HLS 14RS-1147 ORIGINAL
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Regular Session, 2014
HOUSE BILL NO. 640
BY REPRESENTATIVES FANNIN AND LAMBERT
BONDS: Provides with respect to grant anticipation revenue bonds
AN ACT1
To amend and reenact R.S. 48:27(D)(1)(a), (2)(a), (E), (F), (G), and (H)(1) and (12), relative2
to grant anticipation revenue bonds; to provide with respect to the issuance of bonds;3
to provide with respect to federal transportation funds; to provide with respect to4
duties of the state treasurer; to provide with respect to state matching funds; to5
provide with respect to the enhancement of the bonds; to provide with respect to6
instances when such bonds are included in state debt; and to provide for related7
matters.8
Section. 1. R.S. 48:27(D)(1)(a), (2)(a), (E), (F), (G), and (H)(1) and (12) are hereby9
amended and reenacted to read as follows:10
ยง27. Grant Anticipation Revenue Vehicles11
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D. Power to issue bonds; repayment; principal amount of bonds.13
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(1)(a) The State Bond Commission, or its successor, on behalf of the state,15
is hereby authorized to issue bonds for the purpose of financing any qualified16
federal-aid transportation project or state transportation project secured by a pledge17
of and payable from any of the following:18
(i) Federal transportation funds and state State matching funds, if any, that19
are appropriated on an annual basis for such purpose by the state.20 HLS 14RS-1147 ORIGINAL
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(ii) Federal transportation funds that are maintained in a separate identifiable1
fund or account outside of the state treasury as provided in Subparagraph (2)(a) of2
this Subsection.3
(ii)(iii) Any proceeds of such bonds and any earnings from the investment4
of such bond proceeds pledged for such purpose.5
(iii)(iv) Other revenues, funds, or other security, if any, pledged or6
appropriated for such purpose under state law.7
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(2)(a) The portion of the principal of and interest on the bonds and the costs9
associated with the issuance and administration of such bonds that may be paid from10
federal transportation funds pursuant to federal law and any agreement between the11
United States Department of Transportation and the department hereinafter referred12
to in this Paragraph as "the federal share of principal, interest, and costs", shall be13
paid from federal transportation funds that the legislature, in its sole discretion, has14
appropriated on an annual basis for this purpose in accordance with state law. In15
accordance with the provisions of Article VII, Section 9(A)(6) of the Constitution16
of Louisiana, there is hereby established a special fund for the purpose of providing17
for the securitization of any bonds which may be issued pursuant to the provisions18
of this Section which shall include requirements for reserves and credit enhancement19
devices, all as may be provided in any resolution, trust agreement, indenture, or other20
instrument pursuant to which such bonds were issued. The fund shall be21
administered by a trustee as designated by the State Bond Commission. The source22
of monies for the fund shall be the federal transportation funds. Federal23
transportation funds, up to the amount necessary to pay principal and interest on the24
bonds, all costs of issuance, any requirement for reserves, or credit enhancement25
devices shall be set aside in a separate identifiable fund or account outside of the26
state treasury but maintained by the state treasury and such revenues shall be27
assigned and pledged to the trustee under the documents pursuant to which the bonds28
were issued for the benefit of the holders of the bonds. Only after satisfaction of all29 HLS 14RS-1147 ORIGINAL
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requirements of this Section shall any federal transportation funds received by the1
state be available for any other purposes.2
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E. Resolutions; trust agreement, publication; peremption. The State Bond4
Commission shall authorize the bonds by a resolution or resolutions adopted by the5
State Bond Commission. However, the State Bond Commission shall not authorize6
the issuance of bonds pursuant to this Section unless such bonds and the projects to7
be funded by them have been previously approved by the Joint Committee on8
Transportation, Highways and Public Works. The bonds issued pursuant to this9
Section may also be secured by a trust agreement by and between the State Bond10
Commission and one or more corporate trustees or fiscal agents which may be any11
trust company or bank having the powers of a trust company within or outside the12
state. The state treasurer may enter into a collection agreement with the trustee to13
provide for the collections of the federal transportation funds. Such resolution or14
trust agreement may provide that the trustee bank shall hold the proceeds of the bond15
pending expenditure for projects as approved by the Joint Legislative Committee on16
the Budget. The State Bond Commission after authorizing the issuance of bonds by17
resolution shall publish once in the official journal of the state, as provided by law,18
a notice of intention to issue the bonds, which notice shall include a description of19
the bonds and the security therefor. Within thirty days after the publication, any20
person in interest may contest the legality of the resolution, any provision of the21
bonds to be issued pursuant to it, the provision securing the bonds, and the validity22
