2005 Texas Transportation Code CHAPTER 454. MUNICIPAL MASS TRANSPORTATION SYSTEMS

TRANSPORTATION CODE

CHAPTER 454. MUNICIPAL MASS TRANSPORTATION SYSTEMS

SUBCHAPTER A. GENERAL PROVISIONS


	§ 454.001. AUTHORITY.  (a) A municipality may own, 
purchase, construct, improve, extend, and operate a mass 
transportation system to carry passengers for hire within the 
municipality, its suburbs, and adjacent areas.
	(b)  A municipality, individually or in cooperation with the 
United States, may:
		(1)  undertake research, development, and 
demonstration projects for a mass transportation system in the 
municipality, its suburbs, and adjacent areas;  and
		(2)  acquire, construct, and improve a facility or 
equipment for use, by operation, lease, or otherwise, in mass 
transportation service in those areas on, under, over, along, or 
across a public street or highway and on real property, an easement, 
or a right-of-way acquired for that purpose.

Acts 1995, 74th Leg., ch. 165, § 1, eff. Sept. 1, 1995.                    


	§ 454.002. ESSENTIAL GOVERNMENTAL FUNCTIONS.  (a) Mass 
transportation service provided by a municipality directly or 
through another entity by lease, contract, or other manner is an 
essential governmental function and not a proprietary function for 
all purposes, including the application of Chapter 101, Civil 
Practice and Remedies Code, if the service is provided:
		(1)  on a fixed rail or other designated and dedicated 
route;               
		(2)  over a distance of less than 20 miles;  and                              
		(3)  primarily for travel through or to an area of 
historical, architectural, recreational, or cultural interest.
	(b)  An independent contractor that on behalf of a 
municipality provides mass transportation service that is an 
essential governmental function under Subsection (a) is liable for 
damages only to the extent that the municipality would be liable if 
the municipality were performing the function.
	(c)  This section does not apply to taxicab transportation 
service.          

Acts 1995, 74th Leg., ch. 165, § 1, eff. Sept. 1, 1995.                    


	§ 454.003. FEDERAL GRANTS AND LOANS.  (a) A municipality 
may accept a grant or loan from the United States to finance all or 
part of the cost of acquiring, constructing, or improving a 
facility or equipment for use, by operation, lease, or otherwise, 
in mass transportation service in the municipality, its suburbs, 
and adjacent areas and in coordinating mass transportation service 
with highway and other transportation in those areas.
	(b)  Ratification by referendum of a regional authority 
under Chapter 451 by less than all municipalities in the 
metropolitan area as defined in that chapter does not affect the 
eligibility of an excepted municipality to receive federal transit 
grants under the National Mass Transportation Assistance Act of 
1974 or subsequent federal statute.
	(c)  Ratification by referendum of an authority under 
Chapter 452 by less than all municipalities in the metropolitan 
area as defined in that chapter does not affect the eligibility of 
an excepted municipality to receive federal transit grants under 
the Surface Transportation Assistance Act of 1978 or subsequent 
federal statute.

Acts 1995, 74th Leg., ch. 165, § 1, eff. Sept. 1, 1995.                    


	§ 454.004. MANAGEMENT.  (a) By the terms of an instrument 
evidencing an encumbrance of a mass transportation system or the 
terms of an ordinance, a municipality may place the management of a 
mass transportation system with the governing body of the 
municipality or a board of trustees named in the instrument or 
ordinance.
	(b)  A board of trustees of a mass transportation system must 
consist of three to nine members, one of whom must be the mayor of 
the municipality.  The instrument or ordinance must set the 
trustees' compensation, which may not exceed two percent of the 
gross annual receipts of the system.  The instrument or ordinance 
may specify:
		(1)  the term of office of the board of trustees;                             
		(2)  the board's powers and duties;                                           
		(3)  the manner in which the board may exercise its 
powers and duties;      
		(4)  the election of the trustees' successors;  and                           
		(5)  any matter relating to the board's organization.                         
	(c)  On any matter not covered by the instrument or 
ordinance, the board is governed by the laws and rules controlling 
the governing body of the municipality to the extent applicable.

Acts 1995, 74th Leg., ch. 165, § 1, eff. Sept. 1, 1995.                    


