HB3788

HB3788 gives municipal hospital authorities more flexibility in board selection, public-health projects, services for older or disabled residents, borrowing and investment. These are authorities governed by Health and Safety Code Chapter 262, not every hospital or hospital district. The act took effect September 1, 2025. Final law.

Board control: Municipal governing bodies appoint the initial directors. An authority’s board can prescribe how directors are selected and their terms through a revenue-bond resolution, trust indenture, agreement securing notes, or another resolution. The old language tied this power to revenue bonds and a majority of directors. The board’s prescribed selection method and terms generally can be changed only by a later board resolution, subject to the existing statutory exceptions for defaults, certain hospital purchases and Chapter 223 financing. Municipalities appoint any remaining directors. Authority employees, as well as the already-excluded municipal officers and employees, cannot be appointed as directors. The existing seven-to-eleven-member board size remains; reducing its size cannot cut short an incumbent’s term. Board provisions.

After a hospital sale or closure: An authority that no longer owns or operates a hospital can expressly use available assets for an administrative office, a fitness or physical-health center, and medical education, alongside its existing public-health initiatives. It can issue revenue bonds or notes for authorized initiatives. The unchanged safeguards still require provision for outstanding debts and liabilities, a predominantly public-health/general-welfare purpose for spending, and sufficient controls to ensure that purpose. Section 262.0331.

Elderly and disability services: The law removes the hospital-ownership and geographic/population restrictions formerly limiting Section 262.034. That section authorizes nursing homes and long-term care, elderly housing, assisted living, home health, personal and special care, continuing care, and durable medical equipment. The act also removes the bar on certain borrowing when a private provider is available and accessible, the special 50-licensed-nursing-home-bed cap for one category of authority, and the provision automatically treating these services as hospital projects under Chapter 223. These are specific statutory repeals, not a waiver of all licensing or financing laws. Affected service provision.

Borrowing and investment: Revenue bonds may finance authorized public-health initiatives and elderly/disability services even if the authority does not own or operate a hospital. They must be payable from and secured by the specified hospital/property/investment revenues or revenues from the authorized initiatives, facilities or services; property may also secure them. The act grants authority to borrow, not an appropriation or guaranteed revenue. It also broadens eligibility for Section 262.039’s investment options by raising the municipal-population cutoff from under 15,000 to under 30,000. The alternative county threshold of at least 2.4 million, requirement that assets exceed outstanding bonds, and requirement not to operate a hospital remain. Investment rule and revenue bonds.