Chapter
292
2007 -- H 5425 SUBSTITUTE A
Enacted 07/06/07
A N A C T
RELATING
TO INDEBTEDNESS OF TOWNS AND CITIES
Introduced
By: Representatives Kennedy, Lewiss, Church, Corvese, and Gallison
Date
Introduced: February 13, 2007
It is enacted by the General Assembly as
follows:
SECTION 1.
Sections 45-12-1, 45-12-2, 45-12-3, 45-12-4, 45-12-4.1, 45-12-4.2, 45-12-
4.3, 45-12-5, 45-12-5.1, 45-12-5.2, 45-12-5.3,
45-12-11, 45-12-14, 45-12-18, 45-12-19, 45-12-20,
45-12-26, 45-12-28, 45-12-29 and 45-12-30 of the
General Laws in Chapter 45-12 entitled
"Indebtedness of Towns and Cities" are
hereby amended to read as follows:
45-12-1.
Payment of indebtedness. -- The outstanding notes, bonds, and contracts
of
cities and towns shall be paid and fulfilled
according to their tenor, and all public works now
authorized to be prosecuted shall be prosecuted,
and all indebtedness now authorized to be
incurred on account thereof may be incurred,
according to the tenor of the authority therefore.
The power and obligation of each city and town
to pay its general obligation bonds and notes,
whether or not issued pursuant to this chapter,
shall be unlimited, and each city and town shall
levy ad valorem taxes upon all the taxable
property within the city or town for the payment of the
general obligation bonds or notes and interest
on these bonds or notes, without limitation of rate
or amount, except as otherwise provided by or
pursuant to law. The faith and credit of each city
and town shall be pledged for the payment of the
principal of, premium and the interest on, all
general obligation bonds and notes of the city
or town whether or not the pledge is stated in the
bonds or notes, or in the proceedings
authorizing their issue. Each city and town shall annually
appropriate a sum sufficient to pay the
principal, premium and interest coming due within the
year on all its general obligation bonds and
notes to the extent that moneys for the general
obligation bonds and notes are not otherwise
provided. If that sum is not appropriated, it shall
nevertheless be added to the annual tax levy.
45-12-2.
Maximum aggregate indebtedness. – Except as provided in section
45-12-11,
no city or town shall, without special statutory
authority, or ministerial approval as provided for
in section 45-12-2.1 incur any debt for
money hired borrowed which would increase its aggregate
outstanding principal indebtedness not
excepted by law from the provisions of this section to an
amount greater than three percent (3%) of the full
assessed value of the taxable property of
within the city or town, but the amount of any
borrowing in anticipation of taxes which is
authorized or validated by section 45-12-4, and
the amount of any sinking fund, fund held on
account to pay such outstanding indebtedness shall be deducted in
computing that indebtedness.
In computing the value of taxable property for
purposes of this section motor vehicles and trailers
shall be valued at full value and without regard
to the assessed value reductions provided for in
section 44-34.1-1. Any city or town may,
without special statutory authority, hire money incur
debt to an aggregate amount, as with the other outstanding
indebtedness of the city or town not
deductible under the foregoing provisions, which
shall not exceed the limitation contained in this
section.
45-12-3.
Statements to accompany bills to general assembly to authorize
indebtedness. -- Whenever any bill is presented
to either house of the general assembly to
authorize any city or town to issue bonds or certificates
of other indebtedness, this every such bill
shall be accompanied by a petition resolution
or ordinance of the city or town council to the
general assembly stating the purpose for which
the proceeds from the sale of the bonds or
certificates of other
indebtedness are to be used, and this bill shall also be accompanied by a
financial statement of the city or town showing its
condition as of the close of the last preceding
fiscal year. The financial statements shall be
in the form prescribed by and upon blanks furnished
by the controller and duly attested by the
proper officers having the custody of the books of
account of the city or town.
45-12-4.
