HLS 19RS-640 REENGROSSED
2019 Regular 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 2019, 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 require approval of the
7 commissioner of administration under certain circumstances; to require the capital
8 outlay application to include certain information; to require the submission of a
9 certificate of completion under certain circumstances; to provide relative to line of
10 credit recommendations for capital outlay projects; to require the approval of certain
11 line of credit recommendations; to provide for an effective date; and to provide for
12 related matters.
13Be it enacted by the Legislature of Louisiana:
14 Section 1. The legislature hereby recognizes that the Constitution of Louisiana
15provides in Article VII, Section 11, that the governor shall present to the legislature a five-
16year Capital Outlay Program and request implementation of the first year of such program,
17and that the capital outlay projects approved by the legislature are to be made part of the
18comprehensive state capital budget which shall, in turn, be adopted by the legislature.
19Further, all projects in such budget adopted by the legislature requiring bond funds must be
20authorized as provided in Article VII, Section 6 of the Constitution of Louisiana. The
21legislature finds that over a period of years the legislature has enacted numerous bond
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1authorizations, but due to inflation and the requirements of specificity of amount for each
2project, impossibility, or impracticability, many of the projects cannot be undertaken. All
3of the unissued bonds must be listed in the financial statements of the state prepared from
4time to time and in connection with the marketing of bonds, and are taken into account by
5rating agencies, prospective purchasers, and investors in evaluating the investment quality
6and credit worthiness of bonds being offered for sale. The continued carrying of the
7aforesaid unissued bonds on the financial statements of the state under the above described
8circumstances operates unnecessarily to the financial detriment of the state. Accordingly,
9the legislature deems it necessary and in the best financial interest of the state to repeal all
10Acts, except any Act authorizing the issuance of refunding bonds and Act 41 of the 2006
11First Extraordinary Session, providing for the issuance of general obligation bonds in the
12state which cannot be issued for the projects contemplated, and in their stead to reauthorize
13general obligation bonds of the state for those projects deemed to be essential, and to
14authorize new projects.
15 Section 2. It is the intent of the legislature that this Act shall constitute the Omnibus
16Bond Authorization Act of 2019 and, together with any Act authorizing the issuance of
17refunding bonds and Act 41 of the 2006 First Extraordinary Session, shall provide bond
18authorization, as required by Article VII, Section 6 of the Constitution of Louisiana, for
19those projects to be funded totally or partially by the sale of general obligation bonds and
20included in House Bill No. 2 of the 2019 Regular Session as finally enacted into law (2019
21Capital Outlay Act). It is the further intent of the legislature that in this year and each year
22hereafter an Omnibus Bond Authorization Act shall be enacted providing for the repeal of
23state general obligation bond authorizations for projects no longer found feasible or
24desirable, the reauthorization of those bonds not sold during the prior fiscal year for projects
25deemed to be of such priority as to warrant such reauthorization, and to enact new
26authorization for projects found to be needed for capital improvements.
27 Section 3. Except as hereinafter provided, all prior Acts of the legislature authorizing
28the issuance of general obligation bonds of the state of Louisiana shall be and the same are
29hereby repealed in their entirety, including without limitation House Bill No. 3 of the 2018
30Second Extraordinary Session of the Louisiana Legislature as finally enacted into law (2018
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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
122019 Capital Outlay Act or the provisions of this 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 2019
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
30treasury, for deposit in the Bond Security and Redemption Fund, designated student fees or
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1revenues or other revenues in an amount equal to the debt service on such project bonds in
2such fiscal year. In addition, the applicable management board, governing body, or state
3agency, in the fiscal year in which such project bonds are issued and in each of the nine
4immediately succeeding fiscal years thereafter, shall transfer and make available to the state
5treasury from designated student fees or revenues or other revenues, for credit to a
6reimbursement reserve account for such project bonds which shall be established in an
7account designated in the reimbursement contract hereafter provided for, monies in an
8amount equal to one-tenth of the average annual debt service on such project bonds, and
9each such reimbursement reserve account thereafter shall be maintained in said minimum
10amount by further transfers, if necessary, from designated student fees or revenues or other
11revenues by the applicable management board, governing body, or state agency to the state
12treasury. Each such reimbursement reserve account shall be used, if necessary, solely to
13make the reimbursement payments herein obligated to be made to the state treasury. When
14the general obligation bonds and the interest thereon issued hereunder have been paid, any
15amount remaining in the reimbursement reserve account, as prorated to such authorized
16project, shall be transferred by the state treasurer to the applicable management board,
17governing body, or state agency.
