Chapter 490
2004 -- H 8260
Enacted 07/07/04
A N A C T
RELATING
TO THE INDEBTEDNESS OF TOWNS AND CITIES
Introduced
By: Representatives Moura, and Slater
Date
Introduced: March 09, 2004
It
is enacted by the General Assembly as follows:
SECTION
1. Chapter 45-12 of the General Laws entitled "Indebtedness of Towns and
Cities"
is hereby amended by adding thereto the following section:
45-12-5.4.
Variable rate obligations and interest rate exchange agreements. – 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.
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.
SECTION
2. This act shall take effect on July 1, 2004.
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LC01513
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