LA 040

2021 -- H 5477 Enacted 04/23/2021

A N   A C T

AUTHORIZING THE TOWN OF CUMBERLAND TO ISSUE GENERAL OBLIGATION BONDS AND/OR NOTES IN AN AMOUNT NOT TO EXCEED $2,500,000 TO FINANCE THE DEVELOPMENT, CONSTRUCTION, RENOVATION, IMPROVEMENT, ALTERATION, REPAIR AND EQUIPPING OF RECREATIONAL AREAS AND FACILITIES IN THE TOWN

Introduced By: Representatives McLaughlin, Giraldo, Ackerman, and Corvese

Date Introduced: February 10, 2021

It is enacted by the General Assembly as follows:

SECTION 1. The town of Cumberland is hereby empowered, in addition to authority

previously granted, to issue general obligation bonds and notes to an amount not exceeding two

million five hundred thousand dollars ($2,500,000) from time to time under its corporate name and

seal. 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,

provided that the final maturity of such bonds shall not exceed thirty (30) years from and after the

date the bonds are issued. 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, and

may bear interest at a fixed rate or rates or at a variable or auction rate or rates. The bonds may be

sold by a negotiated sale or by competitive bid and issued pursuant to a resolution or an indenture

of trust. 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.

SECTION 2. The bonds shall be signed by the finance director and the mayor and shall be

issued and sold in such amounts as the town council may authorize. The manner of sale,

denominations, maturities, interest rates and other terms, conditions and details of any bonds or

notes issued under this act may be fixed by the proceedings of the town council authorizing the

issue or by separate resolution of the 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 or notes. The proceeds

derived from the sale of the bonds shall be delivered to the finance director, and such proceeds,

exclusive of premiums and accrued interest, shall be expended: (1) For the purpose of financing

the development, construction, renovation, improvement, alteration, repair and equipping of

recreational areas and facilities in the town; (2) In payment of the principal of and/or interest on

temporary notes issued under section 3; (3) In repayment of advances made pursuant to section 4;

and/or (4) In payment of costs of issuance associated with the issuance of bonds or notes hereunder.

No purchaser of any bonds or notes under this act shall be in any way responsible for the proper

application of the proceeds derived from the sale thereof. The proceeds of bonds or notes issued

under this act, any applicable federal or state assistance and the other monies referred to in sections

6 and 9, shall be deemed appropriated for the purpose of this act without further action than that

required by this act. This bond issue authorized by this act may be consolidated for the purpose of

issuance and sale with any other bond issue of the town heretofore or hereafter authorized; provided

that, notwithstanding any such consolidation, the proceeds from the sale of the bonds authorized

by this act shall be expended for the purposes set forth above. The finance director and the mayor,

on behalf of the town, are hereby authorized to execute such instruments, documents or other papers

as either of them deem necessary or desirable to carry out the intent of this act and are also

authorized to take all actions and execute all documents or agreements necessary to comply with

federal tax and securities laws, which documents or agreements may have a term coextensive with

the maturity of the bonds authorized hereby, including Rule 15c2-12 of the Securities and Exchange

Commission and to execute and deliver a continuing disclosure agreement or certificate in

connection with the bonds or notes.

SECTION 3. The town council may by resolution authorize the issue from time to time of

interest bearing or discounted notes in anticipation of the issue of bonds or in anticipation of the

receipt of federal or state aid for the purposes of this act. The amount of original notes issued in

anticipation of bonds may not exceed the amount of bonds which may be issued under this act and

the amount of original notes issued in anticipation of federal or state aid may not exceed the amount

of available federal or state aid as estimated by the finance director. Temporary notes issued

hereunder shall be signed by the finance director and the mayor and shall be payable within 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 hereunder; provided

the period from the date of an original note to the maturity of any notes issued to renew or pay the

same debt or the interest thereon shall not exceed five (5) years. Any temporary notes in anticipation

of bonds issued under this section may be refunded prior to the maturity of the notes by the issuance

of additional temporary notes; provided that, no such refunding shall result in any amount of such

temporary notes outstanding at any one time in excess of two hundred percent (200%) of the amount

of bonds which may be issued under this act; and provided further, that if the issuance of any such

refunding notes results in any amount of such temporary notes outstanding at any one time in excess

of the amount of bonds which may be issued under this act, the proceeds of such refunding notes

shall be deposited in a separate fund established with the bank which is paying agent for the notes

being refunded. Pending their use to pay the notes being refunded, monies in the fund shall be

invested for the benefit of the town by the paying agent at the direction of the finance director in

any investment permitted under section 5. The monies in the fund and any investments held as a

part of the fund shall be held in trust and shall be applied by the paying agent solely to the payment

or prepayment of the principal of and interest on the notes being refunded. Upon payment of all

principal of and interest on the notes, any excess monies in the fund shall be distributed to the town.

