Senate File 539 - Enrolled

PAG LIN



  1  1                                         SENATE FILE 539
  1  2
  1  3                             AN ACT
  1  4 ESTABLISHING UNIFORM FINANCE PROCEDURES FOR OBLIGATIONS
  1  5    ISSUED BY THE STATE.
  1  6
  1  7 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
  1  8
  1  9    Section 1.  NEW SECTION.  12F.1  DEFINITIONS.
  1 10    As used in this chapter, unless the context otherwise
  1 11 requires:
  1 12    1.  "Authorizing document" means the resolution of the
  1 13 issuer, indenture of trust, or other instrument setting forth
  1 14 the terms and conditions of obligations issued in accordance
  1 15 with the provisions of this chapter.
  1 16    2.  "Enabling legislation" means legislation enabling the
  1 17 issuance by an issuer of obligations in accordance with the
  1 18 provisions of this chapter.
  1 19    3.  "Issuer" means the state, a department or public or
  1 20 quasi=public agency or instrumentality of the state, or an
  1 21 authority of the state authorized to issue obligations and
  1 22 enabled to issue the obligations in accordance with the
  1 23 provisions of this chapter.
  1 24    4.  "Obligations" means notes, bonds, including refunding
  1 25 bonds, and other evidences of indebtedness of an issuer.
  1 26    Sec. 2.  NEW SECTION.  12F.2  PROVISIONS APPLICABLE.
  1 27    An issuer may issue obligations in accordance with the
  1 28 provisions of this chapter if enabling legislation enacted on
  1 29 or after the effective date of this Act provides that the
  1 30 obligations shall or may be issued in accordance with the
  1 31 provisions of this chapter.  This chapter establishes the
  1 32 terms, conditions, and procedures applicable to the issuance
  1 33 of obligations by an issuer enabled to issue obligations under
  1 34 this chapter.
  1 35    Sec. 3.  NEW SECTION.  12F.3  LIMITED OBLIGATIONS.
  2  1    Obligations issued under this chapter are payable solely
  2  2 out of the moneys, assets, or revenues pledged to the payment
  2  3 of the obligations pursuant to the enabling legislation and
  2  4 any bond reserve funds established in accordance with this
  2  5 chapter, all of which may be deposited with trustees or
  2  6 depositories in accordance with the authorizing documents and
  2  7 pledged by the issuer to the payment thereof.  Obligations
  2  8 issued under this chapter shall contain a statement that the
  2  9 obligations are issued pursuant to this chapter; are payable
  2 10 solely from the moneys, assets, and revenues pledged for their
  2 11 payment and any bond reserve funds established; and that such
  2 12 obligations do not constitute an indebtedness of the state.
  2 13 The issuer shall not pledge the credit or taxing power of this
  2 14 state or any political subdivision of this state or make
  2 15 obligations issued pursuant to this chapter payable out of any
  2 16 moneys except those pledged in the enabling legislation and
  2 17 any bond reserve funds established by the issuer.
  2 18    Sec. 4.  NEW SECTION.  12F.4  GENERAL POWERS.
  2 19    1.  An issuer may issue obligations under this chapter and
  2 20 do all things necessary with respect to the issuance of the
  2 21 obligations.  An issuer shall have all of the powers necessary
  2 22 to issue and secure obligations and carry out the purposes for
  2 23 which the obligations are to be issued, including the power to
  2 24 secure credit enhancement or support and to enter into
  2 25 agreements providing interest rate protection, as deemed
  2 26 appropriate by the issuer.  The issuer may issue obligations
  2 27 in principal amounts consistent with the enabling legislation
  2 28 and which the issuer determines are necessary to provide
  2 29 sufficient funds for the purposes for which the obligations
  2 30 are issued, and to provide for the payment of capitalized
  2 31 interest on the obligations, the establishment of reserves to
  2 32 secure the obligations, the payment of the costs of issuance
  2 33 of the obligations, the payment of other expenditures of the
  2 34 issuer incident to and necessary or convenient to carry out
  2 35 the issue, and the payment of all other expenditures necessary
  3  1 or convenient to the purposes for which the obligations are
  3  2 issued.
  3  3    2.  The proceeds of obligations issued by the issuer and
  3  4 not required for immediate disbursement may be deposited with
  3  5 a trustee or depository or the treasurer of state as provided
  3  6 in the authorizing documents.  Proceeds shall be invested or
  3  7 reinvested as directed by the treasurer of state and specified
  3  8 in the authorizing documents without regard to any limitation
  3  9 otherwise provided by law.
