20-25-402. Borrowing by regents. (1) In carrying out the powers provided in 20-25-107, 20-25-301, and 20-25-302, the regents may:
(a) borrow money for any purpose or purposes stated in parts 3 and 4 of this chapter, including, if considered desirable by the regents, the payment of interest on the money borrowed for a facility during the construction of the facility and for 1 year after construction and the creation of a reserve for the payment of bond principal and interest;
(b) make purchases on a time or installment basis;
(c) issue bonds, notes, and other securities, negotiable or otherwise, secured as provided in this section, including bearer bonds with appurtenant interest coupons, which must be fully negotiable notwithstanding any limitation on the source of payment of the bonds, notes, or securities, or fully registered bonds or bonds registered as to ownership of principal only;
(d) pledge for the payment of the purchase price of any facility or of the principal and interest on bonds, notes, or other securities authorized in this chapter or otherwise obligate:
(i) the net income received from rents, board, or both in housing, food service, and other facilities;
(ii) receipts from student building, activity, union, and other special fees prescribed by the regents for all students; and
(iii) (A) other income in the form of gifts, bequests, contributions, or federal grants of funds, including the proceeds or income from grants of lands or other real or personal property;
(B) receipts from athletic and other contests, exhibitions, and performances; and
(C) collections of admissions and other charges for the use of facilities, including all use by other persons, firms, and corporations for athletic and other contests, exhibitions, and performances and for the conduct of their business, educational, or governmental functions;
(e) make payments on loans or purchases from any other available income not obligated for those purposes, including receipts from sale of materials, equipment, and fixtures of the facilities or from sales of the facilities themselves, other than land;
(f) secure any bonds authorized under this section by a trust indenture between the regents and any bank or trust company within or outside of the state of Montana or by a resolution establishing covenants of the regents with the holders of the bonds relating to:
(i) the construction, operation, use, and insurance of the facilities;
(ii) the segregation, expenditure, and audit of accounts of the bond proceeds and of the income pledged;
(iii) the establishment and collection of rents, charges, admissions, and fees sufficient to provide net income adequate for prompt payment of principal and interest on bonds and creation and maintenance of reserves for that purpose; and
(iv) other matters that the regents may determine to be necessary or desirable for the security and marketability of the bonds;
(g) subject to the following provisions, issue and sell or exchange bonds, secured as provided in this section, for the refunding of any outstanding bonds or other obligations issued by the regents:
(i) refunding bonds may, with the consent of the holders of the bonds to be refunded, be exchanged at par plus accrued interest for all or part of the bonds or may be sold at a price not less than par plus accrued interest. They may be secured by a pledge of the same revenue as the bonds refunded or by a pledge of different or additional revenues received at the same unit of the university. This subsection (1)(g) may not require the holder of any outstanding bond to accept payment of the bond or the delivery of a refunding bond in exchange for the bond, except in accordance with the terms of the outstanding bond. Bonds may be issued to refund interest as well as principal actually due and payable if the revenue pledged for the bonds are not sufficient, but not to refund any bonds or interest due that can be paid from revenue then on hand.
(ii) refunding bonds may bear interest at a rate lower or higher than the bonds refunded by the refunding bonds if they are issued to refund matured principal or interest for the payment of which revenue on hand is not sufficient, for the purpose of releasing revenue required for payment of the outstanding bonds permitting the pledge of the revenue for the security of other bonds as well as the refunding bonds, subject to the rights of the holders of the outstanding bonds until those bonds are fully paid and redeemed. Except as authorized in the preceding sentence, refunding bonds may not be issued unless their average annual interest rate, computed to their stated maturity dates and excluding any premium from the computation, is at least 3/8 of 1% less than the average annual interest rate on the bonds refunded, computed to their respective stated maturity dates.
(iii) in any case in which refunding bonds are issued and sold 6 months or more before the earliest date on which all bonds refunded by the refunding bonds mature or are prepayable in accordance with their terms, the proceeds of the refunding bonds, including any premium and accrued interest, must be deposited in escrow with a suitable bank or trust company having its principal place of business within or outside of the state, which is a member of the federal reserve system and has a combined capital and surplus of not less than $1 million, and must be invested in the amount and in securities maturing on the dates and bearing interest at the rates that will be required to provide funds sufficient to pay when due the interest to accrue on each bond refunded to its maturity or, if it is prepayable, to the earliest prior date upon which the bond may be called for redemption from the proceeds of the refunding bonds and to pay and redeem the principal amount of each bond at maturity or, if prepayable, on that redemption date and any premium required for redemption on that date. The resolution or indenture authorizing the refunding bonds must irrevocably appropriate for these purposes the escrow fund and all income from the escrow fund and must provide for the call of all prepayable bonds in accordance with their terms. The securities to be purchased with the escrow funds must be limited to general obligations of the United States, securities for which principal and interest payments are guaranteed by the United States, and securities issued by the following United States government agencies, including only banks for cooperatives, federal home loan banks, federal intermediate credit banks, federal land banks, and the federal national mortgage association. The securities must be purchased simultaneously with the delivery of the refunding bonds.
(iv) revenue or other funds on hand in excess of the amount pledged by resolutions or indentures authorizing outstanding bonds for the payment of principal and interest currently due on the outstanding bonds and reserves securing the payment may be used to pay the expenses incurred by the regents for the purpose of refunding, including but without limitation the cost of advertising and printing refunding bonds, legal and financial advice and assistance in connection with refunding the bonds, and the reasonable and customary charges of escrow agents and paying agents. Revenue and other funds on hand, including reserves pledged for the payment and security of outstanding revenue bonds, may be deposited in an escrow fund created for the retirement of those bonds and may be invested and disbursed as provided in subsection (1)(g)(iii) to the extent consistent with the resolutions or indentures authorizing the outstanding bonds.
(h) sell bonds and sell or exchange refunding bonds issued under this section in the manner and upon the terms as to maturities, interest rates, and redemption privileges and for the price that the regents determine with the approval of the department of administration.
(2) If applicable, the regents shall specify whether the bonds issued under this section are tax credit bonds as provided in 17-5-117.
History: En. 75-8504 by Sec. 33, Ch. 2, L. 1971; amd. Sec. 32, Ch. 266, L. 1977; R.C.M. 1947, 75-8504; amd. Sec. 26, Ch. 489, L. 2009.