Title 35
Public Finance

Chapter 8.1
Refunding Bond Authority

§ 35-8.1-13. Bonds of the authority — Issuance — Purposes.

(a) The authority shall have the power and is authorized to provide by resolution for the issuance of bonds upon the request of the governor and a finding of a financial benefit to the state, in such principal amounts as it shall deem necessary to provide funds for the purposes of:

(1) Loaning money to the state to provide funds to pay, redeem, or retire:

(i) All or a part of the 1984 and 1985 bonds; or

(ii) A portion of the unfunded liability of the state retirement system not to exceed three hundred million dollars ($300,000,000); provided, that the authority conferred hereby, as it relates to the refunded liability of the state retirement system, shall expire on June 30, 1995;

(2) Funding or refunding the principal of, or interest or redemption premium on, any bonds issued by it, whether the bonds or interest to be paid, funded, or refunded have or have not become due or are subject to redemption prior to maturity in accordance with their terms;

(3) Establishing or increasing reserves to secure or to pay such bonds or interest thereon as are reasonably required and permitted by law; and

(4) Paying all other costs or expenses of the authority incident to and necessary or convenient to carry out its purposes and powers.

(b) In the event that the authority issues refunding bonds pursuant to subsection (a)(2), the proceeds of the refunding bonds may be applied, in the discretion of the authority, to the purchase, retirement at maturity, or redemption of the outstanding bonds either at their earliest or a subsequent redemption date, and may, pending that application, be placed in escrow with a suitable trustee. While the proceeds are held in trust, they may be invested in obligations of the United States or the state or any other state.

(c) If the authority shall deposit the proceeds of refunding bonds with a suitable trustee in such an amount that, when invested in and combined with income expected to be derived from obligations of the United States or the state or any other state, are sufficient to pay all principal, interest, and premium, if any, on any of its outstanding bonds, then, until the outstanding bonds are called for prepayment or otherwise paid, the outstanding bonds shall not be considered debts of the authority, for any purpose, from the date of deposit of the moneys with the trustee.

(d) Notwithstanding the provisions of subsections (a) — (c) above, (1) with the consent of both the governor and the general assembly the authority is hereby authorized to provide by resolution for the issuance, at one time or from time to time, of revenue bonds of the authority for the purpose of paying all or a part of the cost of any one or more projects, the construction or acquisition of which is authorized by this chapter. The principal of and the interest on the bonds shall be payable solely from the funds herein provided for the payment. The bonds of each issue pursuant to this subsection shall be dated, shall bear interest at such rate or rates as the authority shall determine, payable semi-annually, shall mature at such time or times not exceeding forty (40) years from their date or dates, as may be determined by the authority, and may be made redeemable before maturity, at the option of the authority, at such price or prices and under such terms and conditions as may be fixed by the authority prior to the issuance of the bonds. The authority shall determine the form of the bonds, including any interest coupons to be attached thereto, and shall fix the denomination or denominations of the bonds and the place or places of payment of the principal and interest, which may be at any bank or trust company within or without the state. The bonds shall be signed by the chairperson of the authority or shall bear his or her facsimile signature, and the official seal of the authority or a facsimile thereof shall be impressed or imprinted thereon and attested by the secretary of the authority, and any coupons attached to the bonds shall bear the facsimile signature of the chairperson of the authority. In case any officer whose signature or facsimile of whose signature shall appear on any bonds or coupons shall cease to be an officer before the delivery of the bonds, the signature or the facsimile shall nevertheless be valid and, sufficient for all purposes, the same as if he or she had remained in office until the delivery. The bonds may be issued in coupon or in registered form, or both, as the authority may determine, and provision may be made for the registration of any coupon bonds as to principal alone and also as to both principal and interest, for the reconversion into coupon bonds of any bonds registered as to both principal and interest and for the interchange of registered and coupon bonds. The authority may sell such bonds in such manner, either at public or private sale, and for such price, as it may determine will best effect the purposes of this chapter.

