HLS 172ES-3 ENGROSSED
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
20project, impossibility, or impracticability, many of the projects cannot be undertaken. All
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1of the unissued bonds must be listed in the financial statements of the state prepared from
2time to time and in connection with the marketing of bonds, and are taken into account by
3rating agencies, prospective purchasers, and investors in evaluating the investment quality
4and credit worthiness of bonds being offered for sale. The continued carrying of the
5aforesaid unissued bonds on the financial statements of the state under the above described
6circumstances operates unnecessarily to the financial detriment of the state. Accordingly, the
7legislature deems it necessary and in the best financial interest of the state to repeal all Acts,
8except any Act authorizing the issuance of refunding bonds and Act 41 of the 2006 First
9Extraordinary Session, providing for the issuance of general obligation bonds in the state
10which cannot be issued for the projects contemplated, and in their stead to reauthorize
11general obligation bonds of the state for those projects deemed to be essential, and to
12authorize new projects.
13 Section 2. It is the intent of the legislature that this Act shall constitute the Omnibus
14Bond Authorization Act of 2017 and, together with any Act authorizing the issuance of
15refunding bonds and Act 41 of the 2006 First Extraordinary Session, shall provide bond
16authorization, as required by Article VII, Section 6 of the Constitution of Louisiana, for
17those projects to be funded totally or partially by the sale of general obligation bonds and
18included in House Bill No. 2 of the 2017 Regular Session as finally enacted into law (2017
19Capital Outlay Act). It is the further intent of the legislature that in this year and each year
20hereafter an Omnibus Bond Authorization Act shall be enacted providing for the repeal of
21state general obligation bond authorizations for projects no longer found feasible or
22desirable, the reauthorization of those bonds not sold during the prior fiscal year for projects
23deemed to be of such priority as to warrant such reauthorization, and to enact new
24authorization for projects found to be needed for capital improvements.
25 Section 3. Except as hereinafter provided, all prior Acts of the legislature authorizing
26the issuance of general obligation bonds of the state of Louisiana shall be and the same are
27hereby repealed in their entirety, including without limitation House Bill No. 3 of the 2016
28Second Extraordinary Session of the Louisiana Legislature as finally enacted into law (2016
29Omnibus Bond Authorization Act) and any Acts heretofore repealed with such Act. This
30repeal shall not be applicable to any Act providing for the issuance of refunding bonds nor
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1to Act 41 of the 2006 First Extraordinary Session, and such Acts shall remain in full force
2and effect and shall not be affected by the provisions of this Act. In addition, the repeal shall
3not in any manner affect the validity of any bonds heretofore issued pursuant to any of the
4bond authorizations repealed hereby.
5 Section 4. To provide funds for certain capital improvement projects the State Bond
6Commission is hereby authorized pursuant to Article VII, Section 6 of the Constitution of
7Louisiana to issue general obligation bonds or other general obligations of the state for
8capital improvements for the projects, and subject to any terms and conditions set forth on
9the issuance of bonds or the expenditure of monies for each project as is provided for in the
102017 Capital Outlay Act.
11 Section 5.(A) To provide funds for certain capital improvement projects authorized
12prior to this Act and by this Act, which projects are designed to provide for reimbursement
13of debt service on general obligation bonds, the State Bond Commission is hereby authorized
14pursuant to Article VII, Section 6 of the Constitution of Louisiana, to issue general
15obligation bonds of the state, hereinafter referred to as "project bonds", for capital
16improvements for the projects and subject to any terms and conditions set forth on the
17issuance of bonds or the expenditure of monies for each such project as provided in the 2017
18Capital Outlay Act the terms of which require such reimbursement of debt service.
19 (B) Without affecting, restricting, or limiting the pledge herein made of the full faith
20and credit of the state of Louisiana to the payment of the general obligation bonds authorized
21by this Section and without affecting, restricting, or limiting the obligation of the state to pay
22the same from monies pledged and dedicated to and paid into the Bond Security and
23Redemption Fund, but in order to decrease the possible financial burden on the general funds
24of the state resulting from this pledge and obligation, the applicable management board,
25governing body, or state agency for which any of such project bonds are issued, in the fiscal
26year in which such project bonds are issued and in each fiscal year thereafter until such
27project bonds and the interest thereon are paid, shall transfer and make available to the state
28treasury, for deposit in the Bond Security and Redemption Fund, designated student fees or
29revenues or other revenues in an amount equal to the debt service on such project bonds in
30such 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 execute
24any such reimbursement contract unless the estimates and projections of the designated
25student fees or revenues or other revenues available for payment into the state treasury
26thereunder for the authorized projects are sufficient to reimburse the costs of the principal,
27interest, and premium, if any, on the project bonds. A reimbursement contract hereunder
28shall be authorized by resolution of the applicable management board, governing body, or
29state agency, or board or by act of the chief executive officer if no governing board exists.
