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PAG LIN 1 1 SENATE FILE 532 1 2 1 3 AN ACT 1 4 RELATING TO MATTERS RELATED TO THE TOBACCO SETTLEMENT INCLUDING 1 5 THE TOBACCO SETTLEMENT AUTHORITY, THE TOBACCO SETTLEMENT 1 6 TRUST FUND, AND THE TOBACCO SETTLEMENT ENDOWMENT FUND, AND 1 7 PROVIDING AN EFFECTIVE DATE. 1 8 1 9 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 1 10 1 11 Section 1. Section 12.65, Code 2001, is amended to read as 1 12 follows: 1 13 12.65 HEALTHY IOWANS TOBACCOSETTLEMENT ENDOWMENT FUND1 14 TRUST. 1 15 1. A healthy Iowans tobaccosettlement endowment fund1 16 trust is created in the office of the treasurer of state. 1 17After payment of litigation costs, all moneys paid to the1 18state pursuant to the master settlement agreement, as defined1 19in section 453C.1,Moneys transferred to the healthy Iowans 1 20 tobacco trust from the endowment for Iowa's health account of 1 21 the tobacco settlement trust fund established in section 1 22 12E.12 and appropriated or transferred from any other source 1 23 shall be deposited in thefundhealthy Iowans tobacco trust. 1 242. Any moneys paid to the state by the tobacco settlement1 25authority pursuant to chapter 12E shall be deposited in the1 26fund. Additionally, the state's share of the moneys which are1 27not sold to the tobacco settlement authority pursuant to1 28chapter 12E shall be deposited in the fund.1 293.2. Moneys deposited in thefundhealthy Iowans tobacco 1 30 trust shall be used only in accordance with appropriations 1 31 from thefundhealthy Iowans tobacco trust for purposes 1 32 related to health care, substance abuse treatment and 1 33 enforcement, tobacco use prevention and control, and other 1 34 purposes related to the needs of children, adults, and 1 35 families in the state. 2 14. A savings account for healthy Iowans is created within2 2the tobacco settlement endowment fund. Moneys, appropriated2 3annually, shall be deposited in the account and shall be2 4invested to provide an ongoing source of investment earnings.2 55.3. Notwithstanding section 8.33, any unexpended balance 2 6 in thefundhealthy Iowans tobacco trust at the end of the 2 7 fiscal year shall be retained in thefundtrust. 2 8 Notwithstanding section 12C.7, subsection 2, interest or 2 9 earnings on investments or time deposits of the moneys in the 2 10 healthy Iowans tobaccosettlement endowment fund, in the2 11savings account for healthy Iowans, and in any other account2 12established within the fundtrust shall be credited to the 2 13 healthy Iowans tobaccosettlement endowment fund, to the2 14savings account for healthy Iowans, or to any other account2 15established, respectivelytrust. 2 166. For the purposes of this section, "litigation costs"2 17are those costs itemized by the attorney general and submitted2 18to and approved by the attorney general.2 197.4. Moneys in thefundhealthy Iowans tobacco trust 2 20 shall be considered part of the general fund of the state for 2 21 cash flow purposes only, provided any moneys used for cash 2 22 flow purposes are returned to thefundtrust by the close of 2 23 each fiscal year. 2 24 Sec. 2. Section 12E.2, Code 2001, is amended by adding the 2 25 following new subsections: 2 26 NEW SUBSECTION. 4A. "Healthy Iowans tobacco trust" means 2 27 the healthy Iowans tobacco trust created in section 12.65. 2 28 NEW SUBSECTION. 4B. "Interest rate agreement" means an 2 29 interest rate swap or exchange agreement, an agreement 2 30 establishing an interest rate floor or ceiling or both, or any 2 31 similar agreement. Any such agreement may include the option 2 32 to enter into or cancel the agreement or to reverse or extend 2 33 the agreement. 2 34 NEW SUBSECTION. 5A. "Net proceeds" means the amount of 2 35 proceeds remaining following each sale of bonds which are not 3 1 required by the authority to establish and fund reserve funds 3 2 and to pay the costs of issuance and other expenses and fees 3 3 directly related to the authorization and issuance of bonds. 3 4 Sec. 3. Section 12E.2, subsections 7, 8, and 10, Code 3 5 2001, are amended to read as follows: 3 6 7. "Program plan" means the tobacco settlement program 3 7 planestablished in this chapterdated February 14, 2001, 3 8 including exhibits to the program plan, submitted by the 3 9 authority to the legislative council and the executive 3 10 council, to provide the state with a secure and stable source 3 11 of funding for the purposes designated by this chapter and 3 12 section 12.65. 