Borrowing in anticipation of taxes. -- Any city or town may hire
by resolution
of its city or town council may borrow money in each financial year
in anticipation of the receipt
of the proceeds of the annual tax due or to
become due in that financial year upon the ratable
taxable property within the city or town, an amount
which, together with any money borrowed in
anticipation of taxes in any prior year which
may remain unpaid, shall not exceed in the aggregate
the total tax levy of the then current financial
year, or which if no tax levy was made, shall not
exceed the tax levy of the next preceding
financial year, the money hired borrowed to be used and
expended for the payment of the current
liabilities and expenses of the city or town, and may
issue its negotiable notes therefore. Notes
issued under authority of this section shall bear upon
their face the notation "issued in
anticipation of taxes assessed as of December 31, ________ "
and shall be made payable not later than one
year from their date, but may be renewed refunded
or paid by the issue of new notes bearing the
notation and payable not later than one year from
the date of the original notes renewed or
paid. The outstanding notes of any city or town issued
prior to May 3, 1951 in anticipation of taxes of
the then current year are validated to the same
extent as if those notes had been expressly
authorized by act of the general assembly before their
issue, and are declared to be valid and binding obligations
of the city or town.
so refunded or
paid. The failure of a city or town to comply
with any time requirement or deadline imposed by
general law, special law or charter in relation
to the levy or assessment of taxes shall not affect
the validity of notes issued pursuant to this
section.
Every city and town hiring borrowing
money under the provisions of this section shall
assess and levy a tax in each financial year
sufficient to provide funds for the payment of
all outstanding notes previously issued in
anticipation of taxes of the preceding financial
year.
45-12-4.1.
Borrowing where collection of taxes delayed or taxes refunded. -- (a)
Notwithstanding any provision of section 45-12-4
to the contrary, the treasurer or finance director
of any city or town with the approval of the
mayor, administrator, or town council, whichever is
the appropriate approving authority, may issue a city or town by
resolution of its city council or
town council, may authorize the issue of notes of the city or
town in order to pay any outstanding
tax anticipation notes or other obligations of
the city or town which, in the judgment of the
treasurer or finance director, cannot be paid
when due from property tax revenues as a result of a
court order or decision which directly or
indirectly delays the collection of taxes by the city or
town, or which provides for the refunding of
taxes previously collected, or for any other reason.
Notes issued under this section are payable
within a period of time, not exceeding one year, that
is necessary, in the judgment of the treasurer
or finance director, for the city or town to receive
sufficient property tax revenue to pay them.
(b) Notes issued
under this section may be renewed refunded or paid by the issue
of
other similar notes. Notes issued under this
section shall be excepted from the operation of
section 45-12-4 and shall not be taken into
account for the purpose of determining the borrowing
capacity of the city or town under that section.
45-12-4.2.
Borrowing in anticipation of federal or state grants. -- A city or town
may
contract for and accept grants of federal or
state aid for any purpose for which it is authorized to
appropriate money. A city or town, by resolution
of its city council or town council, may
authorize the issue of notes in anticipation of
the receipt of federal or state aid; provided, that the
aid has been previously approved by the
appropriate federal or state agency. The proceeds of the
notes may be used only for the purpose for which
the aid is granted. The amount of original notes
issued under the provisions of this section may
not exceed the amount of available federal or state
aid as estimated by the director of finance or
treasurer and are payable within three (3) years from
their dates, but the principal of and interest
on notes issued for a shorter period may be renewed
refunded or paid from time to time by the issue of other
notes under the provisions of this section;
provided, that the period from the date of an
original note to the maturity of any note issued to
renew refund or pay the same debt or the
interest on that debt does not exceed three (3) years. To
the extent that the state or federal aid
actually received is insufficient to pay the principal and
interest on those notes, the city or town shall
appropriate a sum sufficient to make the payments.
45-12-4.3.
Borrowing in anticipation of water and sewer tax and user charge
revenue. -- Any city or town, by resolution
of its city or town council, may borrow authorize the
issuance of notes in any fiscal year in
anticipation of the receipt of water and sewer tax and user
charge revenues, and may issue notes for
these to an in a principal amount which, together with
any money borrowed in anticipation of these
revenues in any prior fiscal year that remains
unpaid, shall not exceed in the aggregate eighty
percent (80%) of the total amount of those
revenues due or expected to be received during
the fiscal year, as estimated by the director of
finance or treasurer. Notes issued under this
section are payable within one year from their dates
and may be renewed refunded;
provided, that the period from the date of an original note to the
maturity of any note issued to renew refund
the same debt does exceed one year.
45-12-5.
Sale of evidences of indebtedness -- Annual payments -- Terms. – (a)
A city
or town which has authorized the hiring borrowing
of money under the provisions of this chapter
may sell the bonds, notes, or other evidence of
the indebtedness authorized at public or private
sale, or may use these in payment of its debts. In
the case of a sale at discount, the discount shall
be treated as interest paid in advance. In the
case of any hiring under section 45-12-2 for a period
longer than one year, payment of principal shall
be by that annual payments that will extinguish
the debt at maturity, the first annual payments
to be made not later than one year, and the last
payment 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 serial redemption 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 dated
date of the original borrowing; provided, that the term of
any hiring to pay for a public work, improvement,
or equipment does not exceed the expected
useful life of the public work, improvement, or
equipment as determined by the town council or
city council. The denomination, maturity,
interest rate, method of sale, 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.
