Alabama 2022 Regular Session

Alabama Senate Bill SB178 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
1	1		1 SB178
2		-	2 214918-4
	2	+	2 214918-3
3	3		3 By Senator Givhan
4	4		4 RFD: Governmental Affairs
5	5		5 First Read: 02-FEB-22
6	6
7		-	Page 0 SB178
8		-	1 SB178
9		-	2
10		-	3
11		-	4 ENROLLED, An Act,
12		-	5 Relating to local government; to amend Section
13		-	6 11-81-21, Code of Alabama 1975, to further provide the
14		-	7 investment of certain municipal and county funds; and to make
15		-	8 nonsubstantive, technical revisions to update the existing
16		-	9 code language to current style.
17		-	10 BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
18		-	11 Section 1. Section 11-81-21, Code of Alabama 1975,
19		-	12 is amended to read as follows:
20		-	13 "§11-81-21.
21		-	14 "(a) Any municipal funds or county funds that a
22		-	15 municipal or county governing body determines are not
23		-	16 presently needed for other purposes may be invested in any
24		-	17 obligations in which sinking funds are now authorized to be
25		-	18 invested, pursuant to Section 11-81-19, and, in addition, in
26		-	19 any of the following:
27		-	20 "(1) Direct obligations of (including obligations
28		-	21 issued or held in book entry form on the books of) the
29		-	22 Department of the Treasury of the United States of America;
30		-	23 "(2) Obligations of any of the following federal
31		-	24 agencies, which obligations represent the full faith and
32		-	25 credit of the United States of America:
33		-	Page 1 SB178
34		-	1 "a. Farmers Home Administration.
35		-	2 "b. General Services Administration.
36		-	3 "c. U.S. Maritime Administration.
37		-	4 "d. Small Business Administration.
38		-	5 "e. Government National Mortgage Association (GNMA).
39		-	6 "f. U.S. Department of Housing and Urban Development
40		-	7 (HUD).
41		-	8 "g. Federal Housing Administration (FHA).
42		-	9 "(3) U.S. dollar denominated U.S. dollar-denominated
43		-	10 deposit accounts and certificates of deposit with banks or
44		-	11 savings associations which are qualified public depositories
45		-	12 under Chapter 14A of Title 41.
46		-	13 "(4) Pre-refunded public obligations, defined as
47		-	14 follows:
48		-	15 "Any (4) Pre-refunded public obligations, defined as
49		-	16 bonds or other obligations of any state of the United States
50		-	17 of America or of any agency, instrumentality, or local
51		-	18 governmental unit of any such state (i) which are which
52		-	19 fulfill all of the following:
53		-	20 "a. Are not callable at the option of the obligor
54		-	21 prior to maturity or as to which irrevocable notice has been
55		-	22 given by the obligor to call on the date specified in the
56		-	23 notice , and (ii) which are.
57		-	24 "b. Are fully secured as to principal and interest
58		-	25 and redemption premium, if any, by a fund consisting only of
59		-	Page 2 SB178
60		-	1 cash or obligations described in subdivision (1) above, which
61		-	2 fund may be applied only to the payment of such principal of,
62		-	3 and interest and redemption premium, if any, on such, the
63		-	4 bonds or other obligations on the maturity date or dates
64		-	5 thereof or the specified redemption date or dates pursuant to
65		-	6 such the irrevocable instructions referred to in paragraph a.,
66		-	7 as appropriate, and (iii) which fund is and the fund is
67		-	8 sufficient, as verified by an independent certified public
68		-	9 accountant, to pay principal of and interest and redemption,
69		-	10 if any, on the bonds or other obligations described in this
70		-	11 paragraph on the maturity date or dates thereof or on the
71		-	12 redemption date or dates specified in the irrevocable
72		-	13 instructions referred to in subclause (i) of this paragraph
73		-	14 a., as appropriate, and (iv) which are.
74		-	15 "c. Are rated, based on the escrow, in the highest
75		-	16 rating category of Standard & Poor's Corporation and Moody's
76		-	17 Investors Service, Inc., or any successors thereto.
77		-	18 "(5)a. Interests, however evidenced, in any common
78		-	19 trust fund or other collective investment fund maintained by
79		-	20 any national or state chartered bank, trust company or savings
80		-	21 association having trust powers, or securities of or other
81		-	22 interests in any open-end or closed-end management type
82		-	23 investment company or investment trust registered under the
83		-	24 Investment Company Act of 1940, as from time to time amended,
84		-	Page 3 SB178
85		-	1 so long as all of the following requirements are met at the
86		-	2 time of purchase and during the term of investment:
87		-	3 "(i)1. At least 65% of the portfolio of such common
88		-	4 trust fund, collective investment fund, or investment company
89		-	5 or investment trust must consist of investments authorized in
90		-	6 subdivisions (1), (2), (3), or (4) above, and (ii) the.