  3 10    3.  Obligations shall be issued as follows:
  3 11    a.  In a form, issued in denominations, executed in a
  3 12 manner, and payable over terms and with rights of redemption,
  3 13 and subject to such other terms and conditions as prescribed
  3 14 in the authorizing documents.
  3 15    b.  Sold at prices, at public or private sale, and in a
  3 16 manner, as prescribed by the issuer.  Chapters 73A, 74, 74A,
  3 17 75, and 76 do not apply to the sale, issuance, or retirement
  3 18 of the obligations if this chapter is utilized.
  3 19    c.  Subject to the terms, conditions, and covenants
  3 20 providing for the payment of the principal, redemption
  3 21 premiums, if any, interest, and other terms, conditions,
  3 22 covenants, and protective provisions safeguarding payment, not
  3 23 inconsistent with this chapter and as determined by the
  3 24 authorizing documents.
  3 25    4.  Obligations issued under this chapter are investment
  3 26 securities and negotiable instruments within the meaning of
  3 27 and for purposes of the uniform commercial code, chapter 554.
  3 28 Obligations are securities in which public officers and bodies
  3 29 of this state; political subdivisions of this state; insurance
  3 30 companies and associations and other persons carrying on an
  3 31 insurance business; banks, trust companies, savings
  3 32 associations, savings and loan associations, and investment
  3 33 companies; administrators, guardians, executors, trustees, and
  3 34 other fiduciaries; and other persons authorized to invest in
  3 35 obligations of the state, may properly and legally invest
  4  1 funds, including capital, in their control or belonging to
  4  2 them.
  4  3    5.  Obligations must be authorized by a trust indenture,
  4  4 resolution, or other instrument of the issuer.  A trust
  4  5 indenture, resolution, or other instrument authorizing the
  4  6 issuance of obligations may, however, delegate to an officer
  4  7 of a board or of a governing body of an issuer the power to
  4  8 negotiate and fix the details of an issue of obligations.
  4  9    6.  A resolution, trust agreement, or any other instrument
  4 10 by which a pledge is created shall not be required to be
  4 11 recorded or filed under the uniform commercial code, chapter
  4 12 554, to be valid, binding, or effective.
  4 13    7.  Subject to the terms of the authorizing documents, the
  4 14 proceeds of obligations may be expended for administrative
  4 15 expenses.
  4 16    8.  An issuer may issue obligations for the purpose of
  4 17 refunding any obligations then outstanding, including the
  4 18 payment of any redemption premiums thereon and any interest
  4 19 accrued or to accrue to the date of redemption of the
  4 20 outstanding obligations.  Until the proceeds of obligations
  4 21 issued for the purpose of refunding outstanding obligations
  4 22 are applied to the purchase or retirement of outstanding
  4 23 obligations or the redemption of outstanding obligations, the
  4 24 proceeds may be placed in escrow and be invested and
  4 25 reinvested in accordance with the provisions of this chapter,
  4 26 the authorizing documents, and any applicable escrow
  4 27 agreement.  The interest, income, and profits earned or
  4 28 realized on an investment may also be applied to the payment
  4 29 of the outstanding obligations to be refunded by purchase,
  4 30 retirement, or redemption.  After the terms of the escrow have
  4 31 been fully satisfied and carried out, any balance of proceeds
  4 32 and interest earned or realized on the investments may be
  4 33 returned to the issuer.  All refunding obligations shall be
  4 34 issued and secured and subject to the provisions of this
  4 35 chapter in the same manner and to the same extent as other
  5  1 obligations issued pursuant to this chapter.
  5  2    Sec. 5.  NEW SECTION.  12F.5  RESERVE FUNDS.
  5  3    1.  An issuer may create and establish one or more special
  5  4 funds, to be known as bond reserve funds, to secure one or
  5  5 more issues of obligations.  The issuer shall pay into each
  5  6 bond reserve fund any moneys appropriated and made available
  5  7 by the state for the purpose of that reserve fund, any
  5  8 proceeds of the sale of obligations to the extent provided in
  5  9 the authorizing documents, and any other moneys which may be
  5 10 available from any other sources and which the issuer
  5 11 determines to deposit in the reserve fund.  All moneys held in
  5 12 a bond reserve fund, except as otherwise provided in this
  5 13 chapter, shall be used as required solely for the payment of
  5 14 the principal of obligations secured in whole or in part by
  5 15 the fund or of the sinking fund or other payments with respect
  5 16 to the obligations, the purchase or redemption of the
  5 17 obligations, the payment of interest on the obligations, or
  5 18 the payments of any redemption premium required to be paid
  5 19 when the obligations are redeemed prior to maturity.