3 13 8. "Qualified investments" means investments of the 3 14 authority authorizedbypursuant to this chapter. 3 15 10. "State's share" means all of thestate's monetary3 16rights and interests, all rights of enforcement, and all3 17rights necessary and convenient for enforcement of those3 18monetary rights and interests in the master settlement3 19agreementfollowing: 3 20 a. All payments required to be made by tobacco product 3 21 manufacturers to the state, and the state's rights to receive 3 22 such payments, under the master settlement agreement. 3 23 b. To the extent that such amounts have been assigned to 3 24 the state, all payments of attorney fees required to be made 3 25 by tobacco product manufacturers under the master settlement 3 26 agreement, and all rights to receive such attorney fees. 3 27 Sec. 4. Section 12E.2, Code 2001, is amended by adding the 3 28 following new subsections: 3 29 NEW SUBSECTION. 10A. "Tax-exempt bonds" means bonds 3 30 issued by the authority that are accompanied by a written 3 31 opinion of legal counsel to the authority that the bonds are 3 32 excluded from the gross income of the recipients for federal 3 33 income tax purposes. 3 34 NEW SUBSECTION. 10B. "Taxable bonds" means bonds issued 3 35 by the authority that are not accompanied by a written opinion 4 1 of legal counsel to the authority that the bonds are excluded 4 2 from the gross income of the recipients for federal income tax 4 3 purposes. 4 4 Sec. 5. Section 12E.2, subsection 11, Code 2001, is 4 5 amended by striking the subsection. 4 6 Sec. 6. Section 12E.3, subsection 2, paragraphs a and d, 4 7 Code 2001, are amended to read as follows: 4 8 a. To implement and administer the program plan and to 4 9 establish a stable source of revenue to be used for the 4 10 purposes designated in this chapter and section 12.65. 4 11 d. To sell, pledge, or assign, as security or 4 12 consideration, all or a portion of the state's share sold to 4 13 the authority pursuant to a sales agreement, to provide for 4 14 and secure the issuance and repayment of its bonds. 4 15 Sec. 7. Section 12E.8, subsection 1, paragraphs g and h, 4 16 Code 2001, are amended to read as follows: 4 17 g. The power to invest or deposit moneys of or held by the 4 18 authority in any manner determined by the authority, 4 19 notwithstanding chapter 12B or 12C. 4 20 h. The power to procure insurance, other credit 4 21 enhancements, and other financing arrangements, and to execute 4 22 instruments and contracts and to enter into agreements 4 23 convenient or necessary to facilitate financing arrangements 4 24 of the authority and to fulfillitsthe purposes of the 4 25 authority under this chapter, including but not limited to 4 26 such arrangements, instruments, contracts, and agreements as 4 27 municipal bond insurance, liquidity facilities, interest rate 4 28 agreements, and letters of credit. 4 29 Sec. 8. Section 12E.8, subsection 1, Code 2001, is amended 4 30 by adding the following new paragraphs: 4 31 NEW PARAGRAPH. k. The power to acquire, own, hold, 4 32 administer, and dispose of property. 4 33 NEW PARAGRAPH. l. The power to determine, in connection 4 34 with the issuance of bonds, and subject to the sales 4 35 agreement, the terms and other details of financing, and the 5 1 method of implementation of the program plan. 5 2 NEW PARAGRAPH. m. The power to perform any act not 5 3 inconsistent with federal or state law necessary to carry out 5 4 the purposes of the authority. 5 5 Sec. 9. Section 12E.9, subsection 1, Code 2001, is amended 5 6 by striking the subsection and inserting in lieu thereof the 5 7 following: 5 8 1. a. The governor or the governor's designee shall sell 5 9 and assign all or a portion of the state's share to the 5 10 authority pursuant to one or more sales agreements for the 5 11 purpose of securitization as described in the program plan and 5 12 as specified in section 12E.10. The attorney general shall 5 13 assist the governor in the preparation and review of all 5 14 necessary documentation to effect such a sale as soon as 5 15 reasonably practicable. 