91		-	7 "2. The remainder of the portfolio (if any, but not
92		-	8 more than 35%), if any, but in no case more than 35 percent,
93		-	9 may consist only of one or more of the following investments:
94		-	10 "(x) obligations (i) Obligations issued or
95		-	11 guaranteed by any of the following agencies: Federal National
96		-	12 Mortgage Association (FNMA), Federal Home Loan Mortgage
97		-	13 Corporation (FHLMC), including FNMA, and FHLMC participation
98		-	14 certificates, Federal Land Banks, Central Bank for
99		-	15 Cooperatives, Federal Intermediate Credit Banks, Student Loan
100		-	16 Marketing Association, and Federal Home Loan Banks, (y)
101		-	17 mortgage.
102		-	18 "(ii) Mortgage related securities (as that term is
103		-	19 defined in Section 3(a)(41) of the Securities Exchange Act of
104		-	20 1934 (15 U.S.C. § 78c(a)(41)), or (z) repurchase.
105		-	21 "(iii) Repurchase agreements fully collateralized by
106		-	22 obligations, securities, or investments otherwise authorized
107		-	23 under subdivisions 5(i)-(ii) this subdivision, so long as the
108		-	24 common trust fund, collective investment fund, investment
109		-	25 company, or investment trust takes possession and delivery of
110		-	Page 4 SB178
111		-	1 the collateral for any repurchase agreement either directly or
112		-	2 through an authorized custodian.
113		-	3 "b. The fact that any financial institution making
114		-	4 such investment an investment as described in paragraph a. on
115		-	5 behalf of the municipality or county, or any affiliate of such
116		-	6 financial institution, is providing services to the investment
117		-	7 company or investment trust as an investment advisor, sponsor,
118		-	8 distributor, custodian, transfer agent, registrar, or
119		-	9 otherwise, and is receiving reasonable remuneration for such
120		-	10 services, shall not preclude such institution from making the
121		-	11 investment in the securities of such investment company or
122		-	12 investment trust; provided, however, that with respect to any
123		-	13 account for municipal funds or county funds to which fees are
124		-	14 charged for such services, the said financial institution
125		-	15 shall disclose (by prospectus, account statement, or
126		-	16 otherwise), by prospectus, account statement, or otherwise, to
127		-	17 the beneficiary of such account or, to any third party
128		-	18 directing investments, the basis (expressed as a percentage of
129		-	19 asset value or otherwise), expressed as a percentage of asset
130		-	20 value or otherwise, upon which the fee is calculated.
131		-	21 "(6) Commercial paper with the highest credit rating
132		-	22 at the time of purchase.
133		-	23 "(7) Banker's acceptances.
134		-	24 "(b) The terms "municipal funds" and "county funds"
135		-	25 as used in this section shall include all general, special,
136		-	Page 5 SB178
137		-	1 permanent, trust, and other funds, regardless of source or
138		-	2 purpose, held or administered by any county, city, or town, or
139		-	3 by any officer or agency thereof, in the State of Alabama.
140		-	4 "(c) Investments of municipal funds or county funds
141		-	5 shall be made by the officer or agency controlling their
142		-	6 disposition. Such The county, city, or town, or official or
143		-	7 agency thereof, may at any time sell such obligations
144		-	8 purchased pursuant to this section, and the money received
145		-	9 from such the sale and the interest and profits on such the
146		-	10 investment shall be credited to the fund from which the
147		-	11 investment was made. Any such obligation purchased pursuant to
148		-	12 this section may be deposited for safekeeping with any bank,
149		-	13 trust company, or savings association organized either under
150		-	14 the laws of the State of Alabama or of the United States."
151		-	15 Section 2. This act shall become effective
152		-	16 immediately following its passage and approval by the
153		-	17 Governor, or its otherwise becoming law.
154		-	Page 6 SB178
155		-	1
	7	+	Page 0 1 214918-3:n:12/29/2021:LK/bm 2021-1813R2
156	8		2
157	9		3
158	10		4
159		-	President and Presiding Officer of the Senate
160		-
161	11		5
162		-	6 ~~Speaker of the House of Representatives~~
163		-	~~SB1787~~
164		-	8 ~~Senate 16-FEB-22~~
165		-	9 ~~I hereby certify that the within Act originated in and passed~~
166		-	10 ~~the Senate~~.