  5 20    2.  Moneys in a bond reserve fund shall not be withdrawn at
  5 21 any time in an amount that will reduce the amount of the fund
  5 22 to less than the bond reserve fund requirement established for
  5 23 the fund, except for the purpose of making, with respect to
  5 24 obligations secured in whole or in part by the fund, payment
  5 25 when due of principal, interest, redemption premiums, and the
  5 26 sinking fund and other payments with respect to the
  5 27 obligations for which other moneys are not available, all in
  5 28 accordance with the authorizing documents.  For the purposes
  5 29 of this chapter, "bond reserve fund requirement" means, as of
  5 30 any particular date of computation, the amount of moneys,
  5 31 provided in the authorizing documents with respect to which
  5 32 the fund is established.  Any income or interest earned by, or
  5 33 incremental to, a bond reserve fund due to its investment may
  5 34 be transferred to other funds or accounts as provided in the
  5 35 authorizing documents to the extent the transfer does not
  6  1 reduce the amount of that bond reserve fund below its bond
  6  2 reserve fund requirement.
  6  3    3.  The issuer shall not at any time issue obligations,
  6  4 secured in whole or in part by a bond reserve fund if, upon
  6  5 the issuance of the obligations, the amount in the bond
  6  6 reserve fund for the obligations will be less than the bond
  6  7 reserve fund requirement for the fund, unless the issuer at
  6  8 the time of issuance of the obligations deposits in the fund
  6  9 from the proceeds of the obligations issued or from other
  6 10 sources an amount which, together with the amount then in the
  6 11 fund, will not be less than the bond reserve fund requirement
  6 12 for the fund.
  6 13    4.  In order to assure maintenance of bond reserve funds,
  6 14 an issuer shall, on or before January 1 of each calendar year,
  6 15 make and deliver to the governor the issuer's certificate
  6 16 stating the sum, if any, required to restore each bond reserve
  6 17 fund to the bond reserve fund requirement for that fund.
  6 18 Within thirty days after the beginning of the session of the
  6 19 general assembly next following the delivery of the
  6 20 certificate, the governor shall submit to both houses printed
  6 21 copies of a budget including the sum, if any, required to
  6 22 restore each bond reserve fund to the bond reserve fund
  6 23 requirement for that fund.  Any sums appropriated by the
  6 24 general assembly and paid to the issuer pursuant to this
  6 25 subsection shall be deposited by the issuer in the applicable
  6 26 bond reserve fund.
  6 27    Sec. 6.  NEW SECTION.  12F.6  PLEDGE OF FUNDS.
  6 28    1.  Amounts authorized to be pledged as security for
  6 29 obligations shall be held in separate and distinct funds in
  6 30 the state treasury.  Moneys in a fund shall not be subject to
  6 31 appropriation for any other purpose by the general assembly,
  6 32 but shall be used only for debt service on the obligations and
  6 33 other amounts as set forth in the authorizing documents.  The
  6 34 treasurer of state shall act as custodian of the funds and
  6 35 disburse moneys contained in the funds as directed by the
  7  1 authorizing documents.
  7  2    2.  Moneys in any fund pledged as security for obligations
  7  3 are not subject to section 8.33.  Notwithstanding section
  7  4 12C.7, subsection 2, interest or earnings on moneys in the
  7  5 funds shall be credited to the applicable fund.
  7  6    Sec. 7.  NEW SECTION.  12F.7  RESOLUTION PROVISIONS.
  7  7    Authorizing document provisions, which shall be a part of
  7  8 the contract with the holders of the obligations to be issued,
  7  9 may contain the following:
  7 10    1.  Pledging or assigning the revenue of a project with
  7 11 respect to which the obligations are to be issued or the
  7 12 revenue of other property or facilities.
  7 13    2.  Setting aside reserves or sinking funds, and their
  7 14 regulation, investment, and disposition.
  7 15    3.  Limitations on the use of a project.
  7 16    4.  Limitations on the purpose to which or the investments
  7 17 in which the proceeds of sale of an issue of obligations then
  7 18 or thereafter to be issued may be applied and pledging the
  7 19 proceeds to secure the payment of the obligations or an issue
  7 20 of the obligations.
  7 21    5.  Limitations on the issuance of additional obligations,
  7 22 the terms upon which additional obligations may be issued and
  7 23 secured, and the refunding of outstanding obligations.
  7 24    6.  The procedure, if any, by which the terms of any
  7 25 contract with the holder of an obligation may be amended or
  7 26 abrogated, the amount of obligations may be specified for
  7 27 which the holders must consent to amendment or abrogation, and
  7 28 the manner in which the consent may be given.
  7 29    7.  Defining the acts or omissions to act which constitute
  7 30 a default in the duties of the issuer to holders of
  7 31 obligations and providing the rights and remedies of the
  7 32 holders in the event of a default.