Annual installments of principal may be provided
for by maturity of principal in the case of serial
bonds or by mandatory serial redemption in the
case of term bonds. 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 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.
(b) The manner
of sale, denominations, maturities, interest rates and the uses of the
proceeds thereof (including, but not limited to,
the costs of issuance and capitalized interest) and
other terms, conditions, and details of any bond,
note, or hiring under the provisions of this
chapter bonds, notes or other evidence of
indebtedness issued under this section may be fixed by
the vote or resolution authorizing these, or
if no provision is made in the vote or resolution, by the
town or city council, or in absence of any of
the foregoing, by the treasurer or other officer
authorized to issue those bonds or notes or to
hire that money.
ordinance or resolution of the city
or town council authorizing the issue or by
separate resolution of the city or town 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, notes or other
evidence of indebtedness. The officers authorized to
sign the bonds, notes or other evidence of
indebtedness on behalf of the city or town are
authorized to execute such instruments,
documents or other papers as they deem necessary or
desirable to effectuate the issuance of the
bonds, notes or other evidence of indebtedness and are
also authorized to take all actions and execute
all documents or agreements necessary to comply
with federal tax and securities laws, including
rule 15c2-12 of the securities and exchange
commission or any similar rule or regulation now
or hereafter adopted by the securities and
exchange commission, which documents or
agreements may have a term coextensive with the
maturity of the bonds, notes or other evidence
of indebtedness authorized hereby and to execute
and deliver a continuing disclosure agreement or
certificate in connection with the bonds, notes or
other evidence of indebtedness.
(c) Pending any
authorization or issue of bonds hereunder or pending or in lieu of any
authorization or issue of notes hereunder, the
city or town council, to the extent that bonds or
notes may be issued hereunder, may, by
resolution apply funds in the treasury of the city or town
to the purposes for which bonds or notes will be
issued, 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.
(d) 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 premium arising from the sale of
bonds or notes hereunder shall, in the
discretion of the finance director or treasurer, be applied to
the cost of preparing, issuing and marketing bonds
or notes hereunder to the extent not otherwise
provided, to the payment of project costs, to
the payment of the principal of or interest on bonds
or notes issued hereunder 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 finance director or
treasurer, be met from bond or note proceeds
exclusive of premium and accrued interest or from
other moneys available therefor. Any balance of bond
or note proceeds remaining after payment
of the cost of the project 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 may,
upon receipt, be added to and dealt with as part of
the revenues of the city or town from property
taxes. In exercising any discretion under this
section, the finance director or treasurer shall
be governed by any instructions adopted by
resolution of the city or town council.
45-12-5.1.
Callable bonds. -- (a) Bonds issued by any cities, towns or other
political
subdivision subdivisions of this state may be
issued subject to call and prepayment prior to their
stated maturities at the option of the issuer.
All, or less than all, of the bonds comprising an issue
may be subject to call simultaneously or from
time to time. ; provided, that:
(1) No bond
may be called for less than its face amount; and
(2) No bond
may be called unless all bonds of the same issue with later maturities are
also called at the same time or have been
previously called.
(b) A premium
may be paid in connection with the prepayment of any bond, but no
premium payable on any particular date shall be
larger than the premium payable on the
prepayment of the bond at an earlier date. No
bond, whether in bearer or registered form, shall be
issued subject to prepayment on less than
fifteen (15) days' notice published at least once in a
daily newspaper of general circulation in Rhode
Island and in a nationally distributed newspaper
devoted primarily to financial or investment information,
except that any bondholder may waive
any defect in the notice of prepayment given
with respect to his or her bond.
(c) (b)
Every bond issued subject to prepayment shall, by appropriate statements on
its
face, indicate:
(1) That the bond
is subject to call and prepayment;
(2) The time or
times at which the bond may be prepaid;
(3) The schedule
of premiums, if any, which are payable; and
(4) The time and
type of notice which must be given by the issuer before the bond can be
prepaid.; and
(5) That the
bond will not bear interest from and after the date on which it is payable as
the result of being called.
