Chapter 252

2007 -- S 0054 SUBSTITUTE B

Enacted 07/03/07

 

A N A C T

RELATING TO INDEBTEDNESS OF TOWNS AND CITIES

          

     Introduced By: Senators Bates, Lenihan, Walaska, Blais, and Paiva-Weed

     Date Introduced: January 17, 2007

 

It is enacted by the General Assembly as follows:

 

     SECTION 1. Sections 45-12-1, 45-12-2, 45-12-3, 45-12-4, 45-12-4.1, 45-12-4.2, 45-12-

4.3, 45-12-5, 45-12-5.1, 45-12-5.2, 45-12-5.3, 45-12-11, 45-12-14, 45-12-18, 45-12-19, 45-12-20,

45-12-26, 45-12-28, 45-12-29 and 45-12-30 of the General Laws in Chapter 45-12 entitled

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

 

     45-12-1. Payment of indebtedness. -- The outstanding notes, bonds, and contracts of

cities and towns shall be paid and fulfilled according to their tenor, and all public works now

authorized to be prosecuted shall be prosecuted, and all indebtedness now authorized to be

incurred on account thereof may be incurred, according to the tenor of the authority therefore.

The power and obligation of each city and town to pay its general obligation bonds and notes,

whether or not issued pursuant to this chapter, shall be unlimited, and each city and town shall

levy ad valorem taxes upon all the taxable property within the city or town for the payment of the

general obligation bonds or notes and interest on these bonds or notes, without limitation of rate

or amount, except as otherwise provided by or pursuant to law. The faith and credit of each city

and town shall be pledged for the payment of the principal of, premium and the interest on, all

general obligation bonds and notes of the city or town whether or not the pledge is stated in the

bonds or notes, or in the proceedings authorizing their issue. Each city and town shall annually

appropriate a sum sufficient to pay the principal, premium and interest coming due within the

year on all its general obligation bonds and notes to the extent that moneys for the general

obligation bonds and notes are not otherwise provided. If that sum is not appropriated, it shall

nevertheless be added to the annual tax levy.

 

     45-12-2. Maximum aggregate indebtedness. – Except as provided in section 45-12-11,

no city or town shall, without special statutory authority, or ministerial approval as provided for

in section 45-12-2.1 incur any debt for money hired borrowed which would increase its aggregate

outstanding principal indebtedness not excepted by law from the provisions of this section to an

amount greater than three percent (3%) of the full assessed value of the taxable property of

within the city or town, but the amount of any borrowing in anticipation of taxes which is

authorized or validated by section 45-12-4, and the amount of any sinking fund, fund held on

account to pay such outstanding indebtedness shall be deducted in computing that indebtedness.

In computing the value of taxable property for purposes of this section motor vehicles and trailers

shall be valued at full value and without regard to the assessed value reductions provided for in

section 44-34.1-1. Any city or town may, without special statutory authority, hire money incur

debt to an aggregate amount, as with the other outstanding indebtedness of the city or town not

deductible under the foregoing provisions, which shall not exceed the limitation contained in this

section.

 

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

indebtedness. -- Whenever any bill is presented to either house of the general assembly to

authorize any city or town to issue bonds or certificates of other indebtedness, this every such bill

shall be accompanied by a petition resolution or ordinance of the city or town council to the

general assembly stating the purpose for which the proceeds from the sale of the bonds or

certificates of other indebtedness are to be used, and this bill shall also be accompanied by a

financial statement of the city or town showing its condition as of the close of the last preceding

fiscal year. The financial statements shall be in the form prescribed by and upon blanks furnished

by the controller and duly attested by the proper officers having the custody of the books of

account of the city or town.

 

     45-12-4. Borrowing in anticipation of taxes. -- Any city or town may hire by resolution

of its city or town council may borrow money in each financial year in anticipation of the receipt

of the proceeds of the annual tax due or to become due in that financial year upon the ratable

taxable property within the city or town, an amount which, together with any money borrowed in

anticipation of taxes in any prior year which may remain unpaid, shall not exceed in the aggregate

the total tax levy of the then current financial year, or which if no tax levy was made, shall not

exceed the tax levy of the next preceding financial year, the money hired borrowed to be used and

expended for the payment of the current liabilities and expenses of the city or town, and may

issue its negotiable notes therefore. Notes issued under authority of this section shall bear upon

their face the notation "issued in anticipation of taxes assessed as of December 31, ________ "

and shall be made payable not later than one year from their date, but may be renewed refunded