The town 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 pursuant to section 1 hereof. In such case, the town’s

authority to issue bonds or notes in anticipation of bonds under this act shall continue provided

that: (1) The town council passes a resolution evidencing the town’s intent to pay off the notes; and

(2) That the period from the date of an original note to the maturity date of any other notes shall

not exceed five (5) years.

SECTION 4. Pending any authorization or issue of bonds hereunder or pending or in lieu

of any authorization or issue of notes hereunder, the finance director, with the approval of the town

council, may, to the extent that bonds or notes may be issued hereunder, apply funds in the treasury

of the town to the purposes specified in section 2, 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.

SECTION 5. Any proceeds of bonds or notes issued hereunder or of any applicable federal

or state assistance, pending their expenditure, may be deposited or invested by the finance director

in demand deposits, time deposits or savings deposits in banks which are members of the Federal

Deposit Insurance Corporation or in obligations issued or guaranteed by the United States of

America or by any agency or instrumentality thereof or as may be provided in any other applicable

law of the state of Rhode Island or resolution of the town council or pursuant to an investment

policy of the town.

SECTION 6. 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 premiums arising from the sale of

bonds or notes hereunder, and to the extent permitted by applicable federal law, any earnings or net

profit realized from the deposit or investment of funds hereunder, shall, in the discretion of the

finance director, be applied to the cost of preparing, issuing and marketing bonds or notes hereunder

to the extent not otherwise provided, to the payment of the cost of the project, 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 issued hereunder may also,

in the discretion of the finance director, be met from bond or note proceeds exclusive of accrued

interest or from other monies 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 hereunder may, upon receipt, be added to and dealt

with as part of the revenues of the town from property taxes. In exercising any discretion under this

section, the finance director shall be governed by any instructions adopted by resolution of the town

council.

SECTION 7. All bonds and notes issued under this act and the debts evidenced thereby

shall be obligatory on the town in the same manner and to the same extent as other debts lawfully

contracted by it and shall be excepted from the operation of § 45-12-2. No such obligation shall at

any time be included in the debt of the town for the purpose of ascertaining its borrowing capacity.

The town shall annually appropriate a sum sufficient to pay the principal and interest coming due

within the year on bonds and notes issued hereunder to the extent that monies therefor are not

otherwise provided. If such sum is not appropriated, it shall nevertheless be added to the annual tax

levy. In order to provide such sum in each year and notwithstanding any provision of law to the

contrary, all taxable property in the town shall be subject to ad valorem taxation by the town without

limitation as to rate or amount.

SECTION 8. Any bonds or notes issued under the provisions of this act, if properly

executed by officers of the town in office on the date of execution, shall be valid and binding

according to their terms notwithstanding that before the delivery thereof and payment therefor any

or all such officers shall for any reason have ceased to hold office.

SECTION 9. The town, acting by resolution of its town council, is authorized to apply for,

contract for and expend any federal or state advances or other grants or assistance which may be

available for the purposes of this act, and any such expenditures may be in addition to other monies

provided in this act. To the extent of any inconsistency between any law of this state and any

applicable federal law or regulation, the latter shall prevail. Federal and state advances, with interest

where applicable, whether contracted for prior to or after the effective date of this act, may be

repaid as project costs under section 2.

SECTION 10. Bonds and notes may be issued under this act without obtaining the approval

of any governmental agency or the taking of any proceedings or the happening of any conditions

except as specifically required by this act for such issue. In carrying out any project financed in

whole or in part under this act, including where applicable the condemnation of any land or interest

in land, and in the levy and collection of assessments or other charges permitted by law on account

of any such project, all action shall be taken which is necessary to meet constitutional requirements

whether or not such action is otherwise required by statute, but the validity of bonds and notes

issued hereunder shall in no way depend upon the validity or occurrence of such action.

SECTION 11. All or any portion of the authorized but unissued authority to issue bonds

and notes under this act may be extinguished by resolution of the town council, without further

action by the general assembly, seven (7) years after the effective date of this act.

SECTION 12. The issuance of bonds and notes under this act has been previously approved

by the electors of the town at the general election held on November 3, 2020, and therefore, the act

shall take effect upon the passage.

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LC001571

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