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2018 Second Extraordinary Session
HOUSE BILL NO. 3
BY REPRESENTATIVE ABRAMSON
CAPITAL OUTLAY: Provides for the Omnibus Bond Act
1 AN ACT
2To enact the Omnibus Bond Authorization Act of 2018, 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 for
6 an effective date; and to provide for related matters.
7Be it enacted by the Legislature of Louisiana:
8 Section 1. The legislature hereby recognizes that the Constitution of Louisiana
9provides in Article VII, Section 11, that the governor shall present to the legislature a five-
10year Capital Outlay Program and request implementation of the first year of such program,
11and that the capital outlay projects approved by the legislature are to be made part of the
12comprehensive state capital budget which shall, in turn, be adopted by the legislature.
13Further, all projects in such budget adopted by the legislature requiring bond funds must be
14authorized as provided in Article VII, Section 6 of the Constitution of Louisiana. The
15legislature finds that over a period of years the legislature has enacted numerous bond
16authorizations, but due to inflation and the requirements of specificity of amount for each
17project, impossibility, or impracticability, many of the projects cannot be undertaken. All
18of the unissued bonds must be listed in the financial statements of the state prepared from
19time to time and in connection with the marketing of bonds, and are taken into account by
20rating agencies, prospective purchasers, and investors in evaluating the investment quality
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1and credit worthiness of bonds being offered for sale. The continued carrying of the
2aforesaid unissued bonds on the financial statements of the state under the above described
3circumstances operates unnecessarily to the financial detriment of the state. Accordingly,
4the legislature deems it necessary and in the best financial interest of the state to repeal all
5Acts, except any Act authorizing the issuance of refunding bonds and Act 41 of the 2006
6First Extraordinary Session, providing for the issuance of general obligation bonds in the
7state which cannot be issued for the projects contemplated, and in their stead to reauthorize
8general obligation bonds of the state for those projects deemed to be essential, and to
9authorize new projects.
10 Section 2. It is the intent of the legislature that this Act shall constitute the Omnibus
11Bond Authorization Act of 2018 and, together with any Act authorizing the issuance of
12refunding bonds and Act 41 of the 2006 First Extraordinary Session, shall provide bond
13authorization, as required by Article VII, Section 6 of the Constitution of Louisiana, for
14those projects to be funded totally or partially by the sale of general obligation bonds and
15included in House Bill No. 2 of the 2018 Regular Session as finally enacted into law (2018
16Capital Outlay Act). It is the further intent of the legislature that in this year and each year
17hereafter an Omnibus Bond Authorization Act shall be enacted providing for the repeal of
18state general obligation bond authorizations for projects no longer found feasible or
19desirable, the reauthorization of those bonds not sold during the prior fiscal year for projects
20deemed to be of such priority as to warrant such reauthorization, and to enact new
21authorization for projects found to be needed for capital improvements.
22 Section 3. Except as hereinafter provided, all prior Acts of the legislature authorizing
23the issuance of general obligation bonds of the state of Louisiana shall be and the same are
24hereby repealed in their entirety, including without limitation House Bill No. 3 of the 2017
25Second Extraordinary Session of the Louisiana Legislature as finally enacted into law (2017
26Omnibus Bond Authorization Act) and any Acts heretofore repealed with such Act. This
27repeal shall not be applicable to any Act providing for the issuance of refunding bonds nor
28to Act 41 of the 2006 First Extraordinary Session, and such Acts shall remain in full force
29and effect and shall not be affected by the provisions of this Act. In addition, the repeal shall
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1not in any manner affect the validity of any bonds heretofore issued pursuant to any of the
2bond authorizations repealed hereby.