or paid by the issue of new notes bearing the notation and payable not later than one year from

the date of the original notes renewed or paid. The outstanding notes of any city or town issued

prior to May 3, 1951 in anticipation of taxes of the then current year are validated to the same

extent as if those notes had been expressly authorized by act of the general assembly before their

issue, and are declared to be valid and binding obligations of the city or town. so refunded or

paid. The failure of a city or town to comply with any time requirement or deadline imposed by

general law, special law or charter in relation to the levy or assessment of taxes shall not affect

the validity of notes issued pursuant to this section. Every city and town hiring borrowing

money under the provisions of this section shall assess and levy a tax in each financial year

sufficient to provide funds for the payment of all outstanding notes previously issued in

anticipation of taxes of the preceding financial year.

 

     45-12-4.1. Borrowing where collection of taxes delayed or taxes refunded. -- (a)

Notwithstanding any provision of section 45-12-4 to the contrary, the treasurer or finance director

of any city or town with the approval of the mayor, administrator, or town council, whichever is

the appropriate approving authority, may issue a city or town by resolution of its city council or

town council, may authorize the issue of notes of the city or town in order to pay any outstanding

tax anticipation notes or other obligations of the city or town which, in the judgment of the

treasurer or finance director, cannot be paid when due from property tax revenues as a result of a

court order or decision which directly or indirectly delays the collection of taxes by the city or

town, or which provides for the refunding of taxes previously collected, or for any other reason.

Notes issued under this section are payable within a period of time, not exceeding one year, that

is necessary, in the judgment of the treasurer or finance director, for the city or town to receive

sufficient property tax revenue to pay them.

      (b) Notes issued under this section may be renewed refunded or paid by the issue of

other similar notes. Notes issued under this section shall be excepted from the operation of

section 45-12-4 and shall not be taken into account for the purpose of determining the borrowing

capacity of the city or town under that section.

 

     45-12-4.2. Borrowing in anticipation of federal or state grants. -- A city or town may

contract for and accept grants of federal or state aid for any purpose for which it is authorized to

appropriate money. A city or town, by resolution of its city council or town council, may

authorize the issue of notes in anticipation of the receipt of federal or state aid; provided, that the

aid has been previously approved by the appropriate federal or state agency. The proceeds of the

notes may be used only for the purpose for which the aid is granted. The amount of original notes

issued under the provisions of this section may not exceed the amount of available federal or state

aid as estimated by the director of finance or treasurer and are payable within three (3) years from

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

refunded or paid from time to time by the issue of other notes under the provisions of this section;

provided, that the period from the date of an original note to the maturity of any note issued to

renew refund or pay the same debt or the interest on that debt does not exceed three (3) years. To

the extent that the state or federal aid actually received is insufficient to pay the principal and

interest on those notes, the city or town shall appropriate a sum sufficient to make the payments.

 

     45-12-4.3. Borrowing in anticipation of water and sewer tax and user charge

revenue. -- Any city or town, by resolution of its city or town council, may borrow authorize the

issuance of notes in any fiscal year in anticipation of the receipt of water and sewer tax and user

charge revenues, and may issue notes for these to an in a principal amount which, together with

any money borrowed in anticipation of these revenues in any prior fiscal year that remains

unpaid, shall not exceed in the aggregate eighty percent (80%) of the total amount of those

revenues due or expected to be received during the fiscal year, as estimated by the director of

finance or treasurer. Notes issued under this section are payable within one year from their dates

and may be renewed refunded; provided, that the period from the date of an original note to the

maturity of any note issued to renew refund the same debt does exceed one year.

 

     45-12-5. Sale of evidences of indebtedness -- Annual payments -- Terms. – (a) A city

or town which has authorized the hiring borrowing of money under the provisions of this chapter

may sell the bonds, notes, or other evidence of the indebtedness authorized at public or private

sale, or may use these in payment of its debts. In the case of a sale at discount, the discount shall

be treated as interest paid in advance. In the case of any hiring under section 45-12-2 for a period

longer than one year, payment of principal shall be by that annual payments that will extinguish

the debt at maturity, the first annual payments to be made not later than one year, and the last

payment The bonds of each issue may be issued in the form of 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 annual 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 dated date of the original borrowing; provided, that the term of

any hiring to pay for a public work, improvement, or equipment does not exceed the expected

useful life of the public work, improvement, or equipment as determined by the town council or

city council. The denomination, maturity, interest rate, method of sale, bonds. All such bonds of a

particular issue may be issued in the form of zero coupon bonds, capital appreciation bonds, serial

bonds or term bonds or a combination thereof. Annual installments of principal may be provided

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

case of term bonds. The amount of principal appreciation each year on any bonds, after the date

of original issuance, shall not be considered to be principal indebtedness for the purposes of any

constitutional or statutory debt limit or any other limitation. The appreciation of principal after

the date of original issue shall be considered interest. Only the original principal amount shall be

counted in determining the principal amount so issued and any interest component shall be

disregarded.

