Terms of General Obligation Bonds — Citizens' Bonds — Interest Rate Agreements
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The general obligation bonds may be sold in one (1) or more series, may bear such date or dates, shall mature at such time or times, not exceeding forty (40) years from their respective dates, may bear interest at a zero (0) rate or at such other rate or rates (which may vary from time to time), may be payable at such time or times, may be in such denomination or denominations, may be in such form, either coupon or registered, may carry such registration and conversion privileges, may be executed in such manner, may be payable in such medium of payment at such place or places, may be subject to such terms of redemption, with or without premium, and may provide for the replacement of mutilated, destroyed, stolen or lost bonds, all as may be provided by resolution of the governing body of the local government. The term of the general obligation bonds shall not exceed the reasonably expected economic life of the project being financed with such bonds, as stated in the resolution authorizing the general obligation bonds. An erroneous estimate of the reasonably expected economic life of the project shall in no way affect the validity of such bonds.
A general obligation bond issue may be delivered as an installment bond payable as to principal and interest in equal or approximately equal installments for the term of the bond issue in accordance with the resolution authorizing the bond issue. The authorizing resolution shall stipulate the maximum annual principal and interest requirements during the full term of the installment bond issue.
Notwithstanding any other provision of this chapter to the contrary, whenever the governing body of the local government is authorized to issue and sell general obligation bonds, it may by resolution authorize the issuance and sale of no more than three million dollars ($3,000,000) per issue of general obligation bonds to be known as citizens bonds; provided, that the aggregate amount of citizens bonds outstanding cannot exceed twenty percent (20%) of the aggregate outstanding debt of the local government. Citizens bonds shall mature at such time or times not exceeding twenty (20) years from their respective dates. The governing body of the local government must disclose to each purchaser of a citizens bond the interest rate of return on a fully taxable investment which would be equivalent to the tax-free yield on the citizens bond assuming the highest marginal rate of income tax under the Internal Revenue Code of 1986 (26 U.S.C.), as amended.
Upon the adoption by the governing body of the initial resolution authorizing the issuance of the citizens bonds, the governing body shall submit for review and approval to the comptroller of the treasury or the comptroller's designee the proposed method of pricing and the disclosure documents as required by this section. The comptroller of the treasury or the comptroller's designee shall approve or disapprove the sale of citizens bonds in writing within fifteen (15) days from the date of receipt of the initial resolution and documentation required by this section or otherwise deemed appropriate. Approved citizens bonds may be sold at either a competitive or negotiated sale; however, no one (1) individual or entity may purchase twenty-five percent (25%) or more of the original offering of the citizens bonds. Prior to the negotiated sale of citizens bonds and as a factor in the comptroller of the treasury's or the comptroller's designee's approval of a negotiated sale of citizens bonds, the local government shall submit to the comptroller of the treasury or the comptroller's designee certificates from two (2) disinterested bondhouses indicating the approximate rates of interest which, in the opinions of the bondhouses, would be bid if the citizens bonds were to be sold at a competitive sale.
The local government shall make provision in the resolution for the retirement of a portion of the citizens bonds equal to not less than one-twentieth (1/20) of the citizens bonds or such other provision to provide funds for retirement. In approving any issue of citizens bonds, the comptroller of the treasury or the comptroller's designee may waive the requirement for periodic retirement. No local elected official of a municipality or county may purchase the bonds authorized by this subsection (c).
With respect to all or any portion of any issue of general obligation bonds issued or anticipated to be issued hereunder, at any time during the term of the general obligation 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 herein are in compliance with the guidelines, rules or regulations as set forth in § 9-21-130, a local government 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 governing body of the local government may determine, including, without limitation, provisions permitting the local government to pay to or receive from any person or entity any loss of benefits under such agreement upon early termination thereof or default under such agreement.