of all other provisions and proceedings relating to the authorization and issuance of23
the bonds. If no action or proceeding is instituted within the thirty days, no person24
may contest the validity of the bonds, the provisions of the resolution pursuant to25
which the bonds were issued, the security of the bonds, or the validity of any other26
provisions or proceedings relating to their authorization and issuance, and the bonds27
shall be presumed conclusively to be legal. Thereafter no court shall have authority28
to inquire into such matters.29 HLS 14RS-1147 ORIGINAL
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F. Financial obligations subject to appropriation. Any bond issued in1
accordance with this Section shall constitute a contract between the state of2
Louisiana and the owner or holder thereof. In no event shall any decision by the3
state not to appropriate, state matching funds, or federal transportation funds in any4
given fiscal year for the payment of such bonds or any costs associated with the5
issuance and administration for such bonds be construed to constitute an action6
impairing such contract. Every contract entered into by the State Bond Commission7
pursuant to the provisions of this Section shall provide that all financial state8
matching fund obligations of the state under such contracts are subject to9
appropriation on an annual basis by the state and that such contracts do not constitute10
or create debt of the state, within the meaning of any constitutional or statutory11
provisions whatsoever, and neither the full faith or credit nor the taxing power of the12
state is pledged to the payment of the principal of, premium, if any, or the interest13
on the bonds. In addition, bonds issued by the State Bond Commission on behalf of14
the state pursuant to the provisions of this Section and every contract relating to the15
issuance of such bonds shall provide that all financial obligations of the state in16
regard to the portion of the principal of and interest on such bonds and the costs17
associated with the issuance and administration of such bonds that may be paid from18
federal transportation funds pursuant to federal law and any agreement between the19
United States Department of Transportation and the department are subject to20
continuing federal appropriations of federal transportation funds at a level equal to21
or greater than the amount needed to pay the federal share of principal, interest, and22
costs on the bonds.23
G. Pledges. Any pledge made by the State Bond Commission pursuant to24
this Section shall be valid and binding from the time the pledge is made. The25
revenues, securities, and other monies so pledged and then held or thereafter received26
by the State Bond Commission state or any fiduciary shall immediately be subject27
to the lien of such pledge without any physical delivery thereof or further act, and the28
lien of any such pledge shall be valid and binding as against all parties having claims29 HLS 14RS-1147 ORIGINAL
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of any kind in tort, contract, or otherwise against the State Bond Commission1
whether or not such parties have notice thereof. Neither the resolution nor any trust2
agreement by which a pledge is created need be filed or recorded except in the3
official minutes of the State Bond Commission.4
H.(1) Certain details of the bonds. Notwithstanding any provision of law to5
the contrary, the bonds shall be of such series, bear such date or dates, be serial or6
term bonds, mature at such time or times no later than thirty years from their date,7
bear interest at such fixed, variable, or adjustable rate or rates payable on such date8
or dates, be in such denomination, be in such form, carry such registration and9
exchangeability provisions, be payable in such medium of payment and at such place10
or places, be subject to such terms of redemption, and be entitled to such priorities11
on the amounts pledged to secure the bonds as the resolution or trust agreement12
authorizing or securing such bonds may provide. The bonds may be additionally13
secured by municipal bond insurance, bank guarantees, surety bonds, letters of14
credit, lines of credit, or other devices to enhance the credit quality of the bonds, or15
any combination thereof, as the State Bond Commission determines. In addition,16
derivative products, including interest rate exchange agreements and other interest17
rate hedge agreements, may be used to either enhance the marketability of the bonds18
or to minimize interest rate risks, or both.19
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(12) Complete authority. This Section does and shall be construed to21
provide a complete method for the doing of the things authorized hereby. No22
proceedings, notice, or approval shall be required for the issuance of any bonds or23
of any instruments or security therefor or any credit enhancement except as provided24
herein and the bonds issued hereunder are not included in the calculation of net state25
tax supported debt as defined in R.S. 39:1367 unless such bonds are served by a state26
appropriation as set forth in a cooperative endeavor agreement. The provisions of27
this Act shall be liberally construed for the accomplishment of its purposes.28
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HB NO. 640
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DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part
of the legislative instrument. The keyword, one-liner, abstract, and digest do not constitute
part of the law or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
Fannin HB No. 640
Abstract: Provides with respect to grant anticipation revenue vehicles.