	§ 454.005. LEASE OF SYSTEM.  (a) In lieu of operating a 
mass transportation system, the governing body of a municipality or 
a board of trustees managing the system, with the approval of the 
municipality's governing body by resolution, may enter into a lease 
or other contractual arrangement for the operation of the system by 
a privately owned and operated corporation.
	(b)  The guaranteed or contingent payment of rentals, 
computed on revenue or gross or net profits or determined by any 
other method of compensation the governing body or board of 
trustees determines to be reasonable, may be the consideration for 
a lease or other contract under this section.
	(c)  The municipality must give public notice and make a 
request for the submission of bids in the manner required by law for 
the taking of bids for a public construction contract before 
entering into a lease or other contract under this section.  The 
municipality shall accept the best bid submitted, considering the 
rentals to be paid and the experience and financial responsibility 
of the corporations submitting the bids.

Acts 1995, 74th Leg., ch. 165, § 1, eff. Sept. 1, 1995.                    


	§ 454.006. FARES.  (a) Fares charged by a mass 
transportation system may be set according to a zone system or other 
classification that the municipality determines to be reasonable.
	(b)  Unless otherwise considered necessary by the governing 
body of the municipality to maintain the level and quality of 
service desired, a mass transportation system shall charge and 
collect fares that are sufficient to:
		(1)  pay all operating, maintenance, depreciation, and 
replacement charges; 
		(2)  provide for extensions to the extent permitted by 
this chapter;  and   
		(3)  provide and maintain in the time and manner 
prescribed by the applicable ordinances, deeds of trust, and 
indentures money sufficient to pay for debt service and reserves 
for the security and orderly payment of bonds or notes.

Acts 1995, 74th Leg., ch. 165, § 1, eff. Sept. 1, 1995.                    


	§ 454.007. USE OF REVENUE TO PAY OTHER MUNICIPAL DEBTS 
PROHIBITED.  (a) Except as permitted by the ordinance authorizing 
the bonds or notes or the deed of trust or indenture securing the 
bonds or notes or as provided by Subsection (b), the revenue of a 
mass transportation system may not be used to pay any other debt, 
expense, or obligation of the municipality.
	(b)  An acquired mass transportation system may pay the 
municipality that acquired the system for the loss of ad valorem 
taxes previously paid by the owners of the system until the 
indebtedness secured by the taxes is paid.

Acts 1995, 74th Leg., ch. 165, § 1, eff. Sept. 1, 1995.                    


	§ 454.008. RECORDS AND ACCOUNTS.  (a) The mayor of a 
municipality shall install and maintain a complete system of 
records and accounts showing the revenue collected and showing 
separately the amount spent or set aside for operation, salaries, 
labor, materials, repairs, maintenance, depreciation, 
replacements, extensions, and debt service on bonds or notes issued 
under this chapter.
	(b)  A mayor commits an offense if the mayor fails to install 
and maintain a system of records and accounts as required by 
Subsection (a) on or before the 90th day after the date the mass 
transportation system is completed.  An offense under this section 
is a misdemeanor punishable by a fine of not less than $100 or more 
than $1,000.

Acts 1995, 74th Leg., ch. 165, § 1, eff. Sept. 1, 1995.                    


	§ 454.009. ANNUAL REPORT.  (a) Not later than February 1 
of each year, the superintendent or manager of a mass 
transportation system shall file with the mayor of the municipality 
a detailed report of the operations for the year ending the 
preceding January 1, showing the total sums collected, the balance 
due, the total disbursements made, and amounts remaining unpaid as 
a result of the operation of the system during the year.
	(b)  A superintendent or manager commits an offense if the 
superintendent or manager fails to file as required by Subsection 
(a).  An offense under this section is a misdemeanor punishable by a 
fine of not less than $100 or more than $1,000.

Acts 1995, 74th Leg., ch. 165, § 1, eff. Sept. 1, 1995.                    


	§ 454.010. ENFORCEMENT.  A taxpayer or holder of 
indebtedness of a mass transportation system residing within the 
municipality may enforce this chapter by appropriate civil action 
in a district court of the county in which the municipality is 
located.

Acts 1995, 74th Leg., ch. 165, § 1, eff. Sept. 1, 1995.                    

