HLS 172ES-3 ORIGINAL
2017 Second Extraordinary Session
HOUSE BILL NO. 3
BY REPRESENTATIVE ABRAMSON
CAPITAL OUTLAY: Provides for the Omnibus Bond Act and provides for limitations on
certain appropriations included in the Capital Outlay Act for Fiscal Year 2017-2018
(Item #4)
1 AN ACT
2To enact the Omnibus Bond Authorization Act of 2017, relative to the implementation of
3 a five-year capital improvement program; to provide for the repeal of certain prior
4 bond authorizations; to provide for new bond authorizations; to provide for
5 authorization and sale of such bonds by the State Bond Commission; to provide
6 relative to the submission of capital outlay applications; to provide with respect to
7 the resubmission of certain capital outlay budget requests; to require approval of the
8 State Bond Commission under certain circumstances; to provide for an effective
9 date; and to provide for related matters.
10Be it enacted by the Legislature of Louisiana:
11 Section 1. The legislature hereby recognizes that the Constitution of Louisiana
12provides in Article VII, Section 11, that the governor shall present to the legislature a five-
13year Capital Outlay Program and request implementation of the first year of such program,
14and that the capital outlay projects approved by the legislature are to be made part of the
15comprehensive state capital budget which shall, in turn, be adopted by the legislature.
16Further, all projects in such budget adopted by the legislature requiring bond funds must be
17authorized as provided in Article VII, Section 6 of the Constitution of Louisiana. The
18legislature finds that over a period of years the legislature has enacted numerous bond
19authorizations, but due to inflation and the requirements of specificity of amount for each
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1project, impossibility, or impracticability, many of the projects cannot be undertaken. All
2of the unissued bonds must be listed in the financial statements of the state prepared from
3time to time and in connection with the marketing of bonds, and are taken into account by
4rating agencies, prospective purchasers, and investors in evaluating the investment quality
5and credit worthiness of bonds being offered for sale. The continued carrying of the
6aforesaid unissued bonds on the financial statements of the state under the above described
7circumstances operates unnecessarily to the financial detriment of the state. Accordingly, the
8legislature deems it necessary and in the best financial interest of the state to repeal all Acts,
9except any Act authorizing the issuance of refunding bonds and Act 41 of the 2006 First
10Extraordinary Session, providing for the issuance of general obligation bonds in the state
11which cannot be issued for the projects contemplated, and in their stead to reauthorize
12general obligation bonds of the state for those projects deemed to be essential, and to
13authorize new projects.
14 Section 2. It is the intent of the legislature that this Act shall constitute the Omnibus
15Bond Authorization Act of 2017 and, together with any Act authorizing the issuance of
16refunding bonds and Act 41 of the 2006 First Extraordinary Session, shall provide bond
17authorization, as required by Article VII, Section 6 of the Constitution of Louisiana, for
18those projects to be funded totally or partially by the sale of general obligation bonds and
19included in House Bill No. 2 of the 2017 Regular Session as finally enacted into law (2017
20Capital Outlay Act). It is the further intent of the legislature that in this year and each year
21hereafter an Omnibus Bond Authorization Act shall be enacted providing for the repeal of
22state general obligation bond authorizations for projects no longer found feasible or
23desirable, the reauthorization of those bonds not sold during the prior fiscal year for projects
24deemed to be of such priority as to warrant such reauthorization, and to enact new
25authorization for projects found to be needed for capital improvements.
26 Section 3. Except as hereinafter provided, all prior Acts of the legislature authorizing
27the issuance of general obligation bonds of the state of Louisiana shall be and the same are
28hereby repealed in their entirety, including without limitation House Bill No. 3 of the 2016
29Second Extraordinary Session of the Louisiana Legislature as finally enacted into law (2016
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1Omnibus Bond Authorization Act) and any Acts heretofore repealed with such Act. This
2repeal shall not be applicable to any Act providing for the issuance of refunding bonds nor
3to Act 41 of the 2006 First Extraordinary Session, and such Acts shall remain in full force
4and effect and shall not be affected by the provisions of this Act. In addition, the repeal shall
5not in any manner affect the validity of any bonds heretofore issued pursuant to any of the
6bond authorizations repealed hereby.