(d) (c)
The coupons, if any, attached to the bonds shall, as appropriate, indicate that
they
may become void as a result of the bond being
called for prepayment. Unless otherwise provided
in the proceedings authorizing the issue of
bonds, the officers of the city, town or other political
subdivision authorized to sell the bonds shall
determine whether the bonds shall be issued subject
to call and prepayment, and if issued, the
officers shall decide the details of these bonds. No bond
shall be called for prepayment, unless the
issuer has deposited with the paying agent or agents for
the bond prior to the giving of notice of the
call of the bond for prepayment a sufficient amount of
cash, or securities issued by the United States
of America, the state of Rhode Island, or its
political subdivisions, with maturities and
interest rates adequate to provide a sufficient amount of
cash, to pay the bond in full on the date on
which it is prepayable. The notice may state: (1) that
it is conditioned on the deposit of moneys, in
an amount necessary to effect the redemption with
the paying agent or agents no later than the
redemption date; and/or (2) that the city, town or
political subdivision retains the right to
rescind such notice on or prior to the scheduled
redemption date, and such notice and optional redemption
shall be of no effect if such monies are
not so deposited or if the notice is rescinded. Bonds may be prepaid
with the proceeds of
refunding bonds as provided in the following
section, or with other funds available for that
purpose; and cities, towns and other
political subdivisions may raise money by taxation for the
purpose of prepaying bonds. For the purposes of
this section "bond" shall include note. The
powers conferred by this section may be used
with regard to bonds authorized for any purpose by
any general, special, or other law, including
section 45-12-5.2.
45-12-5.2.
Issuance of refunding bonds to pay outstanding bonds. -- (a) Any city,
town or political subdivision of this state may
issue refunding bonds in order to pay all or any
designated part of an issue of outstanding
bonds, including principal, redemption premium, if
any, interest on the outstanding bonds coming
due on or prior to the date on which those bonds
are to be redeemed, and the costs of issuing the
refunding bonds.
(b) No bonds
shall be issued under this section, however, more than six (6) months prior
to the date on which the outstanding bonds are
to be redeemed, unless the proceedings
authorizing the refunding bonds include or
incorporate specific findings to the effect that the
refunding will result in a financial benefit to
the political subdivision.
(c) The
authorization and issue of refunding bonds is subject to the same requirements
and provisions of law as would then be
applicable to the authorization and issue of the bonds
being refunded. Refunding bonds
shall be authorized by ordinance or resolution of the town
council or city council. The proceedings
authorizing the issue of refunding bonds shall contain a
general description of the bonds which are to be
refunded.
(d)
Notwithstanding any provision of any municipal charter to the contrary,
refunding
bonds may be sold at public or private sale, and
may provide for annual or more frequent equal,
diminishing, or increasing installments of
principal and deferral of the first installment of
principal to the extent permitted by section
45-12-24 or by the special or general law applicable to
the bonds being refunded. In all other respects,
refunding bonds shall be payable in amounts and
at times that are neither less nor later than
the minimum payment required by law for not later
than the last date that could have been the
final maturity date of the bonds being refunded.
(e) The proceeds
of refunding bonds, exclusive of costs of issuance any premium and
accrued interest shall, upon their receipt, be
paid immediately to the paying agent for the bonds
which are to be refunded, and that paying agent
shall hold those proceeds in trust until they are
applied to refund bonds. While the proceeds are
held in trust they may be invested for the benefit
of the issuer in obligations of the United
States of America, the state of Rhode Island, or its
political subdivisions.
(f) Between the
authorization of refunding bonds and the use of their proceeds to refund
bonds, the refunding bonds shall not be deemed
debts of the issuer in determining its borrowing
capacity for any purpose. Upon the use of the
proceeds of refunding bonds, the refunding bonds
shall be treated as debt of the issuer for the
purposes and to the same extent as the refunded bonds
were so treated.
(g) As used in
this section, "bonds" includes notes, including temporary
notes in
anticipation of bonds.
(h) The powers
conferred by this section and the preceding section are in addition to and
not in substitution for, or diminution of, any
other powers conferred, cities, towns and other on
political subdivisions of this state.
(i) Refunding
bonds may be issued under this section by any city, town or other
political
subdivision without obtaining the approval of
its electors, notwithstanding the provisions of
sections 45-12-19 and 45-12-20 and
notwithstanding any provision of its charter to the contrary.,
unless the electors when assembled in a meeting
are the local legislative body for the purpose of
authorizing indebtedness of the political
subdivision.
