Relating to the operations of municipal hospital authorities, the official text

H.B. No. 3788

AN ACT

relating to the operations of municipal hospital authorities.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 262.011(b), Health and Safety Code, is

amended to read as follows:

(b) The number of directors shall be determined at the time

the authority is created. The number may be changed by amendment of

the ordinance or ordinances creating the authority unless

prohibited by a [the] resolution [authorizing the issuance of

bonds] or [by the] trust indenture described by Section 262.012

[securing the bonds]. A [However, a] reduction in the number of

directors may not shorten the term of an incumbent director.

SECTION 2. Sections 262.012(a), (b), and (f), Health and

Safety Code, are amended to read as follows:

(a) The governing body or governing bodies shall appoint the

initial directors of the authority for terms not to exceed two years

except as otherwise provided by this section. If the authority

includes more than one municipality, each governing body shall

appoint an equal number of directors unless the governing bodies

agree otherwise.

(b) The board may prescribe in the [The] resolution

authorizing the issuance of revenue bonds or the trust indenture

securing the bonds, in an agreement securing notes of any kind

issued by the authority, or in another resolution [may prescribe]

the method of selecting [a majority of] the directors and the term

of office of those directors. Except as provided by Subsections

(c), (d), and (e), the method of selecting the directors and the

term of office of those directors prescribed by the board may not be

changed except by a subsequent resolution adopted by the board.

The[, and the] terms of directors appointed before the issuance of

the bonds are subject to the resolution or trust indenture. The

governing body or governing bodies shall appoint any [the]

remaining directors.

(f) An officer or employee of a municipality in the

authority or an employee of the authority is not eligible for

appointment as a director.

SECTION 3. Section 262.0331, Health and Safety Code, is

amended by amending Subsection (a) and adding Subsection (c) to

read as follows:

(a) If, after the sale or closing of a hospital under

Section 262.033, the authority does not own or operate a hospital,

the board may use the authority's available assets to promote

public health and general welfare initiatives that the board

determines will benefit the residents served by the authority,

including:

(1) owning, operating, or funding an:

(A) administrative office; or

(B) indigent health care clinic, medical

research facility, fitness or physical health center, medical

training or education facility, or other health care facility;

(2) providing direct or indirect financial assistance

to a nonprofit organization that:

(A) owns or operates a hospital, indigent health

care clinic, medical research facility, medical training facility,

or other health care facility; or

(B) supports an initiative promoting health

education, wellness, or disease prevention; and

(3) undertaking any other activity that the board

determines is necessary or appropriate to improve public health,

promote wellness, prevent disease, or enhance the general welfare

of the residents served by the authority.

(c) The authority may issue revenue bonds and other notes in

accordance with this chapter to undertake any initiative authorized

by this section.

SECTION 4. Section 262.039(a), Health and Safety Code, is

amended to read as follows:

(a) This section applies only to an authority that:

(1) is located in:

(A) a county with a population of 2.4 million or

more; or

(B) a municipality with a population of less than

30,000 [15,000];

(2) has assets that exceed the amount of any

outstanding bonds issued under Subchapter D; and

(3) does not operate a hospital.

SECTION 5. Section 262.041, Health and Safety Code, is

amended to read as follows:

Sec. 262.041. REVENUE BONDS. (a) The authority may issue

revenue bonds to provide funds for any of the authority's purposes,

including the purposes described by Sections 262.0331 and 262.034,

regardless of whether the authority owns or operates a hospital.

(b) Revenue bonds must be payable from, and secured by a

pledge of, revenues from:

(1) the operation of one or more hospitals and any

other revenues from the ownership or investment of [owning]

hospital property; or

(2) any initiative described by Section 262.0331 or

any facility or service described by Section 262.034.

(c) Additionally, revenue bonds may be secured by a mortgage

or deed of trust on real property owned by the authority or by a

chattel mortgage on the authority's personal property.

SECTION 6. Sections 262.034(d), (e), (f), and (g), Health

and Safety Code, are repealed.

SECTION 7. This Act takes effect September 1, 2025.

______________________________
______________________________

President of the Senate
Speaker of the House

I certify that H.B. No. 3788 was passed by the House on May

14, 2025, by the following vote: Yeas 118, Nays 23, 2 present, not

voting.

______________________________

Chief Clerk of the House

I certify that H.B. No. 3788 was passed by the Senate on May

21, 2025, by the following vote: Yeas 28, Nays 3.

______________________________

Secretary of the Senate

APPROVED: _____________________

Date

_____________________

Governor