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1 This authorization shall provide for the dates, amounts, and other details for the
2payments required to be made to the state treasury and for the reserve account. The
3authorization may contain such covenants with the State Bond Commission regarding the
4fixing of rates for fees and charges or revenues and such other covenants and agreements
5with the State Bond Commission as will assure the required payments to the state treasury.
6The contract shall be subject to approval by the Office of the Attorney General and the State
7Bond Commission and, when so accepted and approved, shall conclusively constitute and
8be the reimbursement contract for an authorized project, as required hereunder.
9 (D) The obligation to make the reimbursement payments as required by a
10reimbursement contract may be represented by the issuance by the applicable management
11board, governing body, or state agency of its nonnegotiable revenue obligation in the form
12of a bond or other evidence of indebtedness, hereinafter referred to as "reimbursement
13bond". The reimbursement bond shall be issued in a single bond form, without coupons, in
14the principal amount equal to the aggregate principal amount of project bonds, shall be
15registered in principal and interest in the name of and be payable to the State Bond
16Commission, shall bear interest at a rate or rates equal to the interest rate or rates payable
17on the project bonds, and shall be payable as to principal and interest at such times, in such
18manner, from designated student fees or revenues, or other revenues, and be subject to such
19terms and conditions as shall be provided in the authorizing resolution or document executed
20by a chief executive officer, where applicable. This authorization shall be subject to approval
21by the State Bond Commission and the Office of the Attorney General, and when so
22accepted and approved, the authorization shall constitute and be the reimbursement contract
23for such authorized project, as required hereunder. The reimbursement bonds authorized
24under the provisions of this Section may be issued on a parity with outstanding
25reimbursement bonds of the applicable management board, governing body, or state agency,
26or issued on a subordinate lien basis to outstanding bonds, or a combination thereof, and may
27include and contain such covenants with the State Bond Commission for the security and
28payment of the reimbursement bonds and such other customary provisions and conditions
29for their issuance by the applicable management board, governing body, or state agency as
30are authorized and provided for by general law and by this Section. Until project bonds for
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1an authorized project have been paid, the applicable management board, governing body,
2or state agency shall impose fees and charges in an amount sufficient to comply with the
3covenants securing outstanding bonds and to make the payments required by the
4reimbursement contract.
5 (E) In addition to the other payments herein required, reimbursement contracts shall
6provide for the setting aside of sufficient student fees or revenues or other revenues in a
7reserve fund, so that within a period of not less than ten years from date of issuance of
8project bonds there shall be accumulated in a reserve fund monies equal to a sum not less
9than the average annual debt service requirements on such project bonds. Monies in the
10reserve fund shall be used for the purpose of remedying or preventing a default in making
11the required payments under a reimbursement contract. The reserve fund required hereunder
12may consist of a reserve fund heretofore or hereafter established to secure payments for
13reimbursement bonds of the applicable management board, governing body, or state agency,
14provided that (1) payments from said reserve fund to secure the payments required to be
15made under a reimbursement contract shall be on a parity with the payments to be made
16securing outstanding bonds and additional parity bonds and (2) no additional parity
17reimbursement bonds shall be issued except pursuant to the establishment and maintenance
18of an adequate reserve fund as approved by the State Bond Commission.
19 (F) When the balance of reimbursement bond proceeds, for a project, are allocated
20to another project, the State Bond Commission is authorized to make the appropriate
21amendment to the reimbursement contract with the agency making the reimbursement
22payments.