SUBCHAPTER B. REVENUE BONDS AND NOTES


	§ 454.021. AUTHORITY TO ISSUE.  (a) A municipality may 
issue bonds and notes from time to time and in the amounts it 
considers necessary or appropriate for acquiring, constructing, 
improving, or extending a mass transportation system.
	(b)  Bonds or notes issued under this chapter are fully 
negotiable and may be made redeemable before maturity, at the 
option of the issuing municipality, at the price and under the terms 
fixed by the issuing municipality in the ordinance authorizing the 
bonds or notes.
	(c)  Bonds or notes issued under this chapter shall be sold 
for the price the governing body of the municipality determines to 
be in the best interest of the municipality.
	(d)  Subject to the restrictions in this chapter, the 
governing body of a municipality may fix the form, conditions, and 
details of bonds and notes issued under this chapter.

Acts 1995, 74th Leg., ch. 165, § 1, eff. Sept. 1, 1995.                    


	§ 454.022. NOTICE OF ORDINANCE AUTHORIZING 
ISSUANCE.  Before adopting an ordinance authorizing the issuance 
of bonds or notes under this chapter, the governing body of a 
municipality shall give notice of the time when the ordinance is to 
be adopted.  The notice shall be published in a newspaper of general 
circulation in the municipality, in at least two issues, with the 
first publication occurring at least 14 days before the date on 
which the ordinance is to be adopted.

Acts 1995, 74th Leg., ch. 165, § 1, eff. Sept. 1, 1995.                    


	§ 454.023. PETITION FOR ELECTION.  (a) The governing body 
of a municipality may issue bonds or notes under this chapter 
without an election unless a petition requesting an election on the 
question is filed with the municipal secretary before the scheduled 
time for adopting the ordinance authorizing the issuance of the 
bonds or notes.
	(b)  A petition under this section must be signed by at least 
10 percent of the registered voters of the municipality who have 
rendered their property for taxation.

Acts 1995, 74th Leg., ch. 165, § 1, eff. Sept. 1, 1995.                    


	§ 454.024. ELECTION.  (a) If a petition meeting the 
requirements of Section 454.023 is filed:
		(1)  the governing body of the municipality shall hold 
an election on the question as provided by Chapter 1251, Government 
Code;  and
		(2)  the bonds or notes may not be issued unless a 
majority of the votes received at the election favor the question.
	(b)  The governing body of a municipality may call an 
election for the issuance of bonds or notes under this chapter 
without a petition under Section 454.023.

Acts 1995, 74th Leg., ch. 165, § 1, eff. Sept. 1, 1995.  Amended 
by Acts 2001, 77th Leg., ch. 1420, § 8.398, eff. Sept. 1, 2001.


	§ 454.025. ENCUMBRANCE OF TRANSPORTATION SYSTEM.  (a) To 
secure the payment of bonds or notes issued under this chapter, a 
municipality may encumber:
		(1)  all or any part of the mass transportation system;                       
		(2)  the property of the system, including a bus or 
other vehicle, machinery, and equipment of any kind used in the 
operation of the system;
		(3)  the revenue of the system;                                               
		(4)  the franchise of the system;  or                                         
		(5)  any other thing relating to the system that is 
acquired or is to be acquired.
	(b)  A municipality may:                                                       
		(1)  encumber separately any property, including a bus 
or other vehicle, machinery, or equipment of any kind;  or
		(2)  acquire, hold, use, or contract for any property, 
including a bus or other vehicle, machinery, or equipment of any 
kind, under a lease arrangement, chattel mortgage, or conditional 
sale, including an equipment trust transaction.
	(c)  This chapter does not prohibit a municipality from 
encumbering a transportation system for the purposes of purchasing, 
building, mortgaging, extending, or repairing, or reconstructing 
another system and purchasing necessary property in connection with 
the system.

Acts 1995, 74th Leg., ch. 165, § 1, eff. Sept. 1, 1995.                    


	§ 454.026. TRANSPORTATION SYSTEM FRANCHISE.  In addition 
to encumbering the property of a mass transportation system under 
Section 454.025, a municipality, by the terms of an instrument 
evidencing that encumbrance, may grant to the purchaser under the 
power of sale in the instrument a franchise to operate the system 
and the system's property.  A franchise under this section may not 
exceed 25 years.

Acts 1995, 74th Leg., ch. 165, § 1, eff. Sept. 1, 1995.                    


