Issuance of Bonds — Restrictions on Payment — Additional Issues — Refunding — Construction — Interest Rates — Sale of Bonds — Contracts and Agreements — Liability — Calculating Applicable Formula Rate
Issuance of Bonds — Restrictions on Payment — Additional Issues — Refunding — Construction — Interest Rates — Sale of Bonds — Contracts and Agreements — Liability — Calculating Applicable Formula Rate
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All bonds issued by the corporation shall be payable solely out of the revenues and receipts derived from the corporation's activities pursuant to the powers and purposes set forth in this part; provided, that notes issued in anticipation of the issuance of bonds may be retired out of the proceeds of such bonds. Such bonds may be executed and delivered by the corporation, at any time and from time to time, may be in such form and denominations and of such terms and maturities, may be in registered or bearer form, either as to principal or interest, or both, may be payable in such installments and at such time or times not exceeding forty (40) years from the date of issuance, may be payable at such place or places whether within or without the state of Tennessee, may bear interest at such rate or rates payable at such time or times and at such place or places and evidenced in such manner, may be executed by such officers of the corporation, and may contain such provisions not inconsistent with this part, as shall be provided in the proceedings of the board of directors whereunder the bonds shall be authorized to be issued. If deemed advisable by the board of directors, there may be retained in the proceedings under which any bonds of the corporation are authorized to be issued an option to redeem all or any part of the bonds as may be specified in such proceedings, at such price or prices and after such notice or notices and on such terms and conditions as may be set forth in such proceedings and as may be briefly recited in the face of the bonds, but nothing contained in this section shall be construed to confer on the corporation any right or option to redeem any bonds except as may be provided in the proceedings under which they shall be issued. Any bonds of the corporation may be sold at public or private sale in such manner, at such price and from time to time as may be determined by the board of directors of the corporation to be most advantageous, and the corporation may pay all expenses, premiums and commissions that its board of directors may deem necessary or advantageous in connection with the issuance of the bonds. Issuance by the corporation of one (1) or more series of bonds for one (1) or more purposes shall not preclude it from issuing other bonds in connection with the same project or any other project, but the proceedings under which any subsequent bonds may be issued shall recognize and protect any prior pledge or mortgage made for any prior issue of bonds. Proceeds of bonds issued by the corporation may be used for the promotion of any of the purposes of the corporation as set forth in this chapter, including the establishment of a reasonable reserve fund for the payment of principal of and interest on such bonds in the event of a deficiency in the revenues and receipts available for the payment. Any bonds of a corporation may be issued bearing a fixed interest rate or a rate that varies from time to time or a rate that is established from time to time during the term of the bonds and may be issued granting to the owners of the bonds put rights and such other rights as the board of directors of the corporation shall determine. In connection with the issuance of its bonds, a corporation is authorized to enter into such additional agreements as shall be necessary to facilitate the issuance and sale of the bonds or establishment of the interest rate or rates, including agreements providing for liquidity and credit enhancement, and reimbursement agreements relating to the bonds.
Any bonds or notes of the corporation at any time outstanding may, at any time and from time to time, be refunded by the corporation by the issuance of its refunding bonds in such amount as the board of directors may deem necessary, but not exceeding:
The principal amount of the obligations being refinanced;
Applicable redemption premiums on the refunding bonds;
Unpaid interest of such obligations to the date of delivery or exchange of the refunding bonds;
In the event the proceeds from the sale of the refunding bonds are to be deposited in trust as provided in subdivision (d)(2), interest to accrue on such obligations from the date of delivery to the date of maturity or to the first redemption date, whichever shall be earlier; and
Expenses, premiums and commissions of the corporation deemed by the board of directors to be necessary in connection with the issuance of the refunding bonds.
Any such refunding may be effected whether the obligations to be refunded shall have then matured or shall thereafter mature, either by the exchange of the refunding bonds for the obligations to be refunded by the refunding bonds with the consent of the holders of the obligations so to be refunded, or by sale of the refunding bonds and the application of the proceeds of the sale to the payment of the obligations to be refunded by the refunding bonds, and regardless of whether or not the obligations to be refunded were issued in connection with the same projects or separate projects, and regardless of whether or not the obligations proposed to be refunded shall be payable on the same date or different dates or shall be due serially or otherwise.
The principal proceeds from the sale of any refunding bonds shall be applied only as follows either to:
The immediate payment and retirement of the obligations being refunded; or
The extent not required for the immediate payment of the obligations being refunded, then the proceeds shall be deposited in trust to provide for the payment and retirement of the obligations being refunded, and to pay any expenses incurred in connection with such refunding, but may also be used to pay interest on the refunding bonds prior to the retirement of the obligations being refunded. Money in any such trust fund may be invested in direct obligations of or obligations the principal of and interest on which are guaranteed by the United States government, or obligations of any agency or instrumentality of the United States government, or in certificates of deposit issued by a bank or trust company located in the state of Tennessee, if such certificates shall be secured by a pledge of any of such obligations having an aggregate market value, exclusive of accrued interest, equal at least to the principal amount of the certificates so secured. Nothing in this subdivision (d)(2) shall be construed as a limitation on the duration of any deposit in trust for the retirement of obligations being refunded but which shall not have matured and which shall not be presently redeemable.
All bonds, refunding bonds and the interest coupons applicable to the bonds are hereby made and shall be construed to be negotiable instruments.