Notwithstanding any provisions to the
contrary of any special law authorizing the
issuance of bonds by a city, town or other political
subdivision, any temporary notes in
anticipation of bonds issued or to be issued under that law
may be refunded prior to the maturity of the
notes by the issuance, in accordance with this
section, of additional temporary notes;
provided, that no refunding results in an aggregate amount
of temporary notes outstanding under a
special law at any one time in excess of two hundred
percent (200%) of the amount of bonds authorized
but not yet issued under the special law. The
officers authorized to issue the original temporary
notes being refunded are authorized, without
any additional proceedings by the local
legislative body, to issue the refunding temporary notes in
accordance with this section.
45-12-5.3. Debt
maturity for farmers' home loan administration bonds Debt
maturity for United States Department of
Agriculture/Rural Development bonds. --
Notwithstanding any contrary provisions of this
chapter, or any other general or special law or
provision of any municipal charter, bonds issued
by a city or town which are purchased by the
United States of America, acting through the Farmers'
Home Loan Administration United States
Department of Agriculture/Rural Development, or
any successor agency or department, shall be
payable either by maturity of principal in the
case of serial bonds or by mandatory serial
redemption in the case of term bonds, in annual
installments of principal, the first installment not
later than three (3) five (5)
years and the last installment not later than forty (40) years after the
date of the bonds.
45-12-11.
Authority for issuance of indebtedness excess. -- The state director of
administration may, upon petition by the city or
town council, authorize the city or town to incur
indebtedness in excess of the limit of three
percent (3%) of the taxable property of the full
assessed value of the taxable property within
the city or
town imposed by section 45-12-2
whenever the director determines that the sum
appropriated by any city or town or the funds
available are insufficient to pay the necessary
expenses of the city or town. For this purpose the
state director of administration may require any
information concerning the financial condition of
the city or town that the director may deem
necessary for the proper exercise of that authority.
45-12-14. Replacement
of lost or destroyed bond or note -- Bond to indemnify town.
– Replacement of lost or destroyed bond or
note – Bond to indemnify city or town. --
Whenever the board is satisfied that any bond or
note of the city or town has been lost or
destroyed, the board may upon payment to it by
the owner or holder of the bond or note, of a sum
that it deems necessary to cover the actual
expense involved and under such regulations and with
such restrictions that it may prescribe, order
the city treasurer or town treasurer and/or other
officers of the city or town that the board may
designate to issue a duplicate of the bond or note,
payable at the same time, bearing the same rate
of interest as the lost or destroyed bond or note,
and marked as to show the number, if known, and
date of the original bond or note. But no
duplicate shall be issued until the owner of the
lost or destroyed bond or note gives to the city
treasurer or town treasurer a bond in double the
amount of the lost or destroyed bond or note and
of the interest which would accrue until the
principal is due and payable, with two (2) sufficient
sureties, both residents of the state, or with a
surety company authorized to do business in this
state, approved by the board, conditioned to
indemnify and save harmless the city or town from
any claim or demand on account of the lost or
destroyed bond or note.
45-12-18.
Bond anticipation notes. -- A city or town, acting by resolution of its
city
council or town council, after approval of the
issue of bonds by vote of the qualified electors of
the city or town if approval is required, may
authorize the issue from time to time of temporary
notes in anticipation of the issue of bonds
authorized under section 45-12-2 or section 45-12-2.1.
Temporary notes Notes issued under this
section shall be payable within three (3) 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 under this section, 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 on that debt shall not
exceed three (3) five (5) years. When temporary
debt is incurred under this section, the period
within which the annual payments of principal of
bonds must be made under section 45-12-5 shall
be measured from the date of the original note or
notes representing the temporary debt,
but the annual payments need not commence earlier than
one year after the date of the bonds. The
town or 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. In
such case, the town’s or city’s authority to
issue bonds or notes in anticipation of bonds under this
act shall continue, provided that:
(1) the town
council or city council passes a resolution evidencing the town’s or 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 other note shall not exceed five
(5)
years.
45-12-19.
Charter provisions as to referendum. -- The charter of any city or town
may
provide that the issuance of bonds, notes
or other evidences of indebtedness of the city or town be
by ordinance or by resolution after the issuance
of the bonds, notes or other evidences of
indebtedness of the city or town have been
authorized by general or special law. The charter may
provide that the ordinance or resolution becomes
effective only upon approval by a majority of
electors voting thereon; provided, that the
charter provision is inoperative and ineffective, and the
ordinance or resolution becomes effective
without approval by the electors of the city or town,
whenever the general or special law which
authorizes the issuance of the bonds, notes or other
evidences of indebtedness provides substantially
that the general or special law becomes effective
upon acceptance or approval by the electors of
the city or town; and provided, further, that the
charter provision shall be operative and effective
as to this ordinance or resolution only whenever
the general or special law which authorizes the
issuance of the bonds, notes or other evidences of
indebtedness has become effective without
acceptance or approval by the electors of the city or
town, and contains no provision requiring the
acceptance or approval of the electors of the city or
town as a prerequisite to the issuance of the
bonds, notes or other evidences of indebtedness of
the city or town.