     (b) The manner of sale, denominations, maturities, interest rates and the uses of the

proceeds thereof (including, but not limited to, the costs of issuance and capitalized interest) and

other terms, conditions, and details of any bond, note, or hiring under the provisions of this

chapter bonds, notes or other evidence of indebtedness issued under this section may be fixed by

the vote or resolution authorizing these, or if no provision is made in the vote or resolution, by the

town or city council, or in absence of any of the foregoing, by the treasurer or other officer

authorized to issue those bonds or notes or to hire that money. ordinance or resolution of the city

or town council authorizing the issue or by separate resolution of the city or 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, notes or other evidence of indebtedness. The officers authorized to

sign the bonds, notes or other evidence of indebtedness on behalf of the city or town are

authorized to execute such instruments, documents or other papers as they deem necessary or

desirable to effectuate the issuance of the bonds, notes or other evidence of indebtedness and are

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

with federal tax and securities laws, including rule 15c2-12 of the securities and exchange

commission or any similar rule or regulation now or hereafter adopted by the securities and

exchange commission, which documents or agreements may have a term coextensive with the

maturity of the bonds, notes or other evidence of indebtedness authorized hereby and to execute

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

other evidence of indebtedness.

     (c) Pending any authorization or issue of bonds hereunder or pending or in lieu of any

authorization or issue of notes hereunder, the city or town council, to the extent that bonds or

notes may be issued hereunder, may, by resolution apply funds in the treasury of the city or town

to the purposes for which bonds or notes will be issued, 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.

     (d) 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 premium arising from the sale of

bonds or notes hereunder shall, in the discretion of the finance director or treasurer, be applied to

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

provided, to the payment of project costs, 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 finance director or

treasurer, be met from bond or note proceeds exclusive of premium and accrued interest or from

other moneys available therefor. Any balance of bond or note proceeds remaining after payment

of the cost of the project and the cost of preparing, issuing and marketing bonds or notes

hereunder shall be 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 may, upon receipt, be added to and dealt with as part of

the revenues of the city or town from property taxes. In exercising any discretion under this

section, the finance director or treasurer shall be governed by any instructions adopted by

resolution of the city or town council.

 

     45-12-5.1. Callable bonds. -- (a) Bonds issued by any cities, towns or other political

subdivision subdivisions of this state may be issued subject to call and prepayment prior to their

stated maturities at the option of the issuer. All, or less than all, of the bonds comprising an issue

may be subject to call simultaneously or from time to time. ; provided, that:

      (1) No bond may be called for less than its face amount; and

      (2) No bond may be called unless all bonds of the same issue with later maturities are

also called at the same time or have been previously called.

     (b) A premium may be paid in connection with the prepayment of any bond, but no

premium payable on any particular date shall be larger than the premium payable on the

prepayment of the bond at an earlier date. No bond, whether in bearer or registered form, shall be

issued subject to prepayment on less than fifteen (15) days' notice published at least once in a

daily newspaper of general circulation in Rhode Island and in a nationally distributed newspaper

devoted primarily to financial or investment information, except that any bondholder may waive

any defect in the notice of prepayment given with respect to his or her bond.

      (c) (b) Every bond issued subject to prepayment shall, by appropriate statements on its

face, indicate:

      (1) That the bond is subject to call and prepayment;

      (2) The time or times at which the bond may be prepaid;

      (3) The schedule of premiums, if any, which are payable; and

      (4) The time and type of notice which must be given by the issuer before the bond can be

prepaid.; and

      (5) That the bond will not bear interest from and after the date on which it is payable as

the result of being called.

