Bill Text: MO HB1769 | 2014 | Regular Session | Comm Sub
Bill Title: Changes the laws regarding the sale of general obligation bonds
Spectrum: Partisan Bill (Republican 2-0)
Status: (Introduced - Dead) 2014-04-14 - Rules - Motion to Do Pass Failed (H) [HB1769 Detail]
Download: Missouri-2014-HB1769-Comm_Sub.html
SECOND REGULAR SESSION
HOUSE COMMITTEE SUBSTITUTE FOR
97TH GENERAL ASSEMBLY
5174H.06C D. ADAM CRUMBLISS, Chief Clerk
AN ACT
To repeal sections 108.140 and 108.170, RSMo, and to enact in lieu thereof three new sections relating to general obligation bonds.
Be it enacted by the General Assembly of the state of Missouri, as follows:
Section A. Sections 108.140 and 108.170, RSMo, are repealed and three new sections enacted in lieu thereof, to be known as sections 108.140, 108.170, and 108.171, to read as follows:
108.140. 1. The various counties in this state for themselves, as well as for and on behalf of any township, or other political subdivision for which the counties may have issued any general obligation bonds, and the several cities, school districts or other political corporations or subdivisions of the state, are hereby authorized to refund, extend, and unify the whole or part of their valid general obligation bonded indebtedness, or judgment indebtedness, and for such purpose may issue, negotiate, sell and deliver refunding general obligation bonds and with the proceeds therefrom pay off, redeem and cancel the bonds to be refunded in advance of their maturity or redemption or as the same mature or are called for redemption, or pay and cancel such judgment indebtedness, or such refunding general obligation bonds may be issued and delivered in exchange for and upon surrender and cancellation of the bonds refunded thereby, or such judgment indebtedness. School districts may pay costs and expenses related to issuing such refunding general obligation bonds from proceeds from the sale of such bonds. In no case shall the refunding general obligation bonds exceed the amount of the principal of the outstanding bond or judgment indebtedness to be refunded and the interest accrued thereon to the date of such refunding bonds. No refunding bond issued as provided in this subsection shall be payable in more than twenty years from the date thereof and such refunding bonds shall bear interest not to exceed the same rate as the bonds refunded, or judgment indebtedness; provided, that nothing in this section shall be so construed as to prohibit any county, city, school district, or other political corporation or subdivision of the state from refunding its general obligation bonded indebtedness without the submission of the question to a popular vote. Refunding general obligation bonds to be sold by any political corporation or subdivision of the state maintaining a credit rating of “A” or higher shall be sold at public sale, after giving reasonable notice of such sale at the best price obtainable, not less than ninety-five percent of the par value thereof and may bear interest at a rate not exceeding fourteen percent per annum. Any financial advisor involved with any sale of bonds shall not underwrite the issue.
2. The various counties in this state for themselves, as well as for and on behalf of any township, or other political subdivision for which the counties may have issued any revenue bonds, notes or other obligations, and the several cities, school districts or other political corporations or subdivisions of the state, are hereby authorized to refund, extend, and unify the whole or part of their valid outstanding revenue bonds, notes or other obligations, and for such purpose may issue, negotiate, sell and deliver refunding revenue bonds, notes or other obligations and with the proceeds therefrom pay off, redeem and cancel the obligations to be refunded in advance of their maturity or redemption or as the same mature or are called for redemption, or such refunding revenue bonds, notes or other obligations may be issued and delivered in exchange for and upon surrender and cancellation of the obligations refunded thereby. In no case shall the refunding revenue bonds, notes or other obligations exceed the amount determined by the governing body of the issuing political corporation or subdivision to be necessary to pay or provide for the payment of the principal of the outstanding obligations to be refunded, together with the interest accrued thereon to the date of such refunding obligations and the interest to accrue thereon to the date of maturity or redemption of such obligations to be refunded and any premium which may be due under the terms of such obligations to be refunded and any amounts necessary for the payment of costs and expenses related to issuing such refunding obligations and to fund a debt service reserve fund for the obligations. All such refunding revenue bonds, notes or other obligations shall bear interest at such rates as the governing body of the issuing political subdivision shall provide, which rates of interest may exceed the rates of interest on the obligations being refunded but shall not exceed the maximum legal rate established by section 108.170. The refunding revenue bonds, notes or other obligations may be payable from the same sources as were pledged to the payment of the obligations refunded and, in the discretion of the governing body of the issuing political subdivision, may be payable from any other source which may be pledged to the payment of revenue bonds, notes or other obligations under any provision of law relating to the issuance of the obligations refunded. Nothing in this section shall be so construed as to prohibit any county, city, school district, or other political corporation or subdivision of the state from refunding its revenue bonded indebtedness without the submission of the question to a popular vote. The sale of a refunding general obligation bond that was all or part of a voter approved issue authorizing more than three million dollars of bonds by any political corporation or subdivision of the state maintaining a credit rating of “A” or higher, except for any municipality that retains or employs an independent municipal advisor, shall be sold through a competitive bid process after giving reasonable notice of such sale, to the underwriter offering the lowest true interest cost, not less than ninety-five percent of the par value thereof and may bear interest at a rate not exceeding fourteen percent per annum. Any municipal advisor who provides services to an issuing political corporation or subdivision shall be independent of the underwriter. For the purposes of this section, municipal advisor shall mean an individual or entity that provides advice to, or on behalf of, a political corporation or subdivision with respect to the issuance of general obligation bonds, including advice with respect to the structure, timing, terms, and other similar matters concerning such issue.
