REQUIRED LEASE TERMS FOR LEASE OF PUBLIC PROPERTY.

(a) In this section, "governmental entity" has the meaning assigned by Section 2253.001.

(b) Except as provided by Subsection (b-1), a lease between a governmental entity and another person regarding public property must contain lease terms requiring the person to:

(1) include in each contract for the construction, alteration, or repair of an improvement to the leased property a condition that the contractor:

(A) execute a payment bond that conforms to Subchapter I, Chapter 53, Property Code; and

(B) execute a performance bond in an amount equal to the amount of the contract for the protection of the governmental entity and conditioned on the faithful performance of the contractor's work in accordance with the plans, specifications, and contract documents; and

(2) provide to the governmental entity a notice of commencement consistent with this section at least 90 days before the date the construction, alteration, or repair of any improvement to the leased property begins.

(b-1) The requirement that a lease must contain a term requiring notice of commencement to a governmental entity under Subsection (b)(2) does not apply to a lease between an institution of higher education, as defined by Section 61.003, Education Code, and another person regarding public property.

(c) A notice of commencement under Subsection (b) must:

(1) identify the public property where the work will be performed;

(2) describe the work to be performed;

(3) state the total cost of the work to be performed;

(4) include copies of the performance and payment bonds required under Subsection (b); and

(5) include a written acknowledgment signed by the contractor stating that copies of the required performance and payment bonds will be provided to all subcontractors not later than the fifth day after the date a subcontract is executed.

(d) On or before the 10th day after the date a governmental entity receives a notice of commencement for the construction, alteration, or repair of an improvement to leased property required under Subsection (b)(2), the governmental entity may notify the leaseholder that the construction, alteration, or repair may not proceed.

(e) A person commits an offense if the person materially misrepresents information in a notice of commencement. An offense under this subsection is a Class A misdemeanor.