2018 -- S 2972

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LC005862

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2018

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A N   A C T

AUTHORIZING THE TOWN OF CUMBERLAND TO ISSUE NOT TO EXCEED $83,000,000

GENERAL OBLIGATION BONDS, NOTES AND OTHER EVIDENCES OF

INDEBTEDNESS TO FINANCE THE CONSTRUCTION, RENOVATION, IMPROVEMENT,

ALTERATION, REPAIR, FURNISHING AND EQUIPPING OF SCHOOLS AND SCHOOL

FACILITIES THROUGHOUT THE TOWN, SUBJECT TO APPROVAL OF STATE

HOUSING AID AT A REIMBURSEMENT RATE OR STATE SHARE RATIO OF NOT LESS

THAN 50% FOR EXPENDITURES ELIGIBLE FOR STATE AID AND PROVIDED THAT

THE AUTHORIZATION SHALL BE REDUCED BY ANY GRANT RECEIVED FROM THE

SCHOOL BUILDING AUTHORITY CAPITAL FUND

     Introduced By: Senators Pearson, and Picard

     Date Introduced: June 14, 2018

     Referred To: Senate Housing & Municipal Government

     It is enacted by the General Assembly as follows:

     SECTION 1. The town of Cumberland is hereby empowered, in addition to authority

previously granted, to issue bonds in an amount not exceeding eighty-three million dollars

($83,000,000) from time to time under its corporate name and seal; provided however, that bonds

shall not be issued unless the conditions of section 2 hereof as to the level of state aid are met.

The bonds of each issue may be issued in the form of zero coupon bonds, capital appreciation

bonds, serial bonds or term bonds or a combination thereof and shall be payable either by

maturity of principal in the case of serial bonds or by mandatory serial redemption in the case of

term bonds, in installments of principal, the first installment to be not later than five (5) years and

the last installment not later than thirty (30) years after the date the bonds are issued.

     SECTION 2. The town may be eligible for school housing aid reimbursement on debt

service pursuant to chapter 7 of title 16, or for a grant, loan or other "financial assistance" as

defined in §45-38.2-1(6), from the School Building Authority Capital Fund under chapter 38.2 of

chapter 45. The amount of borrowing authorized pursuant to this act shall be reduced by the

amount of any grant received by the town from the School Building Authority Capital Fund.

Bonds, notes or other evidences of indebtedness shall not be issued under this act unless the town

has received a letter from the Rhode Island Department of Education ("RIDE") confirming that

the then-current school housing aid reimbursement rate under chapter 7 of title 16, as amended

from time to time, or financial assistance from the School Building Authority Capital Fund, or

pursuant to any other law hereafter enacted providing for funds to municipalities for school

housing purposes, is not less than fifty percent (50%) for those expenditures which are eligible for

state aid. This act shall constitute an enabling act of the general assembly that is required pursuant

to § 16-7-44. Any bonds, notes or other evidences of indebtedness issued under this act for school

projects shall not be eligible for state housing aid reimbursement pursuant to § 16-7-44 unless the

school projects described herein have been approved by the Rhode Island Department of

Education.

     SECTION 3. The bonds shall be signed by the mayor and the director of finance and

shall be issued and sold in such amounts as the town council may authorize. The manner of sale,

denominations, maturities, interest rates and other terms, conditions and details of any bonds or

notes issued under this act may be fixed by the proceedings of the town council authorizing the

issue or by separate resolution of the town council or, to the extent provisions for these matters

are not so made, they may be fixed by the officers authorized to sign the bonds or notes.

Notwithstanding anything contained in this act to the contrary, the town may enter into financing

agreements with the Rhode Island Health and Educational Building Corporation pursuant to

chapter 7 of title 16 and chapter 38.1 of title 45 and, with respect to notes or bonds issued in

connection with such financing agreements, if any, the town may elect to have the provisions of

chapter 38.1 of title 45 apply to the issuance of the bonds or notes issued hereunder to the extent

the provisions of chapter 38.1 of title 45 are inconsistent herewith. In addition, the town may

enter into financing agreements with the Rhode Island Infrastructure Bank pursuant to the

provisions of chapter 12.2 of title 46 and, with respect to notes or bonds issued in connection with

such financing agreements, if any, the town may elect to have the provisions of chapter 12.2 of

title 46 apply to the issuance of the bonds or notes issued hereunder to the extent the provisions of

chapter 12.2 of title 46 are inconsistent herewith. Such election may be fixed by the proceedings

of the town council authorizing such issuance of by separate resolution of the town council, or, to

the extent provisions for these matters are not so made, they may be fixed by the officers

authorized to sign the bonds or notes. The proceeds derived from the sale of the bonds shall be

delivered to the director of finance, and such proceeds exclusive of premiums and accrued

interest shall be expended (1) For the construction, renovation, improvement, alteration, repair

furnishing and equipping of schools and school facilities in the Town and all costs related thereto;