45-12-20.
Issuance of bonds authorized by law approved by electors. -- Whenever a
general or special law which authorizes the
issuance of bond, notes or other evidences of
indebtedness has become effective upon
acceptance or approval by the electors of a city or town,
such law shall be effective notwithstanding any
failure or defect in the posting or notice of the
election therefor as required by law, including
the city or town charter, and the city or town may
immediately issue bonds, notes or other
evidences of indebtedness without further approval by
the electors of the city or town, by ordinance
or by resolution if required by the charters of the
city or town, which ordinances or resolution
shall become effective without approval by the
electors of the city or town as ordinances or resolutions
generally become effective under the
charter of the city or town.
45-12-26.
Commercial agreements relating to registered bonds and notes. -- In
connection with the issuance by a city, town, or
other political subdivision of this state of
original or replacement bonds or notes in
registered form, the treasurer of the city, town, or other
political subdivision, with the approval of any
other officers authorized to sign those bonds or
notes, is authorized to contract for and engage
the services of any bank, trust company, or other
banking or financial institution within or
without the state to perform authentication, registration,
transfer, exchange, record, and paying agent
functions, and for the preparation, signing, and
issuance of checks in payment of those bonds or
notes, the preparation and maintenance of
reports and accounts and the performance of
related duties. The treasurer, with this approval, may
also enter into agreements with custodian banks,
trust companies, or other financial institutions
and financial intermediaries and nominees of any
of them in connection with the establishment
and maintenance by others of a central
depository system for the transfer or pledge of those bonds
and notes. The agreements may provide for
limitation of liabilities of the parties, indemnification,
or payment of liquidated damages, and shall
include those provisions that the treasurer may deem
necessary or desirable to protect the city,
town, or other political subdivision, including
provisions indemnifying it for losses sustained
by it as the result of negligence of the other party
or parties or any breach of the duties imposed
upon them under the agreement.
45-12-28.
Permitted temporary investments for bond proceeds. -- Notwithstanding
any contrary provision of general or special
law, towns and cities may invest proceeds of any
bond or note available during the period before
those proceeds are needed for the purpose for
which the bonds or notes were issued, in securities
the interest of which is exempt from income
taxation by the United States of America,
including bonds and notes issued by states and their
political subdivisions, and shares or interests
in funds investing exclusively in those securities.
This section applies only to proceeds of bonds
or notes issued after the town or city has adopted
an ordinance or resolution to use the investment
authority provided by this section. The ordinance
or resolution may be general or limited to
specific issues of bonds or notes, and may limit
investments described in section 35-10-11. A
city council or town council may adopt an
ordinance or resolution limiting the permitted
investments under this section 35-10-11 to
investments meeting specified standards of
creditworthiness.
45-12-29. Rebate
to federal government. Agreements relating to tax and securities
compliance rebate to federal government. -- Notwithstanding any
contrary provision of general
or special law, cities, and towns and
their agencies towns and other political subdivisions of this
state may enter into agreements to comply with
federal tax and securities laws and may rebate to
the United States treasury from available
sources, any income from investments (including gains
from the disposition of investments) of proceeds
of bonds or notes to the extent deemed necessary
to exempt (in whole or in part) the interest
paid on the bonds or notes from federal income
taxation. The term of any such agreement may
extend to a date six (6) years after the final
maturity of the bonds or notes to which the
agreement relates.
45-12-30.
Securing of bonds or notes -- Trust agreements. -- (a) Bonds or notes
issued
by a city or town may be secured in whole or in
part by insurance or by letters or lines of credit or
other credit facilities. upon an
approving resolution of the city or town council. This insurance,
letter, or line of credit or credit facility may
provide for reimbursement to be made over period of
time, not to exceed two (2) years beyond the
maturity date of the bonds or notes secured, as the
treasurer or director of finance deems proper,
and may provide for reimbursement to be made and
any of these notes or bonds to be issued at a
rate or rates of interest as the treasurer or director of
finance deems proper, including rates variable
from time to time as determined by an index,
banker's loan rate, or other method that may be
specified in the agreement or the bond or note.