      (d) (c) The coupons, if any, attached to the bonds shall, as appropriate, indicate that they

may become void as a result of the bond being called for prepayment. Unless otherwise provided

in the proceedings authorizing the issue of bonds, the officers of the city, town or other political

subdivision authorized to sell the bonds shall determine whether the bonds shall be issued subject

to call and prepayment, and if issued, the officers shall decide the details of these bonds. No bond

shall be called for prepayment, unless the issuer has deposited with the paying agent or agents for

the bond prior to the giving of notice of the call of the bond for prepayment a sufficient amount of

cash, or securities issued by the United States of America, the state of Rhode Island, or its

political subdivisions, with maturities and interest rates adequate to provide a sufficient amount of

cash, to pay the bond in full on the date on which it is prepayable. The notice may state: (1) that

it is conditioned on the deposit of moneys, in an amount necessary to effect the redemption with

the paying agent or agents no later than the redemption date; and/or (2) that the city, town or

political subdivision retains the right to rescind such notice on or prior to the scheduled

redemption date, and such notice and optional redemption shall be of no effect if such monies are

not so deposited or if the notice is rescinded. Bonds may be prepaid with the proceeds of

refunding bonds as provided in the following section, or with other funds available for that

purpose; and cities, towns and other political subdivisions may raise money by taxation for the

purpose of prepaying bonds. For the purposes of this section "bond" shall include note. The

powers conferred by this section may be used with regard to bonds authorized for any purpose by

any general, special, or other law, including section 45-12-5.2.

 

     45-12-5.2. Issuance of refunding bonds to pay outstanding bonds. -- (a) Any city,

town or political subdivision of this state may issue refunding bonds in order to pay all or any

designated part of an issue of outstanding bonds, including principal, redemption premium, if

any, interest on the outstanding bonds coming due on or prior to the date on which those bonds

are to be redeemed, and the costs of issuing the refunding bonds.

      (b) No bonds shall be issued under this section, however, more than six (6) months prior

to the date on which the outstanding bonds are to be redeemed, unless the proceedings

authorizing the refunding bonds include or incorporate specific findings to the effect that the

refunding will result in a financial benefit to the political subdivision.

      (c) The authorization and issue of refunding bonds is subject to the same requirements

and provisions of law as would then be applicable to the authorization and issue of the bonds

being refunded. Refunding bonds shall be authorized by ordinance or resolution of the town

council or city council. The proceedings authorizing the issue of refunding bonds shall contain a

general description of the bonds which are to be refunded.

      (d) Notwithstanding any provision of any municipal charter to the contrary, refunding

bonds may be sold at public or private sale, and may provide for annual or more frequent equal,

diminishing, or increasing installments of principal and deferral of the first installment of

principal to the extent permitted by section 45-12-24 or by the special or general law applicable to

the bonds being refunded. In all other respects, refunding bonds shall be payable in amounts and

at times that are neither less nor later than the minimum payment required by law for not later

than the last date that could have been the final maturity date of the bonds being refunded.

      (e) The proceeds of refunding bonds, exclusive of costs of issuance any premium and

accrued interest shall, upon their receipt, be paid immediately to the paying agent for the bonds

which are to be refunded, and that paying agent shall hold those proceeds in trust until they are

applied to refund bonds. While the proceeds are held in trust they may be invested for the benefit

of the issuer in obligations of the United States of America, the state of Rhode Island, or its

political subdivisions.

      (f) Between the authorization of refunding bonds and the use of their proceeds to refund

bonds, the refunding bonds shall not be deemed debts of the issuer in determining its borrowing

capacity for any purpose. Upon the use of the proceeds of refunding bonds, the refunding bonds

shall be treated as debt of the issuer for the purposes and to the same extent as the refunded bonds

were so treated.

      (g) As used in this section, "bonds" includes notes, including temporary notes in

anticipation of bonds.

      (h) The powers conferred by this section and the preceding section are in addition to and

not in substitution for, or diminution of, any other powers conferred, cities, towns and other on

political subdivisions of this state.

      (i) Refunding bonds may be issued under this section by any city, town or other political

subdivision without obtaining the approval of its electors, notwithstanding the provisions of

sections 45-12-19 and 45-12-20 and notwithstanding any provision of its charter to the contrary.,

unless the electors when assembled in a meeting are the local legislative body for the purpose of

authorizing indebtedness of the political subdivision. Notwithstanding any provisions to the

contrary of any special law authorizing the issuance of bonds by a city, town or other political

subdivision, any temporary notes in anticipation of bonds issued or to be issued under that law

may be refunded prior to the maturity of the notes by the issuance, in accordance with this

section, of additional temporary notes; provided, that no refunding results in an aggregate amount

of temporary notes outstanding under a special law at any one time in excess of two hundred

percent (200%) of the amount of bonds authorized but not yet issued under the special law. The

officers authorized to issue the original temporary notes being refunded are authorized, without

any additional proceedings by the local legislative body, to issue the refunding temporary notes in

accordance with this section.