(2) For payment of the principal or interest on temporary notes issued under section 4; (3) In

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payment of capitalized interest on bonds or notes; (4) in repayment of advances under section 5;

or (5) In payment of related costs of issuance of any bonds or notes. No purchaser of any bonds or

notes under this act shall be in any way responsible for the proper application of the proceeds

derived from the sales thereof. The project shall be carried out and all contracts made therefor on

behalf of the town by the mayor, subject to approval of the town council. The proceeds of bonds

or notes issued under this act, any applicable federal or state assistance and other moneys referred

to in section 7 and 10, shall be deemed appropriated for the purposes of this act without further

action than that required by this act. The bond issue authorized by this act may be consolidated

for the purposes of issuance and sale with any other bond issue of the town heretofore or hereafter

authorized; provided that, notwithstanding any such consolidation, the proceeds from the sale of

the bonds authorized by this act shall be expended for the purposes set forth above.

     SECTION 4. The town council may by resolution authorize the issue from time to time of

interest bearing or discounted notes in anticipation of the issue of bonds or in anticipation of the

receipt of federal or state aid for the purposes of this act. The amount of original notes issued in

anticipation of bonds may not exceed the amount of bonds which may be issued under this act

(without any reduction for any grant to be received from the School Building Authority Capital

Fund), and the amount of original notes issued in anticipation of federal or state aid may not

exceed the amount of available federal or state aid as estimated by the director of finance.

Temporary notes issued hereunder, shall be signed by the manual or facsimile signatures of the

director of finance and the mayor and shall be payable within five (5) years from their respective

dates, but the principal of and interest on notes issued for a shorter period may be renewed or paid

from time to time by the issue of other notes thereunder; provided the period from the date of an

original note to the maturity or any note issued to renew or pay the same debt or the interest

thereon shall not exceed five (5) years. Any temporary notes in anticipation of bonds issued under

this section may be refunded prior to the maturity of the notes by the issuance of additional

temporary notes; provided that, no such refunding shall result in any amount of such temporary

notes outstanding at any one time in excess of two hundred percent (200%) of the amount of

bonds which may be issued under this act; and provided further, that, if the issuance of any such

refunding notes results in any amount of such temporary notes outstanding at any one time in

excess of the amount of bonds which may be issued under this act, the proceeds of such refunding

notes shall be deposited in a separate fund established with the bank which is paying agent for the

notes being refunded. Pending their use to pay the notes being refunded, moneys in the fund shall

be invested for the benefit of the town by the paying agent at the direction of the director of

finance in any investment permitted under section 5. The moneys in the fund and any investments

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held as a part of the fund shall be held in trust and shall be applied by the paying agent solely to

the payment or prepayment of the principal of and interest on the notes being refunded. Upon

payment of all principal of and interest on the notes, any excess moneys in the fund shall be

distributed to the town. The town may pay the principal of and interest on notes in full from other

than the issuance of refunding notes prior to the issuance of bonds pursuant to Section 1 hereof.

In such case, the town’s authority to issue bonds or notes in anticipation of bonds under this act

shall continue; provided that, (1) The town council passes a resolution evidencing the town’s

intent to pay off the notes without extinguishing the authority to issue bonds or notes; and (2)

That the period from the date of an original note to the maturity date of any other note shall not

exceed five (5) years.

     SECTION 5. Pending any authorization or issue of bonds hereunder or pending or in lieu

of any authorization or issue of notes hereunder, the director of finance, with the approval of the

town council, may, to the extent that bonds or notes may be issued hereunder, apply funds in the

treasury of the town to the purposes specified in section 2, such advances to be repaid without

interest from the proceeds of bonds or notes subsequently issued or from the proceeds of

applicable federal or state assistance or from other available funds.

