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