 

     45-12-5.3. Debt maturity for farmers' home loan administration bonds Debt

maturity for United States Department of Agriculture/Rural Development bonds. --

Notwithstanding any contrary provisions of this chapter, or any other general or special law or

provision of any municipal charter, bonds issued by a city or town which are purchased by the

United States of America, acting through the Farmers' Home Loan Administration United States

Department of Agriculture/Rural Development, or any successor agency or department, 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 annual installments of principal, the first installment not

later than three (3) five (5) years and the last installment not later than forty (40) years after the

date of the bonds.

 

     45-12-11. Authority for issuance of indebtedness excess. -- The state director of

administration may, upon petition by the city or town council, authorize the city or town to incur

indebtedness in excess of the limit of three percent (3%) of the taxable property of the full

assessed value of the taxable property within the city or town imposed by section 45-12-2

whenever the director determines that the sum appropriated by any city or town or the funds

available are insufficient to pay the necessary expenses of the city or town. For this purpose the

state director of administration may require any information concerning the financial condition of

the city or town that the director may deem necessary for the proper exercise of that authority.

 

     45-12-14. Replacement of lost or destroyed bond or note -- Bond to indemnify town.

Replacement of lost or destroyed bond or note – Bond to indemnify city or town. --

Whenever the board is satisfied that any bond or note of the city or town has been lost or

destroyed, the board may upon payment to it by the owner or holder of the bond or note, of a sum

that it deems necessary to cover the actual expense involved and under such regulations and with

such restrictions that it may prescribe, order the city treasurer or town treasurer and/or other

officers of the city or town that the board may designate to issue a duplicate of the bond or note,

payable at the same time, bearing the same rate of interest as the lost or destroyed bond or note,

and marked as to show the number, if known, and date of the original bond or note. But no

duplicate shall be issued until the owner of the lost or destroyed bond or note gives to the city

treasurer or town treasurer a bond in double the amount of the lost or destroyed bond or note and

of the interest which would accrue until the principal is due and payable, with two (2) sufficient

sureties, both residents of the state, or with a surety company authorized to do business in this

state, approved by the board, conditioned to indemnify and save harmless the city or town from

any claim or demand on account of the lost or destroyed bond or note.

 

     45-12-18. Bond anticipation notes. -- A city or town, acting by resolution of its city

council or town council, after approval of the issue of bonds by vote of the qualified electors of

the city or town if approval is required, may authorize the issue from time to time of temporary

notes in anticipation of the issue of bonds authorized under section 45-12-2 or section 45-12-2.1.

Temporary notes Notes issued under this section shall be payable within three (3) 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 under this section, provided

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

same debt or the interest on that debt shall not exceed three (3) five (5) years. When temporary

debt is incurred under this section, the period within which the annual payments of principal of

bonds must be made under section 45-12-5 shall be measured from the date of the original note or

notes representing the temporary debt, but the annual payments need not commence earlier than

one year after the date of the bonds. The town or city 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. In

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

act shall continue, provided that:

     (1) the town council or city council passes a resolution evidencing the town’s or city’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 other note shall not exceed five (5)

years.

 

     45-12-19. Charter provisions as to referendum. -- The charter of any city or town may

provide that the issuance of bonds, notes or other evidences of indebtedness of the city or town be

by ordinance or by resolution after the issuance of the bonds, notes or other evidences of

indebtedness of the city or town have been authorized by general or special law. The charter may

provide that the ordinance or resolution becomes effective only upon approval by a majority of

electors voting thereon; provided, that the charter provision is inoperative and ineffective, and the

ordinance or resolution becomes effective without approval by the electors of the city or town,

whenever the general or special law which authorizes the issuance of the bonds, notes or other

evidences of indebtedness provides substantially that the general or special law becomes effective

upon acceptance or approval by the electors of the city or town; and provided, further, that the

charter provision shall be operative and effective as to this ordinance or resolution only whenever

the general or special law which authorizes the issuance of the bonds, notes or other evidences of

indebtedness has become effective without acceptance or approval by the electors of the city or

town, and contains no provision requiring the acceptance or approval of the electors of the city or

town as a prerequisite to the issuance of the bonds, notes or other evidences of indebtedness of

the city or town.