108.170. 1. Notwithstanding any other provisions of any law or charter to the contrary, any issue of bonds, notes, or other evidences of indebtedness, including bonds, notes, or other evidences of indebtedness payable solely from revenues derived from any revenue-producing facility, hereafter issued under any law of this state by any county, city, town, village, school district, educational institution, drainage district, levee district, nursing home district, hospital district, library district, road district, fire protection district, water supply district, sewer district, housing authority, land clearance for redevelopment authority, special authority created under section 64.920, authority created pursuant to the provisions of chapter 238, or other municipality, political subdivision or district of this state shall be negotiable, may be issued in bearer form or registered form with or without coupons to evidence interest payable thereon, may be issued in any denomination, and may bear interest at a rate not exceeding ten percent per annum, and may be sold, at any sale, at the best price obtainable, not less than ninety-five percent of the par value thereof, anything in any proceedings heretofore had authorizing such bonds, notes, or other evidence of indebtedness, or in any law of this state or charter provision to the contrary notwithstanding. Such issue of bonds, notes, or other evidence of indebtedness may bear interest at a rate not exceeding fourteen percent per annum if sold at public sale after giving reasonable notice of such sale, at the best price obtainable, not less than ninety-five percent of the par value thereof; provided, that such bonds, notes, or other evidence of indebtedness may be sold to any agency or corporate or other instrumentality of the state of Missouri or of the federal government at private sale at a rate not exceeding fourteen percent per annum.
2. Notwithstanding the provisions of subsection 1 of this section to the contrary, the sale of bonds, notes, or other evidence of indebtedness issued by the state board of public buildings created under section 8.010, the state board of fund commissioners created under section 33.300, any port authority created under section 68.010, the bi-state metropolitan development district authorized under section 70.370, any special business district created under section 71.790, any county, as defined in section 108.465, exercising the powers granted by sections 108.450 to 108.470, the industrial development board created under section 100.265, any planned industrial expansion authority created under section 100.320, the higher education loan authority created under section 173.360, the Missouri housing development commission created under section 215.020, the state environmental improvement and energy resources authority created under section 260.010, the agricultural and small business development authority created under section 348.020, any industrial development corporation created under section 349.035, or the health and educational facilities authority created under section 360.020 shall, with respect to the sales price, manner of sale and interest rate, be governed by the specific sections applicable to each of these entities.
3. Notwithstanding other provisions of this section or any other law, the sale of a general obligation bond that is all or part of a voter approved issue authorizing more than three million dollars of bonds by the various counties in this state for themselves, as well as for any on behalf of any township, or other political subdivision for which the counties may have issued any general obligation bonds, and the several cities, school districts or other political corporations or subdivisions of the state maintaining a credit rating of “A” or higher, except for any municipality that retains or employs an independent municipal advisor, shall be sold through a competitive bid process after giving reasonable notice of such sale to the underwriter offering the lowest true interest cost, not less than ninety-five percent of the par value thereof and may bear interest at a rate not exceeding fourteen percent per annum. Any municipal advisor that provides services to an issuing political corporation or subdivision shall be independent of the underwriter. For the purposes of this section, municipal advisor shall mean an individual or entity that provides advice to, or on behalf of, a political corporation or subdivision with respect to the issuance of general obligation bonds, including advice with respect to the structure, timing, terms, and other similar matters concerning such issue.
4. Notwithstanding other provisions of this section or other law, the sale of bonds, notes or other evidence of indebtedness issued by any housing authority created under section 99.040 may be sold at any sale, at the best price obtainable, not less than ninety-five percent of the par value thereof, and may bear interest at a rate not exceeding fourteen percent per annum. The sale shall be a public sale unless the issuing jurisdiction adopts a resolution setting forth clear justification why the sale should be a private sale except that private activity bonds may be sold either at public or private sale.
[4.] 5. Notwithstanding other provisions of this section or law, industrial development revenue bonds may be sold at private sale and bear interest at a rate not exceeding fourteen percent per annum at the best price obtainable, not less than ninety-five percent of the par value thereof.
