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2016 Second Extraordinary Session
HOUSE BILL NO. 3
BY REPRESENTATIVE ABRAMSON
CAPITAL OUTLAY: Provides for the Omnibus Bond Act (Item #4)
1 AN ACT
2To enact the Omnibus Bond Authorization Act of 2016 and to repeal the Act which
3 originated as House Bill No. 3 of the 2016 Regular Session of the Legislature,
4 relative to the implementation of a five-year capital improvement program; to
5 provide for the repeal of certain prior bond authorizations; to provide for new bond
6 authorizations; to provide for authorization and sale of such bonds by the State Bond
7 Commission; and to provide for related matters.
8Be it enacted by the Legislature of Louisiana:
9 Section 1. The legislature hereby recognizes that the Constitution of Louisiana
10provides in Article VII, Section 11, that the governor shall present to the legislature a five-
11year Capital Outlay Program and request implementation of the first year of such program,
12and that the capital outlay projects approved by the legislature are to be made part of the
13comprehensive state capital budget which shall, in turn, be adopted by the legislature.
14Further, all projects in such budget adopted by the legislature requiring bond funds must be
15authorized as provided in Article VII, Section 6 of the Constitution of Louisiana. The
16legislature finds that over a period of years the legislature has enacted numerous bond
17authorizations, but due to inflation and the requirements of specificity of amount for each
18project, impossibility, or impracticability, many of the projects cannot be undertaken. All
19of the unissued bonds must be listed in the financial statements of the state prepared from
20time to time and in connection with the marketing of bonds, and are taken into account by
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1rating agencies, prospective purchasers, and investors in evaluating the investment quality
2and credit worthiness of bonds being offered for sale. The continued carrying of the
3aforesaid unissued bonds on the financial statements of the state under the above described
4circumstances operates unnecessarily to the financial detriment of the state. Accordingly,
5the legislature deems it necessary and in the best financial interest of the state to repeal all
6Acts, except any Act authorizing the issuance of refunding bonds and Act 41 of the 2006
7First Extraordinary Session, providing for the issuance of general obligation bonds in the
8state which cannot be issued for the projects contemplated, and in their stead to reauthorize
9general obligation bonds of the state for those projects deemed to be essential, and to
10authorize new projects.
11 Section 2. It is the intent of the legislature that this Act shall constitute the Omnibus
12Bond Authorization Act of 2016 and, together with any Act authorizing the issuance of
13refunding bonds and Act 41 of the 2006 First Extraordinary Session, shall provide bond
14authorization, as required by Article VII, Section 6 of the Constitution of Louisiana, for
15those projects to be funded totally or partially by the sale of general obligation bonds and
16included in House Bill No. 2 of the 2016 Second Extraordinary Session as finally enacted
17into law (2016 Capital Outlay Act). It is the further intent of the legislature that in this year
18and each year hereafter an Omnibus Bond Authorization Act shall be enacted providing for
19the repeal of state general obligation bond authorizations for projects no longer found
20feasible or desirable, the reauthorization of those bonds not sold during the prior fiscal year
21for projects deemed to be of such priority as to warrant such reauthorization, and to enact
22new authorization for projects found to be needed for capital improvements.
23 Section 3. Except as hereinafter provided, all prior Acts of the legislature authorizing
24the issuance of general obligation bonds of the state of Louisiana shall be and the same are
25hereby repealed in their entirety, including without limitation House Bill No. 3 of the 2015
26Regular Session of the Louisiana Legislature as finally enacted into law (2015 Omnibus
27Bond Authorization Act) and any Acts heretofore repealed with such Act. This repeal shall
28not be applicable to any Act providing for the issuance of refunding bonds nor to Act 41 of
29the 2006 First Extraordinary Session, and such Acts shall remain in full force and effect and
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1shall not be affected by the provisions of this Act. In addition, the repeal shall not in any
2manner affect the validity of any bonds heretofore issued pursuant to any of the bond
3authorizations repealed hereby.
4 Section 4. To provide funds for certain capital improvement projects the State Bond
5Commission is hereby authorized pursuant to Article VII, Section 6 of the Constitution of
6Louisiana to issue general obligation bonds or other general obligations of the state for
7capital improvements for the projects, and subject to any terms and conditions set forth on
8the issuance of bonds or the expenditure of monies for each project as is provided for in the
92016 Capital Outlay Act.
10 Section 5.(A) To provide funds for certain capital improvement projects authorized
11prior to this Act and by this Act, which projects are designed to provide for reimbursement
12of debt service on general obligation bonds, the State Bond Commission is hereby authorized
13pursuant to Article VII, Section 6 of the Constitution of Louisiana, to issue general
14obligation bonds of the state, hereinafter referred to as "project bonds", for capital
15improvements for the projects and subject to any terms and conditions set forth on the
16issuance of bonds or the expenditure of monies for each such project as provided in the 2016
17Capital Outlay Act the terms of which require such reimbursement of debt service.