 

     45-12-20. Issuance of bonds authorized by law approved by electors. -- Whenever a

general or special law which authorizes the issuance of bond, notes or other evidences of

indebtedness has become effective upon acceptance or approval by the electors of a city or town,

such law shall be effective notwithstanding any failure or defect in the posting or notice of the

election therefor as required by law, including the city or town charter, and the city or town may

immediately issue bonds, notes or other evidences of indebtedness without further approval by

the electors of the city or town, by ordinance or by resolution if required by the charters of the

city or town, which ordinances or resolution shall become effective without approval by the

electors of the city or town as ordinances or resolutions generally become effective under the

charter of the city or town.

 

     45-12-26. Commercial agreements relating to registered bonds and notes. -- In

connection with the issuance by a city, town, or other political subdivision of this state of

original or replacement bonds or notes in registered form, the treasurer of the city, town, or other

political subdivision, with the approval of any other officers authorized to sign those bonds or

notes, is authorized to contract for and engage the services of any bank, trust company, or other

banking or financial institution within or without the state to perform authentication, registration,

transfer, exchange, record, and paying agent functions, and for the preparation, signing, and

issuance of checks in payment of those bonds or notes, the preparation and maintenance of

reports and accounts and the performance of related duties. The treasurer, with this approval, may

also enter into agreements with custodian banks, trust companies, or other financial institutions

and financial intermediaries and nominees of any of them in connection with the establishment

and maintenance by others of a central depository system for the transfer or pledge of those bonds

and notes. The agreements may provide for limitation of liabilities of the parties, indemnification,

or payment of liquidated damages, and shall include those provisions that the treasurer may deem

necessary or desirable to protect the city, town, or other political subdivision, including

provisions indemnifying it for losses sustained by it as the result of negligence of the other party

or parties or any breach of the duties imposed upon them under the agreement.

 

     45-12-28. Permitted temporary investments for bond proceeds. -- Notwithstanding

any contrary provision of general or special law, towns and cities may invest proceeds of any

bond or note available during the period before those proceeds are needed for the purpose for

which the bonds or notes were issued, in securities the interest of which is exempt from income

taxation by the United States of America, including bonds and notes issued by states and their

political subdivisions, and shares or interests in funds investing exclusively in those securities.

This section applies only to proceeds of bonds or notes issued after the town or city has adopted

an ordinance or resolution to use the investment authority provided by this section. The ordinance

or resolution may be general or limited to specific issues of bonds or notes, and may limit

investments described in section 35-10-11. A city council or town council may adopt an

ordinance or resolution limiting the permitted investments under this section 35-10-11 to

investments meeting specified standards of creditworthiness.

 

     45-12-29. Rebate to federal government. Agreements relating to tax compliance

rebate to federal government. -- Notwithstanding any contrary provision of general or special

law, cities, and towns and their agencies towns and other political subdivisions of this state may

enter into agreements to comply with federal tax laws and may rebate to the United States

treasury from available sources, any income from investments (including gains from the

disposition of investments) of proceeds of bonds or notes to the extent deemed necessary to

exempt (in whole or in part) the interest paid on the bonds or notes from federal income taxation.

The term of any such agreement may extend to a date six (6) years after the final maturity of the

bonds or notes to which the agreement relates.

 

     45-12-30. Securing of bonds or notes -- Trust agreements. -- (a) Bonds or notes issued

by a city or town may be secured in whole or in part by insurance or by letters or lines of credit or

other credit facilities. upon an approving resolution of the city or town council. This insurance,

letter, or line of credit or credit facility may provide for reimbursement to be made over period of

time, not to exceed two (2) years beyond the maturity date of the bonds or notes secured, as the

treasurer or director of finance deems proper, and may provide for reimbursement to be made and

any of these notes or bonds to be issued at a rate or rates of interest as the treasurer or director of

finance deems proper, including rates variable from time to time as determined by an index,

banker's loan rate, or other method that may be specified in the agreement or the bond or note.

Notwithstanding any contrary provision of law, bonds or notes secured as described in this

section may, in the discretion of the treasurer or director of finance, be subject to prepayment at

the option of the holder of these bonds or notes at times and prices and under circumstances that

the treasurer or director of finance specifies. For the purpose of securing bonds and notes, a city

or town, acting by its treasurer or director of finance, upon an approving resolution of the city or

town council, may enter into a trust agreement between the city or town and a corporate trustee

which shall be a bank or trust company doing business in the state. This trust agreement, and any

remarketing or other agreements necessary or incidental to the issuance of these bonds or notes,

shall be in any form deemed proper by the treasurer or director of finance of the city or town, and

shall be executed by its treasurer or director of finance and countersigned by its mayor or

president of the town council. It shall be lawful for any bank or trust company doing business in

the state to act as a depository or trustee under this trust agreement, and to furnish

indemnification and pledge securities that may be required by any city or town. Any trustee under

a trust agreement established pursuant to this section may bring suit upon the bonds or notes and

may, either at law or equity, by suit, action, mandamus, or other proceedings for legal or

equitable relief, enforce all rights under the laws of the state or granted under this section or under

the trust agreement, and may enforce and compel the performance of all duties required under the

trust agreement to be performed by the city or town or by any officer of the city or town. All

expenses incurred in carrying out the provisions of this section may be treated by the city or town

as a cost of issuance.

