EXPLANATION-Matter enclosed in bold-faced brackets [thus] in this bill is not enacted
and is intended to be omitted in the law.
FIRST REGULAR SESSION
SENATE BILL NO. 332
103RD GENERAL ASSEMBLY
INTRODUCED BY SENATOR CRAWFORD.
0401S.01I KRISTINA MARTIN, Secretary
AN ACT
To repeal section 108.170, RSMo, and to enact in lieu thereof one new section relating to bonds.
Be it enacted by the General Assembly of the State of Missouri, as follows:
Section A. Section 108.170, RSMo, is repealed and one new 1
section enacted in lieu thereof, to be known as section 108.170, 2
to read as follows:3
108.170. 1. Notwithstanding any other provisi ons of 1
any law or charter to the contrary, any issue of bonds, 2
notes, or other evidences of indebtedness, including bonds, 3
notes, or other evidences of indebtedness payable solely 4
from revenues derived from any revenue -producing facility, 5
hereafter issued under any law of this state by any county, 6
city, town, village, school district, educational 7
institution, drainage district, levee district, nursing home 8
district, hospital district, library district, road 9
district, fire protection district, water supply district, 10
sewer district, housing authority, land clearance for 11
redevelopment authority, special authority created under 12
section 64.920, authority created pursuant to the provisions 13
of chapter 238, or other municipality, political 14
subdivision, or district of this state shall be 15
negotiable[,]; may be issued in [bearer] book-entry form or 16
registered form with or without coupons to evidence interest 17
payable thereon[,]; may be issued in any denomination [, 18
and]; may bear interest at a rate not e xceeding ten percent 19 SB 332 2
per annum or at a rate that is up to two hundred fifty basis 20
points above the longest maturity United States Treasury 21
bond, whichever is greater [,]; and may be sold, at any sale, 22
at [the best price obtainable, ] a competitive market yield 23
as evidenced by a signed statement or memorandum from the 24
underwriter, bond purchaser, or the issuer's municipal 25
advisor, at a price not less than [ninety-five] fifty 26
percent of the par value thereof, anything in any 27
proceedings heretofore had authorizing such bonds, notes, or 28
other evidence of indebtedness, or in any law of this state 29
or charter provision to the contrary notwithstanding. Such 30
issue of bonds, notes, or other evidence of indebtedness may 31
bear interest at a rate not exceeding fourteen percent per 32
annum or at a rate that is up to two hundred fifty basis 33
points above the longest maturity United States Treasury 34
bond, whichever is greater, if sold at public sale after 35
giving reasonable notice of such sale, at the [best price 36
obtainable,] lowest true interest cost bid received, at a 37
price not less than [ninety-five] fifty percent of the par 38
value thereof; provided [,] that such bonds, notes, or other 39
evidence of indebtedness may be sold to any agency or 40
corporate or other in strumentality of the state of Missouri 41
or of the federal government at private sale at a rate not 42
exceeding fourteen percent per annum or at a rate that is up 43
to two hundred fifty basis points above the longest maturity 44
United States Treasury bond, whi chever is greater. If a 45
political subdivision has an unenhanced bond rating [of AA+ 46
or higher, or comparable rating, ] that is one of the two 47
highest long-term ratings or the highest short -term rating 48
issued by a nationally recognized rating agency on its 49
outstanding general obligation bonds or is proposing to 50
issue general obligation bonds with an unenhanced bond 51 SB 332 3
rating [of AA+ or higher, or comparable rating ] that is one 52
of the two highest long -term ratings or the highest short - 53
term rating issued by a nationally recognized rating agency , 54
the new issue of general obligation bonds shall be issued 55
through a competitive process unless the political 56
subdivision employs the services of a municipal advisor, in 57
which case the political subdivision may use a negotiated or 58
competitive process, except that such requirements shall not 59
apply to any general obligation bonds: 60
(1) Sold, pursuant to written agreement, to the 61
government of the United States of America or of the state 62
of Missouri or to any bureau, department, body corporate, 63
instrumentality, or agency of the United [State] States of 64
America or the state of Missouri; 65
(2) Where the principal amount of the bonds issued 66
does not exceed [twelve] twenty million [five hundred 67
thousand] dollars; or 68
(3) That are issued or are part of an issue issued to 69
refinance a prior issue of general obligation indebtedness 70
or which are issued contemporaneously with any such issue of 71
refunding bonds; provided, the refunding bonds shall not 72
exceed the principal of the outstanding indebtedness to be 73
refunded and the accrued interest to the date of such 74
refunding bonds. 75
A municipal advisor shall not be allowed to profit 76
financially or otherwise, either directly or indirectly, 77
from the underwriter of a negotiated bond issuance. 78
2. Notwithstanding the provisions of subsection 1 of 79
this section to the contrary, the sale of bonds, notes, or 80
