2016 -- S 2007 SUBSTITUTE A

========

LC003777/SUB A/3

========

     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2016

____________

A N   A C T

RELATING TO STATE AFFAIRS AND GOVERNMENT -- PUBLIC FINANCE

MANAGEMENT BOARD

     Introduced By: Senators DaPonte, Pearson, DiPalma, Lombardi, and Walaska

     Date Introduced: January 12, 2016

     Referred To: Senate Finance

     It is enacted by the General Assembly as follows:

     SECTION 1. Section 42-10.1-2 of the General Laws in Chapter 42-10.1 entitled "Public

Finance Management Board" is hereby amended to read as follows:

     42-10.1-2. Purpose. -- It shall be the purpose and responsibility of the board:

      (1) To advise and assist all state departments, municipal and regional authorities,

agencies, boards, commissions, and public and quasi-public corporations and fire district and

other special districts having authority to issue revenue or general obligation bonds or GARVEE

bonds or notes or other various types of conduit debt or enter into financing leases with respect to

issuance of and financial planning related to all those bonds, leases and notes;

      (2) Upon request, to To advise and/or assist any city or town and any municipal or

regional agency, authority, board, commission, or public or quasi-public corporation corporations

or fire districts or other special districts having authority to issue revenue or general obligation

bonds or GARVEE bonds or notes or other various types of conduit debt or enter into financing

leases with respect to the issuance and financial planning related to those bonds, leases and notes;

      (3) To collect, maintain, and provide information on all state, municipal and regional

authority, agency, board, commission, public or quasi-public corporation and fire district and

other special district debt authorization, sold and outstanding, and serve as a statistical center for

all state and municipal debt issues;

      (4) To maintain contact with state municipal and regional authority, agency, board,

commission, public or quasi-public corporation or fire district and other special district bond

issuers, underwriters, credit rating agencies, investors, and others to improve the market for state

and local government debt issues;

      (5) To undertake or commission studies on methods to reduce the costs and improve

credit ratings of state and local debt issues;

      (6) To recommend changes in state laws and local practices to improve the sale and

servicing of state and local debts.

     (7) To annually compile and ascertain the total amount of state, municipal and regional

authority, agency, board, commission, public and quasi-public corporation and fire district and

other special district debt authorized, sold and unsold, both in the aggregate and for each such

body, and no less frequently than every two (2) years and to oversee the undertaking of a debt

affordability study, which shall include all appropriate factors necessary to recommend debt

limits for the debt capacity of all state, municipal and regional departments, authorities, agencies,

boards, commissions, public and quasi-public corporations and/or fire districts and other special

districts having authority to issue revenue or general obligation bonds or GARVEE bonds or

notes or other various types of conduit debt or enter into financing leases. The board's analysis

and debt affordability study shall be a non-binding recommendation that shall, upon completion,

be forwarded to the governor and both chambers of the general assembly for their review.

Following such review and subject to any revision or amendment to the recommendation

incorporated by the general assembly, the general assembly shall vote to ratify the

recommendation or adopt the revised or amended recommendation. The board's analysis and

recommendation should include, but not be limited to, a benchmark comparison to the current

aggregate and comparative individual body debt burdens in other northeastern states.

     SECTION 2. Chapter 42-10.1 of the General Laws entitled "Public Finance Management

Board" is hereby amended by adding thereto the following section:

     42-10.1-2.1. Report of debt. -- (a) The board, at any interval, but no less frequently than

annually, shall compile the total amount of state, municipal and regional authority, agency, board,

commission, public and quasi-public corporation and fire district and other special district debt

authorized, sold and unsold, both in the aggregate and for each such body. The board shall

undertake to prepare a debt affordability study, which shall include all appropriate factors

necessary to recommend debt limits for the debt capacity of all state, municipal and regional

departments, authorities, agencies, boards, commissions, public and quasi-public corporations and

or fire district and other special district having authority to issue revenue or general obligation

bonds or GARVEE bonds or notes or other various types of conduit debt or enter into financing

LC003777/SUB A/3 - Page 2 of 6

leases. The board shall provide a full copy of the debt affordability study which shall include a

recommended debt limit for each body to the governor and both chambers of the general

assembly for their review. Following such review and subject to any revision or amendment to

the recommendation incorporated by the general assembly, the general assembly shall vote to

ratify the recommendation or adopt the revised or amended recommendation. The board's report

and recommendation should include, but not be limited to, a benchmark comparison to a

comparative of the current aggregate and individual body debt burdens in other northeastern

states.