      (b) The powers granted in this section are in addition to and not in substitution for

authority previously granted or subsequently granted to cities and towns or officers on behalf of

cities and towns to set the terms, conditions, or details of any bonds or notes, including without

limitation, the provision of bond insurance.

 

     SECTION 2. Chapter 45-12 of the General Laws entitled "Indebtedness of Towns and

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

 

     45-12-2.1. Ministerial approval. – Effective January 1, 2008, a city or town shall have

authority to incur debt for money borrowed, through the issuance of bonds, if such application for

approval of bonds is approved by the auditor general as described below, as meeting all of the

following standards:

     (1) The city or town has a long-term unenhanced credit rating from one nationally

recognized credit rating agency in at least the “A” rating category without regard to gradations

within such category;

     (2) The city or town has represented in the application that the proposed bonds will

finance a capital asset or assets and the average useful life of the capital asset or assets to be

financed will be greater than or equal to the average maturity of the proposed borrowing as

determined by an appropriate official of the city or town at the time of the issuance of bonds

therefore under this section or notes therefore under section 45-12-18;

     (3) The city or town is in compliance with financial reporting requirements as set forth in

section 45-10-5 and is not subject to enforcement proceedings or remedies as provided for in 45-

12-22.7; and

     (4) The authorization for the issuance of such bonds has been approved by local

referendum at a general or special election or financial town meeting.

     The auditor general shall establish standards and rules for the submission of applications

for approval of bonds by cities and towns in accordance with this section. Upon the submission of

a complete application from a city or town, the auditor general shall within thirty (30) days

determine whether the standards set forth in this section have been met. If the standards have

been met, then the auditor general shall give approval to the application and the city or town shall

have the power under law to issue bonds, provided it is otherwise lawful; if the auditor general

finds that the borrowing does not meet said standards, the city or town shall be notified that the

certification standards have not been met, which notification shall state the standards that were

and were not met, and if otherwise required, the city or town shall seek special statutory authority

as provided in section 45-12-2. No ministerial approval pursuant to this section shall be given by

the auditor general for tax year synchronization bonds, pension obligation bonds or bonds to fund

other post employment benefits. The auditor general shall submit a copy of each approval and

each notification that approval has been denied within five (5) business days after issuance to the

director of administration and the chairpersons of the house committees on corporations and

finance and the chairpersons of the senate committees on housing and municipal government and

finance.

 

     45-12-4.5. Relationship to charters. – Any city or town is authorized to issue debt by

resolution under and in accordance with the procedures of sections 45-12-4, 45-12-4.1, 45-12-4.2,

45-12-4.3, 45-12-4.4 and 45-12-5.2 notwithstanding any provision of its charter to the contrary.

 

     45-12-31. Extinguishment of authorizations. – All or any portion of the authority to

issue bonds pursuant to a resolution or ordinance passed by a city or town council or pursuant to a

special act passed by the general assembly may be extinguished by ordinance of the city or town

council, without further action by the general assembly, after seven (7) years have passed from

the date the resolution, ordinance or special act was passed.

 

     SECTION 3. Section 44-5-22 of the General Laws in Chapter 44-5 entitled "Levy and

Assessment of Local Taxes" is hereby amended to read as follows:

 

     44-5-22. Certification of tax roll. -- The tax levy shall be applied to the assessment roll

and the resulting tax roll certified by the assessors to the city or town clerk, city or town treasurer,

or tax collector, as the case may be., not later than the next succeeding June 15. Thereafter, but in

any event prior to June 30 succeeding the certification, Thereafter, the assessor shall cause to be

published in a newspaper of general circulation within the city or town the rate of tax and the

percentage of fair market value employed in assessing the tax on manufacturer's machinery and

equipment.

 

     SECTION 4. Sections 45-12-5.5, 45-12-10 and 45-12-24 of the General Laws in Chapter

45-12 entitled "Indebtedness of Towns and Cities" are hereby repealed.

