2020 -- H 8125

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LC005553

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2020

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A N   A C T

AUTHORIZING THE TOWN OF CUMBERLAND TO ISSUE GENERAL OBLIGATION

BONDS AND/OR NOTES IN AN AMOUNT NOT TO EXCEED $2,500,000 TO FINANCE

THE DEVELOPMENT, CONSTRUCTION, RENOVATION, IMPROVEMENT,

ALTERATION, REPAIR AND EQUIPPING OF RECREATIONAL AREAS AND

FACILITIES IN THE TOWN

     

     Introduced By: Representative James N. McLaughlin

     Date Introduced: August 13, 2020

     Referred To: House Municipal Government

     It is enacted by the General Assembly as follows:

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

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previously granted, to issue general obligation bonds and notes to an amount not exceeding two

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million five hundred thousand dollars ($2,500,000) from time to time under its corporate name and

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seal. The bonds of each issue may be issued in the form of serial bonds or term bonds or a

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combination thereof and shall be payable either by maturity of principal in the case of serial bonds

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or by mandatory serial redemption in the case of term bonds, in annual installments of principal,

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provided that the final maturity of such bonds shall not exceed thirty (30) years from and after the

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date the bonds are issued. All such bonds of a particular issue may be issued in the form of zero

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coupon bonds, capital appreciation bonds, serial bonds or term bonds or a combination thereof, and

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may bear interest at a fixed rate or rates or at a variable or auction rate or rates. The bonds may be

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sold by a negotiated sale or by competitive bid and issued pursuant to a resolution or an indenture

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of trust. Annual installments of principal may be provided for by maturity of principal in the case

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of serial bonds or by mandatory serial redemption in the case of term bonds. The amount of

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principal appreciation each year on any bonds, after the date of original issuance, shall not be

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considered to be principal indebtedness for the purposes of any constitutional or statutory debt limit

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or any other limitation. The appreciation of principal after the date of original issue shall be

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considered interest. Only the original principal amount shall be counted in determining the principal

 

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amount so issued and any interest component shall be disregarded.

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     SECTION 2. The bonds shall be signed by the finance director and the mayor and shall be

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

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

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

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

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

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derived from the sale of the bonds shall be delivered to the finance director, and such proceeds,

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exclusive of premiums and accrued interest, shall be expended: (1) for the purpose of financing the

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development, construction, renovation, improvement, alteration, repair and equipping of

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recreational areas and facilities in the town; (2) in payment of the principal of and/or interest on

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temporary notes issued under section 3; (3) in repayment of advances made pursuant to section 4;

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and/or (4) in payment of costs of issuance associated with the issuance of bonds or notes hereunder.

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No purchaser of any bonds or notes under this act shall be in any way responsible for the proper

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application of the proceeds derived from the sale thereof. The proceeds of bonds or notes issued

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under this act, any applicable federal or state assistance and the other monies referred to in sections

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6 and 9, shall be deemed appropriated for the purpose of this act without further action than that

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required by this act. This bond issue authorized by this act may be consolidated for the purpose of

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issuance and sale with any other bond issue of the town heretofore or hereafter authorized, provided

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

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by this act shall be expended for the purposes set forth above. The finance director and the mayor,

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on behalf of the town, are hereby authorized to execute such instruments, documents or other papers

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as either of them deem necessary or desirable to carry out the intent of this act and are also

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authorized to take all actions and execute all documents or agreements necessary to comply with

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federal tax and securities laws, which documents or agreements may have a term coextensive with

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the maturity of the bonds authorized hereby, including Rule 15c2-12 of the Securities and Exchange

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Commission and to execute and deliver a continuing disclosure agreement or certificate in

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connection with the bonds or notes.

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     SECTION 3. The town council may by resolution authorize the issue from time to time of

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

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

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

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the amount of original notes issued in anticipation of federal or state aid may not exceed the amount

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of available federal or state aid as estimated by the finance director. Temporary notes issued

 

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hereunder shall be signed by the finance director and the mayor and shall be payable within five

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(5) years from their respective dates, but the principal of and interest on notes issued for a shorter

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period may be renewed or paid from time to time by the issue of other notes hereunder, provided

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the period from the date of an original note to the maturity of any notes issued to renew or pay the

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same debt or the interest thereon shall not exceed five (5) years. Any temporary notes in anticipation

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of bonds issued under this section may be refunded prior to the maturity of the notes by the issuance

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

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

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

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

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

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

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

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

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any investment permitted under section 5. The monies in the fund and any investments held as a

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

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

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principal of and interest on the notes, any excess monies in the fund shall be distributed to the town.

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The town may pay the principal of and interest on notes in full from other than the issuance of

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refunding notes prior to the issuance of bonds pursuant to section 1 hereof. In such case, the town’s

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authority to issue bonds or notes in anticipation of bonds under this act shall continue provided

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that: (1) the town council passes a resolution evidencing the town’s intent to pay off the notes; and

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(2) that the period from the date of an original note to the maturity date of any other notes shall not

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exceed five (5) years.