  7 33    8.  Other matters relating to the obligations as may be
  7 34 provided by the issuer.
  7 35    Sec. 8.  NEW SECTION.  12F.8  OBLIGATIONS SECURED BY TRUST
  8  1 AGREEMENT.
  8  2    Obligations issued under this chapter may be secured by a
  8  3 trust agreement by and between the issuer and an incorporated
  8  4 trustee, which may be a trust company or bank having the
  8  5 powers of a trust company in this state or another state.  The
  8  6 trust agreement or the resolution providing for the issuance
  8  7 of the obligations may pledge or assign the revenue to be
  8  8 received for payment of the obligations or the proceeds of any
  8  9 contract pledged.  A pledge or assignment made by the issuer
  8 10 pursuant to this chapter is valid and binding from the time
  8 11 that the pledge or assignment is made, and the revenue pledged
  8 12 and thereafter received by the issuer is immediately subject
  8 13 to the lien of the pledge or assignment without physical
  8 14 delivery or any further act.  The lien of the pledge or
  8 15 assignment is valid and binding against all parties having
  8 16 claims of any kind in tort, contract, or otherwise against the
  8 17 issuer irrespective of whether the parties have notice of the
  8 18 lien.  The trust agreement or resolution by which a pledge is
  8 19 created or an assignment made shall be filed in the records of
  8 20 the issuer.  The trust agreement or resolution providing for
  8 21 the issuance of the obligations may contain provisions for
  8 22 protecting and enforcing the rights and remedies of the
  8 23 holders of an obligation as are reasonable and proper, not in
  8 24 violation of law, or provided for in this chapter.  A bank or
  8 25 trust company incorporated under the laws of this state or
  8 26 another state which acts as depository of proceeds of the
  8 27 obligations, revenue, or other moneys shall furnish the
  8 28 indemnifying obligations or pledge securities as and to the
  8 29 extent required by the issuer.  The trust agreement or
  8 30 resolution may set forth the rights and remedies of the
  8 31 holders of an obligation and of the trustee, and may restrict
  8 32 the individual right of action by holders of an obligation.
  8 33 The trust agreement or resolution may contain other provisions
  8 34 the issuer deems reasonable and proper for the security of the
  8 35 obligation holders.
  9  1    Sec. 9.  NEW SECTION.  12F.9  STATE TAX.
  9  2    Obligations issued under the provisions of this chapter are
  9  3 declared to be issued for a general public and governmental
  9  4 purpose and the obligations and interest on the obligations
  9  5 shall be exempt from state income and inheritance tax.
  9  6    Sec. 10.  NEW SECTION.  12F.10  AGREEMENT OF THE STATE.
  9  7    The state pledges to and agrees with the holders of any
  9  8 obligations issued under this chapter, and with those parties
  9  9 who enter into contracts with an issuer pursuant to this
  9 10 chapter, that the state will not limit or alter the rights
  9 11 vested in the issuer until the obligations, together with the
  9 12 interest on the obligations, are fully met and discharged and
  9 13 the contracts are fully performed on the part of the issuer,
  9 14 except that this chapter does not preclude a limitation or
  9 15 alteration if adequate provision is made by law for the
  9 16 protection of the rights of the holders of the obligations of
  9 17 the issuer or those entering into contracts with the issuer.
  9 18    Sec. 11.  NEW SECTION.  12F.11  PROVISIONS CONTROLLING.
  9 19    The powers granted issuers under this chapter are in
  9 20 addition to the powers of each issuer contained elsewhere in
  9 21 the Code.  Nothing in this chapter limits the powers of an
  9 22 issuer to issue obligations under any other applicable
  9 23 provisions of the Code or to otherwise carry out its
  9 24 responsibilities as otherwise set forth in the Code.
  9 25    Sec. 12.  NEW SECTION.  12F.12  CONSTRUCTION.
  9 26    This chapter, being necessary for the welfare of this state
  9 27 and its inhabitants, shall be liberally construed to effect
  9 28 its purpose.
  9 29
  9 30
  9 31                                                             
  9 32                               JOHN P. KIBBIE
  9 33                               President of the Senate
  9 34
  9 35
 10  1                                                             
 10  2                               PATRICK J. MURPHY
 10  3                               Speaker of the House
 10  4
 10  5    I hereby certify that this bill originated in the Senate and
 10  6 is known as Senate File 539, Eighty=second General Assembly.
 10  7
 10  8
 10  9                                                             
 10 10                               MICHAEL E. MARSHALL
 10 11                               Secretary of the Senate
 10 12 Approved                , 2007
 10 13
 10 14
 10 15                                
 10 16 CHESTER J. CULVER
 10 17 Governor