5 16 b. Any sales agreement shall be consistent with the 5 17 program plan and this chapter. The terms and conditions of 5 18 the sale established in such sales agreement may include but 5 19 are not limited to any of the following: 5 20 (1) A requirement that the state enforce, at the sole 5 21 expense of the authority, the provisions of the master 5 22 settlement agreement that require payment of the state's share 5 23 that has been sold to the authority under a sales agreement. 5 24 (2) A requirement that the state not agree to any 5 25 amendment of the master settlement agreement that materially 5 26 and adversely affects the authority's ability to receive the 5 27 state's share that has been sold to the authority. 5 28 (3) An agreement that the anticipated use by the state of 5 29 bond proceeds received pursuant to the sales agreement shall 5 30 be for capital projects, certain debt service on outstanding 5 31 obligations that funded capital projects, payment of attorney 5 32 fees related to the master settlement agreement, and to 5 33 provide a secure and stable source of funding to the state for 5 34 purposes designated by this chapter and section 12.65. 5 35 (4) A statement that the net proceeds from the sale of 6 1 bonds shall be deposited in the tobacco settlement trust fund 6 2 established under section 12E.12 and that in no event shall 6 3 the amounts in the trust fund be available or be applied for 6 4 payment of bonds or any claim against the authority or any 6 5 debt or obligation of the authority. 6 6 (5) A requirement that the net proceeds received by the 6 7 authority from the sale of any tax-exempt bonds issued to 6 8 provide funds for capital projects, certain debt service, and 6 9 attorney fees related to the master settlement agreement be 6 10 paid by the authority to the state as consideration for the 6 11 sale of that portion of the state's share, that such net 6 12 proceeds be deposited by the state upon receipt in the tax- 6 13 exempt bond proceeds restricted capital funds account of the 6 14 tobacco settlement trust fund, and that such proceeds are to 6 15 be held by the authority solely for the benefit of the state, 6 16 subject to annual appropriation by the state in accordance 6 17 with section 12E.10, subsection 1, paragraph "b". 6 18 (6) A requirement that the net proceeds received by the 6 19 authority from the sale of taxable bonds or tax-exempt bonds 6 20 issued to provide funds for the purposes specified in section 6 21 12.65 be deposited in the endowment for Iowa's health account 6 22 of the tobacco settlement trust fund as moneys of the 6 23 authority until transferred to the state pursuant to section 6 24 12E.12, subsection 1, paragraph "b", subparagraph (2). Each 6 25 amount transferred shall be the consideration received by the 6 26 state for that portion of the state's share. 6 27 (7) An agreement that the effective date of the sale is 6 28 the date of receipt of the bond proceeds by the authority and 6 29 the deposits of the net proceeds of the tax-exempt bonds and 6 30 any taxable bonds in the respective accounts of the tobacco 6 31 settlement trust fund. 6 32 Sec. 10. Section 12E.9, subsection 5, Code 2001, is 6 33 amended to read as follows: 6 34 5. The authority, the treasurer of state, and the attorney 6 35 general shall report to the legislative council and the 7 1 executive council on or before the datespecified in the7 2program planof the sale, advising them of theaccomplishment7 3 status of the sale, its terms, and conditions. 7 4 Sec. 11. Section 12E.10, Code 2001, is amended by striking 7 5 the section and inserting in lieu thereof the following: 7 6 12E.10 TOBACCO SETTLEMENT PROGRAM PLAN. 7 7 1. a. (1) The authority shall implement the program plan 7 8 and shall proceed with a securitization to maximize the 7 9 transference of risks associated with the master settlement 7 10 agreement. 7 11 (2) The authority shall issue tax-exempt bonds in an 7 12 amount that is sufficient to provide net proceeds in an amount 7 13 of not more than five hundred forty million dollars for 7 14 deposit in the tax-exempt bond proceeds restricted capital 7 15 funds account of the tobacco settlement trust fund, to be used 7 16 for capital projects, certain debt service on outstanding 7 17 obligations which funded capital projects, and attorney fees 7 18 related to the master settlement agreement. 7 19 (3) The authority may also issue taxable bonds or tax- 7 20 exempt bonds to provide additional amounts to be used for the 7 21 purposes specified in section 12.65. 