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     SECTION 4. Pending any authorization or issue of bonds hereunder or pending or in lieu

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

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

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

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the proceeds of bonds or notes subsequently issued or from the proceeds of applicable federal or

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state assistance or from other available funds.

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     SECTION 5. Any proceeds of bonds or notes issued hereunder or of any applicable federal

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

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

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Deposit Insurance Corporation or in obligations issued or guaranteed by the United States of

 

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

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

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policy of the town.

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     SECTION 6. Any accrued interest received upon the sale of bonds or notes hereunder shall

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

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bonds or notes hereunder, and to the extent permitted by applicable federal law, any earnings or net

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profit realized from the deposit or investment of funds hereunder, shall, in the discretion of the

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finance director, be applied to the cost of preparing, issuing and marketing bonds or notes hereunder

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to the extent not otherwise provided, to the payment of the cost of the project, to the payment of

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the principal of or interest on bonds or notes issued hereunder or to any one or more of the

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foregoing. The cost of preparing, issuing and marketing bonds or notes issued hereunder may also,

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in the discretion of the finance director, be met from bond or note proceeds exclusive of accrued

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interest or from other monies available therefor. Any balance of bond or note proceeds remaining

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after payment of the cost of the project and the cost of preparing, issuing and marketing bonds or

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notes hereunder shall be applied to the payment of the principal of or interest on bonds or notes

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issued hereunder. To the extent permitted by applicable federal laws, any earnings or net profit

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realized from the deposit or investment of funds hereunder may, upon receipt, be added to and dealt

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with as part of the revenues of the town from property taxes. In exercising any discretion under this

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

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council.

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     SECTION 7. All bonds and notes issued under this act and the debts evidenced thereby

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

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

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

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The town shall annually appropriate a sum sufficient to pay the principal and interest coming due

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within the year on bonds and notes issued hereunder to the extent that monies therefor are not

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otherwise provided. If such sum is not appropriated, it shall nevertheless be added to the annual tax

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levy. In order to provide such sum in each year and notwithstanding any provision of law to the

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contrary, all taxable property in the town shall be subject to ad valorem taxation by the town without

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limitation as to rate or amount.

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     SECTION 8. Any bonds or notes issued under the provisions of this act, if properly

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

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

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

 

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     SECTION 9. The town, acting by resolution of its town council, is authorized to apply for,

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

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

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

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

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

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repaid as project costs under section 2.

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     SECTION 10. Bonds and notes may be issued under this act without obtaining the approval

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

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

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

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in land, and in the levy and collection of assessments or other charges permitted by law on account

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of any such project, all action shall be taken which is necessary to meet constitutional requirements

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whether or not such action is otherwise required by statute, but the validity of bonds and notes

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issued hereunder shall in no way depend upon the validity or occurrence of such action.

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     SECTION 11. The question of the approval of this act shall be submitted to the electors of

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the town at the general election to be held on November 3, 2020 or at a general or special election

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(other than a primary election) to be held on a date as shall be designated by the town council. The

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question shall be submitted in substantially the following form: “Shall an act, passed at the 2020

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session of the general assembly, entitled ‘AN ACT AUTHORIZING THE TOWN OF

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CUMBERLAND TO ISSUE GENERAL OBLIGATION BONDS AND/OR NOTES IN THE

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AMOUNT NOT TO EXCEED $2,500,000 TO FINANCE THE DEVELOPMENT,

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CONSTRUCTION, RENOVATION, IMPROVEMENT, ALTERATION, REPAIR AND

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EQUIPPING OF RECREATIONAL AREAS AND FACILITIES IN THE TOWN’ be approved?”

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The warning for the election shall contain the question to be submitted. From the time the election

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

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at his or her office for public inspection, but the validity of the election shall not be affected by this

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requirement. To the extent of any inconsistency between this act and the town charter, this act shall

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prevail.

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     SECTION 12. All or any portion of the authorized but unissued authority to issue bonds

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and notes under this act may be extinguished by resolution of the town council, without further

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action by the general assembly, seven (7) years after the effective date of this act.

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     SECTION 13. Sections 11 and 13 shall take effect upon the passage of this act. The

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remainder of this act shall take effect upon the approval of this act by a majority of those voting on

 

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the question at the election prescribed by Section 11.

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LC005553

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EXPLANATION

OF

A N   A C T

AUTHORIZING THE TOWN OF CUMBERLAND TO ISSUE GENERAL OBLIGATION

BONDS AND/OR NOTES IN AN AMOUNT NOT TO EXCEED $2,500,000 TO FINANCE

THE DEVELOPMENT, CONSTRUCTION, RENOVATION, IMPROVEMENT,

ALTERATION, REPAIR AND EQUIPPING OF RECREATIONAL AREAS AND

FACILITIES IN THE TOWN

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     This act would authorize the town of Cumberland to issue two million five hundred

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thousand dollars ($2,500,000) of general obligation bonds and notes in order to finance the

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development, construction, renovation, improvement, alteration, repair and equipping of

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recreational areas and facilities in the town.

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     Sections 11 and 13 would take effect upon passage. The remainder of the act would take

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effect upon approval of the act by the electors of the town of Cumberland.

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