Authorized Investments for Bond Proceeds

  1. Law
  2. Georgia Code
  3. Local Government
  4. Bonds
  5. General Provisions
  6. Authorized Investments for Bond Proceeds

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The proceeds of any bonds issued by any county, municipal corporation, school district, or other political subdivision of this state or any portion thereof or any authority or other public body corporate and politic created under the Constitution or laws of this state may, from time to time, be placed for investment and reinvestment in the local government investment pool created in Chapter 83 of this title by the governing authorities of the county, municipal corporation, school district, political subdivision, authority, or body or be invested and reinvested by the governing authorities of the county, municipal corporation, school district, political subdivision, authority, or body in the following securities, and no others:

  1. Bonds or obligations of such county, municipal corporation, school district, political subdivision, authority, or body or bonds or obligations of this state or other states or of other counties, municipal corporations, and political subdivisions of this state;
  2. Bonds or other obligations of the United States or of subsidiary corporations of the United States government which are fully guaranteed by such government;
  3. Obligations of and obligations guaranteed by agencies or instrumentalities of the United States government, including those issued by the Federal Land Bank, Federal Home Loan Bank, Federal Intermediate Credit Bank, Bank for Cooperatives, and any other such agency or instrumentality now or hereafter in existence; provided, however, that all such obligations shall have a current credit rating from a nationally recognized rating service of at least one of the three highest rating categories available and have a nationally recognized market;
  4. Bonds or other obligations issued by any public housing agency or municipal corporation in the United States, which such bonds or obligations are fully secured as to the payment of both principal and interest by a pledge of annual contributions under an annual contributions contract or contracts with the United States government, or project notes issued by any public housing agency, urban renewal agency, or municipal corporation in the United States which are fully secured as to payment of both principal and interest by a requisition, loan, or payment agreement with the United States government;
  5. Certificates of deposit of national or state banks located within this state which have deposits insured by the Federal Deposit Insurance Corporation and certificates of deposit of federal savings and loan associations and state building and loan or savings and loan associations located within this state which have deposits insured by the Savings Association Insurance Fund of the Federal Deposit Insurance Corporation or the Georgia Credit Union Deposit Insurance Corporation, including the certificates of deposit of any bank, savings and loan association, or building and loan association acting as depository, custodian, or trustee for any such bond proceeds. The portion of such certificates of deposit in excess of the amount insured by the Federal Deposit Insurance Corporation, the Savings Association Insurance Fund of the Federal Deposit Insurance Corporation, or the Georgia Credit Union Deposit Insurance Corporation, if any, shall be secured by deposit, with the Federal Reserve Bank of Atlanta, Georgia, or with any national or state bank or federal savings and loan association or state building and loan or savings and loan association located within this state or with a trust office within this state, of one or more of the following securities in an aggregate principal amount equal at least to the amount of such excess: direct and general obligations of this state or other states or of any county or municipal corporation in this state, obligations of the United States or subsidiary corporations included in paragraph (2) of this Code section, obligations of the agencies and instrumentalities of the United States government included in paragraph (3) of this Code section, or bonds, obligations, or project notes of public housing agencies, urban renewal agencies, or municipalities included in paragraph (4) of this Code section;
  6. Securities of or other interests in any no-load, open-end management type investment company or investment trust registered under the Investment Company Act of 1940, as from time to time amended, or any common trust fund maintained by any bank or trust company which holds such proceeds as trustee or by an affiliate thereof so long as:
    1. The portfolio of such investment company or investment trust or common trust fund is limited to the obligations referenced in paragraphs (2) and (3) of this Code section and repurchase agreements fully collateralized by any such obligations;
    2. Such investment company or investment trust or common trust fund takes delivery of such collateral either directly or through an authorized custodian;
    3. Such investment company or investment trust or common trust fund is managed so as to maintain its shares at a constant net asset value; and
    4. Securities of or other interests in such investment company or investment trust or common trust fund are purchased and redeemed only through the use of national or state banks having corporate trust powers and located within this state; and
  7. Interest-bearing time deposits, repurchase agreements, reverse repurchase agreements, rate guarantee agreements, or other similar banking arrangements with a bank or trust company having capital and surplus aggregating at least $50 million or with any government bond dealer reporting to, trading with, and recognized as a primary dealer by the Federal Reserve Bank of New York having capital aggregating at least $50 million or with any corporation which is subject to registration with the Board of Governors of the Federal Reserve System pursuant to the requirements of the Bank Holding Company Act of 1956, provided that each such interest-bearing time deposit, repurchase agreement, reverse repurchase agreement, rate guarantee agreement, or other similar banking arrangement shall permit the moneys so placed to be available for use at the time provided with respect to the investment or reinvestment of such moneys.

(Ga. L. 1947, p. 1173, § 1; Ga. L. 1969, p. 961, § 1; Ga. L. 1976, p. 400, § 1; Ga. L. 1982, p. 3, § 36; Ga. L. 1985, p. 1461, § 1; Ga. L. 1987, p. 334, § 1; Ga. L. 1991, p. 338, § 1; Ga. L. 1992, p. 6, § 36; Ga. L. 2010, p. 404, § 2/SB 369.)

Cross references.

- Authorized investments of counties, municipalities, and other entities, generally, § 36-83-4.

Code Commission notes.

- Pursuant to Code Section 28-9-5, in 1987, a comma was inserted following the second "authority" in the introductory language.

JUDICIAL DECISIONS

Use of bond money to buy bonds approved when insufficient to build project.

- County board of education does not abuse the board's discretion, when the board determines that it would be impossible to build a schoolhouse with the amount of bond money on hand, in using the money to buy more bonds. Williams v. Ragsdale, 205 Ga. 274, 53 S.E.2d 339 (1949).

RESEARCH REFERENCES

Am. Jur. 2d.

- 64 Am. Jur. 2d, Public Securities and Obligations, § 109.

C.J.S.

- 64A C.J.S., Municipal Corporations, § 2167.

ALR.

- Constitutionality, construction, and application of statute empowering municipal corporation to issue bonds the proceeds of which shall be invested in municipal securities, 108 A.L.R. 736.


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