 

     45-12-5.5. Political subdivisions with a population greater than 125,000 inhabitants -

- Variable rate obligations and interest exchange agreements. -- (a) In connection with the

issuance of duly authorized bonds or notes of a political subdivision with population greater than

one hundred twenty-five thousand (125,00) inhabitants, notwithstanding any other authority to

the contrary, such bonds or notes may be issued in the form of variable rate obligations, so-called.

In connection therewith, a political subdivision with population greater than one hundred twenty-

five thousand (125,000) inhabitants, acting through its chief financial officer, may enter into

agreements with banks, trust companies or other financial institutions within or without the state,

whether in the form of letters or lines of credit, liquidity facilities, insurance or other support

arrangements. Any debt issued as variable rate obligations shall bear such terms as the chief

financial officer of the political subdivision shall determine, including provisions for prepayment

at any time with or without premium at the option of a political subdivision with population

greater than one hundred twenty-five thousand (125,000) inhabitants, may be sold at a premium

or discount, and may bear interest or not and if interest bearing, may bear interest at such rate or

rates variable from time to time as determined by such index, banking loan rate or other method

specified in any such agreement. Any such agreement may also include such other covenants and

provisions for protecting the rights, security and remedy of the lenders as may, in the discretion of

the chief financial officer of the political subdivision, be reasonable and proper and not in

violation of law. The chief financial officer of the political subdivision may also enter into

agreements with brokers for the placement or marketing of any such debt or notes of a political

subdivision with population greater than one hundred twenty-five thousand (125,000) inhabitants

issued as variable rate obligations.

      (b) In addition, the chief financial officer of the political subdivision, with the approval

of the mayor, or city or town manager, as applicable, may from time to time, enter into and

amend interest rate exchange agreements including, but not limited to, interest rate "caps,"

"floors," "collars," or "swaps" that the chief financial officer of the political subdivision

determines to be necessary or desirable for the purpose of generating savings, managing an

interest rate, or similar risk that arises in connection with, or subsequent to or is incidental to the

issuance, carrying or securing of variable rate obligations, fixed rate bonds or fixed rate

obligations. Such interest rate exchange agreements entered into by a political subdivision with

population greater than one hundred twenty-five thousand (125,000) inhabitants shall contain

such provisions, including payment, term, security, default and remedy provisions, and shall be

with such parties, as the chief financial officer of the political subdivision shall determine to be

necessary or desirable after due consideration to the creditworthiness of those parties.

 

     45-12-10. Substitution of legal coin or currency for payment in gold. -- Whenever

authority already granted any city or town by any act to issue bonds provides that the bonds shall

be payable in gold coin of the United States of the then present standard of weight and fineness,

and the bonds have not been issued, authority is conferred on the cities and towns to provide

when the bonds are issued that they shall be payable in any coin or currency of the United States

of America which, at the time of payment, is legal tender for public and private debts, and to this

extent the authority for the issuance of bonds conforming with the other requirements of that act

is amended and modified.

 

     45-12-24. Debt maturity. -- Notwithstanding any contrary provisions of general or

special law enacted prior to January 1, 1982, all bonds or serial notes of any city, town, or other

political subdivision may mature in annual installments of principal each of which either (1) does

not exceed any prior installment by more than eight percent (8%) of the total principal amount of

the issue, or (2) is not less than the quotient which results from dividing the total principal amount

of the bond or note issue by the maximum number of years for which the bonds or notes may be

issued under applicable law. All bonds of a particular issue may be issued in the form of serial

bonds or term bonds or a combination of these bonds, and the annual installments of principal

required by this section may be provided for either by maturity of principal in the case of serial

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

 

     SECTION 5. Section 45-27-4 of the General Laws in Chapter 45-27 entitled "Housing

Authority Bonds and Obligations" is hereby repealed.

 

     45-27-4. Sale of bonds -- Notice. -- The bonds may be sold at public sale held after

notice has been published at least once ten (10) days prior to the sale in a newspaper having a

general circulation in the city or town in which the authority is located and in a financial

newspaper published in the city of Boston, Massachusetts, or in the city of New York, New York;

provided, that the bonds may be sold to the federal government at private sale without any public

advertisement. Bonds issued for a term of not more than one year from their date are excepted

from the requirement of this section for public advertisement, and may be sold at public or private

sale. The bonds may be sold at a price or prices that the authority determines.

 

     SECTION 6. This act shall take effect upon passage.

     

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LC00481/SUB B/2

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