	§ 454.027. OPERATING EXPENSES AS LIEN ON REVENUE.  If the 
revenue of a mass transportation system is encumbered under this 
chapter, the expenses of operation and maintenance, including all 
salaries, labor, materials, interest, repairs, and extensions 
necessary to render efficient service and each proper item of 
expense, are a first lien against the revenues.  The expense of an 
extension may be a lien prior to an existing lien only if:
		(1)  the governing body of the municipality considers 
the extension necessary to keep the system in operation and render 
adequate service to the municipality and its inhabitants;  or
		(2)  the extension is necessary to meet a condition 
that would otherwise impair the original securities.

Acts 1995, 74th Leg., ch. 165, § 1, eff. Sept. 1, 1995.                    


	§ 454.028. OBLIGATION OF TRANSPORTATION SYSTEM NOT 
MUNICIPAL DEBT.  (a) An obligation of a mass transportation system:
		(1)  is not a debt of the municipality;                                       
		(2)  is solely a charge on the property, including the 
pledged revenue, of the encumbered system;  and
		(3)  may not be included in determining the power of the 
municipality to issue any bonds or notes for any purpose authorized 
by law.
	(b)  A municipality may make payments on bonds or notes 
issued under this chapter out of any other funds that lawfully may 
be used for that purpose.

Acts 1995, 74th Leg., ch. 165, § 1, eff. Sept. 1, 1995.                    


	§ 454.029. ADDITIONAL BONDS OR NOTES.  (a) While bonds or 
notes that are payable from and secured by a pledge of the revenue 
of a mass transportation system are outstanding, the municipality 
that issued the bonds or notes may from time to time issue other 
bonds or notes for the purpose of:
		(1)  extending, improving, or both extending and 
improving the system;  or  
		(2)  acquiring another mass transportation system.                            
	(b)  Bonds or notes issued under Subsection (a) constitute a 
lien on the revenue, in the order of their issuance, inferior to the 
liens securing all issues and series of bonds or notes previously 
issued.
	(c)  Notwithstanding Subsection (b), a municipality may:                       
		(1)  adopt an ordinance or execute and issue a deed of 
trust, trust indenture, or similar instrument that provides for the 
subsequent issuance of additional bonds or notes on a parity with 
the previously issued bonds or notes;  and
		(2)  authorize, issue, and sell additional bonds or 
notes, from time to time and in different series, payable from the 
revenue of the mass transportation system and the revenue of any 
additional sources, on a parity with the bonds or notes previously 
issued and secured by liens on the transportation system that are on 
a parity with the lien securing the previously issued bonds or 
notes, subject to the conditions of the ordinance or instrument 
described by Subdivision (1).

Acts 1995, 74th Leg., ch. 165, § 1, eff. Sept. 1, 1995.                    


	§ 454.030. REFUNDING BONDS OR NOTES.  (a) A municipality 
may issue refunding bonds or notes to refund one or more series or 
issues of bonds or notes.
	(b)  Refunding bonds or notes have the same priority of lien 
on the revenue pledged to their payment that the bonds or notes 
being refunded have, except that if all the outstanding bonds or 
notes of two or more series or issues of bonds or notes are refunded 
in a single issue of refunding bonds or notes, the lien of all 
refunding bonds or notes is equal.  A refunding bond or note may not 
have a priority of lien greater than the highest priority of lien of 
the bonds or notes being refunded.
	(c)  Refunding bonds or notes must bear interest at the same 
or lower rate than that borne by the bonds or notes being refunded 
unless it is shown mathematically that:
		(1)  a saving will result in the total amount of 
interest to be paid;  and  
		(2)  the annual principal and interest burden will not 
be increased so as to impair the rights of the holders of any bonds 
or notes, if any, having a prior or inferior lien.
	(d)  Bonds or notes may be refunded by issuing refunding 
bonds or notes to be:
		(1)  exchanged for the bonds or notes being refunded or 
cancelled;  or      
		(2)  sold, with the proceeds of the sale being used to 
redeem and cancel the bonds or notes being refunded.
	(e)  A municipality may provide in a refunding bond or note 
issue money necessary for paying:
		(1)  any call premium;  and                                                   
		(2)  interest to the date set for calling for 
redemption the outstanding bonds or notes.

Acts 1995, 74th Leg., ch. 165, § 1, eff. Sept. 1, 1995.