LA 057

2020 -- H 8039 Enacted 07/25/2020

A N   A C T

AUTHORIZING THE CITY OF CRANSTON TO ISSUE NOT TO EXCEED $147,000,000 GENERAL OBLIGATION BONDS, NOTES AND OTHER EVIDENCES OF INDEBTEDNESS TO FINANCE THE CONSTRUCTION, RENOVATION, IMPROVEMENT, ALTERATION, REPAIR, LANDSCAPING, FURNISHING AND EQUIPPING OF SCHOOLS AND SCHOOL FACILITIES THROUGHOUT THE CITY, SUBJECT TO APPROVAL OF STATE HOUSING AID AT A REIMBURSEMENT RATE OR STATE SHARE RATIO OF NOT LESS THAN 50% AT THE TIME OF ISSUANCE AND PROVIDED THAT THE AUTHORIZATION SHALL BE REDUCED BY THE AMOUNT OF CERTAIN GRANTS RECEIVED FROM STATE BOND PROCEEDS, FROM THE RHODE ISLAND DEPARTMENT OF EDUCATION OR FROM THE RHODE ISLAND SCHOOL BUILDING AUTHORITY

Introduced By: Representatives Mattiello, Lima, Millea, and Handy

Date Introduced: June 18, 2020

It is enacted by the General Assembly as follows:

SECTION 1. The city of Cranston is hereby authorized, in addition to authority previously

granted, to issue bonds and other evidences of indebtedness (hereinafter “bonds”) up to an amount

not exceeding one hundred forty-seven million dollars ($147,000,000) from time to time under its

corporate name and seal or a facsimile of such 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 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 sinking

fund installments 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

date of the 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. 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, charter 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.

SECTION 2. The city 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 from

proceeds of bonds ‎issued by the state of Rhode Island (the “state”), ‎from the Rhode Island

Department of ‎Education (“RIDE”) or from the Rhode Island School Building Authority. The

amount of ‎borrowing authorized ‎pursuant to this act shall be reduced by the amount of certain

grants actually ‎received by the city from state bond proceeds, from RIDE or from the Rhode Island

School ‎Building Authority; provided however, that the amount of borrowing authorized shall not

be reduced by the amount of any grant received by the city for any portion of the projects funded

by capital reserve funds. Bonds, notes or other evidences of indebtedness shall not be issued

under ‎this act unless the city has received a letter from 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 debt ‎service for those expenditures which are eligible for state aid.‎

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

facsimile signature of the mayor and be issued and sold in such amounts as the city council may

determine by resolution or order. 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 city council authorizing the issue or by separate resolution or order of the city

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 city 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 bonds or notes issued in connection with such financing agreements, if any, the city

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 city 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 bonds

or notes issued in connection with such financing agreements, if any, the city 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 city council authorizing such issuance or by separate resolution

or order of the city 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, landscaping, furnishing and equipping of schools and school facilities throughout

the city of Cranston and all costs related thereto (the “projects”); (2) In payment of the principal of

or interest on temporary notes issued under section 4; (3) In repayment of advances under section

5; (4) In payment of related costs of issuance of any bonds or notes; and/or (5) In payment of

capitalized interest during construction of the projects. 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

sale thereof. The proceeds of bonds or notes issued under this act, any applicable federal or state

assistance and the other monies referred to in sections 7 and 10 shall be deemed appropriated for

the purposes of this act without further action than that required by this act. The bonds authorized

by this act may be consolidated for the purpose of issuance and sale with any other bonds of the

city 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 city council may by resolution or order authorize the issuance from time

to time of interest bearing or discounted notes in anticipation of the issue of bonds under section 3

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 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 hereunder, 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 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 the paying agent for the notes being refunded.

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

benefit of the city by the paying agent at the direction of the director of finance in any investment

permitted under section 6. The monies in the fund and any investments 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 monies in the fund shall be distributed to the city. The 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 pursuant to section 1 hereof. In such case, the city's authority to issue

bonds or notes in anticipation of bonds under this act shall continue provided that: (1) The city

council passes a resolution or order evidencing the 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 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

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

general treasury of the city to the purposes specified in section 3, 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 or order of the city council or pursuant to

an investment policy of the city.

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, to the extent permitted by applicable federal laws, any net earnings

or profits 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 projects, to the

payment of the principal of or interest on bonds or notes issued hereunder, to the revenues of the

city and dealt with as part of the revenues of the city from property taxes to the extent permitted by

federal law, 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 premium and accrued interest or from other monies 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 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 city from

property taxes. In exercising any discretion under this section, the director of finance shall be

governed by any instructions adopted by resolution or order of the city council.

SECTION 8. All bonds and notes issued under this act and the debt evidenced hereby shall

be obligatory on the city 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 and any provision of the city

charter. No such obligation shall at any time be included in the debt of the city for the purpose of

ascertaining its borrowing capacity. The city 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 monies 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 provisions of law to the contrary, all taxable property in the city shall be

subject to ad valorem taxation by the city without limitation as to rate or amount.

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

executed by the officers of the city 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 city, acting by resolution or order of its city council is authorized to

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

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

monies 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 a cost of the projects under section 3.

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 validity of bonds and notes

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

SECTION 12. The director of finance and the mayor, on behalf of the city are hereby

authorized to execute such instruments, 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 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 13. All or any portion of the authorized but unissued authority to issue bonds

and notes under this act may be extinguished by resolution or order of the city council, without

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

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

the city at the general election to be held on November 3, 2020 or, if so determined by the city

council, at a special city-wide election, other than a primary, held on a date to be determined by

resolution or order of the city council. The question shall be submitted in substantially the following

form: "Shall an act passed at the 2020 session of the general assembly entitled 'AN ACT

AUTHORIZING THE CITY OF CRANSTON TO ISSUE NOT TO EXCEED $147,000,000

GENERAL OBLIGATION BONDS, NOTES AND OTHER EVIDENCES OF INDEBTEDNESS

TO FINANCE THE CONSTRUCTION, RENOVATION, IMPROVEMENT, ALTERATION,

REPAIR, LANDSCAPING, FURNISHING AND EQUIPPING OF SCHOOLS AND SCHOOL

FACILITIES THROUGHOUT THE CITY, SUBJECT TO APPROVAL OF STATE HOUSING

AID AT A REIMBURSEMENT RATE OR STATE SHARE RATIO OF NOT LESS THAN 50%

AT THE TIME OF ISSUANCE AND PROVIDED THAT THE AUTHORIZATION SHALL BE

REDUCED BY THE AMOUNT OF CERTAIN GRANTS RECEIVED FROM STATE BOND

PROCEEDS, FROM THE RHODE ISLAND DEPARTMENT OF EDUCATION OR FROM THE

RHODE ISLAND SCHOOL BUILDING AUTHORITY' 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 city 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. To

the extent of any inconsistency between this act and the city charter or any law of special

applicability to the city, this act shall prevail.

SECTION 15. 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 aid reimbursement pursuant to § 16-7-44

unless the school projects described herein have been approved by RIDE.

SECTION 16. This Section and Sections 14 and 15 shall take effect upon passage. The

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

the question at the election prescribed by section 14.

========

LC005446

========