18 (B) Without affecting, restricting, or limiting the pledge herein made of the full faith
19and credit of the state of Louisiana to the payment of the general obligation bonds authorized
20by this Section and without affecting, restricting, or limiting the obligation of the state to pay
21the same from monies pledged and dedicated to and paid into the Bond Security and
22Redemption Fund, but in order to decrease the possible financial burden on the general funds
23of the state resulting from this pledge and obligation, the applicable management board,
24governing body, or state agency for which any of such project bonds are issued, in the fiscal
25year in which such project bonds are issued and in each fiscal year thereafter until such
26project bonds and the interest thereon are paid, shall transfer and make available to the state
27treasury, for deposit in the Bond Security and Redemption Fund, designated student fees or
28revenues or other revenues in an amount equal to the debt service on such project bonds in
29such fiscal year. In addition, the applicable management board, governing body, or state
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1agency, in the fiscal year in which such project bonds are issued and in each of the nine
2immediately succeeding fiscal years thereafter, shall transfer and make available to the state
3treasury from designated student fees or revenues or other revenues, for credit to a
4reimbursement reserve account for such project bonds which shall be established in an
5account designated in the reimbursement contract hereafter provided for, monies in an
6amount equal to one-tenth of the average annual debt service on such project bonds, and
7each such reimbursement reserve account thereafter shall be maintained in said minimum
8amount by further transfers, if necessary, from designated student fees or revenues or other
9revenues by the applicable management board, governing body, or state agency to the state
10treasury. Each such reimbursement reserve account shall be used, if necessary, solely to
11make the reimbursement payments herein obligated to be made to the state treasury. When
12the general obligation bonds and the interest thereon issued hereunder have been paid, any
13amount remaining in the reimbursement reserve account, as prorated to such authorized
14project, shall be transferred by the state treasurer to the applicable management board,
15governing body, or state agency.
16 (C) No project bonds authorized by this Section shall be issued for any authorized
17project unless and until a reimbursement contract has been entered into and executed
18between the applicable management board, governing body, or state agency and the State
19Bond Commission pertaining to the reimbursement payment and reimbursement reserve
20account payments for such project. The contract shall require payment into the state treasury
21of designated student fees or revenues or other revenues in an amount sufficient to reimburse
22the cost to the state of the principal, interest, and premium, if any, obligated to be paid by
23the state on such project bonds. The State Bond Commission shall not be required to
24execute any such reimbursement contract unless the estimates and projections of the
25designated student fees or revenues or other revenues available for payment into the state
26treasury thereunder for the authorized projects are sufficient to reimburse the costs of the
27principal, interest, and premium, if any, on the project bonds. A reimbursement contract
28hereunder shall be authorized by resolution of the applicable management board, governing
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1body, or state agency, or board or by act of the chief executive officer if no governing board
2exists.
3 This authorization shall provide for the dates, amounts, and other details for the
4payments required to be made to the state treasury and for the reserve account. The
5authorization may contain such covenants with the State Bond Commission regarding the
6fixing of rates for fees and charges or revenues and such other covenants and agreements
7with the State Bond Commission as will assure the required payments to the state treasury.
8The contract shall be subject to approval by the Office of the Attorney General and the State
9Bond Commission and, when so accepted and approved, shall conclusively constitute and
10be the reimbursement contract for an authorized project, as required hereunder.
11 (D) The obligation to make the reimbursement payments as required by a
12reimbursement contract may be represented by the issuance by the applicable management
13board, governing body, or state agency of its nonnegotiable revenue obligation in the form
14of a bond or other evidence of indebtedness, hereinafter referred to as "reimbursement
15bond". The reimbursement bond shall be issued in a single bond form, without coupons, in
16the principal amount equal to the aggregate principal amount of project bonds, shall be
17registered in principal and interest in the name of and be payable to the State Bond
18Commission, shall bear interest at a rate or rates equal to the interest rate or rates payable
19on the project bonds, and shall be payable as to principal and interest at such times, in such
20manner, from designated student fees or revenues, or other revenues, and be subject to such
21terms and conditions as shall be provided in the authorizing resolution or document executed
22by a chief executive officer, where applicable. This authorization shall be subject to
23approval by the State Bond Commission and the Office of the Attorney General, and when
24so accepted and approved, the authorization shall constitute and be the reimbursement
25contract for such authorized project, as required hereunder. The reimbursement bonds
26authorized under the provisions of this Section may be issued on a parity with outstanding
27reimbursement bonds of the applicable management board, governing body, or state agency,
28or issued on a subordinate lien basis to outstanding bonds, or a combination thereof, and may
29include and contain such covenants with the State Bond Commission for the security and
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1payment of the reimbursement bonds and such other customary provisions and conditions
2for their issuance by the applicable management board, governing body, or state agency as
3are authorized and provided for by general law and by this Section. Until project bonds for
4an authorized project have been paid, the applicable management board, governing body,
5or state agency shall impose fees and charges in an amount sufficient to comply with the
6covenants securing outstanding bonds and to make the payments required by the
7reimbursement contract.
