Sec. 45.111. CERTIFICATES OF INDEBTEDNESS; ISSUANCE BY CERTAIN SCHOOL AND JUNIOR COLLEGE DISTRICTS

(a) Any school district, including a junior college district, situated in a county with a population of 200,000 or more may issue interest-bearing certificates of indebtedness to provide funds for erecting or equipping school buildings in the boundaries of the district or refinancing outstanding certificates as provided by this section. The term "certificates," as used in this section, includes all obligations authorized to be issued under this section and the interest on those obligations.

(b) The governing body of the district shall provide for the payment of the certificates issued under this section by appropriating and pledging local school funds derived from maintenance taxes levied and assessed under Sections 45.002 and 130.122; Chapter 273, Acts of the 53rd Legislature, Regular Session, 1953 (Article 2784g, Vernon's Texas Civil Statutes); or other similar law that limits the amount of tax that may be levied for maintenance purposes, as distinguished from bond requirements. The appropriation and pledge may be in the nature of a continuing irrevocable pledge to apply the first moneys collected annually from the tax levy to the payment of the obligations or by the irrevocable present levy and appropriation of the amount of the maintenance tax required to meet the annual debt service requirements of the obligations, in which event the governing body shall covenant to annually set aside the amount in the annual tax levy, showing the same is a portion of the maintenance tax. The governing body shall annually budget the amount required to pay the principal and interest of the obligations that may be scheduled to become due in any fiscal year. This section may not be construed as permitting the levy of a maintenance tax in excess of the amount approved by the qualified voters of the district.

(c) A district may not at any one time have certificates outstanding and unpaid in principal amount in excess of $250,000, unless the excessive amount becomes the obligation of the district by assumption under Subsection (k) or the new certificates are being issued to refund or refinance outstanding obligations under Subsection (i).

(d) The principal amount of certificates that may be authorized at any one time and the scheduling of their principal maturity are further restricted as follows:

(1) if the assessed valuation is more than $1 million and less than $15 million, the limiting factor is 25 cents;

(2) if the assessed valuation is $15 million or more but less than $35 million, the limiting factor is 15 cents; and

(3) if the assessed valuation is $35 million or more, the limiting factor is 5 cents.

(e) Assessed valuation means the valuation for school district purposes on the tax rolls of the district most recently approved before the authorization of the certificates. The limiting factor for a particular district, as prescribed by Subsection (d), is multiplied by the assessed valuation of the district, and the product is the maximum amount of debt service requirements on the certificates that may be scheduled to become due in any fiscal year on a cumulative basis. A district that has an assessed valuation less than $1 million may not issue certificates under this section.

(f) Certificates authorized to be issued under this section shall be payable at the times and be in such form and denomination or denominations either in coupon form or registered as to principal, interest, or both. The certificates may contain options for redemption before the scheduled maturity and may be payable at the place and may contain other provisions as the governing body of the district determines. A certificate may not mature over a period in excess of 25 years from the date of the certificate or bear interest at a rate in excess of seven percent per annum.

(g) Except if issued in exchange for certificates outstanding as provided by Subsection (i), the certificates shall be sold for cash at not less than the face or par value plus accrued interest. The proceeds shall be applied for the purpose for which the certificates were issued, except that all accrued interest and premium received, if any, shall be deposited in the interest and sinking fund established for the payment of the obligations. The cost of issuing the obligations, including attorneys', printing, and fiscal fees, may be paid from the proceeds, except if certificates are sold under Subsection (i).

(h) The certificates, including interest whether issued in coupon or registered form, are securities within the meaning of Chapter 8, Business & Commerce Code, and that chapter applies to the certificates after their approval by the attorney general and registration by the comptroller.

(i) Each governing body may refund or refinance outstanding certificates by issuing new interest-bearing certificates within the limitations and conditions provided in this section. The new certificates shall be issued and delivered in lieu of and on surrender to the comptroller and the cancellation of the obligations being refunded, and the comptroller shall register the new certificates and deliver them in accordance with the order authorizing their issuance. The new certificates may be issued in accordance with Subchapter A, Chapter 1207, Government Code, and delivered in accordance with Subchapter B or C of that chapter.

(j) A certified copy of all proceedings relating to the authorization of the certificates shall be submitted to the attorney general.

(k) Certificates issued under this section are an indebtedness of the school district issuing them, but the holder of a certificate does not have the right to demand payment out of any fund other than those pledged to its payment. If the boundary lines of any issuing district are changed while the certificates remain outstanding, the indebtedness shall be adjusted or assumed as provided under general law for the adjustment of bond indebtedness payable from taxation.

(l) For purposes of this section, the governing body of a common school district is the commissioners court of the county having administrative jurisdiction. The governing body of an independent school district, a rural high school district, or a junior college district is its board of trustees, and the governing body of a municipally controlled school district is the city or town council or commission. Certificates shall be authorized by order of the governing body of the district.

Added by Acts 1995, 74th Leg., ch. 260, Sec. 1, eff. May 30, 1995. Amended by Acts 2001, 77th Leg., ch. 1420, Sec. 8.213, eff. Sept. 1, 2001.