18 (C) No project bonds authorized by this Section shall be issued for any authorized
19project unless and until a reimbursement contract has been entered into and executed
20between the applicable management board, governing body, or state agency and the State
21Bond Commission pertaining to the reimbursement payment and reimbursement reserve
22account payments for such project. The contract shall require payment into the state treasury
23of designated student fees or revenues or other revenues in an amount sufficient to reimburse
24the cost to the state of the principal, interest, and premium, if any, obligated to be paid by
25the state on such project bonds. The State Bond Commission shall not be required to
26execute any such reimbursement contract unless the estimates and projections of the
27designated student fees or revenues or other revenues available for payment into the state
28treasury thereunder for the authorized projects are sufficient to reimburse the costs of the
29principal, interest, and premium, if any, on the project bonds. A reimbursement contract
30hereunder 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
30payment of the reimbursement bonds and such other customary provisions and conditions
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1for their issuance by the applicable management board, governing body, or state agency as
2are authorized and provided for by general law and by this Section. Until project bonds for
3an authorized project have been paid, the applicable management board, governing body,
4or state agency shall impose fees and charges in an amount sufficient to comply with the
5covenants securing outstanding bonds and to make the payments required by the
6reimbursement contract.
7 (E) In addition to the other payments herein required, reimbursement contracts shall
8provide for the setting aside of sufficient student fees or revenues or other revenues in a
9reserve fund, so that within a period of not less than ten years from date of issuance of
10project bonds there shall be accumulated in a reserve fund monies equal to a sum not less
11than the average annual debt service requirements on such project bonds. Monies in the
12reserve fund shall be used for the purpose of remedying or preventing a default in making
13the required payments under a reimbursement contract. The reserve fund required
14hereunder may consist of a reserve fund heretofore or hereafter established to secure
15payments for reimbursement bonds of the applicable management board, governing body,
16or state agency, provided that (1) payments from said reserve fund to secure the payments
17required to be made under a reimbursement contract shall be on a parity with the payments
18to be made securing outstanding bonds and additional parity bonds and (2) no additional
19parity reimbursement bonds shall be issued except pursuant to the establishment and
20maintenance of an adequate reserve fund as approved by the State Bond Commission.
21 (F) When the balance of reimbursement bond proceeds, for a project, are allocated
22to another project, the State Bond Commission is authorized to make the appropriate
23amendment to the reimbursement contract with the agency making the reimbursement
24payments.
25 Section 6. The bonds authorized to be sold by the State Bond Commission pursuant
26to this Act shall be issued and sold in conformity with the provisions of Article VII, Section
276 of the Louisiana Constitution, R.S. 39:1361 through R.S. 39:1367, and R.S. 39:1401
28through R.S. 39:1430.1, and any amendments thereto adopted prior to, at the same time as,
29or subsequent to, the effective date of this Act. However, the provisions of R.S. 39:1365(9)
30shall 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, 2020, 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. Notwithstanding the provisions of R.S. 39:101(A) and 112(C), projects
28included within Section 1 of the Act which originated as House Bill No. 2 of the 2019
29Regular Session of the Legislature which did not submit a capital outlay application by
30November 1, 2018, in compliance with the provisions of R.S. 39:101(A), and which have
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1not received late approval as required by R.S. 39:112(C) are hereby deemed to have until
2June 30, 2019, to submit a capital outlay budget request application pursuant to R.S.
339:101(A) and if the application is submitted by that date, the project is deemed to have
4complied with the late approval requirements of R.S. 39:112(C). Additionally, the capital
5outlay budget requests together with supporting information and documents for these
6projects shall constitute the feasibility study required by Article VI, Section 11(C) of the
7Constitution of Louisiana. Beginning in Fiscal Year 2020-2021, all projects shall comply
8with the provisions of R.S. 39:101(A) and 112(C).
9 Section 9. The office of facility planning and control shall revise the capital outlay
10application for entities applying for capital outlay funding for Fiscal Year 2020-2021 and
11thereafter, to include information regarding the status of the project and the amount of any
12outstanding obligations for the project. If construction of a project is complete, the entity
13which received capital outlay funding shall submit a certificate of completion to the office
14of facility planning and control within one year of completion of construction of the project.
15Any entity that receives cash lines of credit for any portion of design, planning, or
16construction of a capital outlay project that fails to timely submit a certificate of completion
17shall be ineligible for future capital outlay funding unless the entity receives approval of
18both the House Ways and Means Committee and the Senate Revenue and Fiscal Affairs
19Committee.