     SECTION 6. Any proceeds of bonds or notes issued hereunder or of any applicable

federal or state assistance, pending their expenditure, may be deposited or invested by the director

of finance in demand deposits, time deposits or savings deposits in banks which are members of

the Federal Deposit Insurance Corporation or in obligations issued or guaranteed by the United

States of America or by any agency or instrumentality thereof or as may be provided in any other

applicable law of the state of Rhode Island or resolution of the town council or pursuant to an

investment policy of the town.

     SECTION 7. Any accrued interest received upon the sale of bonds or notes hereunder

shall be applied to the payment of the first interest due thereon. Any premiums arising from the

sale of bonds or notes hereunder and any earnings or net profit realized from the deposit or

investment of funds hereunder shall, in the discretion of the director of finance, be applied to the

cost of preparing, issuing, and marketing bonds or notes hereunder to the extent not otherwise

provided, to the payment of the cost of the project, to the payment of the principal of or interest

on bonds or notes issued hereunder or to any one or more of the foregoing. The cost of preparing,

issuing and marketing bonds or notes hereunder may also, in the discretion of the director of

finance, be met from bond or note proceeds exclusive of accrued interest or from other moneys

available therefor. Any balance of bond or note proceeds remaining after payment of the cost of

the projects and the cost of preparing, issuing and marketing bonds or notes hereunder shall be

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applied to the payment of the principal of or interest on bonds or notes issued hereunder. To the

extent permitted by applicable federal laws, any earnings or net profit realized from the deposit or

investment of funds hereunder may, upon receipt, be added to and dealt with as part of the

revenues of the town from property taxes. In exercising any discretion under this section, the

director of finance shall be governed by any instructions adopted by resolution of the town

council.

     SECTION 8. All bonds and notes issued under this act and the debts evidenced thereby

shall be obligatory on the town in the same manner and to the same extent as other debts lawfully

contracted by it and shall be excepted from the operation of § 45-12-2. No such obligation shall at

any time be included in the debt of the town for the purpose of ascertaining its borrowing

capacity. The town shall annually appropriate a sum sufficient to pay the principal and interest

coming due within the year on bonds and notes issued hereunder to the extent that moneys

therefor are not otherwise provided. If such sum is not appropriated, it shall nevertheless be added

to the annual tax levy. In order to provide such sum in each year and notwithstanding any

provision of law to the contrary, all taxable property in the town shall be subject to ad valorem

taxation by the town without limitation as to rate or amount.

     SECTION 9. Any bonds or notes issued under the provisions of this act, if properly

executed by officers of the town in office on the date of execution, shall be valid and binding

according to their terms notwithstanding that before the delivery thereof and payment therefor

any or all of such officers shall for any reason have ceased to hold office.

     SECTION 10. The town, acting by resolution of its town council is authorized to apply

for, contract for and expend any federal or state advances or other grants or assistance which may

be available for the purposes of this act, and any such expenditures may be in addition to other

moneys provided in this act. To the extent of any inconsistency between any law of this state and

any applicable federal law or regulation, the latter shall prevail. Federal and state advances, with

interest where applicable, whether contracted for prior to or after the effective date of this act,

may be repaid as project costs under section 2.

     SECTION 11. Bonds and notes may be issued under this act without obtaining the

approval of any governmental agency or the taking of any proceedings or the happening of any

conditions except as specifically required by this act for such issue. In carrying out any project

financed in whole or in part under this act, including where applicable the condemnation of any

land or interest in land, and in the levy and collection of assessments or other charges permitted

by law on account of any such project, all action shall be taken which is necessary to meet

constitutional requirements whether or not such action is otherwise required by statute; but the

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validity of bonds and notes issued hereunder shall in no way depend upon the validity or

occurrence of such action.

     SECTION 12. All or any portion of the authority to issue bonds and notes under this act

may be extinguished by resolution of the town council, without further action by the general

assembly seven (7) years after the effective date of this act.

     SECTION 13. The director of finance and the mayor, on behalf of the town, are hereby

authorized to execute such documents or other papers as either of them deem necessary or

desirable to carry out the intent of this act and are also authorized to take all actions and execute

all documents or agreements necessary to comply with federal tax and securities laws, which

documents or agreements may have a term coextensive with the maturity of the bonds authorized

hereby, including Rule 15c2-12 of the Securities and Exchange Commission (the Rule) and to

execute and deliver a continuing disclosure agreement or certificate in connection with the bonds

or notes in the form as shall be deemed advisable by such officers in order to comply with the

Rule.