Notwithstanding any contrary provision of law,
bonds or notes secured as described in this
section may, in the discretion of the treasurer
or director of finance, be subject to prepayment at
the option of the holder of these bonds or notes
at times and prices and under circumstances that
the treasurer or director of finance specifies.
For the purpose of securing bonds and notes, a city
or town, acting by its treasurer or director of
finance, upon an approving resolution of the city or
town council, may enter into a trust agreement between
the city or town and a corporate trustee
which shall be a bank or trust company doing
business in the state. This trust agreement, and any
remarketing or other agreements necessary or
incidental to the issuance of these bonds or notes,
shall be in any form deemed proper by the treasurer
or director of finance of the city or town, and
shall be executed by its treasurer or director
of finance and countersigned by its mayor or
president of the town council. It shall be
lawful for any bank or trust company doing business in
the state to act as a depository or trustee
under this trust agreement, and to furnish
indemnification and pledge securities that may
be required by any city or town. Any trustee under
a trust agreement established pursuant to this
section may bring suit upon the bonds or notes and
may, either at law or equity, by suit, action,
mandamus, or other proceedings for legal or
equitable relief, enforce all rights under the
laws of the state or granted under this section or under
the trust agreement, and may enforce and compel
the performance of all duties required under the
trust agreement to be performed by the city or
town or by any officer of the city or town. All
expenses incurred in carrying out the provisions
of this section may be treated by the city or town
as a cost of issuance.
(b) The powers
granted in this section are in addition to and not in substitution for
authority previously granted or subsequently
granted to cities and towns or officers on behalf of
cities and towns to set the terms, conditions,
or details of any bonds or notes, including without
limitation, the provision of bond insurance.
SECTION 2. Chapter
45-12 of the General Laws entitled "Indebtedness of Towns and
Cities" is hereby amended by adding thereto
the following sections:
45-12-2.1.
Ministerial approval. – Effective January 1, 2008, a city or town
shall have
authority to incur debt for money borrowed,
through the issuance of bonds, if such application for
approval of bonds is approved by the auditor general
as described below, as meeting all of the
following standards:
(1) The city or
town has a long-term unenhanced credit rating from one nationally
recognized credit rating agency in at least the
“A” rating category without regard to gradations
within such category;
(2) The city or
town has represented in the application that the proposed bonds will
finance a capital asset or assets and the
average useful life of the capital asset or assets to be
financed will be greater than or equal to the
average maturity of the proposed borrowing as
determined by an appropriate official of the
city or town at the time of the issuance of bonds
therefore under this section or notes therefore
under section 45-12-18;
(3) The city or
town is in compliance with financial reporting requirements as set forth in
section 45-10-5 and is not subject to
enforcement proceedings or remedies as provided for in 45-
12-22.7; and
(4) The
authorization for the issuance of such bonds has been approved by local
referendum at a general or special election or
financial town meeting.
(5) Notwithstanding any
provision of the general or public laws, or rule or regulation to
the contrary, the projects or
activities set forth in this act receiving ministerial approval shall not
qualify for school housing aid as set
forth in Chapter 16-7 of the general laws.
The auditor
general shall establish standards and rules for the submission of applications
for approval of bonds by cities and towns in
accordance with this section. Upon the submission of
a complete application from a city or town, the
auditor general shall within thirty (30) days
determine whether the standards set forth in
this section have been met. If the standards have
been met, then the auditor general shall give
approval to the application and the city or town shall
have the power under law to issue bonds,
provided it is otherwise lawful; if the auditor general
finds that the borrowing does not meet said
standards, the city or town shall be notified that the
certification standards have not been met, which
notification shall state the standards that were
and were not met, and if otherwise required, the
city or town shall seek special statutory authority
as provided in section 45-12-2. No ministerial
approval pursuant to this section shall be given by
the auditor general for tax year synchronization
bonds, pension obligation bonds or bonds to fund
other post employment benefits. The auditor
general shall submit a copy of each approval and
each notification that approval has been denied
within five (5) business days after issuance to the
director of administration and the chairpersons
of the house committees on corporations and
finance and the chairpersons of the senate
committees on housing and municipal government and
finance.
45-12-4.5.
Relationship to charters. – Any city or town is authorized to issue
debt by
resolution under and in accordance with the procedures
of sections 45-12-4, 45-12-4.1, 45-12-4.2,
45-12-4.3, 45-12-4.4 and 45-12-5.2
notwithstanding any provision of its charter to the contrary.
45-12-31.
