(a) A governmental entity may, consistent with the Texas Constitution, issue bonds, notes, or other obligations or enter into and make payments under agreements with an authority in connection with the financing, acquisition, construction, or operation of a transportation project by an authority, whether inside or outside the geographic boundaries of the governmental entity, including agreements to pay the principal of, and interest on, bonds, notes, or other obligations issued by the authority and make payments under any related credit agreements. The entity may impose and collect taxes to pay the interest on the bonds and to provide a sinking fund for the redemption of the bonds.
(b) In addition to the powers provided by Subsection (a), a governmental entity may, to the extent constitutionally permitted, agree with an authority to:
(1) issue bonds, notes, or other obligations;
(2) create:
(A) a taxing district;
(B) a transportation reinvestment zone under Subchapter E, Chapter 222; or
(C) an entity to promote economic development;
(3) collect and remit to an authority taxes, fees, or assessments collected for purposes of developing transportation projects;
(4) fund public improvements to promote economic development; or
(5) enter into and make payments under an agreement to acquire, construct, maintain, or operate any portion of a transportation project of the authority.

(b-1) An agreement under Subsection (a) or (b) may include a means for a governmental entity to pledge or otherwise provide funds for a transportation project that benefits the governmental entity to be developed by the authority.
(c) To make payments under an agreement under Subsection (b), to pay the interest on bonds issued under Subsection (b), or to provide a sinking fund for the bonds or the agreement, a governmental entity may:
(1) pledge revenue from any available source, including annual appropriations;
(2) impose and collect taxes; or
(3) pledge revenue and impose and collect taxes.
(d) The term of an agreement under this section may not exceed 40 years.
(e) An election required to authorize action under this subchapter must be held in conformity with Chapter 1251, Government Code, or other law applicable to the governmental entity.
(f) The governing body of any governmental entity issuing bonds, notes, or other obligations or entering into agreements under this section may exercise the authority granted to the governing body of an issuer with regard to issuance of obligations under Chapter 1371, Government Code, except that the prohibition in that chapter on the repayment of an obligation with ad valorem taxes does not apply to an issuer exercising the authority granted by this section.
(g) An agreement under this section may contain repayment or reimbursement obligations of an authority.