Alabama 2022 Regular Session

Alabama House Bill HB121 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	1 HB121
2	2	2 214918-3
3	3	3 By Representative Garrett
4	4	4 RFD: County and Municipal Government
5	5	5 First Read: 13-JAN-22
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7	7	Page 0 1 214918-3:n:12/29/2021:LK/bm 2021-1813R2
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14	14	8 SYNOPSIS: Under current law, municipal funds and
15	15	9 county funds not needed for other purposes may be
16	16	10 invested in certain obligations.
17	17	11 This bill would authorize the investment of
18	18	12 municipal funds and county funds into commercial
19	19	13 paper with the highest credit rating at the time of
20	20	14 purchase, or banker's acceptances, and would
21	21	15 prohibit the investment of those funds into
22	22	16 closed-end management type investment companies.
23	23	17 This bill would also make nonsubstantive,
24	24	18 technical revisions to update the existing code
25	25	19 language to current style.
26	26	20
27	27	21 A BILL
28	28	22 TO BE ENTITLED
29	29	23 AN ACT
30	30	24
31	31	25 Relating to local government; to amend Section
32	32	26 11-81-21, Code of Alabama 1975, to further provide the
33	33	27 investment of certain municipal and county funds; and to make
34	34	Page 1 1 nonsubstantive, technical revisions to update the existing
35	35	2 code language to current style.
36	36	3 BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
37	37	4 Section 1. Section 11-81-21, Code of Alabama 1975,
38	38	5 is amended to read as follows:
39	39	6 "§11-81-21.
40	40	7 "(a) Any municipal funds or county funds that a
41	41	8 municipal or county governing body determines are not
42	42	9 presently needed for other purposes may be invested in any
43	43	10 obligations in which sinking funds are now authorized to be
44	44	11 invested, pursuant to Section 11-81-19, and, in addition, in
45	45	12 any of the following:
46	46	13 "(1) Direct obligations of (including obligations
47	47	14 issued or held in book entry form on the books of) the
48	48	15 Department of the Treasury of the United States of America;
49	49	16 "(2) Obligations of any of the following federal
50	50	17 agencies, which obligations represent the full faith and
51	51	18 credit of the United States of America:
52	52	19 "a. Farmers Home Administration.
53	53	20 "b. General Services Administration.
54	54	21 "c. U.S. Maritime Administration.
55	55	22 "d. Small Business Administration.
56	56	23 "e. Government National Mortgage Association (GNMA).
57	57	24 "f. U.S. Department of Housing and Urban Development
58	58	25 (HUD).
59	59	26 "g. Federal Housing Administration (FHA).
60	60	Page 2 1 "(3) U.S. dollar denominated U.S. dollar-denominated
61	61	2 deposit accounts and certificates of deposit with banks or
62	62	3 savings associations which are qualified public depositories
63	63	4 under Chapter 14A of Title 41.
64	64	5 "(4) Pre-refunded public obligations, defined as
65	65	6 follows:
66	66	7 "Any (4) Pre-refunded public obligations, defined as
67	67	8 bonds or other obligations of any state of the United States
68	68	9 of America or of any agency, instrumentality, or local
69	69	10 governmental unit of any such state (i) which are which
70	70	11 fulfill all of the following:
71	71	12 "a. Are not callable at the option of the obligor
72	72	13 prior to maturity or as to which irrevocable notice has been
73	73	14 given by the obligor to call on the date specified in the
74	74	15 notice , and (ii) which are.
75	75	16 "b. Are fully secured as to principal and interest
76	76	17 and redemption premium, if any, by a fund consisting only of
77	77	18 cash or obligations described in subdivision (1) above, which
78	78	19 fund may be applied only to the payment of such principal of,
79	79	20 and interest and redemption premium, if any, on such, the
80	80	21 bonds or other obligations on the maturity date or dates
81	81	22 thereof or the specified redemption date or dates pursuant to
82	82	23 such the irrevocable instructions referred to in paragraph a.,
83	83	24 as appropriate, and (iii) which fund is and the fund is
84	84	25 sufficient, as verified by an independent certified public
85	85	26 accountant, to pay principal of and interest and redemption,
86	86	27 if any, on the bonds or other obligations described in this
87	87	Page 3 1 paragraph on the maturity date or dates thereof or on the
88	88	2 redemption date or dates specified in the irrevocable
89	89	3 instructions referred to in subclause (i) of this paragraph
90	90	4 a., as appropriate, and (iv) which are.
91	91	5 "c. Are rated, based on the escrow, in the highest
92	92	6 rating category of Standard & Poor's Corporation and Moody's
93	93	7 Investors Service, Inc., or any successors thereto.