With respect to all or any portion of any issue of bonds issued or anticipated to be issued under this section, at any time during the term of the bonds, and upon receipt of a report of the comptroller of the treasury or the comptroller's designee finding that the contracts and agreements authorized in this section are in compliance with the guidelines, rules or regulations as set forth in subsection (i), a corporation by resolution may authorize and enter into interest rate swap or exchange agreements, agreements establishing interest rate floors or ceilings, or both, and other interest rate hedging agreements under such terms and conditions as the board of directors of the corporation may determine, including, but not limited to, provisions permitting the corporation to pay to or receive from any person or entity any loss of benefits under such agreement upon early termination of the agreement or default under such agreement.
The governing body of a corporation may enter into an agreement to sell its bonds under this part providing for delivery of its bonds on a date greater than ninety (90) days and not greater than five (5) years, or such greater period of time if approved by the comptroller of the treasury or the comptroller's designee, from the date of execution of such agreement only upon receipt of a report of the comptroller of the treasury or the comptroller's designee finding that such an agreement or contract of a corporation to sell its bonds as authorized in this subsection (g) is in compliance with the guidelines, rules or regulations adopted or promulgated by the state funding board in accordance with subsection (i). Agreements to sell bonds for delivery ninety (90) days or less from the date of execution of the agreement to sell the bonds do not require a report of the comptroller of the treasury or the comptroller's designee.
Prior to the adoption or promulgation by the state funding board of guidelines, rules or regulations with respect to the contracts and agreements authorized in subsections (f) and (g), a corporation may enter into such contracts or agreements to the extent otherwise authorized in this chapter or in any other law, notwithstanding subsections (f) and (g). Nothing in this section is intended to alter any existing authority in this chapter or in any other law otherwise providing authority for a corporation to enter into the contracts or agreements described in subsections (f) and (g) heretofore entered into prior to the adoption or promulgation by the state funding board of guidelines, rules or regulations.
The state funding board shall establish guidelines, rules or regulations with respect to the agreements and contracts authorized in subsections (f) and (g), which may include, but shall not be limited to, the following:
The conditions under which such agreements or contracts can be entered into;
The methods by which such contracts are to be solicited and procured;
The form and content such contracts shall take;
The aspects of risk exposure associated with such contracts;
The standards and procedures for counterparty selection, including rating criteria;
The procurement of credit enhancement, liquidity facilities, or the setting aside of reserves in connection with such contracts or agreements;
The methods of securing the financial interest in such contracts;
The methods to be used to reflect such contracts in the corporation's financial statements;
Financial monitoring and periodic assessment of such contracts by the corporation;
The application and source of nonperiodic payments; and
Educational requirements for officials of any corporation responsible for approving any such contract or agreement.
Prior to the adoption by the board of directors of the corporation of a resolution authorizing such contract or agreement, a request shall be submitted to the comptroller of the treasury or the comptroller's designee for a report finding that such contract or agreement is in compliance with the guidelines, rules or regulations of the state funding board. Within fifteen (15) days of receipt of the request, the comptroller of the treasury or the comptroller's designee shall determine whether the contract or agreement substantially complies with the guidelines, rules or regulations and shall report on the compliance to the corporation. If the report of the comptroller of the treasury or the comptroller's designee finds that the contract or agreement complies with the guidelines, rules or regulations of the state funding board or the comptroller of the treasury shall fail to report within the fifteen-day period, then the corporation may take such action with respect to the proposed contract or agreement as it deems advisable in accordance with this section and the guidelines, rules or regulations of the state funding board. If the report of the comptroller of the treasury or the comptroller's designee finds that such contract or agreement is not in compliance with the guidelines, rules or regulations, then the corporation is not authorized to enter into such contract or agreement. The guidelines, rules or regulations shall provide for a process for the appeal of a determination of noncompliance.
Neither an associated municipality nor any municipality, acquisition corporation or other entity purchasing natural gas or electrical power from the corporation shall in any event be liable for the payment of the principal of or interest on any bonds, notes or other obligations of the corporation, or for the performance of any pledge, mortgage, obligation or agreement of any kind whatsoever that may be undertaken by the corporation and none of the bonds, notes or other obligations of the corporation nor any of its agreements or obligations shall be construed to constitute an indebtedness of any associated municipality, acquisition corporation or other entity purchasing natural gas or electrical power from the acquisition corporation, within the meaning of any constitutional or statutory provision whatsoever, except to the extent the associated municipality, acquisition corporation, or other entity shall have guaranteed or assumed the payment of any bonds, notes or other obligations of such corporation or pledged its revenues to the payment of any bonds, notes or obligations of the corporation pursuant to the terms of § 7-39-304 or of any other provision of applicable law.
When entering into an interest rate agreement authorized by this section, a corporation may secure its obligations under the agreement, including its obligation for termination or other nonperiodic payments, with the revenues available to secure the bonds with respect to which such interest rate agreement is entered into.
For purposes of calculating the “applicable formula rate” under § 47-14-103 and the related provisions of title 47, chapter 14, to determine the maximum effective rate applicable to bonds or other obligations issued by energy acquisition corporations, the language “four (4) percentage points above the average prime loan rate” in the definition of “formula rate” in § 47-14-102 shall be replaced with the language “seven (7) percentage points above the average prime loan rate.” This subsection (l ) shall apply to any bonds or other obligations issued by energy acquisition corporations on or before June 30, 2012.