§ 15 — Highway Construction and Improvement Bonds - Acts 1995, No. 1007

SECTION 1. TITLE; LEGISLATIVE FINDINGS. (a) This Act may be referred to and cited as the "Arkansas Highway General Obligation Bond Act of 1995." (b) The General Assembly of the State of Arkansas has determined that there is an immediate need for new highways and highway improvements throughout the State of Arkansas in order to provide for the health, safety and welfare of its citizens and others and to promote economic development within the state. The General Assembly has determined that current funding sources for highway construction and improvements are inadequate to meet the needs of the state and that the best way to accomplish such improvements expeditiously is through the issuance of general obligation bonds to finance highway construction and improvements. SECTION 2. DEFINITIONS. The following terms, as used in this Act, shall have the meanings set forth in this section: (a) "Act" shall mean this Arkansas Highway General Obligation Bond Act of 1995. (b) "Bonds" shall mean the State of Arkansas Highway Construction and Improvement General Obligation Bonds, as authorized herein. (c) "Chief Fiscal Officer" shall mean the Director of the Department of Finance and Administration. (d) "Commission" shall mean the Arkansas State Highway Commission, created and existing pursuant to Amendment 42 to the Constitution of the State of Arkansas. (e) "Debt service" shall mean all amounts required for the payment of principal of, interest on, and premium, if any, due with respect to the bonds in any fiscal year, along with all associated costs, including, without limitation, the fees and costs of paying agents and trustees, and remarketing agent fees. (f) "Designated tax revenues" shall mean (1) portions of taxes collected pursuant to Ark. Code Ann. § 26-57-1101 , et seq; (2) taxes collected pursuant to Ark. Code Ann. §§ 26-52-302(c) and 26-53-107(c) ; (3) portions of taxes collected pursuant to Ark. Code Ann. § 26-56-201(e) , if approved; (4) revenues derived from economic growth within Arkansas which is a direct result of highway improvements which are financed by the bonds issued pursuant to this Act; or, (5) any other fees or taxes which are dedicated to the repayment of the bonds, including but not limited to toll road fees and right-of-way lease revenues. (g) "Highway improvements" shall mean improvements to any of the roadways, bridges, tunnels, rights-of-way, and other capital improvements and facilities appurtenant or pertaining thereto, including costs of acquisition and construction. Highway improvements shall also include the maintenance of highway improvements constructed with proceeds of the bonds. SECTION 3. AUTHORIZATION; PURPOSES. The Arkansas State Highway Commission is hereby authorized, subject to the approval of the voters at a state-wide election pursuant to Amendment 20 to the Constitution of the State of Arkansas, to issue the bonds in a total principal amount not to exceed three billion five hundred million dollars ($3,500,000,000) for the purposes of (i) accelerating highway improvements in progress or scheduled as of January 1, 1995, (ii) funding new highway improvements not in progress or scheduled as of January 1, 1995, (iii) providing matching funds in connection with federal highway programs, and (iv) paying the costs of issuance of the bonds. The bonds may be issued in one or more series at such times, in such amounts, and bearing such designations as the Commission in consultation with the Chief Fiscal Officer of the State shall determine pursuant to Section 6 hereof. SECTION 4. IMPROVEMENTS TO BE FINANCED. At least ninety (90) days prior to the calling of an election as set forth in Section 5 hereof, the Commission shall prepare and distribute to the Governor and the Legislative Council a report setting forth in general terms the highway improvements which would be financed if all of the authorized bonds were to be issued and the estimated cost of each highway improvement. Upon receipt of the report described in the preceding sentence, the Governor, after obtaining the advice of the Legislative Council and in accordance with the provisions of Amendments 20 and 42 to the Arkansas Constitution, shall, if he deems it to be in the public interest, by proclamation call an election on the question of issuing the bonds. SECTION 5. ELECTION. (a) No bonds shall be issued under this Act unless the issuance of bonds has been approved by a majority of the qualified electors of the state voting on the question at a state-wide election called by proclamation of the Governor. Such election may be in conjunction with a general election or it may be a special election. Notice of such election shall be published by the Secretary of State in a newspaper of general circulation in the state at least thirty (30) days prior to such election, and notice thereof shall be mailed to each county board of election commissioners and the sheriff of each county at least sixty (60) days prior to such election. (b) It