other evidence of indebtedness issued by the state board of 81
public buildings created under section 8.010, the state 82 SB 332 4
board of fund commissioners created under section 33.300, 83
any port authority created under section 68.010, the bi - 84
state metropolitan development district authorized under 85
section 70.370, any special business district created under 86
section 71.790, any county, as defined in section 108.465, 87
exercising the powers granted by sections 108.450 to 88
108.470, the [industrial development ] Missouri development 89
finance board created under section 100.265, any planned 90
industrial expansion autho rity created under section 91
100.320, the higher education loan authority created under 92
section 173.360, the Missouri housing development commission 93
created under section 215.020, the state environmental 94
improvement and energy resources authority created under 95
section 260.010, the agricultural and small business 96
development authority created under section 348.020, any 97
industrial development corporation created under section 98
349.035, or the health and educational facilities authority 99
created under section 360.020 shall, with respect to the 100
sales price, manner of sale and interest rate, be governed 101
by the specific sections applicable to each of these 102
entities. 103
3. Any person who is engaged as a municipal advisor by 104
a political corporation or su bdivision with respect to a 105
particular issue of securities shall be independent of the 106
underwriter of that issue of securities. For the purposes 107
of this section, "municipal advisor" shall be either: 108
(1) A person registered as a municipal advisor under 109
the rules of the United States Securities and Exchange 110
Commission; or 111
(2) A person who is a chief financial officer of a 112
school district and either: 113
(a) Is a certified public accountant; or 114 SB 332 5
(b) Has a masters of business administr ation and is 115
certified as an administrator of school finance and 116
operations by the Association of School Business Officials 117
International. 118
For the purposes of this subsection, "independent" shall 119
have the same meaning as defined by the rules of the Uni ted 120
States Securities and Exchange Commission. In determining 121
the individuals or entities that may serve as a municipal 122
advisor, nothing in this section shall be construed to be 123
more restrictive than the definition of a municipal advisor 124
as established by the United States Securities and Exchange 125
Commission. 126
4. Notwithstanding other provisions of this section or 127
other law, the sale of bonds, notes , or other evidence of 128
indebtedness issued by any housing authority created under 129
section 99.040 may be sold at any sale, at the [best price] 130
lowest true interest cost obtainable, not less than [ninety- 131
five] fifty percent of the par value thereof, and may bear 132
interest at a rate not exceeding fourteen percent per annum 133
or at a rate that is up to two hundred fifty basis points 134
above the longest maturity United States Treasury bond, 135
whichever is greater . The sale shall be a public sale 136
unless the issuing jurisdiction adopts a resolution setting 137
forth clear justification why the sale should be a private 138
sale except that private activity bonds may be sold either 139
at public or private sale. 140
5. Notwithstanding other provisions of this section or 141
law, industrial development revenue bonds may be sold at 142
private sale and bear interest at a rat e not exceeding 143
fourteen percent per annum or at a rate that is up to two 144
hundred fifty basis points above the longest maturity United 145 SB 332 6
States Treasury bond, whichever is greater, at the [best 146
price] lowest true interest cost obtainable, not less than 147
[ninety-five] fifty percent of the par value thereof. 148
6. Notwithstanding other provisions in subsection 1 of 149
this section to the contrary, revenue bonds issued for 150
airport purposes by any constitutional charter city in this 151
state which now has or may hereafter acquire a population of 152
more than three hundred thousand but less than six hundred 153
thousand inhabitants, according to the last federal 154
decennial census, may bear interest at a rate not exceeding 155
fourteen percent per annum or at a rate that is up to two 156
hundred fifty basis points above the longest maturity United 157
States Treasury bond, whichever is greater, if sold at 158
public sale after giving reasonable notice, at the [best 159
price] lowest true interest cost obtainable, not less than 160
[ninety-five] fifty percent of the par value thereof. 161
7. For purposes of the interest rate limitations set 162
forth in this section, the interest rate on bonds, notes or 163
other evidence of indebtedness described in this section 164
means the rate at which the present value of the debt 165
service payments on an issue of bonds, notes or other 166
evidence of indebtedness, discounted to the date of 167
issuance, equals the original price at which such bonds, 168
notes or other evidence of indebtedness are sold by the 169
issuer. Interest on bonds, notes or other evidence of 170
indebtedness may be paid periodically at such times as shall 171