3 Section 4. To provide funds for certain capital improvement projects the State Bond
4Commission is hereby authorized pursuant to Article VII, Section 6 of the Constitution of
5Louisiana to issue general obligation bonds or other general obligations of the state for
6capital improvements for the projects, and subject to any terms and conditions set forth on
7the issuance of bonds or the expenditure of monies for each project as is provided for in the
82018 Capital Outlay Act.
9 Section 5.(A) To provide funds for certain capital improvement projects authorized
10prior to this Act and by this Act, which projects are designed to provide for reimbursement
11of debt service on general obligation bonds, the State Bond Commission is hereby authorized
12pursuant to Article VII, Section 6 of the Constitution of Louisiana, to issue general
13obligation bonds of the state, hereinafter referred to as "project bonds", for capital
14improvements for the projects and subject to any terms and conditions set forth on the
15issuance of bonds or the expenditure of monies for each such project as provided in the 2018
16Capital Outlay Act the terms of which require such reimbursement of debt service.
17 (B) Without affecting, restricting, or limiting the pledge herein made of the full faith
18and credit of the state of Louisiana to the payment of the general obligation bonds authorized
19by this Section and without affecting, restricting, or limiting the obligation of the state to pay
20the same from monies pledged and dedicated to and paid into the Bond Security and
21Redemption Fund, but in order to decrease the possible financial burden on the general funds
22of the state resulting from this pledge and obligation, the applicable management board,
23governing body, or state agency for which any of such project bonds are issued, in the fiscal
24year in which such project bonds are issued and in each fiscal year thereafter until such
25project bonds and the interest thereon are paid, shall transfer and make available to the state
26treasury, for deposit in the Bond Security and Redemption Fund, designated student fees or
27revenues or other revenues in an amount equal to the debt service on such project bonds in
28such fiscal year. In addition, the applicable management board, governing body, or state
29agency, in the fiscal year in which such project bonds are issued and in each of the nine
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1immediately succeeding fiscal years thereafter, shall transfer and make available to the state
2treasury from designated student fees or revenues or other revenues, for credit to a
3reimbursement reserve account for such project bonds which shall be established in an
4account designated in the reimbursement contract hereafter provided for, monies in an
5amount equal to one-tenth of the average annual debt service on such project bonds, and
6each such reimbursement reserve account thereafter shall be maintained in said minimum
7amount by further transfers, if necessary, from designated student fees or revenues or other
8revenues by the applicable management board, governing body, or state agency to the state
9treasury. Each such reimbursement reserve account shall be used, if necessary, solely to
10make the reimbursement payments herein obligated to be made to the state treasury. When
11the general obligation bonds and the interest thereon issued hereunder have been paid, any
12amount remaining in the reimbursement reserve account, as prorated to such authorized
13project, shall be transferred by the state treasurer to the applicable management board,
14governing body, or state agency.
15 (C) No project bonds authorized by this Section shall be issued for any authorized
16project unless and until a reimbursement contract has been entered into and executed
17between the applicable management board, governing body, or state agency and the State
18Bond Commission pertaining to the reimbursement payment and reimbursement reserve
19account payments for such project. The contract shall require payment into the state treasury
20of designated student fees or revenues or other revenues in an amount sufficient to reimburse
21the cost to the state of the principal, interest, and premium, if any, obligated to be paid by
22the state on such project bonds. The State Bond Commission shall not be required to
23execute any such reimbursement contract unless the estimates and projections of the
24designated student fees or revenues or other revenues available for payment into the state
25treasury thereunder for the authorized projects are sufficient to reimburse the costs of the
26principal, interest, and premium, if any, on the project bonds. A reimbursement contract
27hereunder shall be authorized by resolution of the applicable management board, governing
28body, or state agency, or board or by act of the chief executive officer if no governing board
29exists.
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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
21approval by the State Bond Commission and the Office of the Attorney General, and when
22so accepted and approved, the authorization shall constitute and be the reimbursement
23contract for such authorized project, as required hereunder. The reimbursement bonds
24authorized under 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
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1are authorized and provided for by general law and by this Section. Until project bonds for
2an authorized project have been paid, the applicable management board, governing body,
3or state agency shall impose fees and charges in an amount sufficient to comply with the
4covenants securing outstanding bonds and to make the payments required by the
5reimbursement contract.