7 Section 4. To provide funds for certain capital improvement projects the State Bond
8Commission is hereby authorized pursuant to Article VII, Section 6 of the Constitution of
9Louisiana to issue general obligation bonds or other general obligations of the state for
10capital improvements for the projects, and subject to any terms and conditions set forth on
11the issuance of bonds or the expenditure of monies for each project as is provided for in the
122017 Capital Outlay Act.
13 Section 5.(A) To provide funds for certain capital improvement projects authorized
14prior to this Act and by this Act, which projects are designed to provide for reimbursement
15of debt service on general obligation bonds, the State Bond Commission is hereby authorized
16pursuant to Article VII, Section 6 of the Constitution of Louisiana, to issue general
17obligation bonds of the state, hereinafter referred to as "project bonds", for capital
18improvements for the projects and subject to any terms and conditions set forth on the
19issuance of bonds or the expenditure of monies for each such project as provided in the 2017
20Capital Outlay Act the terms of which require such reimbursement of debt service.
21 (B) Without affecting, restricting, or limiting the pledge herein made of the full faith
22and credit of the state of Louisiana to the payment of the general obligation bonds authorized
23by this Section and without affecting, restricting, or limiting the obligation of the state to pay
24the same from monies pledged and dedicated to and paid into the Bond Security and
25Redemption Fund, but in order to decrease the possible financial burden on the general funds
26of the state resulting from this pledge and obligation, the applicable management board,
27governing body, or state agency for which any of such project bonds are issued, in the fiscal
28year in which such project bonds are issued and in each fiscal year thereafter until such
29project bonds and the interest thereon are paid, shall transfer and make available to the state
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1treasury, for deposit in the Bond Security and Redemption Fund, designated student fees or
2revenues or other revenues in an amount equal to the debt service on such project bonds in
3such fiscal year. In addition, the applicable management board, governing body, or state
4agency, in the fiscal year in which such project bonds are issued and in each of the nine
5immediately succeeding fiscal years thereafter, shall transfer and make available to the state
6treasury from designated student fees or revenues or other revenues, for credit to a
7reimbursement reserve account for such project bonds which shall be established in an
8account designated in the reimbursement contract hereafter provided for, monies in an
9amount equal to one-tenth of the average annual debt service on such project bonds, and
10each such reimbursement reserve account thereafter shall be maintained in said minimum
11amount by further transfers, if necessary, from designated student fees or revenues or other
12revenues by the applicable management board, governing body, or state agency to the state
13treasury. Each such reimbursement reserve account shall be used, if necessary, solely to
14make the reimbursement payments herein obligated to be made to the state treasury. When
15the general obligation bonds and the interest thereon issued hereunder have been paid, any
16amount remaining in the reimbursement reserve account, as prorated to such authorized
17project, shall be transferred by the state treasurer to the applicable management board,
18governing body, or state agency.
19 (C) No project bonds authorized by this Section shall be issued for any authorized
20project unless and until a reimbursement contract has been entered into and executed
21between the applicable management board, governing body, or state agency and the State
22Bond Commission pertaining to the reimbursement payment and reimbursement reserve
23account payments for such project. The contract shall require payment into the state treasury
24of designated student fees or revenues or other revenues in an amount sufficient to reimburse
25the cost to the state of the principal, interest, and premium, if any, obligated to be paid by
26the state on such project bonds. The State Bond Commission shall not be required to execute
27any such reimbursement contract unless the estimates and projections of the designated
28student fees or revenues or other revenues available for payment into the state treasury
29thereunder for the authorized projects are sufficient to reimburse the costs of the principal,
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1interest, and premium, if any, on the project bonds. A reimbursement contract hereunder
2shall be authorized by resolution of the applicable management board, governing body, or
3state agency, or board or by act of the chief executive officer if no governing board exists.
4 This authorization shall provide for the dates, amounts, and other details for the
5payments required to be made to the state treasury and for the reserve account. The
6authorization may contain such covenants with the State Bond Commission regarding the
7fixing of rates for fees and charges or revenues and such other covenants and agreements
8with the State Bond Commission as will assure the required payments to the state treasury.
9The contract shall be subject to approval by the Office of the Attorney General and the State
10Bond Commission and, when so accepted and approved, shall conclusively constitute and
11be the reimbursement contract for an authorized project, as required hereunder.