[5.] 6. Notwithstanding other provisions in subsection 1 of this section to the contrary, revenue bonds issued for airport purposes by any constitutional charter city in this state which now has or may hereafter acquire a population of more than three hundred thousand but less than six hundred thousand inhabitants, according to the last federal decennial census, may bear interest at a rate not exceeding fourteen percent per annum if sold at public sale after giving reasonable notice, at the best price obtainable, not less than ninety-five percent of the par value thereof.
[6.] 7. For purposes of the interest rate limitations set forth in this section, the interest rate on bonds, notes or other evidence of indebtedness described in this section means the rate at which the present value of the debt service payments on an issue of bonds, notes or other evidence of indebtedness, discounted to the date of issuance, equals the original price at which such bonds, notes or other evidence of indebtedness are sold by the issuer. Interest on bonds, notes or other evidence of indebtedness may be paid periodically at such times as shall be determined by the governing body of the issuer and may be compounded in accordance with section 408.080.
[7.] 8. Notwithstanding any provision of law or charter to the contrary:
(1) Any entity referenced in subsection 1 or 2 of this section and any other political corporation of the state which entity or political corporation has an annual operating budget for the current year exceeding twenty-five million dollars may, in connection with managing the cost to such entity or political corporation of purchasing fuel, electricity, natural gas, and other commodities used in the ordinary course of its lawful operations, enter into agreements providing for fixing the cost of such commodity, including without limitation agreements commonly referred to as hedges, futures, and options; provided that as of the date of such agreement, such entity or political corporation shall have complied with subdivision (3) of this subsection; and further provided that no eligible school, as defined in section 393.310, shall be authorized by this subsection to enter into such agreements in connection with the purchase of natural gas while the tariffs required under section 393.310 are in effect;
(2) Any entity referenced in subsection 1 or 2 of this section and any other political corporation of the state may, in connection with its bonds, notes, or other obligations then outstanding or to be issued and bearing interest at a fixed or variable rate, enter into agreements providing for payments based on levels of or changes in interest rates, including without limitation certain derivative agreements commonly referred to as interest rate swaps, hedges, caps, floors, and collars, provided that:
(a) As of the date of issuance of the bonds, notes, or other obligations to which such agreement relates, such entity or political corporation will have bonds, notes, or other obligations outstanding in an aggregate principal amount of at least fifty million dollars; and
(b) As of the date of such agreement, such entity's or political corporation's bonds, notes, or other obligations then outstanding or to be issued have received a stand-alone credit rating in one of the two highest categories, without regard to any gradation within such categories, from at least one nationally recognized credit rating agency, or such entity or political corporation has an issuer or general credit rating, in one of the two highest categories, without regard to any gradation within such categories, from at least one nationally recognized credit rating agency; and
(c) As of the date of such agreement, such entity or political corporation shall have complied with subdivision (3) of this subsection;
(3) Prior to entering into any agreements pursuant to subdivision (1) or (2) of this subsection, the governing body of the entity or political corporations entering into such agreements shall have adopted a written policy governing such agreements. Such policy shall be prepared by integrating the recommended practices published by the Government Finance Officers Association or comparable nationally recognized professional organization and shall provide guidance with respect to the permitted purposes, authorization process, mitigation of risk factors, ongoing oversight responsibilities, market disclosure, financial strategy, and any other factors in connection with such agreements determined to be relevant by the governing body of such entity or political corporation. Such entity or political corporation may enter into such agreements at such times and such agreements may contain such payment, security, default, remedy, and other terms and conditions as shall be consistent with the written policy adopted under this subdivision and as may be approved by the governing body of such entity or other obligated party, including any rating by any nationally recognized rating agency and any other criteria as may be appropriate;
(4) Nothing in this subsection shall be applied or interpreted to authorize any such entity or political corporation to enter into any such agreement for investment purposes or to diminish or alter the special or general power any such entity or political corporation may otherwise have under any other provisions of law including the special or general power of any interstate transportation authority.
108.171. 1. The state treasurer may provide technical and advisory assistance regarding the issuance of bonds, notes, or other evidences of indebtedness in order to obtain the lowest possible net interest costs to those political corporations or subdivisions whose governing bodies request such assistance. The assistance may include, but need not be limited to:
(1) Advice on the structuring and marketing of bonds, notes, or other evidences of indebtedness;
(2) Training in debt management; and
(3) Promotion of the use of such tools for sound financial management as adequate systems of budgeting, accounting, auditing, and reporting.
2. The treasurer may promulgate rules and regulations necessary to achieve the objectives of this section. Any rule or portion of a rule, as that term is defined in section 536.010, that is created under the authority delegated in this section shall become effective only if it complies with and is subject to all of the provisions of chapter 536 and, if applicable, section 536.028. This section and chapter 536 are nonseverable and if any of the powers vested with the general assembly under chapter 536 to review, to delay the effective date, or to disapprove and annul a rule are subsequently held unconstitutional, then the grant of rulemaking authority and any rule proposed or adopted after August 28, 2014, shall be invalid and void.
•