6 (E) In addition to the other payments herein required, reimbursement contracts shall
7provide for the setting aside of sufficient student fees or revenues or other revenues in a
8reserve fund, so that within a period of not less than ten years from date of issuance of
9project bonds there shall be accumulated in a reserve fund monies equal to a sum not less
10than the average annual debt service requirements on such project bonds. Monies in the
11reserve fund shall be used for the purpose of remedying or preventing a default in making
12the required payments under a reimbursement contract. The reserve fund required
13hereunder may consist of a reserve fund heretofore or hereafter established to secure
14payments for reimbursement bonds of the applicable management board, governing body,
15or state agency, provided that (1) payments from said reserve fund to secure the payments
16required to be made under a reimbursement contract shall be on a parity with the payments
17to be made securing outstanding bonds and additional parity bonds and (2) no additional
18parity reimbursement bonds shall be issued except pursuant to the establishment and
19maintenance of an adequate reserve fund as approved by the State Bond Commission.
20 (F) When the balance of reimbursement bond proceeds, for a project, are allocated
21to another project, the State Bond Commission is authorized to make the appropriate
22amendment to the reimbursement contract with the agency making the reimbursement
23payments.
24 Section 6. The bonds authorized to be sold by the State Bond Commission pursuant
25to this Act shall be issued and sold in conformity with the provisions of Article VII, Section
266 of the Louisiana Constitution, R.S. 39:1361 through R.S. 39:1367, and R.S. 39:1401
27through R.S. 39:1430.1, and any amendments thereto adopted prior to, at the same time as,
28or subsequent to, the effective date of this Act. However, the provisions of R.S. 39:1365(9)
29shall not apply to any bonds issued hereunder in the form of variable rate and/or tender
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1option bonds and that said bonds need not be issued in serial form and may mature in such
2year or years as may be specified by the State Bond Commission. Should any provision of
3this Act be inconsistent with any provision of the Louisiana Revised Statutes of 1950, the
4provision of this Act shall govern. In connection with the issuance of the bonds authorized
5hereby, the State Bond Commission may, without regard to any other laws of the state
6relating to the procurement of services, insurance, or facilities, enter into contracts upon such
7terms as it deems advantageous to the state for (1) the obtaining of credit enhancement or
8liquidity devices designed to improve the marketability of the bonds and (2) if the bonds are
9structured as variable rate and/or tender option bonds to provide the services and facilities
10required for or deemed appropriate by the State Bond Commission for such type of bonds,
11including those of tender agents, placement agents, indexing agents, remarketing agents,
12and/or standby bond purchase facilities. The cost of obtaining credit enhancement or
13liquidity devices and fees for other services set forth in this Section shall, if authorized by
14the State Bond Commission, be paid from the Bond Security and Redemption Fund as a
15requirement with respect to the issuance of the bonds authorized hereby. The bonds shall be
16general obligations of the state of Louisiana, to the payment of which, as to principal,
17premium, if any, and interest, as and when the same become due, the full faith and credit of
18the state is hereby irrevocably pledged. These bonds shall be secured by monies in the Bond
19Security and Redemption Fund and shall be payable on a parity with bonds and other
20obligations heretofore and hereafter issued which are secured by that fund. The maximum
21interest rate or rates on such bonds, and their maturities, shall be determined by the State
22Bond Commission. The state treasurer shall invest all bond proceeds until disbursed.
23 Section 7. Unless specifically repealed, this Act shall expire, and be considered null
24and void and of no further effect on June 30, 2019, except as to any bonds authorized herein
25(1) which have been sold, (2) to which lines of credit have been issued, or (3) for which
26contracts for construction have been signed.
27 Section 8. This Act shall become effective upon signature by the governor or, if not
28signed by the governor, upon expiration of the time for bills to become law without signature
29by the governor, as provided by Article III, Section 18 of the Constitution of Louisiana. If
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1vetoed by the governor and subsequently approved by the legislature, this Act shall become
2effective 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 2018 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.
Effective upon signature of governor or lapse of time for gubernatorial action.
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