12 (D) The obligation to make the reimbursement payments as required by a
13reimbursement contract may be represented by the issuance by the applicable management
14board, governing body, or state agency of its nonnegotiable revenue obligation in the form
15of a bond or other evidence of indebtedness, hereinafter referred to as "reimbursement
16bond". The reimbursement bond shall be issued in a single bond form, without coupons, in
17the principal amount equal to the aggregate principal amount of project bonds, shall be
18registered in principal and interest in the name of and be payable to the State Bond
19Commission, shall bear interest at a rate or rates equal to the interest rate or rates payable
20on the project bonds, and shall be payable as to principal and interest at such times, in such
21manner, from designated student fees or revenues, or other revenues, and be subject to such
22terms and conditions as shall be provided in the authorizing resolution or document executed
23by a chief executive officer, where applicable. This authorization shall be subject to approval
24by the State Bond Commission and the Office of the Attorney General, and when so
25accepted and approved, the authorization shall constitute and be the reimbursement contract
26for such authorized project, as required hereunder. The reimbursement bonds authorized
27under the provisions of this Section may be issued on a parity with outstanding
28reimbursement bonds of the applicable management board, governing body, or state agency,
29or issued on a subordinate lien basis to outstanding bonds, or a combination thereof, and may
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1include and contain such covenants with the State Bond Commission for the security and
2payment of the reimbursement bonds and such other customary provisions and conditions
3for their issuance by the applicable management board, governing body, or state agency as
4are authorized and provided for by general law and by this Section. Until project bonds for
5an authorized project have been paid, the applicable management board, governing body,
6or state agency shall impose fees and charges in an amount sufficient to comply with the
7covenants securing outstanding bonds and to make the payments required by the
8reimbursement contract.
9 (E) In addition to the other payments herein required, reimbursement contracts shall
10provide for the setting aside of sufficient student fees or revenues or other revenues in a
11reserve fund, so that within a period of not less than ten years from date of issuance of
12project bonds there shall be accumulated in a reserve fund monies equal to a sum not less
13than the average annual debt service requirements on such project bonds. Monies in the
14reserve fund shall be used for the purpose of remedying or preventing a default in making
15the required payments under a reimbursement contract. The reserve fund required hereunder
16may consist of a reserve fund heretofore or hereafter established to secure payments for
17reimbursement bonds of the applicable management board, governing body, or state agency,
18provided that (1) payments from said reserve fund to secure the payments required to be
19made under a reimbursement contract shall be on a parity with the payments to be made
20securing outstanding bonds and additional parity bonds and (2) no additional parity
21reimbursement bonds shall be issued except pursuant to the establishment and maintenance
22of an adequate reserve fund as approved by the State Bond Commission.
23 (F) When the balance of reimbursement bond proceeds, for a project, are allocated
24to another project, the State Bond Commission is authorized to make the appropriate
25amendment to the reimbursement contract with the agency making the reimbursement
26payments.
27 Section 6. The bonds authorized to be sold by the State Bond Commission pursuant
28to this Act shall be issued and sold in conformity with the provisions of Article VII, Section
296 of the Louisiana Constitution, R.S. 39:1361 through R.S. 39:1367, and R.S. 39:1401
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1through R.S. 39:1430.1, and any amendments thereto adopted prior to, at the same time as,
2or subsequent to, the effective date of this Act. However, the provisions of R.S. 39:1365(9)
3shall not apply to any bonds issued hereunder in the form of variable rate and/or tender
4option bonds and that said bonds need not be issued in serial form and may mature in such
5year or years as may be specified by the State Bond Commission. Should any provision of
6this Act be inconsistent with any provision of the Louisiana Revised Statutes of 1950, the
7provision of this Act shall govern. In connection with the issuance of the bonds authorized
8hereby, the State Bond Commission may, without regard to any other laws of the state
9relating to the procurement of services, insurance, or facilities, enter into contracts upon such
10terms as it deems advantageous to the state for (1) the obtaining of credit enhancement or
11liquidity devices designed to improve the marketability of the bonds and (2) if the bonds are
12structured as variable rate and/or tender option bonds to provide the services and facilities
13required for or deemed appropriate by the State Bond Commission for such type of bonds,
14including those of tender agents, placement agents, indexing agents, remarketing agents,
15and/or standby bond purchase facilities. The cost of obtaining credit enhancement or
16liquidity devices and fees for other services set forth in this Section shall, if authorized by
17the State Bond Commission, be paid from the Bond Security and Redemption Fund as a
18requirement with respect to the issuance of the bonds authorized hereby. The bonds shall be
19general obligations of the state of Louisiana, to the payment of which, as to principal,
20premium, if any, and interest, as and when the same become due, the full faith and credit of
21the state is hereby irrevocably pledged. These bonds shall be secured by monies in the Bond
22Security and Redemption Fund and shall be payable on a parity with bonds and other
23obligations heretofore and hereafter issued which are secured by that fund. The maximum
24interest rate or rates on such bonds, and their maturities, shall be determined by the State
25Bond Commission. The state treasurer shall invest all bond proceeds until disbursed.
26 Section 7. Unless specifically repealed, this Act shall expire, and be considered null
27and void and of no further effect on June 30, 2018, except as to any bonds authorized herein
28(1) which have been sold, (2) to which lines of credit have been issued, or (3) for which
29contracts for construction have been signed.
