HBA-DMD S.B. 1101 76(R) BILL ANALYSIS Office of House Bill AnalysisS.B. 1101 By: Cain Transportation 5/18/1999 Engrossed BACKGROUND AND PURPOSE Subject to a list of narrow exceptions, governmental entities in Texas, including the Dallas/Fort Worth International Airport (DFW) Board, are required to publicly and competitively bid any contract involving an expenditure of more than $15,000. This has created problems for joint airport boards in trying to control the development of airport property. In particular, the need for the DFW board to meet a potential customers' needs to occupy a development in an expedited time frame forced the airport to look at new ways of financing, contracting, and building projects. Alternatively, airports were faced with surrendering substantial control of airport development to their tenants. Consequently, the Airport Development Team and the concept of a guaranteed maximum price contract were developed. In 1989, the DFW board succeeded in obtaining legislation (Section 22.084, Transportation Code) that allows it to exempt certain construction projects from the otherwise applicable competitive bid laws. Although the legislation was designed to include construction projects that were funded by a wide variety of funding mechanisms including joint revenue bonds, the wording of the legislation was unintentionally altered. The resulting legislation has led to confusion as to what type of financing is permissible in these particular construction contracts. One legal interpretation is that only those projects which are funded at least in part from bond proceeds are exempt from the public bid laws. Federal law still requires competitive bidding for any project over $25,000, but this bill will allow joint airport boards to exempt the use of passenger facility charges, airline trust funds, airport capital improvement funds, and public safety seized funds for projects and exempt them up to the federal limit from competitive bidding requirements. S.B. 1101 clarifies a joint airport board's ability to exempt certain contracts from the competitive bids statute regardless of the type of funding used. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 22.084(a), Transportation Code, as follows: Sec. 22.084. AIRPORT REVENUE AND REVENUE BOND PROCEEDS; CONTRACTING OPPORTUNITIES FOR MINORITY- AND WOMEN-OWNED BUSINESSES. (a) Reorganizes this subsection, to clarify the ability of a joint board to enter an agreement to spend the proceeds of revenue bonds issued by its constituent agencies, the proceeds of bonds issued by a nonprofit corporation created under Section 22.152 (Nonprofit Airport Facility Financing Corporations), Transportation Code, and any other airport income or revenue for the planning, construction, or acquisition of facilities authorized by Sections 22.011(a)-(c) (General Powers Regarding Airports and Air Navigation Facilities) and 22.012 (Financing of Airport Facilities), Transportation Code, without inviting, advertising for, or otherwise requiring competitive bids. SECTION 2.Emergency clause. Effective date: upon passage.