7 22 (4) Notwithstanding subparagraphs (1) and (2), the 7 23 authority is not required to issue tax-exempt bonds if the 7 24 authority determines that the issuance would not be in the 7 25 best interest of the state due to market conditions. 7 26 b. It is the expectation of the state that not less than 7 27 eighty-five percent of the proceeds deposited in the tax- 7 28 exempt bond proceeds restricted capital funds account of the 7 29 tobacco settlement trust fund will be expended within five 7 30 years from the effective date of the sale, consistent with the 7 31 requirements of federal law, and that the specific capital 7 32 projects, debt service, and attorney fees payments shall be 7 33 determined, annually, through appropriations authorized by a 7 34 constitutional majority of each house of the general assembly 7 35 and approved by the governor. 8 1 2. The authority shall periodically report to the 8 2 legislative council and the governor regarding implementation 8 3 of the program plan and shall, prior to any public offering of 8 4 bonds, submit a report to the legislative council and the 8 5 governor describing the terms of the proposed bond issue. 8 6 3. Any amendment to the program plan shall be authorized 8 7 by a constitutional majority of each house of the general 8 8 assembly and approved by the governor. 8 9 4. To the extent that any provision of the program plan is 8 10 inconsistent with this chapter, the provisions of this chapter 8 11 shall govern. 8 12 Sec. 12. Section 12E.11, subsections 1, 4, and 5, Code 8 13 2001, are amended to read as follows: 8 14 1. The authority may issue bonds anduse, if bonds are 8 15 issued, shall make the proceeds from the bondsfor the purpose8 16of providingavailable to the state pursuant to the sales 8 17 agreement to fund capital projects, certain debt service on 8 18 outstanding obligations that funded capital projects, and 8 19 attorney fees related to the master settlement agreement, and 8 20 to provide a secure and stable source of funding to the state, 8 21 consistent with the purposes of this chapter and section 8 22 12.65. In connection with the issuance of bonds and subject 8 23 to the terms of the sales agreement, the authority shall 8 24 determine the terms and other details of the financing and the 8 25 method of implementation of the program plan. Bonds issued 8 26 pursuant to this section may be secured by a pledge of all or 8 27 a portion of the state's share and any moneys derived from the 8 28 state's share, and any other sources available to the 8 29 authority with the exception of moneys in the tobacco 8 30 settlement trust fund. The authority may also issue refunding 8 31 bonds, including advance refunding bonds, for the purpose of 8 32 refunding previously issued bonds, and may issue other types 8 33 of bonds, debt obligations, and financing arrangements 8 34 necessary to fulfill its purposes or the purposes of this 8 35 chapter. 9 1 4. Bonds shall state on their face that they are payable 9 2 both as to principal and interest solely out of the assets of 9 3 the authority pledged for their purpose and do not constitute 9 4 an indebtedness of the state or any political subdivision of 9 5 the state; are secured solely by and payable solely from 9 6receipts under the master settlement agreementassets of the 9 7 authority pledged for such purpose; constitute neither a 9 8 general, legal, or moral obligation of the state or any of its 9 9 political subdivisions; and that the state has no obligation 9 10 or intention to satisfy any deficiency or default of any 9 11 payment of the bonds. 9 12 5. Any amount pledged by the authority to be received 9 13 under the master settlement agreement shall be valid and 9 14 binding at the time the pledge is made.ReceiptsAmounts so 9 15 pledged and then or thereafter received by the authority shall 9 16 immediately be subject to the lien of such pledge without any 9 17 physical delivery thereof or further act. The lien of any 9 18 such pledge shall be valid and binding as against all parties 9 19 having claims of any kind against the authority, whether such 9 20 parties have notice of the lien. Notwithstanding any other 9 21 provision to the contrary, the resolution of the authority or 9 22 any other instrument by which a pledge is created need not be 9 23 recorded or filed to perfect such pledge. 