The Texas Bond Review Board, created in 1987, is composed of the Governor, Lieutenant Governor, Speaker of the House of Representatives, and Comptroller of Public Accounts. The agency’s statutory authority is found in Chapter 1231 and Chapter 1372 of the Texas Government Code. The agency’s mission is to ensure that debt financing is used prudently to meet Texas’ infrastructure needs and other public purposes, to support and enhance the debt issuance and debt management functions of state and local entities, and to administer the state’s private activity bond allocation.
Agency functions are guided by a strategic plan which outlines four goals. The first goal is to ensure that Texas state bonds attain the highest possible bond rating and that these bonds are issued in the most cost-effective manner possible. Agency initiatives to accomplish this goal include the creation of debt issuing guidelines, review of state debt issuance, and statewide capital planning. With the exception of Tax Revenue Anticipation Notes, State Highway Fund Revenue Anticipation Notes, Permanent University Fund issuances, and non-general obligation issuances by university systems that have an unenhanced long-term rating of at least AA- or its equivalent, the board reviews and approves all bonds, installment sales, and lease-purchases issued by state debt issuers with a principal greater than $250,000 or a term greater than five years. This oversight role is exercised as a final step before the bonds go to market. To protect the proceeds of bond sales, state issuers must submit to the board a detailed plan for administration and disbursement of bond proceeds, investment provisions, and any specific provisions for safety and security of the proceeds. Also under this goal, the board is required to submit to the legislature an annual report of bond transaction information from state issuers and a semi-annual report to the joint committee charged with monitoring implementation of historically underutilized business goals. Additionally, legislation was passed in 1997 which requires the board to compile a statewide capital expenditure plan for the 2000-01 biennium that identifies the state’s capital needs, alternatives to financing those needs, and the possible budget impact on the state’s debt capacity.
The agency’s second goal is to ensure that public officials have access to current information regarding local government capital planning, finance, and debt management. The agency collects, maintains, and analyzes the status of local government debt and reports findings to the legislature, other state officials, and local policy makers. The board is mandated to submit to the legislature in even-numbered years a report on state and local government debt that includes information on state and local government debt outstanding, debt service requirements, the costs of debt issuance, savings from refunding, and other related information.
The agency’s third goal is to ensure that the authorization for Texas state and local entities to issue private activity bonds is allocated consistently with legislative mandates in the most equitable manner possible and in the best interest of the people of Texas. The federal Tax Reform Act of 1986 requires the allocation of private activity bond issuance authority because it sets a per capita limit on the use of tax-exempt bonds for private activities. Although the legislature is responsible for setting priorities and mandates of the Private Activity Bond Allocation Program, the agency drafts administrative rules and guidelines for processing and reviewing applications for the state’s private activity bonds. The administration of this program is fully funded by fees generated from the recipients of these federal allocations. Private activity bonds are those which have met any or all of the following tests: Private Business Use Test More than 10% of the proceeds are to be used for any private business use; Private Security or Payment Test Payment on principal or interest of more than 10% of the proceeds is directly or indirectly secured by, or payments are derived from, a private business use; and Private Loan Financing Test Proceeds will be used to make or finance loans to persons other than governmental units.
The agency’s fourth goal is to establish and carry out policies governing purchasing and contracting that will foster meaningful and substantive inclusion of historically underutilized businesses (HUBs). Agency initiatives to accomplish this goal include development and implementation of a plan to increase the use of historically underutilized businesses through purchasing and contracts. The agency remains actively committed to fair and impartial efforts to foster HUB participation.