Present law provides that the State Bond Commission, or its successor, on behalf of the state,
is authorized to issue revenue anticipation bonds for the purpose of financing any qualified
federal-aid transportation project or state transportation project secured by a pledge of
federal transportation funds, state appropriated matching funds, proceeds of such bonds,
earnings from the investment of such bond proceeds and other revenues, funds or other
security, pledge or appropriated under state law.
Proposed law retains present law and provides that security for the bonds by federal
transportation funds are maintained in a separate identifiable fund or account outside of the
state treasury.
Present law provides that the federal share of the principal, interest, and costs associated with
the issuance and administration of revenue anticipation bonds shall be paid from federal
transportation funds that have been annually appropriated by the legislature.
Proposed law deletes the provision that the federal transportation funds shall be annually
appropriated.
Proposed law further provides for the establishment of a special fund, administered by a
trustee as designated by the State Bond Commission, for the purpose of providing for the
securitization of any bonds and the servicing of such bonds as may be provided in any
instrument pursuant to which such bonds were issued. The source of monies for the fund
shall be the federal transportation funds. Federal transportation funds, up to the amount
necessary to service the bonds, shall be set aside in a separate identifiable fund or account
outside of the state treasury but maintained by the state treasury and such revenues shall be
assigned and pledged to the trustee under the bond documents for the benefit of the holders
of the bonds. Only after satisfaction of all requirements of R.S. 48:27(D)(2)(a) shall any
federal transportation funds received by the state be available for any other purposes.
Present law provides that the State Bond Commission shall authorize the bonds by an
adopted resolution provided that the issuance of such bonds and projects to be funded by
them have been previously approved by the Joint Committee on Transportation, Highways
and Public Works. The bonds issued may also be secured by a trust agreement by and
between the State Bond Commission and one or more corporate trustees or fiscal agents.
Such resolution or trust agreement may provide that the trustee bank shall hold the proceeds
of the bond pending expenditure for projects as approved by the JLCB. Present law
provides for publication and notice requirements and peremption.
Proposed law retains present law and provides that the state treasurer may enter into a
collection agreement with the trustee to provide for the collections of the federal
transportation funds.
Present law provides that any bonds issued in accordance with present law shall constitute
a contract between the state of La. and the bond holders and that non-appropriation of state
matching funds or federal transportation funds in any given fiscal year for the servicing of
such bonds shall not constitute an action impairing such contract. HLS 14RS-1147 ORIGINAL
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Proposed law retains present law but exempts federal transportation funds from annual state
appropriation and provides that financial obligations of the state under contracts with the
bond holders are subject to annual appropriation as to state matching funds.
Proposed law changes the fiduciary responsibility from the State Bond Commission to the
state.
Present law provides for details of the bonds that can be issued and provides that derivative
products from acceptable credit enhancement devices may be used to enhance marketability
of the bonds. Present law lists acceptable credit enhancement devices.
Proposed law deletes present law.
Proposed law provides that the bonds are not included in the calculation of net state tax
supported debt as defined in R.S. 39:1367 unless such bonds are served by a state
appropriation as set forth in a cooperative endeavor agreement.
(Amends R.S. 48:27(D)(1)(a), (2)(a), (E), (F), (G), and (H)(1) and (12))