shall not be necessary, in the case of the notice or proclamation for the election, to publish this Act in its entirety, but the notice or proclamation shall state that the election is to be held for the purpose of submitting to the people the following proposition, in substantially the form set forth herein: "Authorizing the Arkansas State Highway Commission to issue State of Arkansas Highway Construction and Improvement General Obligation Bonds (the "Bonds") in a total principal amount not to exceed $3,500,000,000. If approved, such Bonds will be issued in series of various principal amounts from time to time for the purpose of paying the cost of highway construction and improvements in the State of Arkansas. The Bonds shall be issued pursuant to the authority of and the terms set forth in Amendment 20 to the Arkansas Constitution and the Arkansas Highway General Obligation Bond Act of 1995 (the "Act"). The Bonds shall be general obligations of the State of Arkansas, secured by and payable from the general revenues of the State. The Bonds will be payable first from certain designated revenues, specifically: portions of the proceeds of a five cent per gallon increase in the excise tax on distillate special fuels (diesel and other related products), if such tax increase is approved by the voters, revenues derived from an additional one-half of one percent (1/2 of 1%) excise tax on gross proceeds or gross receipts (sales tax) and from an additional one-half of one percent (1/2 of 1%) compensating excise tax (use tax), portions of the proceeds of a wholesale excise tax at the rate of six and one-half percent on motor fuel (gasoline and related products); revenues derived from economic growth directly attributable to highway improvements financed by the bonds; and any other revenues designated by the General Assembly for such purpose. The wholesale excise tax on motor fuel, the sales tax and the use tax have already been levied, but such taxes will not be collected unless the bonds are hereby approved by the voters. If the bonds are hereby approved, the wholesale excise tax on motor fuel, the sales tax and the use tax will be collected so long as the bonds are outstanding. If the bonds are not hereby approved, such taxes will not be collected. The excise tax of five cents per gallon on distillate special fuels is being submitted to the voters for their approval elsewhere on this ballot." (c) The ballot title and the proposition set forth in Section 5(b) shall be submitted by the Secretary of State to the Attorney General for approval in substantially the following form: Click here to view form. (d) The county boards of election commissioners in each of the several counties of the state shall hold and conduct the election, and each such board is hereby authorized and directed to take such action with respect to the appointment of election officials and such other matters as is required by the laws of the state. The vote shall be canvassed and the result thereof declared in each county by such boards. The results shall, within ten (10) days after the date of the election, be certified by such county boards to the Secretary of State, who shall forthwith tabulate all returns so received and certify to the Governor the total vote for and against the proposition submitted pursuant to this Act. (e) The result of the election shall be proclaimed by the Governor by the publication of such proclamation one (1) time in a newspaper of general circulation in the State of Arkansas, and the results as proclaimed shall be conclusive unless a complaint challenging the election results is filed within thirty (30) days after the date of such publication in the chancery court of Pulaski County. (f) If a majority of the qualified electors voting on the proposition vote in favor of the issuance of the bonds, then the Commission shall proceed with the issuance of bonds in the manner and on the terms set forth in this Act. If a majority of the qualified electors voting on the proposition vote against the issuance of the bonds, none of the bonds authorized by this Act shall be issued. One subsequent election may be called by the Governor if the proposition fails, but such subsequent election may be held no earlier than six (6) months after the preceding election, but no later than December 31, 1996. SECTION 6. PROCEDURE FOR ISSUING BONDS. Prior to the issuance of any series of bonds, the following actions shall be taken: (a) The Commission shall, in consultation with the Chief Fiscal Officer, determine the estimated amount of designated tax revenues to be collected by the state in the remainder of the then current fiscal biennium. The estimated amount of designated tax revenues shall be reported to the Governor. (b) The Commission shall present a report to the Governor and the Legislative Council, setting forth the specific highway improvements to be financed with the proceeds of such series of bonds, the estimated cost of each of the highway improvements, the amount of bonds necessary to finance