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1 Section 8. Notwithstanding the provisions of R.S. 39:101(A) and 112(C), projects
2included within Section (1)(A) of House Bill No. 2 of the 2017 Regular Session of the
3Legislature are hereby deemed to have timely resubmitted capital outlay budget request
4applications for Fiscal Year 2017-2018 and to have complied with the late approval
5requirements of R.S. 39:112(C), and as such shall be eligible for cash and noncash lines of
6credit for Fiscal Year 2017-2018. Beginning in Fiscal Year 2018-2019, all projects shall
7comply with the provisions of R.S. 39:101(A) and 112(C).
8 Section 9. Notwithstanding the provisions of R.S. 39:101(A) and 112(C), projects
9included within Section (1)(B) of House Bill No. 2 of the 2017 Regular Session of the
10Legislature are hereby deemed to have until June 19, 2017, to submit capital outlay budget
11request applications pursuant to R.S. 39:101(A) and to obtain late approval pursuant to the
12provisions of R.S. 39:112(C). Beginning in Fiscal Year 2018-2019, all projects shall
13comply with the provisions of R.S. 39:101(A) and 112(C).
14 Section 10. No project which receives an appropriation in the Capital Outlay Act for
15Fiscal Year 2017-2018 shall be exempt from any provision of the public bid laws or laws
16pertaining to the review of plans and specifications by the state entity administering the
17project without prior authorization from the State Bond Commission. Furthermore, no
18project that receives an appropriation in the Capital Outlay Act shall enter into contracts
19prior to the issuance of a line of credit, prior to receipt of funding, or prior to entering into
20a cooperative endeavor agreement, nor may the entity be reimbursed for any such
21expenditures without prior authorization from the State Bond Commission. Notwithstanding
22anything in this Act, or any other Capital Outlay Act, the Milne Boys Home Complex -
23North and South Cottage Renovation project is hereby transferred from the Gentilly
24Development District to the City of New Orleans. Furthermore, the issuance of a line of
25credit for all or a portion of the funds in Priority 2 or Priority 5 for the Milne Boys Home
26Complex - North and South Cottage Renovation project shall be subject to the submission
27of a duly adopted resolution of the City Council of New Orleans in support of the Gentilly
28Development District, which resolution shall be submitted to the commissioner of
29administration, the State Bond Commission, and the attorney general.
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1 Section 11. This Act shall become effective upon signature by the governor or, if not
2signed by the governor, upon expiration of the time for bills to become law without signature
3by the governor, as provided by Article III, Section 18 of the Constitution of Louisiana. If
4vetoed by the governor and subsequently approved by the legislature, this Act shall become
5effective 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 Original 2017 Second Extraordinary Session Abramson
Abstract: Provides for the implementation of a five-year capital improvement program;
provides for limitations and exceptions for projects receiving capital outlay
appropriations for FY 2017-2018; and prohibits certain exemptions from present law
without the approval of the State Bond Commission.
Proposed law 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.
Proposed law deems projects included within Section (1)(A) of HB No. 2 of the 2017 R.S.
to have timely resubmitted capital outlay budget request applications for FY 2017-2018 and
to have complied with the late approval requirements of present law. Further authorizes
these projects to be eligible for lines of credit for FY 2017-2018.
Proposed law deems projects included within Section (1)(B) of HB No. 2 of the 2017 R.S.
to have until June 19, 2017, to submit capital outlay budget request applications and to
obtain late approval pursuant to present law.
Proposed law prohibits projects receiving capital outlay appropriations for FY 2017-2018
from being exempt from public bid laws or laws pertaining to the review of plans and
specifications by administering agencies without prior authorization from the State Bond
Commission. Further prohibits projects receiving capital outlay appropriations for FY 2017-
2018 from entering into contracts prior to the issuance of a line of credit, prior to receipt of
funding, or prior to entering into a CEA, nor receiving reimbursement for expenditures
without prior authorization from the State Bond Commission.
Proposed law transfers the Milne Boys Home Complex - North and South Cottage
Renovation project is hereby transferred from the Gentilly Development District to the City
of New Orleans. Further provides that the issuance of a line of credit for all or a portion of
the funds in Priority 2 or Priority 5 for the Milne Boys Home Complex - North and South
Cottage Renovation project shall be subject to the submission of a duly adopted resolution
of the City Council of New Orleans in support of the Gentilly Development District, which
resolution shall be submitted to the commissioner of administration, the State Bond
Commission, and the attorney general.
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Proposed law requires all projects receiving capital outlay appropriations to comply with the
provisions of present law beginning in FY 2018-2019.
Effective upon signature of governor or lapse of time for gubernatorial action.
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