It is enacted by the General Assembly as follows
SECTION 1. Chapter 8 of the general laws in title 35 entitled "Bonded Indebtedness of State" is amended by adding the following sections:
{ADD 35-8-26. Refunding bonds. -- ADD} {ADD When bonds or notes have been issued as provided in this chapter, the general treasurer shall be authorized and empowered hereby, with the approval of the governor and in accordance with this chapter, to issue, from time to time, refunding bonds or notes of the state to refund any of such outstanding bonds or notes as may be specified from time to time by the governor provided that the outstanding amount of debt on account of any project shall not be increased thereby to an amount in excess of the amount approved for such project by the people.
If the people shall have approved the issuance of refunding bonds or notes, at the election at which the incurring of debt for the respective project or projects was approved or as a separate approval at another time, the proceeds of the refunding bonds or notes, exclusive of any premium or accrued interest thereon, shall upon receipt be applied to retire the bonds or notes being refunded or shall be deposited by the general treasurer with an escrow agent, which may be the paying agent for the bonds being refunded, in trust for application to payment of such bonds or notes at maturity or upon earlier call. Such escrowed amounts shall be invested for the benefit of the owners of the refunded bonds or notes and shall be invested only in direct or guaranteed obligations of the United States of America or the state of Rhode Island. Money held in escrow, together with the earnings thereon, shall be applied to any principal, interest and early redemption premiums, if any, to the owners of the refunded bonds or notes, in accordance with the instructions of the general treasurer included in the terms of the escrow. An amount of bonds or notes being refunded, which is the largest amount of such bonds or notes for which the escrowed deposit will provide sufficient funds to pay all principal, interest and early redemption premiums, if any, when due, will be considered no longer outstanding and not debts of the state for the purpose of determining the amount of debt outstanding for the respective project or projects from and after the deposit of funds into escrow.
If the people have not approved the issuance of refunding bonds or notes as aforesaid, the general treasurer may nevertheless issue refunding bonds or notes as provided herein for the purpose of paying or refunding all or any portion of an issue of bonds or notes then outstanding, including the amount of any redemption premium and costs of issuance related thereto; provided, however, that no such refunding bonds shall be payable over a period longer than the period during which the original bonds or notes so refunded must be paid pursuant to law, and provided further that the present value of the principal and interest payments due on refunding bonds issued under this section shall not exceed the present value of the principal and interest payments to be paid by the state on account of bonds or notes to be refunded. ADD}
{ADD 35-8-27. Variable rate obligations. -- ADD} {ADD In connection with the issuance of duly authorized bonds or notes of the state, 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, the state, acting through the general treasurer, 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 general treasurer shall determine, including provisions for prepayment at any time with or without premium at the option of the state, 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 general treasurer, be reasonable and proper and not in violation of law. The general treasurer may also enter into agreements with brokers for the placement or marketing of any such debt or notes of the state issued as variable rate obligations.
In addition, the general treasurer, with the approval of the governor, may from time to time, enter into and amend interest rate exchange agreements specifically, known as interest rate "caps", "floors", or "collars", that the general treasurer determines to be necessary or desirable for the purpose of managing an interest rate, or similar risk that arises in connection with, or is incidental to the issuance, carrying or securing of such variable rate obligations. Such interest rate exchange entered into by the state shall contain such provisions, including payment, term, security, default and remedy provisions, and shall be with such parties, as the general treasurer shall determine to be necessary or desirable after due consideration to the creditworthiness of those parties. ADD}
SECTION 2. Severability. If any provision of this act or the application to any person or circumstances is held invalid, such invalidity shall not affect other provisions or applications of the act, which can be given effect without the invalid provisions or application, and to this end the provisions of this act are declared to be severable.
SECTION 3. This act shall take effect upon passage.