such highway improvements, and the estimated amount of debt service required to pay the bonds. (c) Upon receipt of the reports described in Sections 6(a) and 6(b) hereof, the Governor shall, if he and the Commission determine that the estimated designated tax revenues and any other revenues appropriated by the General Assembly for repayment of bonds will be sufficient to pay debt service on such series of bonds, by proclamation authorize the Commission to proceed with the issuance of such series of bonds. (d) Once the Governor has issued his proclamation with respect to one or more series of bonds, the Commission shall adopt a resolution authorizing the issuance of such bonds. Each such resolution shall contain such terms, covenants, and conditions as are deemed desirable and consistent with this Act, including, without limitation, those pertaining to the establishment and maintenance of funds and accounts, the deposit and investment of tax collections and of bond proceeds, and the rights and obligations of the state, its officers and officials, the Commission, and the registered owners of the bonds. The resolutions of the Commission may provide for the execution and delivery by the Commission of a trust indenture or trust indentures, with one or more banks or trust companies located within or without the state, containing any of the terms, covenants, and conditions referred to above and other terms and conditions deemed necessary by the Commission, which trust indenture or trust indentures shall be binding upon the Commission and the State, and their respective officers and officials. SECTION 7. TERMS OF BONDS. The bonds shall be subject to the following terms and conditions: (a) The bonds shall be issued in series, as set forth herein, in amounts sufficient to finance all or part of the costs of highway improvements described in Section 4 hereof, with the respective series to be designated by the year in which issued and, if more than one series is to be issued in a particular year, by alphabetical designation. (b) The bonds of each series shall have such date or dates as the Commission shall determine and shall mature, or be subject to mandatory sinking fund redemption, over a period ending not later than thirty (30) years after the date of issue of each series. (c) The bonds of each series shall bear interest at the rate or rates determined by the Commission at the sale of the bonds. The bonds may bear interest at either a fixed or a variable rate, or may be convertible from one interest rate mode to another, and such interest shall be payable at such times as the Commission shall determine. (d) The bonds shall be issued in the form of bonds registered as to both principal and interest without coupons; may be in such denominations; may be made exchangeable for bonds of another form or denomination, bearing the same rate of interest; may be made payable at such places within or without the state; may be made subject to redemption prior to maturity in such manner and for such redemption prices; and may contain such other terms and conditions, all as the Commission shall determine. (e) Each bond shall be executed with the facsimile signatures of the Governor, the Chairman of the Commission, and the Treasurer of the State of Arkansas, and shall have affixed or imprinted thereon the Great Seal of the State of Arkansas. Delivery of the bonds so executed shall be valid, notwithstanding any change in persons holding such offices occurring after the bonds have been executed. SECTION 8. SALE OF BONDS. (a) The bonds may be sold in such manner, either at private or public sale, and upon such terms as the Commission shall determine to be reasonable and expedient for effecting the purposes of this Act. The bonds may be sold at a price acceptable to the Commission, which price may include a discount or a premium. (b) If the bonds are to be sold at public sale, the Commission shall give notice of the offering of such bonds in a manner reasonably designed to notify the public finance industry that such offering is being made. The Commission shall set the terms and conditions of bidding, including the basis on which the winning bid will be selected. (c) The Commission is authorized to structure the sale of bonds utilizing such financing techniques as are recommended by its professional advisors in order to take advantage of market conditions and obtain the most favorable interest rates consistent with the purposes of this Act. In furtherance of this authorization, the Commission may enter into such ancillary agreements in connection with the sale of the bonds as it deems necessary and advisable, including, without limitation, bond purchase agreements, remarketing agreements, and letter of credit and reimbursement agreements. SECTION 9. EMPLOYMENT OF PROFESSIONALS. The Commission is authorized to retain such professionals as it deems necessary to accomplish the issuance and sale of the bonds, including, without limitation, legal counsel, financial advisors, underwriters, trustees, paying