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<br />Art. 842a-2
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<br />BOND5-COUNTY, MUNICIPAL, ETC.
<br />Title 22
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<br />(2) direct obligations of the State of Texas or its agencies;
<br />(3) other obligations, the principal of and interest on which are unconditionally guaran-
<br />teed or insured by the State of Texas or the United States:
<br />(4) obligations. of states, agencies, counties, cities, and other political subdivisions of
<br />any state having been rated. as to. investment quality by a nationally recognized invest-
<br />ment rating firm and having received a rating of not less than A or its equivalent;
<br />(5) certificates of deposit issued. by state and national banks domiciled in. this state that
<br />are:
<br />(A) guaranteed or insured by the Federal Deposit Insurance Corporation, or its succes.
<br />sor; or
<br />(B) secured by obligations that are described by Subdivisions (lH4) of this subsection,
<br />which are intended to include all direct agency or instrumentality issued mortgage backed
<br />securities rated AAA by a nationally recognized rating agency, or by Chapter 726, Acts of
<br />the 67th Legislature, Regular Session, 1981 (Article 2529~1, Vernon's Texas Civil
<br />Statutes), and that have a market value of not less than the principal amount of the
<br />certificates: and
<br />(6) fully collateralized direct repurchase agreements having a defmed. termination date,
<br />secured by obligations descn'bed by Subdivision (1) of this subsection, pledged with a third
<br />party selected or approved by the political entity, and placed through a primary govern-
<br />ment securities dealer, as defmed by the Federal Reserve, or a bank domiciled in this
<br />state.
<br />(b) In addition to investment. in obligations, certificates, or agreements descnòed in
<br />Subsection (a) of this section, bond proceeds of an incorporated. city or town, a county, or
<br />a public school district, or local revenue of an institution of higher education, may be
<br />invested in common trust funds or comparable investment devices owned or administered
<br />by banks domiciled in this state and whose assets consist exclusively of all or a
<br />combination of the obligations descn'bed by Subdivisions (lH4) and (6) of Subsection (a) of
<br />this section. Common trust funds of banks domiciled in this state may be used if they:
<br />(1) are available;
<br />(2) comply with the provisions of the Tax Reform Act of 1986 and applicable federal
<br />regulations governing the investment of bond proceeds: and
<br />(3) meet the cash flow requirements and the investment needs of the political subdivi.
<br />sion or institution.
<br />(c) In this section:
<br />(1) "Bond proceeds" includes but is not limited to proceeds from the sale of bonds and
<br />reserves and funds maintained for debt service purposes.
<br />(2) "Repurchase agreement" means a simultaneous agreement to buy, hold for a
<br />specified time, and then sell back at a future date, obligations described by Subsection
<br />(a)(l) of this section, the principal and interest of which are guaranteed by the United
<br />States or any of its agencies, in. market value of not less than the principal amount of the
<br />funds disbursed.
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<br />Bids
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<br />Sec. 3. (a) Investments under Section 2(b) of this Act may be made only after
<br />competitive bids are solicited from at least three banks as provided by thiS $ection. The
<br />bids may be solicited orally.
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<br />(b) An incorporated city or town or a public school district must attempt to solicit bids
<br />initially from banks located within its boundaries. If there are not three banks available
<br />for the investments within the city's, town's, or public school district's boundaries, the
<br />city, town, or public school district may solicit bids from banks located within the county
<br />or counties in which the city, town, or public school district is located iK addition to those
<br />banks, if any, that are located within the boundaries of the city, town, or public school
<br />district. If there are not three banks avaIlable for the investments wiUrin the boundaries
<br />of the city, town, or public school district, or of the county or counties in which it is
<br />located, the city, town, or public school district may solicit bids from any bank within the
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