Extinguishment of authorizations. – All or any portion of the
authority to
issue bonds pursuant to a resolution or
ordinance passed by a city or town council or pursuant to a
special act passed by the general assembly may
be extinguished by ordinance of the city or town
council, without further action by the general
assembly, after seven (7) years have passed from
the date the resolution, ordinance or special
act was passed.
SECTION 3. Section
44-5-22 of the General Laws in Chapter 44-5 entitled "Levy and
Assessment of Local Taxes" is hereby
amended to read as follows:
44-5-22.
Certification of tax roll. -- The tax levy shall be applied to the
assessment roll
and the resulting tax roll certified by the
assessors to the city or town clerk, city or town treasurer,
or tax collector, as the case may be.,
not later than the next succeeding June 15. Thereafter, but in
any event prior to June 30 succeeding the
certification,
Thereafter, the assessor shall cause to be
published in a newspaper of general circulation
within the city or town the rate of tax and the
percentage of fair market value employed in
assessing the tax on manufacturer's machinery and
equipment.
SECTION 4.
Sections 45-12-5.5, 45-12-10 and 45-12-24 of the General Laws in Chapter
45-12 entitled "Indebtedness of Towns and
Cities" are hereby repealed.
45-12-5.5.
Political subdivisions 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 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.
(b) 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.
45-12-10.
Substitution of legal coin or currency for payment in gold. --
Whenever
authority already granted any city or town by
any act to issue bonds provides that the bonds shall
be payable in gold coin of the United States of
the then present standard of weight and fineness,
and the bonds have not been issued, authority is
conferred on the cities and towns to provide
when the bonds are issued that they shall be
payable in any coin or currency of the United States
of America which, at the time of payment, is
legal tender for public and private debts, and to this
extent the authority for the issuance of bonds
conforming with the other requirements of that act
is amended and modified.
45-12-24.
Debt maturity. -- Notwithstanding any contrary provisions of
general or
special law enacted prior to January 1, 1982,
all bonds or serial notes of any city, town, or other
political subdivision may mature in annual
installments of principal each of which either (1) does
not exceed any prior installment by more than
eight percent (8%) of the total principal amount of
the issue, or (2) is not less than the quotient
which results from dividing the total principal amount
of the bond or note issue by the maximum number
of years for which the bonds or notes may be
issued under applicable law. All bonds of a
particular issue may be issued in the form of serial
bonds or term bonds or a combination of these
bonds, and the annual installments of principal
required by this section may be provided for
either by maturity of principal in the case of serial
bonds or by mandatory serial redemption in the
case of term bonds.
SECTION 5. Section
45-27-4 of the General Laws in Chapter 45-27 entitled "Housing
Authority Bonds and Obligations" is hereby
amended to read as follows:
45-27-4.
Sale of bonds -- Notice. -- The bonds may be sold at public sale
held after
notice has been published at least once ten (10)
days prior to the sale in a newspaper having a
general circulation in the city or town in which
the authority is located and in a financial
newspaper published in the city of Boston,
Massachusetts, or in the city of New York, New York;
provided, that the bonds may be sold to the
federal government at private sale without any public
advertisement. Bonds issued for a term of not more
than one year from their date are excepted
from the requirement of this section for public
advertisement, and may
be sold at public or private
sale. The bonds may be sold at a price or
prices that the authority determines.
SECTION 6. Section
42-10.1-4 of the General Laws in Chapter 42-10.1 entitled "Public
Finance Management Board" is hereby amended
to read as follows:
42-10.1-4.
Notice of debt issue to board. -- (a) Each state, municipal and
regional
department, authority, agency, board,
commission, and public and quasi-public corporation
having authority to issue revenue or general
obligation bonds or notes shall, no later than thirty
(30) days prior to the sale of any such debt
issue at public or private sale, give written notice of
the proposed sale to the board.
(b) The notice
shall include one proposed sale date, the name of the issuer, the nature of
the debt issue, and the estimated principal
amount thereof, and such further information as may
be required by rule of the board and shall be
delivered in accordance with procedures to be
established by rule of the board.
(c) Failure of
delivery of the above notice or of the time or efficiency thereof shall not
affect the validity of the issuance of any debt,
bond or note.
(d) The board
shall submit a report annually on or before March 31st of each year to the
director of administration, the speaker of the
house, the chairman of the house finance committee,
the president of the senate, the chairman of the
senate finance committee, and the auditor general
on debt issues by cities and towns and other
authorities subject to the provision of chapter 45-12,
which report shall include the information set
forth in division (b) of this section and shall be for
the notices of debt issues received in the prior
calendar year.
SECTION 7. This
act shall take effect upon passage.
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LC00480/SUB A
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