agents and remarketing agents. SECTION 10. INVESTMENT OF PROCEEDS. The proceeds from the issuance of the bonds shall, prior to expenditure of such proceeds for the purposes described in this Act, be held, maintained, and invested by the trustee as set forth in a resolution of the Commission or as set forth in any trust indenture securing the bonds. SECTION 11. GENERAL OBLIGATION. (a) All bonds issued under this Act shall be direct general obligations of the State of Arkansas, for the payment of the debt service on which the full faith and credit of the State of Arkansas are hereby irrevocably pledged so long as the bonds are outstanding. The bonds shall be payable from the 1995 Arkansas Highway Construction and Improvement Bond Account and general revenues of the state as that term is defined in the Revenue Stabilization Law of Arkansas, Ark. Code Ann. § 19-5-101 et seq., and such amount of general revenues as is necessary is hereby pledged to the payment of debt service on the bonds, and shall be and remain pledged for those purposes. (b) This Act shall constitute a contract between the State of Arkansas and the registered owners of all bonds issued hereunder which shall never be impaired, and any violation of its terms, whether under purported legislative authority or otherwise, may be enjoined by the Chancery Court of Pulaski County upon the complaint of any bond owner or any taxpayer. The court shall, in any suit against the Commission, the State Treasurer, or other appropriate officer or official of the state, prevent a diversion of any funds pledged in accordance with this Act and shall compel the restoration of diverted funds, by injunction or mandamus. Also, and without limitation as to any other appropriate remedy at law or in equity, any bond owner may, by an appropriate action, including, without limitation, injunction or mandamus, compel the performance of all covenants and obligation of the State, its officers and officials, hereunder. (c) This Act shall not create any right of any character with respect to the bonds and no right of any character with respect to the bonds shall arise under or pursuant to it, unless and until the first series of bonds authorized by this Act shall have been sold and delivered. SECTION 12. SOURCES OF REPAYMENT. (a) Without in any way limiting the general obligation of the State of Arkansas to repay the bonds, the designated tax revenues (as such term is defined in Section 2 hereof) are hereby specifically pledged to the payment of the debt service on the bonds. (b) Pursuant to certain acts of the 80th General Assembly, the State Treasurer has been authorized to establish in the State Highway and Transportation Department Fund a special account, known as the "1995 Arkansas Highway Construction and Improvement Bond Account," and shall deposit therein all designated tax revenues. In addition, pursuant to certain acts of the 80th General Assembly, the State Treasurer has been authorized to establish in the State Highway and Transportation Department Fund a special account, known as the Highway Resurfacing and Rehabilitation Account. The Commission is authorized to pledge to the repayment of the bonds the full faith and credit of the State, as provided in Section 11 of this Act, and to grant a lien upon the funds on deposit in the 1995 Arkansas Highway Construction and Improvement Bond Account and the Highway Resurfacing and Rehabilitation Account in the State Highway and Transportation Department Fund. (c) On or before commencement of each fiscal year, the Commission in consultation with the Chief Fiscal Officer shall determine the estimated amount required for payment of debt service due on each series of bonds issued and outstanding under this Act during such fiscal year, and shall certify such estimated amount to the State Treasurer. The State Treasurer shall then make transfers from the 1995 Arkansas Highway Construction and Improvement Bond Account in the State Highway and Transportation Department Fund to the trustees for each series of bonds, in such amounts and at such times as shall be specified in the indentures, to pay the maturing debt service on each series of bonds issued and outstanding under this Act. The State Treasurer shall make such additional transfers as the Commission shall certify as being required under the indentures to enable the Commission to establish and thereafter maintain with the trustee for each series of bonds a reserve or reserves for payment of debt service on each series of bonds. Upon certification from the Commission, the State Treasurer may also make transfers of designated amounts from the Highway Resurfacing and Rehabilitation Account in the State Highway and Transportation Department Fund to the trustees or to the 1995 Arkansas Highway Construction and Improvement Bond Account for payment of debt service due on each series of bonds issued and outstanding. (d) The obligation to make transfers from the 1995 Arkansas Highway Construction and Improvement Bond Account in the State Highway and