94	94	8 "(5)a. Interests, however evidenced, in any common
95	95	9 trust fund or other collective investment fund maintained by
96	96	10 any national or state chartered bank, trust company or savings
97	97	11 association having trust powers, or securities of or other
98	98	12 interests in any open-end or closed-end management type
99	99	13 investment company or investment trust registered under the
100	100	14 Investment Company Act of 1940, as from time to time amended,
101	101	15 so long as all of the following requirements are met at the
102	102	16 time of purchase and during the term of investment:
103	103	17 "(i)1. At least 65% of the portfolio of such common
104	104	18 trust fund, collective investment fund, or investment company
105	105	19 or investment trust must consist of investments authorized in
106	106	20 subdivisions (1), (2), (3), or (4) above, and (ii) the.
107	107	21 "2. The remainder of the portfolio (if any, but not
108	108	22 more than 35%), if any, but in no case more than 35 percent,
109	109	23 may consist only of one or more of the following investments:
110	110	24 "(x) obligations (i) Obligations issued or
111	111	25 guaranteed by any of the following agencies: Federal National
112	112	26 Mortgage Association (FNMA), Federal Home Loan Mortgage
113	113	27 Corporation (FHLMC), including FNMA, and FHLMC participation
114	114	Page 4 1 certificates, Federal Land Banks, Central Bank for
115	115	2 Cooperatives, Federal Intermediate Credit Banks, Student Loan
116	116	3 Marketing Association, and Federal Home Loan Banks, (y)
117	117	4 mortgage.
118	118	5 "(ii) Mortgage related securities (as that term is
119	119	6 defined in Section 3(a)(41) of the Securities Exchange Act of
120	120	7 1934 (15 U.S.C. § 78c(a)(41)), or (z) repurchase.
121	121	8 "(iii) Repurchase agreements fully collateralized by
122	122	9 obligations, securities, or investments otherwise authorized
123	123	10 under subdivisions 5(i)-(ii) this subdivision, so long as the
124	124	11 common trust fund, collective investment fund, investment
125	125	12 company, or investment trust takes possession and delivery of
126	126	13 the collateral for any repurchase agreement either directly or
127	127	14 through an authorized custodian.
128	128	15 "b. The fact that any financial institution making
129	129	16 such investment an investment as described in paragraph a. on
130	130	17 behalf of the municipality or county, or any affiliate of such
131	131	18 financial institution, is providing services to the investment
132	132	19 company or investment trust as an investment advisor, sponsor,
133	133	20 distributor, custodian, transfer agent, registrar, or
134	134	21 otherwise, and is receiving reasonable remuneration for such
135	135	22 services, shall not preclude such institution from making the
136	136	23 investment in the securities of such investment company or
137	137	24 investment trust; provided, however, that with respect to any
138	138	25 account for municipal funds or county funds to which fees are
139	139	26 charged for such services, the said financial institution
140	140	27 shall disclose (by prospectus, account statement, or
141	141	Page 5 1 otherwise), by prospectus, account statement, or otherwise, to
142	142	2 the beneficiary of such account or, to any third party
143	143	3 directing investments, the basis (expressed as a percentage of
144	144	4 asset value or otherwise), expressed as a percentage of asset
145	145	5 value or otherwise, upon which the fee is calculated.
146	146	6 "(6) Commercial paper with the highest credit rating
147	147	7 at the time of purchase.
148	148	8 "(7) Banker's acceptances.
149	149	9 "(b) The terms "municipal funds" and "county funds"
150	150	10 as used in this section shall include all general, special,
151	151	11 permanent, trust, and other funds, regardless of source or
152	152	12 purpose, held or administered by any county, city, or town, or
153	153	13 by any officer or agency thereof, in the State of Alabama.
154	154	14 "(c) Investments of municipal funds or county funds
155	155	15 shall be made by the officer or agency controlling their
156	156	16 disposition. Such The county, city, or town, or official or
157	157	17 agency thereof, may at any time sell such obligations
158	158	18 purchased pursuant to this section, and the money received
159	159	19 from such the sale and the interest and profits on such the
160	160	20 investment shall be credited to the fund from which the
161	161	21 investment was made. Any such obligation purchased pursuant to
162	162	22 this section may be deposited for safekeeping with any bank,
163	163	23 trust company, or savings association organized either under
164	164	24 the laws of the State of Alabama or of the United States."
165	165	25 Section 2. This act shall become effective
166	166	26 immediately following its passage and approval by the
167	167	27 Governor, or its otherwise becoming law.
168	168	Page 6 Page 7