     (b) The board shall give notice to any issuer of state, municipal and regional authority,

agency, board, commission, public or quasi-public corporation or fire district or other special

district debt that their issuance of proposed debt will cause the allowable total debt limit

established for any such state, municipal and regional authority, agency, board, commission,,

public or quasi-public corporation or fire district or other special district to be exceeded, and that

such issuance cannot proceed until that is no longer the case or the allowable total debt limit

established for such body is increased and ratified by vote of the general assembly.

     (c) The board shall provide its initial report and recommendation to the governor and

both chambers of the general assembly for their review no later than March 1, 2017. Pending the

issuance of that initial report and recommendation, for purposes of §42-10.1-2.1(b) the total debt

limit established for each state, municipal and regional authority, agency, board, commission,

public or quasi-public corporation or fire district or other special district shall be an amount equal

to five percent (5%) above the debt authorized and issued for any such body as of September 1,

2016.

     (d) Tax Anticipation Notes issued by any municipality shall not be considered by the

board in determining and recommending a municipalities' debt affordability or debt limit pursuant

to this chapter 10.1 of title 42.

     SECTION 3. Section 42-10.1-4 of the General Laws in Chapter 42-10.1 entitled "Public

Finance Management Board" is hereby amended to read as follows:

     42-10.1-4. Notice of debt issue to board Notice of debt issue to board. – Subject to

§42-10.1-2.1. -- (a) Each state, municipal and regional department, authority, agency, board,

commission, and public and quasi-public corporation and fire district and other special district

having authority to issue revenue or general obligation bonds or GARVEE bonds notes or other

various types of conduit debt shall, no later than thirty (30) days prior to the sale of any such debt

issue at public or private sale, give written notice of the proposed sale to the board; and each such

issuer shall, within thirty (30) days after such sale, submit to the board a report of final sale.

LC003777/SUB A/3 - Page 3 of 6

      (b) The notice of proposed debt shall include one proposed sale date, the name of the

issuer, the nature of the debt issue, and the estimated principal amount thereof, and such further

information as may be required by rule of the board and shall be delivered in accordance with

procedures to be established by rule of the board.; and the notice of final sale shall be made on a

form approved by the board and contain all of the information requested on said form. Any issuer

which fails to submit the report of proposed debt or report of final sale by the appropriate

deadline shall be subject to a per diem fine of two hundred fifty dollars ($250), which shall be

collected and enforced by the office of the general treasurer.

     (c) Each state, municipal and regional department, authority, agency, board, commission,

public and quasi-public corporation and fire district and other special district having authority to

issue revenue or general obligation bonds or GARVEE bonds or notes or other various types of

conduit debt shall provide annually, by the end of each fiscal year, the following information for

each outstanding debt incurred: (1) The principal amount of the issue outstanding; (2) The

amount of proceeds of the issue that remains unspent; (3) The amount of debt authorized by the

bond act or other appropriate authorization relevant to the issue that remains authorized but

unissued; (4) A list of the purposes for which the debt has been issued and the amounts expended

for each purpose in the prior fiscal year from the proceeds of the issue; (5) If no longer necessary

for the original purpose of the issue, a list of re-purposing options for the amount of proceeds

remaining unspent, if any; and (6) A list of potential additional sources of funds for under funded

projects, if any.

      (c)(d) Failure of delivery of the above notice or of the time or efficiency thereof shall not

affect the validity of the issuance of any debt, bond or note unless such issuance will result in any

issuing body to exceed the debt limit established in accordance with chapter 10.1 of title 42.

      (d)(e) The board shall submit a report annually on or before September 30th of each year

to the director of administration, the speaker of the house, the chairman of the house finance

committee, the president of the senate, the chairman of the senate finance committee, and the

auditor general on debt issues by cities and towns and other authorities, agencies, boards,

commissions, public and quasi-public corporations, fire districts and other special districts subject

to the provision provisions of chapter 45-12 12 of title 45 or 10.1 of title 42, which report shall

include the information set forth in division (b) of this section and shall be for the notices of debt

issues received during the state's fiscal year next preceding. An electronic transmission of the

report shall be considered an acceptable submission.

     SECTION 4. Chapter 42-10.1 of the General Laws entitled "Public Finance Management

Board" is hereby amended by adding thereto the following sections:

LC003777/SUB A/3 - Page 4 of 6

     42-10.1-9. Public finance management board approval. -- (a) The board shall compile

and publish annually the total amount of public state, regional, municipal, public and quasi-public

corporation and fire district and other special district debt authorized, sold and unsold.