     SECTION 14. The question of the approval of this act shall be submitted to the electors

of the town at the next general election on November 6, 2018 or at a special election (other than a

primary), on a date as shall be designated by the town council. The question shall be submitted in

substantially the following form: "Shall an Act, passed at the 2018 session of the General

Assembly, entitled, 'AN ACT AUTHORIZING THE TOWN OF CUMBERLAND TO ISSUE

NOT TO EXCEED $83,000,000 GENERAL OBLIGATION BONDS, NOTES AND OTHER

EVIDENCES OF INDEBTEDNESS TO FINANCE THE CONSTRUCTION, RENOVATION,

IMPROVEMENT, ALTERATION, REPAIR, FURNISHING AND EQUIPPING OF SCHOOLS

AND SCHOOL FACILITIES THROUGHOUT THE TOWN, SUBJECT TO APPROVAL OF

STATE HOUSING AID AT A REIMBURSEMENT RATE OR STATE SHARE RATIO OF

NOT LESS THAN 50% FOR EXPENDITURES ELIGIBLE FOR STATE AID AND

PROVIDED THAT THE AUTHORIZATION SHALL BE REDUCED BY ANY GRANT

RECEIVED FROM THE SCHOOL BUILDING AUTHORITY CAPITAL FUND' be

approved?" and the warning for the election shall contain the question to be submitted. From the

time the election is warned and until it is held, it shall be the duty of the town clerk to keep a copy

of the act available at the clerk's office for public inspection, but the validity of the election shall

not be affected by this requirement.

     SECTION 15. This section and the foregoing section shall take effect upon the passage of

this act. The remainder of this act shall take effect upon the approval of this act by a

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majority of those voting on the question at the election prescribed by the foregoing section.

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LC005862

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EXPLANATION

OF

A N   A C T

AUTHORIZING THE TOWN OF CUMBERLAND TO ISSUE NOT TO EXCEED $83,000,000

GENERAL OBLIGATION BONDS, NOTES AND OTHER EVIDENCES OF

INDEBTEDNESS TO FINANCE THE CONSTRUCTION, RENOVATION, IMPROVEMENT,

ALTERATION, REPAIR, FURNISHING AND EQUIPPING OF SCHOOLS AND SCHOOL

FACILITIES THROUGHOUT THE TOWN, SUBJECT TO APPROVAL OF STATE

HOUSING AID AT A REIMBURSEMENT RATE OR STATE SHARE RATIO OF NOT LESS

THAN 50% FOR EXPENDITURES ELIGIBLE FOR STATE AID AND PROVIDED THAT

THE AUTHORIZATION SHALL BE REDUCED BY ANY GRANT RECEIVED FROM THE

SCHOOL BUILDING AUTHORITY CAPITAL FUND

***

     This act would authorize the Town of Cumberland to issue bonds and notes in an amount

not exceeding $83,000,000 to finance the construction, renovation, improvement, alteration,

repair, furnishing and equipping of schools and school facilities throughout the town, subject to

approval of state housing aid at a reimbursement rate or state share ratio of not less than 50% for

expenditures eligible for state aid and; provided that, the authorization would be reduced by any

grant received from the School Building Authority Capital Fund. The town may be eligible for

school housing aid reimbursement on debt service pursuant to chapter 7 of title 16, or for a grant,

loan or other "financial assistance" as defined in § 45-38.2-1(6), from the School Building

Authority Capital Fund under chapter 38.2 of chapter 45. The amount of borrowing authorized

pursuant to this act shall be reduced by the amount of any grant received by the town from the

School Building Authority Capital Fund. Bonds, notes or other evidences of indebtedness may

not be issued under this act unless the town has received a letter from the Rhode Island

Department of Education ("RIDE") confirming that the then-current school housing aid

reimbursement rate under chapter 7 of title 16, as amended from time to time, or financial

assistance from the School Building Authority Capital Fund, or pursuant to any other law

hereafter enacted providing for funds to municipalities for school housing purposes, is not less

than fifty percent (50%) of those expenditures which are eligible for state aid.

     This act would constitute an enabling act of the general assembly that is required

pursuant to § 16-7-44. Any bonds, notes or other evidences of indebtedness issued under this act

for school projects would not be eligible for state housing aid reimbursement pursuant to § 16-7-

44 unless the school projects described herein have been approved by the Rhode Island

Department of Education.

     Sections 14 and 15 would take effect upon passage. The remainder of the act would take

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effect upon approval of the question provided for in Section 14.

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