be determined by the governing body of the issuer and may be 172
compounded in accordance with section 408.080. 173
8. Notwithstanding any provi sion of law or charter to 174
the contrary: 175
(1) Any entity referenced in subsection 1 or 2 of this 176
section and any other political corporation of the state 177 SB 332 7
which entity or political corporation has an annual 178
operating budget for the current year exce eding twenty-five 179
million dollars may, in connection with managing the cost to 180
such entity or political corporation of purchasing fuel, 181
electricity, natural gas, and other commodities used in the 182
ordinary course of its lawful operations, enter into 183
agreements providing for fixing the cost of such commodity, 184
including without limitation agreements commonly referred to 185
as hedges, futures, and options; provided that as of the 186
date of such agreement, such entity or political corporation 187
shall have complied with subdivision (3) of this subsection; 188
and further provided that no eligible school entity, as 189
defined in section 393.310, shall be authorized by this 190
subsection to enter into such agreements in connection with 191
the purchase of natural gas while the tariffs required under 192
section 393.310 are in effect; 193
(2) Any entity referenced in subsection 1 or 2 of this 194
section and any other political corporation of the state 195
may, in connection with its bonds, notes, or other 196
obligations then outstand ing or to be issued and bearing 197
interest at a fixed or variable rate, enter into agreements 198
providing for payments based on levels of or changes in 199
interest rates, including without limitation certain 200
derivative agreements commonly referred to as inter est rate 201
swaps, hedges, caps, floors, and collars, provided that: 202
(a) As of the date of issuance of the bonds, notes, or 203
other obligations to which such agreement relates, such 204
entity or political corporation will have bonds, notes, or 205
other obligations outstanding in an aggregate principal 206
amount of at least fifty million dollars; and 207
(b) As of the date of such agreement, such entity's or 208
political corporation's bonds, notes, or other obligations 209 SB 332 8
then outstanding or to be issued have rec eived a stand-alone 210
credit rating in one of the [two highest categories, without 211
regard to any gradation within such categories, from at 212
least one] four highest long-term ratings or the highest 213
short-term rating issued by a nationally recognized credit 214
rating agency, or such entity or political corporation has 215
an issuer or general credit rating, in one of the [two 216
highest categories, without regard to any gradation within 217
such categories, from at least one ] four highest long-term 218
ratings or the highest short-term rating issued by a 219
nationally recognized credit rating agency; and 220
(c) As of the date of such agreement, such entity or 221
political corporation shall have complied with subdivision 222
(3) of this subsection; 223
(3) Prior to entering into any agreements pursuant to 224
subdivision (1) or (2) of this subsection, the governing 225
body of the entity or political corporations entering into 226
such agreements shall have adopted a written policy 227
governing such agreements. Such policy shall be pre pared by 228
integrating the recommended practices published by the 229
Government Finance Officers Association or comparable 230
nationally recognized professional organization and shall 231
provide guidance with respect to the permitted purposes, 232
authorization process, mitigation of risk factors, ongoing 233
oversight responsibilities, market disclosure, financial 234
strategy, and any other factors in connection with such 235
agreements determined to be relevant by the governing body 236
of such entity or political corporation . Such entity or 237
political corporation may enter into such agreements at such 238
times and such agreements may contain such payment, 239
security, default, remedy, and other terms and conditions as 240
shall be consistent with the written policy adopted under 241 SB 332 9
this subdivision and as may be approved by the governing 242
body of such entity or other obligated party, including any 243
rating by any nationally recognized rating agency and any 244
other criteria as may be appropriate; 245
(4) Nothing in this subsection shal l be applied or 246
interpreted to authorize any such entity or political 247
corporation to enter into any such agreement for investment 248
purposes or to diminish or alter the special or general 249
power any such entity or political corporation may otherwise 250
have under any other provisions of law including the special 251
or general power of any interstate transportation authority. 252
9. The state treasurer shall make available to 253
municipalities, political subdivisions, or districts listed 254
under subsection 1 of this section relevant information 255
regarding debt issuance and bidding processes, including 256
best practices resources published by a national association 257
of government finance officers on debt issuance, to aid such 258
entities with the process of issuing de bt and awarding bonds 259
to the best bidder. 260