9 24 Sec. 13. Section 12E.11, subsection 7, paragraph c, Code 9 25 2001, is amended to read as follows: 9 26 c. The bonds shall be subject to the terms, conditions, 9 27 and covenants providing for the payment of the principal, 9 28 redemption premiums, if any, interest which may be fixed or 9 29 variable during any period the bonds are outstanding, and 9 30 other terms, conditions, covenants, and protective provisions 9 31 safeguarding payment, not inconsistent with this chapter and 9 32 as determined by resolution of the board authorizing their 9 33 issuance. 9 34 Sec. 14. Section 12E.11, Code 2001, is amended by adding 9 35 the following new subsection: 10 1 NEW SUBSECTION. 11. The state reserves the right at any 10 2 time to alter, amend, repeal, or otherwise change the 10 3 structure, organization, programs, or activities of the 10 4 authority, including the power to terminate the authority, 10 5 except that a law shall not be enacted that impairs any 10 6 obligation made pursuant to a sales agreement or any contract 10 7 entered into by the authority with or on behalf of the holders 10 8 of the bonds to the extent that any such law would contravene 10 9 Article I, section 21, of the Constitution of the State of 10 10 Iowa or Article I, section 10, of the Constitution of the 10 11 United States. 10 12 Sec. 15. Section 12E.12, subsection 1, Code 2001, is 10 13 amended to read as follows: 10 14 1. a. A tobacco settlement trust fund is established, 10 15 separate and apart from all other public moneys or funds of 10 16 the state, under the control of the authority. The fund shall 10 17 consist of moneys paid to the authority and not pledged to the 10 18 payment of bonds or otherwise obligated. Such moneys shall 10 19 include but are not limited to payments received from the 10 20 master settlement agreement which are not pledged to the 10 21 payment of bonds or which are subsequently released from a 10 22 pledge to the payment of any bonds; payments which, in 10 23 accordance with any sales agreement with the state, are to be 10 24 paid to the state and not pledged to the bonds, including that 10 25 portion of the proceeds of any bonds designated for purchase 10 26 of all or a portion of the state's share, which are designated 10 27 for deposit in the fund, together with all interest, 10 28 dividends, and rents on the bonds; and all securities or 10 29 investment income and other assets acquired by and through the 10 30 use of the moneys belonging to the fund and any other moneys 10 31 deposited in the fund. Moneys in the fund are to be used 10 32 solely and only for the payment of all amounts due and to 10 33 become due to the state, and shall not be used for any other 10 34 purpose. Such moneys shall not be available for the payment 10 35 of any claim against the authority or any debt or obligation 11 1 of the authority. 11 2 b. The fund shall consist of the following accounts: 11 3 (1) The tax-exempt bond proceeds restricted capital funds 11 4 account. The net proceeds of tax-exempt bonds issued to 11 5 provide funds for capital projects, certain debt service, and 11 6 attorney fees related to the master settlement agreement which 11 7 the state treasurer is authorized and directed to deposit on 11 8 behalf of the state, shall be deposited in the account and 11 9 shall be used to fund capital projects, certain debt service, 11 10 and the payment of attorney fees related to the master 11 11 settlement agreement. With respect to capital projects, it is 11 12 the intent of the general assembly to fund capital projects 11 13 that qualify as vertical infrastructure projects as defined in 11 14 section 8.57, subsection 5, paragraph "c", to the extent 11 15 practicable in any fiscal year and without limiting other 11 16 qualifying capital expenditures considered and approved by a 11 17 constitutional majority of each house of the general assembly 11 18 and the governor. 11 19 (2) The endowment for Iowa's health account. The net 11 20 proceeds of any taxable bonds or tax-exempt bonds issued to 11 21 provide funds for the purposes specified in section 12.65 11 22 which the authority is directed to deposit in the account, any 11 23 portion of the state's share which is not sold to the 11 24 authority, and any other moneys appropriated by the state for 11 25 deposit in the account shall be deposited in the account and 11 26 shall be used for the purposes specified in section 12.65. 