167		-	11
168		-	12 ~~Patrick Harris,~~
169		-	13 ~~Secretary.~~
170		-	14
171		-	15
172		-	16
173		-	17 ~~House of Representatives~~
174		-	18 ~~Passed: 09-MAR-22~~
175		-	19
	12	+	6
	13	+	7
	14	+	8 SYNOPSIS: Under current law, municipal funds and
	15	+	9 county funds not needed for other purposes may be
	16	+	10 invested in certain obligations.
	17	+	11 This bill would authorize the investment of
	18	+	12 municipal funds and county funds into commercial
	19	+	13 paper with the highest credit rating at the time of
	20	+	14 purchase, or banker's acceptances, and would
	21	+	15 prohibit the investment of those funds into
	22	+	16 closed-end management type investment companies.
	23	+	17 This bill would also make nonsubstantive,
	24	+	18 technical revisions to update the existing code
	25	+	19 language to current style.
176	26		20
177		-	21 By: Senator Givhan
178		-	Page 7
	27	+	21 A BILL
	28	+	22 TO BE ENTITLED
	29	+	23 AN ACT
	30	+	24
	31	+	25 Relating to local government; to amend Section
	32	+	26 11-81-21, Code of Alabama 1975, to further provide the
	33	+	27 investment of certain municipal and county funds; and to make
	34	+	Page 1 1 nonsubstantive, technical revisions to update the existing
	35	+	2 code language to current style.
	36	+	3 BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
	37	+	4 Section 1. Section 11-81-21, Code of Alabama 1975,
	38	+	5 is amended to read as follows:
	39	+	6 "§11-81-21.
	40	+	7 "(a) Any municipal funds or county funds that a
	41	+	8 municipal or county governing body determines are not
	42	+	9 presently needed for other purposes may be invested in any
	43	+	10 obligations in which sinking funds are now authorized to be
	44	+	11 invested, pursuant to Section 11-81-19, and, in addition, in
	45	+	12 any of the following:
	46	+	13 "(1) Direct obligations of (including obligations
	47	+	14 issued or held in book entry form on the books of) the
	48	+	15 Department of the Treasury of the United States of America;
	49	+	16 "(2) Obligations of any of the following federal
	50	+	17 agencies, which obligations represent the full faith and
	51	+	18 credit of the United States of America:
	52	+	19 "a. Farmers Home Administration.
	53	+	20 "b. General Services Administration.
	54	+	21 "c. U.S. Maritime Administration.
	55	+	22 "d. Small Business Administration.
	56	+	23 "e. Government National Mortgage Association (GNMA).
	57	+	24 "f. U.S. Department of Housing and Urban Development
	58	+	25 (HUD).
	59	+	26 "g. Federal Housing Administration (FHA).
	60	+	Page 2 1 "(3) U.S. dollar denominated U.S. dollar-denominated
	61	+	2 deposit accounts and certificates of deposit with banks or
	62	+	3 savings associations which are qualified public depositories
	63	+	4 under Chapter 14A of Title 41.
	64	+	5 "(4) Pre-refunded public obligations, defined as
	65	+	6 follows:
	66	+	7 "Any (4) Pre-refunded public obligations, defined as
	67	+	8 bonds or other obligations of any state of the United States
	68	+	9 of America or of any agency, instrumentality, or local
	69	+	10 governmental unit of any such state (i) which are which
	70	+	11 fulfill all of the following:
	71	+	12 "a. Are not callable at the option of the obligor
	72	+	13 prior to maturity or as to which irrevocable notice has been
	73	+	14 given by the obligor to call on the date specified in the
	74	+	15 notice , and (ii) which are.
	75	+	16 "b. Are fully secured as to principal and interest
	76	+	17 and redemption premium, if any, by a fund consisting only of
	77	+	18 cash or obligations described in subdivision (1) above, which
	78	+	19 fund may be applied only to the payment of such principal of,
	79	+	20 and interest and redemption premium, if any, on such, the
	80	+	21 bonds or other obligations on the maturity date or dates
	81	+	22 thereof or the specified redemption date or dates pursuant to
	82	+	23 such the irrevocable instructions referred to in paragraph a.,
	83	+	24 as appropriate, and (iii) which fund is and the fund is
	84	+	25 sufficient, as verified by an independent certified public
	85	+	26 accountant, to pay principal of and interest and redemption,
	86	+	27 if any, on the bonds or other obligations described in this
	87	+	Page 3 1 paragraph on the maturity date or dates thereof or on the
	88	+	2 redemption date or dates specified in the irrevocable
	89	+	3 instructions referred to in subclause (i) of this paragraph
	90	+	4 a., as appropriate, and (iv) which are.
	91	+	5 "c. Are rated, based on the escrow, in the highest
	92	+	6 rating category of Standard & Poor's Corporation and Moody's
	93	+	7 Investors Service, Inc., or any successors thereto.
