1,
1999.
Sec. 254.062. LEASE OR SALE OF ISLAND PROPERTY. (a) In
connection with the issuance of revenue obligations, a
municipality or board may lease, sublease, or sell island
property to be constructed or acquired with the proceeds of the
obligations.
(b) A lease, sublease, or contract of sale may contain any
provision that the municipality or board considers advantageous.
(c) A lease, sublease, or contract of sale may provide for the
lessee or purchaser of the island property to make payments in
amounts adequate to pay the principal of and interest and premium
on the obligations when they become due.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 9, eff. Sept. 1,
1999.
Sec. 254.063. ENCUMBRANCE OF ISLAND PROPERTY IMPROVEMENTS OR
FACILITIES FINANCED BY OBLIGATIONS PAYABLE FROM AD VALOREM TAXES.
A municipality may not encumber an island property improvement
or facility financed by obligations payable from ad valorem taxes
unless authorized at the election required by Section 254.052.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 9, eff. Sept. 1,
1999.
SUBCHAPTER D. REFUNDING OBLIGATIONS
Sec. 254.081. APPLICABILITY OF LAW RELATING TO ORIGINAL
OBLIGATIONS. The provisions of this chapter relating to original
obligations apply to refunding obligations issued under this
chapter to the extent the provisions can be made to apply.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 9, eff. Sept. 1,
1999.
Sec. 254.082. AUTHORITY TO ISSUE TAX REFUNDING OBLIGATIONS. The
governing body of a municipality may issue tax obligations under
this chapter to refund outstanding tax obligations.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 9, eff. Sept. 1,
1999.
Sec. 254.083. AUTHORITY TO ISSUE REVENUE REFUNDING OBLIGATIONS.
The governing body of a municipality or a board with the approval
of the governing body may issue revenue obligations under this
chapter to refund outstanding revenue obligations.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 9, eff. Sept. 1,
1999.
Sec. 254.084. TERMS OF ISSUANCE OF REVENUE REFUNDING
OBLIGATIONS. (a) Revenue refunding obligations may:
(1) be combined with new or original revenue obligations into
one series or issue;
(2) be issued to refund obligations of more than one series or
issue;
(3) combine the pledges securing the obligations to be refunded
to secure the revenue refunding obligations; or
(4) be secured by a pledge of other or additional net revenue.
(b) A revenue refunding obligation may bear interest at a rate
higher than that of the obligation to be refunded.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 9, eff. Sept. 1,
1999.
Sec. 254.085. REGISTRATION OF REFUNDING OBLIGATIONS BY
COMPTROLLER. (a) Except as provided by Subsection (b), the
comptroller shall register refunding obligations on surrender and
cancellation of the obligations to be refunded.
(b) The comptroller shall register refunding obligations without
the surrender and cancellation of the obligations to be refunded
if:
(1) the ordinance or resolution authorizing the issuance of the
refunding obligations requires that:
(A) the obligations be sold at public or private sale; and
(B) the proceeds from the sale be deposited:
(i) in a place where the obligations to be refunded are payable;
or
(ii) with the comptroller; and
(2) the refunding obligations are issued in an amount sufficient
to pay the principal of and interest on the obligations to be
refunded to the option or maturity date of the obligations.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 9, eff. Sept. 1,
1999.
Sec. 254.086. ESCROW AGREEMENT. (a) The proceeds from revenue
refunding obligations that are deposited as provided by Section
254.085(b)(1)(B) shall be held under an escrow agreement so that
the proceeds and interest earned on the proceeds will be
available to pay the principal of and interest on the obligations
to be refunded as each becomes due.
(b) The escrow agreement may provide that the proceeds may,
until needed to pay principal and interest, be invested in direct
obligations of the United States.
(c) Interest earned on an investment described by Subsection (b)
may be:
(1) pledged to the payment of the principal of and interest on
the obligations to be refunded or the refunding obligations; or
(2) considered as revenue of the island property.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 9, eff. Sept. 1,
1999.