20 Section 10. Notwithstanding the provisions of R.S. 39:122, for Fiscal Year 2019-
212020, the commissioner of administration shall make recommendations to the House
22Committee on Ways and Means and the Senate Committee on Revenue and Fiscal Affairs
23concerning the state and nonstate entity projects to be granted lines of credit. The
24commissioner of administration shall submit to the House Committee on Ways and Means
25and the Senate Committee on Revenue and Fiscal Affairs a list of state and nonstate entity
26projects that the division of administration recommends for lines of credit no less than thirty
27days prior to the meeting date of the State Bond Commission in which the lines of credit are
28to be considered. The House Committee on Ways and Means and the Senate Committee on
29Revenue and Fiscal Affairs shall receive the list of recommendations from the division of
30administration and shall have discretion to either approve the list or make changes to the list.
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1The committees shall make final recommendations and shall separately approve a list of
2projects which shall be submitted to the State Bond Commission for consideration of lines
3of credit. Only projects which received approval from both the House Committee on Ways
4and Means and the Senate Committee on Revenue and Fiscal Affairs shall be submitted to
5the State Bond Commission for consideration of lines of credit.
6 Section 11. This Act shall become effective upon signature by the governor or, if not
7signed by the governor, upon expiration of the time for bills to become law without signature
8by the governor, as provided by Article III, Section 18 of the Constitution of Louisiana. If
9vetoed by the governor and subsequently approved by the legislature, this Act shall become
10effective 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 Reengrossed 2019 Regular 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.
Proposed law deems projects included in Section 1 of HB No. 2 of the 2019 R.S. to have
until June 30, 2019, to submit capital outlay budget request applications and if the project
application is submitted by that date, the project is deemed to have complied with late
approval requirements in present law. Further provides that capital outlay budget requests
and supporting documents for projects which did not meet the Nov. 1, 2018, application
deadline that comply with the provisions of proposed law shall be deemed to be in
compliance with present constitution requirements regarding feasibility studies.
Proposed law requires the office of facility planning and control (FP&C) to revise the capital
outlay application to include information regarding the status of the project and the amount
of any outstanding obligations for the project. Further requires an entity to submit a
certificate of completion to FP&C within one year of completion of construction of the
project. Any entity that fails to timely submit a certificate of completion shall be ineligible
for future capital outlay funding unless the entity receives approval of both the House
Committee on Ways and Means and the Senate Committee on Revenue and Fiscal Affairs,
hereinafter "legislative committees".
Proposed law requires, for Fiscal Year 2019-2020, the commissioner of administration to
make recommendations to the legislative committees concerning the state and nonstate entity
projects to be granted lines of credit and to submit the list of recommendations to the
legislative committees no less than 30 days prior to the meeting date of the State Bond
Commission (SBC) in which the lines of credit are to be considered. Proposed law
authorizes the legislative committees to make changes to the list but to separately approve
the list of projects which shall be submitted to the SBC for consideration of lines of credit.
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Only projects which received approval from both legislative committees shall be submitted
to the SBC for consideration of lines of credit.
Effective upon signature of governor or lapse of time for gubernatorial action.
Summary of Amendments Adopted by House
The Committee Amendments Proposed by House Committee on Ways and Means to the
original bill:
1. Deem projects included in Section (1)(A) of HB No. 2 of the 2019 R.S. to have
until June 30, 2019, to submit capital outlay budget request applications and if
the project application is submitted by that date, the project is deemed to have
complied with late approval requirements in present law.
2. Require FP&C to revise the capital outlay application to include information
regarding the status of a project and the amount of any outstanding obligations
for the project.
3. Require FP&C to include in reports submitted to the JLCCO, information
regarding the amount of local match required to be provided by a nonstate entity
and whether the local match requirement has been waived by FP&C.
4. Specify the process for Fiscal Year 2019-2020 for submission of and approval
of line of credit recommendations to the SBC.
The House Floor Amendments to the engrossed bill:
1. Specify that projects which did not submit a capital outlay application by Nov.
1, 2018, and which did not receive late approval as required by present law have
until June 30, 2019, to comply with present law to be eligible for capital outlay
funding.
2. Add provision that capital outlay budget requests and supporting documents for
projects which did not meet the Nov. 1, 2018, application deadline that comply
with the provisions of proposed law shall be deemed to be in compliance with
present constitution requirements regarding feasibility studies.
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