23 Section 6. The bonds authorized to be sold by the State Bond Commission pursuant
24to this Act shall be issued and sold in conformity with the provisions of Article VII, Section
256 of the Louisiana Constitution, R.S. 39:1361 through R.S. 39:1367, and R.S. 39:1401
26through R.S. 39:1430.1, and any amendments thereto adopted prior to, at the same time as,
27or subsequent to, the effective date of this Act. However, the provisions of R.S. 39:1365(9)
28shall not apply to any bonds issued hereunder in the form of variable rate and/or tender
29option bonds and that said bonds need not be issued in serial form and may mature in such
30year or years as may be specified by the State Bond Commission. Should any provision of
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1this Act be inconsistent with any provision of the Louisiana Revised Statutes of 1950, the
2provision of this Act shall govern. In connection with the issuance of the bonds authorized
3hereby, the State Bond Commission may, without regard to any other laws of the state
4relating to the procurement of services, insurance, or facilities, enter into contracts upon such
5terms as it deems advantageous to the state for (1) the obtaining of credit enhancement or
6liquidity devices designed to improve the marketability of the bonds and (2) if the bonds are
7structured as variable rate and/or tender option bonds to provide the services and facilities
8required for or deemed appropriate by the State Bond Commission for such type of bonds,
9including those of tender agents, placement agents, indexing agents, remarketing agents,
10and/or standby bond purchase facilities. The cost of obtaining credit enhancement or
11liquidity devices and fees for other services set forth in this Section shall, if authorized by
12the State Bond Commission, be paid from the Bond Security and Redemption Fund as a
13requirement with respect to the issuance of the bonds authorized hereby. The bonds shall be
14general obligations of the state of Louisiana, to the payment of which, as to principal,
15premium, if any, and interest, as and when the same become due, the full faith and credit of
16the state is hereby irrevocably pledged. These bonds shall be secured by monies in the Bond
17Security and Redemption Fund and shall be payable on a parity with bonds and other
18obligations heretofore and hereafter issued which are secured by that fund. The maximum
19interest rate or rates on such bonds, and their maturities, shall be determined by the State
20Bond Commission. The state treasurer shall invest all bond proceeds until disbursed.
21 Section 7. Unless specifically repealed, this Act shall expire, and be considered null
22and void and of no further effect on June 30, 2018, except as to any bonds authorized herein
23(1) which have been sold, (2) to which lines of credit have been issued, or (3) for which
24contracts for construction have been signed.
25 Section 8. Notwithstanding the provisions of R.S. 39:101(A) and 112(C), projects
26included within Section (1)(A) of House Bill No. 2 of the 2017 Regular Session of the
27Legislature are hereby deemed to have timely resubmitted capital outlay budget request
28applications for Fiscal Year 2017-2018 and to have complied with the late approval
29requirements of R.S. 39:112(C), and as such shall be eligible for cash and noncash lines of
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1credit for Fiscal Year 2017-2018. Beginning in Fiscal Year 2018-2019, all projects shall
2comply with the provisions of R.S. 39:101(A) and 112(C).
3 Section 9. Notwithstanding the provisions of R.S. 39:101(A) and 112(C), projects
4included within Section (1)(B) of House Bill No. 2 of the 2017 Regular Session of the
5Legislature are hereby deemed to have until June 19, 2017, to submit capital outlay budget
6request applications pursuant to R.S. 39:101(A) and to obtain late approval pursuant to the
7provisions of R.S. 39:112(C). Beginning in Fiscal Year 2018-2019, all projects shall
8comply with the provisions of R.S. 39:101(A) and 112(C).
9 Section 10. No project which receives an appropriation in the Capital Outlay Act for
10Fiscal Year 2017-2018 shall be exempt from any provision of the public bid laws or laws
11pertaining to the review of plans and specifications by the state entity administering the
12project without prior authorization from the State Bond Commission. Furthermore, no
13project that receives an appropriation in the Capital Outlay Act shall enter into contracts
14prior to the issuance of a line of credit, prior to receipt of funding, or prior to entering into
15a cooperative endeavor agreement, nor may the entity be reimbursed for any such
16expenditures without prior authorization from the State Bond Commission. Notwithstanding
17anything in this Act, or any other Capital Outlay Act, the Milne Boys Home Complex -
18North and South Cottage Renovation project is hereby transferred from the Gentilly
19Development District to the City of New Orleans. Furthermore, the issuance of a line of
20credit for all or a portion of the funds in Priority 2 or Priority 5 for the Milne Boys Home
21Complex - North and South Cottage Renovation project shall be subject to the submission
22of a duly adopted resolution of the City Council of New Orleans in support of the Gentilly
23Development District, which resolution shall be submitted to the commissioner of
24administration, the State Bond Commission, and the attorney general.
25 Section 11. This Act shall become effective upon signature by the governor or, if not
26signed by the governor, upon expiration of the time for bills to become law without signature
27by the governor, as provided by Article III, Section 18 of the Constitution of Louisiana. If
28vetoed by the governor and subsequently approved by the legislature, this Act shall become
29effective on the day following such approval.
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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)]
HB 3 Engrossed 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.
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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