Transportation Department Fund for the payment of debt service on, and, if applicable, a reserve for, each series of bonds shall constitute a first charge against amounts on deposit therein. Funds on deposit in the 1995 Arkansas Highway Construction and Improvement Bond Account in the State Highway and Transportation Department Fund in excess of the amounts required to pay debt service on the bonds and for a reasonable reserve may be used for highway improvements of the Commission, as defined in this Act, and for the redemption of bonds prior to maturity in the manner and in accordance with the provisions pertaining to redemption prior to maturity, as set forth in the trust indentures authorizing or securing each series of bonds. (e) In the event that there are insufficient amounts in the 1995 Arkansas Highway Construction and Improvement Bond Account in the State Highway and Transportation Department Fund to pay the debt service on bonds issued and outstanding under this Act, or to fund any necessary reserves at the required level, the State Treasurer shall, to the extent permitted by law, transfer additional amounts thereto from the general revenues of the State. (f) Prior to the beginning of each fiscal biennium, the Chief Fiscal Officer of the State shall determine the portion of revenues attributable to economic growth within Arkansas which is a direct result of highway improvements which are financed by the bonds issued pursuant to this act and certify such amount to the Governor. If such revenues are appropriated by the General Assembly for repayment of bonds, the Treasurer of the State shall then transfer that amount from general revenues to the 1995 Arkansas Highway Construction and Improvement Bond Account. SECTION 13. INVESTMENT OF REVENUES. Any moneys held in the 1995 Arkansas Highway Construction and Improvement Bond Account in the State Highway and Transportation Department Fund and any fund in the State Treasury created under this Act shall be invested by the State Board of Finance to the full extent practicable pending disbursement for the purposes intended. Notwithstanding any other provision of law, such investments shall be in accordance with the terms of the resolution or trust indenture authorizing or securing the series of bonds to which said fund appertains to the extent the terms of such resolution or trust indenture are applicable. SECTION 14. REFUNDING BONDS. (a) The Commission may issue bonds for the purpose of refunding bonds previously issued pursuant to this Act, provided, however, that the total amount of bonds outstanding after the refunding is completed does not exceed the total amount authorized by this Act. (b) Such refunding bonds shall be general obligations of the State of Arkansas, secured as set forth herein, and shall be secured and sold in accordance with the provisions of this Act. SECTION 15. TAX EXEMPTION. All bonds issued under this Act, and interest thereon, shall be exempt from all taxes of the State of Arkansas, including income, inheritance, and property taxes as well as income tax on any profit from the sale of the bonds at a profit. The bonds shall be eligible to secure deposits of all public funds, and shall be legal for investment of municipal, county, bank, fiduciary, insurance company and trust funds. SECTION 16. POWERS OF COMMISSION. All powers granted to the Commission pursuant to this Act shall be deemed in addition to such powers as already exist pursuant to Amendment 42 to the Arkansas Constitution and the laws of the State of Arkansas. No member of the Commission shall be liable personally for any reason arising from the issuance of bonds pursuant to this Act unless such person shall have acted with corrupt intent. SECTION 17. Ark. Code Ann. § 27-70-209 is hereby repealed. SECTION 18. All provisions of this act of a general and permanent nature are amendatory to the Arkansas Code of 1987 Annotated and the Arkansas Code Revision Commission shall incorporate the same in the Code. SECTION 19. If any provision of this act or the application thereof to any person or circumstance is held invalid, such invalidity shall not affect other provisions or applications of the act which can be given effect without the invalid provision or application, and to this end the provisions of this act are declared to be severable. SECTION 20. All laws and parts of laws in conflict with this act are hereby repealed. SECTION 21. EMERGENCY. (Failed to be adopted) It is hereby found and determined by the General Assembly that there is an immediate need for the construction and repair of highways and roads within the State of Arkansas and that such a program cannot be accomplished without the issuance of bonds to finance the program. Therefore, an emergency is hereby declared to exist and this Act, being necessary for the immediate preservation of the public peace, health and safety, shall be in full force and effect from and after the passage and approval. APPROVED: April 7, 1995.

Legislative History

Acts 1995, No. 1007APPROVED: 4/7/1995.