	94	+	8 "(5)a. Interests, however evidenced, in any common
	95	+	9 trust fund or other collective investment fund maintained by
	96	+	10 any national or state chartered bank, trust company or savings
	97	+	11 association having trust powers, or securities of or other
	98	+	12 interests in any open-end or closed-end management type
	99	+	13 investment company or investment trust registered under the
	100	+	14 Investment Company Act of 1940, as from time to time amended,
	101	+	15 so long as all of the following requirements are met at the
	102	+	16 time of purchase and during the term of investment:
	103	+	17 "(i)1. At least 65% of the portfolio of such common
	104	+	18 trust fund, collective investment fund, or investment company
	105	+	19 or investment trust must consist of investments authorized in
	106	+	20 subdivisions (1), (2), (3), or (4) above, and (ii) the.
	107	+	21 "2. The remainder of the portfolio (if any, but not
	108	+	22 more than 35%), if any, but in no case more than 35 percent,
	109	+	23 may consist only of one or more of the following investments:
	110	+	24 "(x) obligations (i) Obligations issued or
	111	+	25 guaranteed by any of the following agencies: Federal National
	112	+	26 Mortgage Association (FNMA), Federal Home Loan Mortgage
	113	+	27 Corporation (FHLMC), including FNMA, and FHLMC participation
	114	+	Page 4 1 certificates, Federal Land Banks, Central Bank for
	115	+	2 Cooperatives, Federal Intermediate Credit Banks, Student Loan
	116	+	3 Marketing Association, and Federal Home Loan Banks, (y)
	117	+	4 mortgage.
	118	+	5 "(ii) Mortgage related securities (as that term is
	119	+	6 defined in Section 3(a)(41) of the Securities Exchange Act of
	120	+	7 1934 (15 U.S.C. § 78c(a)(41)), or (z) repurchase.
	121	+	8 "(iii) Repurchase agreements fully collateralized by
	122	+	9 obligations, securities, or investments otherwise authorized
	123	+	10 under subdivisions 5(i)-(ii) this subdivision, so long as the
	124	+	11 common trust fund, collective investment fund, investment
	125	+	12 company, or investment trust takes possession and delivery of
	126	+	13 the collateral for any repurchase agreement either directly or
	127	+	14 through an authorized custodian.
	128	+	15 "b. The fact that any financial institution making
	129	+	16 such investment an investment as described in paragraph a. on
	130	+	17 behalf of the municipality or county, or any affiliate of such
	131	+	18 financial institution, is providing services to the investment
	132	+	19 company or investment trust as an investment advisor, sponsor,
	133	+	20 distributor, custodian, transfer agent, registrar, or
	134	+	21 otherwise, and is receiving reasonable remuneration for such
	135	+	22 services, shall not preclude such institution from making the
	136	+	23 investment in the securities of such investment company or
	137	+	24 investment trust; provided, however, that with respect to any
	138	+	25 account for municipal funds or county funds to which fees are
	139	+	26 charged for such services, the said financial institution
	140	+	27 shall disclose (by prospectus, account statement, or
	141	+	Page 5 1 otherwise), by prospectus, account statement, or otherwise, to
	142	+	2 the beneficiary of such account or, to any third party
	143	+	3 directing investments, the basis (expressed as a percentage of
	144	+	4 asset value or otherwise), expressed as a percentage of asset
	145	+	5 value or otherwise, upon which the fee is calculated.
	146	+	6 "(6) Commercial paper with the highest credit rating
	147	+	7 at the time of purchase.
	148	+	8 "(7) Banker's acceptances.
	149	+	9 "(b) The terms "municipal funds" and "county funds"
	150	+	10 as used in this section shall include all general, special,
	151	+	11 permanent, trust, and other funds, regardless of source or
	152	+	12 purpose, held or administered by any county, city, or town, or
	153	+	13 by any officer or agency thereof, in the State of Alabama.
	154	+	14 "(c) Investments of municipal funds or county funds
	155	+	15 shall be made by the officer or agency controlling their
	156	+	16 disposition. Such The county, city, or town, or official or
	157	+	17 agency thereof, may at any time sell such obligations
	158	+	18 purchased pursuant to this section, and the money received
	159	+	19 from such the sale and the interest and profits on such the
	160	+	20 investment shall be credited to the fund from which the
	161	+	21 investment was made. Any such obligation purchased pursuant to
	162	+	22 this section may be deposited for safekeeping with any bank,
	163	+	23 trust company, or savings association organized either under
	164	+	24 the laws of the State of Alabama or of the United States."
	165	+	25 Section 2. This act shall become effective
	166	+	26 immediately following its passage and approval by the
	167	+	27 Governor, or its otherwise becoming law.
	168	+	Page 6 Page 7