Bill Text: IN SB0388 | 2011 | Regular Session | Enrolled
Bill Title: Swap agreements.
Spectrum: Bipartisan Bill
Status: (Passed) 2011-05-18 - Effective 07/01/2011 [SB0388 Detail]
Download: Indiana-2011-SB0388-Enrolled.html
PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana Constitution) is being amended, the text of the existing provision will appear in this style type, additions will appear in this style type, and deletions will appear in
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AN ACT to amend the Indiana Code concerning local government.
(1) "Local issuing body" has the meaning set forth in IC 5-1-5-1.
(2) "Special benefit taxes" has the meaning set forth in IC 5-1-5-1.
(3) "Swap agreement" has the meaning set forth in IC 8-9.5-9-4, except that the term includes a swap agreement entered into by an issuing body (as defined in section 17.2(b) of this chapter) only if any part of the payments owed by the issuing body under the agreement, including any termination or settlement payments, is payable out of:
(A) tax revenues; or
(B) a special assessment.
are subject to this section.
(b) As used in this section, "issuing body" includes:
(1) the state of Indiana and its agencies, commissions, and
authorities;
(2) the Indiana bond bank established under IC 5-1.5-2;
(3) a political subdivision, school corporation, hospital
association, municipal corporation, and special taxing district;
(4) a local public improvement bond bank established under
IC 5-1.4-2; and
(5) any entity that has issued bonds payable directly or
indirectly from taxes or lease rentals payable by any of the
entities listed in subdivisions (1) through (4).
(c) This section provides restrictions on any issuing body
entering into a swap agreement and does not authorize an issuing
body to enter into a swap agreement separate from any other
authority the issuing body has for entering into a swap agreement.
(d) For an issuing body that is authorized by another law to
enter into swap agreements, the issuing body:
(1) may enter into a swap agreement only in connection with
the financing activities of the issuing body as provided in this
section; and
(2) may not enter into a swap agreement as an investment.
(e) An issuing body may enter into one (1) or more swap
agreements in connection with the financing activities of the issuing
body only under the following conditions:
(1) If in connection with or in anticipation of the issuance of
an obligation, entering into the swap agreement would not
cause the percentage determined in STEP FOUR of the
following STEPS to exceed twenty percent (20%):
STEP ONE: Determine the aggregate amount of the
outstanding notional amounts of the issuing body's
outstanding swap agreements.
STEP TWO: Determine the difference between:
(i) the aggregate amount of all the outstanding
obligations of the issuing body; minus
(ii) the aggregate amount of the outstanding obligations
of the issuing body for which no tax revenues nor special
assessments were pledged as a means to repay the
obligations.
STEP THREE: Determine the sum of:
(i) the STEP TWO result; plus
(ii) the amount of obligations not yet issued but for which
one (1) or more swap agreements have been entered into
by the issuing body.
STEP FOUR: Determine the quotient of:
(i) the STEP ONE result; divided by
(ii) the STEP THREE result.
Multiply the quotient by one hundred (100) to convert the
quotient to a percentage.
For purposes of the calculation, if more than one (1) swap
agreement has been entered into in connection with or in
anticipation of specified principal amounts and maturities of
the same obligations, only the swap agreement with the
highest outstanding notional amount is to be included in the
calculation of the aggregate outstanding notional amounts of
outstanding swap agreements. However, if the issuing body,
except the Indiana finance authority, receives prior approval
for entering into a particular swap agreement from the
Indiana finance authority, an issuing body may enter into the
swap agreement in excess of the threshold. In the case of the
Indiana finance authority, the authority may enter into a
swap agreement in excess of the threshold only after review
by the budget committee.
(2) The issuing body, except the Indiana finance authority, has
adopted a comprehensive swap agreement policy at a public
meeting that:
(A) includes provisions governing the adoption of swap
agreements;
(B) is not less restrictive than the swap agreement policy
governing the adoption of swap agreements that is in place
for the Indiana finance authority at the time the issuing
body adopts the comprehensive swap agreement policy;
and
(C) is submitted to the Indiana finance authority for a
determination that it complies with this subdivision.
(3) Each swap agreement is approved by a resolution of the
governing board of the issuing body at a public meeting and
the resolution includes a thorough analysis of the risk the
issuing body is assuming by entering into the swap agreement.
(f) On an annual basis, an issuing body shall report to the
governing board of the issuing body the status and terms and
conditions of all outstanding swap agreements. The issuing body
shall provide a final report to the governing board of the issuing
body upon termination or expiration of each swap agreement.
(g) A swap agreement shall be considered as being entered into in connection with the financing activities of an issuing body if:
(1) the swap agreement is entered into not later than one hundred eighty (180) days after the issuance of the obligation and specifically indicates the swap agreement's relationship to the obligation;
(2) the issuing body designates the swap agreement as having a relationship to the obligation;
(3) the swap agreement amends, modifies, or reverses a swap agreement described in subdivision (1) or (2); or
(4) the terms of the swap agreement bear a reasonable relationship to the terms of the obligation.
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