     (b) No less frequently than every two (2) years, the board shall oversee the undertaking of

a debt affordability study, which shall include all appropriate factors necessary to recommend

debt limits for the debt capacity of all state, municipal and regional departments, authorities,

agencies, boards, commissions, public and quasi-public corporations and or fire districts and

other special districts having authority to issue revenue or general obligation bonds or GARVEE

bonds or notes or other various types of conduit debt or enter into financing leases;

     (c) Notwithstanding any provision of general law, special law, public corporation

municipal or district charter to the contrary, no public corporation, body corporate and politic,

instrumentality, authority or agency created by statute, city or town, any municipal and regional

department, authority, agency, board, commission, fire, sewer or regional school district shall

incur an obligation to borrow money or enter into any financing lease in any amount that will

cause its aggregate total debt to be an amount that exceeds the debt limit established in

accordance with chapter 42-10.1 until:

     (1) Such time as the proposed debt will not cause such body to exceed the allowable total

debt limit established for such body in accordance with chapter 42-10.1;

     (2) In accordance with chapter 42-10.1 the general assembly approves said borrowing by

special statutory authority;

     (3) The total debt limit established for such body in accordance with chapter 42-10.1 is

increased by a vote of the general assembly to an amount that would permit said borrowing; or

     (4) Subject to the total debt limit established in accordance with chapter 42-10.1, the

general assembly grants approval as provided for in the Public Corporation Debt Management

Act, §35-18-3;

     (d) During those times when the General Assembly is not in session, the board, by a vote,

shall be vested with the authority to approve categories of debt deemed by the board to be

especially low-risk and time sensitive but only if the debt sought to be approved does not exceed

the requesting body's total debt limit established in accordance with chapter 42-10.1 by more than

one-half a percent (0.5%). The authority conferred herein shall not be exercised by the board

while the General Assembly is in session.

     (e) Subject to the total debt limit established in accordance with this chapter 42-10.1, any

proposed debt issuance, which is not considered by the board within ninety (90) days after it is

submitted, shall be considered recommended to the general assembly for approval for the

LC003777/SUB A/3 - Page 5 of 6

purposes of this section.

     (f) In addition to, and not by way of limitation on, the exemptions provided in

subsections (c)(1) through (c)(4) above, prior approval by the Board shall not be required under

this chapter for conduit obligations issued by the Rhode Island Student Loan Authority or the

Rhode Island health and education building corporation for non-profit corporations or by the

Rhode Island industrial facilities corporation so long as such conduit obligations will not cause

such bodies to exceed the total debt limit established in accordance with this chapter 42-10.1.

     (g) Prior approval of the Board shall be required for any insurance of the payment of

mortgage loans by the Rhode Island industrial-recreational building authority pledging the faith

and credit of the state pursuant to §42-34-3.

     42-10.1-10. Public finance management board advisory options. -- The board shall

have the authority to offer non-binding, advisory opinions on all aspects of debt management

practices of all state, municipal and regional departments, authorities, agencies, boards,

commissions, public and quasi-public corporations and/or fire districts and other special districts.

     SECTION 5. Section 45-12-3 of the General Laws in Chapter 45-12 entitled

"Indebtedness of Towns and Cities" is hereby amended to read as follows:

     45-12-3. Statements to accompany bills to general assembly to authorize

indebtedness. – (a) Whenever any bill is presented to either house of the general assembly to

authorize any city or town or related department, authority, agency, board, commission, public or

quasi-public corporation or fire district or other special district to issue revenue or general

obligation bonds or financing leases or notes other indebtedness, every such bill shall be

accompanied by a resolution or ordinance of the city or town council to the general assembly and

the office of the general treasurer stating the purpose for which the proceeds from the sale of the

bonds or other indebtedness are to be used.

     (b) Legislation authorizing any city or town to issue bonds or other indebtedness that is

transmitted to the general assembly and the Office of the General Treasurer shall be accompanied

by a report summarizing relevant financial information, as determined by the rules and

regulations promulgated by the board.

     SECTION 6. This act shall take effect upon passage.

========

LC003777/SUB A/3

========

LC003777/SUB A/3 - Page 6 of 6

EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO STATE AFFAIRS AND GOVERNMENT -- PUBLIC FINANCE

MANAGEMENT BOARD

***

     This act expands the purpose and duties of the public finance management board to

include reporting and advisory opinions related to debt.

     This act would take effect upon passage.

========

LC003777/SUB A/3

========

LC003777/SUB A/3 - Page 7 of 6