Title 45
Towns and Cities

Chapter 12
Indebtedness of Towns and Cities

§ 45-12-5.4. Cities or towns 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, notes or other obligations of a city or town with a population greater than one hundred twenty-five thousand (125,000) inhabitants, notwithstanding any other authority to the contrary, such bonds, notes or other obligations may be issued in the form of variable rate obligations, so-called. In connection therewith, any such city or town, acting through its finance director or 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 bonds, notes or other obligations issued as variable rate obligations shall bear such terms as may be fixed by the vote or resolution of the city or town authorizing the bonds, notes or other obligations, or in absence of foregoing such terms as the finance director or treasurer shall determine, including provisions for prepayment at any time with or without premium at the option of the city or town, 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 finance director or treasurer, be reasonable and proper and not in violation of law. The finance director or treasurer of the city or town may also enter into agreements with brokers for the placement or marketing of any such bonds, notes or other obligations issued as variable rate obligations.

(b) In addition, the finance director or treasurer of a city or town with a population greater than one hundred twenty-five thousand (125,000) inhabitants, with the approval of the city or town council, 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 finance director or treasurer 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 shall contain such provisions, including payment, term, security, default and remedy provisions, and shall be with such parties, as the finance director or treasurer shall determine to be necessary or desirable after due consideration to the creditworthiness of those parties. Any municipal public buildings authority established pursuant to title 45, chapter 50 of the general laws and any redevelopment agency operating pursuant to title 45, chapter 31 of the general laws, which public buildings authority or redevelopment agency has been established by a city or town with a population greater than one hundred twenty-five thousand (125,000) inhabitants, shall also have the authority to enter into interest rate exchange agreements as set forth in this paragraph.