11 27 (a) There is transferred from the endowment for Iowa's 11 28 health account of the tobacco settlement trust fund to the 11 29 healthy Iowans tobacco trust for the fiscal year beginning 11 30 July 1, 2001, and ending June 30, 2002, the amount of fifty- 11 31 five million dollars, to be used for the purposes specified in 11 32 section 12.65. 11 33 (b) For each fiscal year beginning July 1, 2002, and 11 34 annually thereafter, there is transferred from the endowment 11 35 for Iowa's health account of the tobacco settlement trust fund 12 1 to the healthy Iowans tobacco trust fifty-five million dollars 12 2 plus an inflationary factor of one and one-half percent of the 12 3 amount transferred in the previous fiscal year. Any transfer 12 4 in an amount not in accordance with this subparagraph shall 12 5 not be made unless authorized by a three-fifths majority of 12 6 each house and approved by the governor. 12 7 Sec. 16. Section 12E.12, subsection 3, Code 2001, is 12 8 amended by adding the following new paragraph: 12 9 NEW PARAGRAPH. e. If consistent with the investment 12 10 policy established by the board, the authority may invest 12 11 moneys of or held by the authority in structured notes and 12 12 investment agreements, the repayment of the principal amount 12 13 of which is protected or guaranteed. 12 14 Sec. 17. Section 12E.13, subsection 5, Code 2001, is 12 15 amended to read as follows: 12 16 5. All moneys of the authority or moneys held by the 12 17 authority shall be invested and held in the name of the 12 18 authority, whether they are held for the benefit, security, or 12 19 future payment to holders of bonds or to the state. All such 12 20 moneys and investments shall be considered moneys and 12 21 investments of the authority with the exception of moneys in 12 22 the tax-exempt bond proceeds restricted capital funds account 12 23 of the tobacco settlement trust fund which are moneys of the 12 24 state. 12 25 Sec. 18. Section 12E.17, Code 2001, is amended to read as 12 26 follows: 12 27 12E.17 DISSOLUTION OF THE AUTHORITY. 12 28 The authority shall dissolve no later than two years from 12 29 the date of final payment of all outstanding bonds and the 12 30 satisfaction of all outstanding obligations of the authority, 12 31 except to the extent necessary to remain in existence to 12 32 fulfill any outstanding covenants or provisions with 12 33 bondholders or third parties made in accordance with this 12 34 chapter. Upon dissolution of the authority, all assets of the 12 35 authority shall be returned to the state and shall be 13 1 deposited in the healthy Iowans tobaccosettlement endowment13 2fundtrust, unless otherwise directed by the general assembly, 13 3 and the authority shall execute any necessary assignments or 13 4 instruments, including any assignment of any right, title, or 13 5 ownership to the state for receipt of payments under the 13 6 master settlement agreement. 13 7 Sec. 19. 2000 Iowa Acts, chapter 1208, section 24, as 13 8 amended by 2001 Iowa Acts, Senate File 258, section 1, is 13 9 repealed. 13 10 Sec. 20. EFFECTIVE DATE – DEPOSIT OF FUNDS. Until the 13 11 effective date of the sale as provided in section 12E.9, the 13 12 state's share shall be deposited in the healthy Iowans tobacco 13 13 trust created in section 12.65. Upon the effective date of 13 14 the sale, the state's share shall be transferred or deposited 13 15 in accordance with any sales agreement and chapter 12E. 13 16 Sec. 21. EFFECTIVE DATE. This Act, being deemed of 13 17 immediate importance, takes effect upon enactment. 13 18 13 19 13 20 13 21 MARY E. KRAMER 13 22 President of the Senate 13 23 13 24 13 25 13 26 BRENT SIEGRIST 13 27 Speaker of the House 13 28 13 29 I hereby certify that this bill originated in the Senate and 13 30 is known as Senate File 532, Seventy-ninth General Assembly. 13 31 13 32 13 33 13 34 MICHAEL E. MARSHALL 13 35 Secretary of the Senate 14 1 Approved , 2001 14 2 14 3 14 4 14 5 THOMAS J. VILSACK 14 6 Governor
Text: SF00531 Text: SF00533 Text: SF00500 - SF00599 Text: SF Index Bills and Amendments: General Index Bill History: General Index
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