(2) The proceeds of the bonds issued pursuant to subsection (d) shall be used solely for the payment of the cost of the project or projects for which the bonds shall have been issued, and shall be disbursed in such manner and under such restrictions, if any, as the authority may provide in the resolution authorizing the issuance of the bonds or in the trust agreement hereinafter mentioned securing the same. If the proceeds of the bonds of any issue shall exceed the cost, the surplus shall be deposited to the credit of the sinking fund for the bonds or may be applied to the payment of the cost of any project thereafter financed under the provisions of subsection (d).

(3) Prior to the preparation of definitive bonds, the authority may, under like restrictions, issue interim receipts or temporary bonds, with or without coupons, exchangeable for definitive bonds when the bonds shall have been executed and are available for delivery. The authority may also provide for the replacement of any bonds which shall become mutilated or shall be destroyed or lost. Bonds may be issued under the provisions of this subsection without obtaining the consent of any department, division, commission, board, bureau, or agency of the state, and without any other proceedings or the happening of any other conditions or things than those proceedings, conditions or things which are specifically required by this chapter.

(4) In the discretion of the authority, any bonds issued under the provisions of this chapter may be secured by a trust agreement by and between the authority and a corporate trustee, which may be any trust company or bank having the powers of a trust company within or without the state. The trust agreement or the resolution providing for the issuance of the bonds may pledge or assign the revenues to be received and may convey or mortgage any project or any part thereof or any combination of projects or parts hereof. The trust agreement or resolution providing for the issuance of the bonds may contain such provisions for protecting and enforcing the rights and remedies of the bondholders or noteholders as may be reasonable and proper and not in violation of the law, including covenants setting forth the duties of the authority in relation to the acquisition of property and the construction, improvement, maintenance, repair, operation, and insurance of the project or projects in connection with which the bonds shall have been authorized, the custody, safeguarding, and application of all moneys, and conditions or limitations with respect to the issuance of additional bonds. It shall be lawful for any bank or trust company incorporated under the laws of the state which may act as depository of the proceeds of bonds or of revenues to furnish such indemnifying bonds or to pledge such securities as may be required by the authority. The trust agreement may set forth the rights and remedies of the bondholders and of the trustee, and may restrict the individual right of action by bondholders. In addition to the foregoing, the trust agreement or resolution may contain such other provisions as the authority may deem reasonable and proper for the security of the bondholders. All expenses incurred in carrying out the provisions of the trust agreement or resolution may be treated as a part of the authority’s cost of operation and maintenance.

(5) The authority is hereby authorized to provide for the issuance of refunding bonds of the authority for the purpose of refunding any bonds then outstanding which shall have been issued under the provisions of this subsection, including the payment of any redemption premium thereon or any interest accrued or to accrue to the earliest or subsequent date of redemption purchase or maturity of the bonds. The proceeds of bonds or notes issued for the purpose of refunding outstanding bonds or notes may be applied, in the discretion of the authority, to the purchase, retirement at maturity, or redemption of the outstanding bonds or notes either on their earliest or a subsequent redemption date, and may, pending the application, be placed in escrow. Any escrowed proceeds may be invested and reinvested in obligations of or guaranteed by the United States of America, or in certificates of deposit, time deposits, or repurchase agreements fully secured or guaranteed by the state or the United States, or an instrumentality of either, maturing at such time or times as shall be appropriate to assure the prompt payment, as to principal, interest, and redemption premium, if any, of the outstanding bonds and notes to be so refunded. The interest, income and profits, if any, earned or realized on any investment may also be applied to the payment of the outstanding bonds or notes to be so refunded. After the terms of the escrow have been fully satisfied and carried out, any balance of the proceeds and interest, income and profits, if any, earned or realized on the investments thereof may be returned to the authority for use by it in furtherance of its purposes. The issuance of the bonds, the maturities and other details thereof, the rights of the holders thereof, and the rights, duties, and obligations of the authority in respect of the same shall be governed by the provisions of this chapter insofar as the same may be applicable.