8 (E) In addition to the other payments herein required, reimbursement contracts shall
9provide for the setting aside of sufficient student fees or revenues or other revenues in a
10reserve fund, so that within a period of not less than ten years from date of issuance of
11project bonds there shall be accumulated in a reserve fund monies equal to a sum not less
12than the average annual debt service requirements on such project bonds. Monies in the
13reserve fund shall be used for the purpose of remedying or preventing a default in making
14the required payments under a reimbursement contract. The reserve fund required
15hereunder may consist of a reserve fund heretofore or hereafter established to secure
16payments for reimbursement bonds of the applicable management board, governing body,
17or state agency, provided that (1) payments from said reserve fund to secure the payments
18required to be made under a reimbursement contract shall be on a parity with the payments
19to be made securing outstanding bonds and additional parity bonds and (2) no additional
20parity reimbursement bonds shall be issued except pursuant to the establishment and
21maintenance of an adequate reserve fund as approved by the State Bond Commission.
22 (F) When the balance of reimbursement bond proceeds, for a project, are allocated
23to another project, the State Bond Commission is authorized to make the appropriate
24amendment to the reimbursement contract with the agency making the reimbursement
25payments.
26 Section 6. The bonds authorized to be sold by the State Bond Commission pursuant
27to this Act shall be issued and sold in conformity with the provisions of Article VII, Section
286 of the Louisiana Constitution, R.S. 39:1361 through R.S. 39:1367, and R.S. 39:1401
29through R.S. 39:1430.1, and any amendments thereto adopted prior to, at the same time as,
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1or subsequent to, the effective date of this Act. However, the provisions of R.S. 39:1365(9)
2shall not apply to any bonds issued hereunder in the form of variable rate and/or tender
3option bonds and that said bonds need not be issued in serial form and may mature in such
4year or years as may be specified by the State Bond Commission. Should any provision of
5this Act be inconsistent with any provision of the Louisiana Revised Statutes of 1950, the
6provision of this Act shall govern. In connection with the issuance of the bonds authorized
7hereby, the State Bond Commission may, without regard to any other laws of the state
8relating to the procurement of services, insurance, or facilities, enter into contracts upon such
9terms as it deems advantageous to the state for (1) the obtaining of credit enhancement or
10liquidity devices designed to improve the marketability of the bonds and (2) if the bonds are
11structured as variable rate and/or tender option bonds to provide the services and facilities
12required for or deemed appropriate by the State Bond Commission for such type of bonds,
13including those of tender agents, placement agents, indexing agents, remarketing agents,
14and/or standby bond purchase facilities. The cost of obtaining credit enhancement or
15liquidity devices and fees for other services set forth in this Section shall, if authorized by
16the State Bond Commission, be paid from the Bond Security and Redemption Fund as a
17requirement with respect to the issuance of the bonds authorized hereby. The bonds shall be
18general obligations of the state of Louisiana, to the payment of which, as to principal,
19premium, if any, and interest, as and when the same become due, the full faith and credit of
20the state is hereby irrevocably pledged. These bonds shall be secured by monies in the Bond
21Security and Redemption Fund and shall be payable on a parity with bonds and other
22obligations heretofore and hereafter issued which are secured by that fund. The maximum
23interest rate or rates on such bonds, and their maturities, shall be determined by the State
24Bond Commission. The state treasurer shall invest all bond proceeds until disbursed.
25 Section 7. Unless specifically repealed, this Act shall expire, and be considered null
26and void and of no further effect on June 30, 2017, except as to any bonds authorized herein
27(1) which have been sold, (2) to which lines of credit have been issued, or (3) for which
28contracts for construction have been signed.
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1 Section 8. The Act which originated as House Bill No. 3 of the 2016 Regular
2Session of the Legislature is hereby repealed in its entirety.
3 Section 9. This Act shall become effective upon signature by the governor or, if not
4signed by the governor, upon expiration of the time for bills to become law without signature
5by the governor, as provided by Article III, Section 18 of the Constitution of Louisiana. If
6vetoed by the governor and subsequently approved by the legislature, this Act shall become
7effective on the day following such approval.
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)]
HB 3 Engrossed 2016 Second Extraordinary Session Abramson
Abstract: Provides for the implementation of a five-year capital improvement program.
Provides for the implementation of a five-year capital improvement program; provides for
the repeal of certain prior bond authorizations; provides for new bond authorizations;
provides for authorization and sale of such bonds by the State Bond Commission; and
provides for related matters.
Repeals the Act that originated as HB No. 3 of the 2016 R.S. of the Legislature.
Effective upon signature of governor or lapse of time for gubernatorial action.
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