§ 23-5-139 — Higher education revenue bond intercept program - definitions

Colorado § 23-5-139

• Jurisdiction: Colorado
• Title 23: Postsecondary Education
• Art.: General Provisions

Text

(1) (a) The state treasurer, on behalf of an institution, shall make payment as
provided in this section of principal and interest on intercept bonds unless the
governing board adopts a resolution stating that it will not accept on behalf of the
institution payment of principal of and interest on intercept bonds as provided in
this section. Any such resolution must be adopted prior to issuance or incurrence of
the intercept bonds to which it applies. Following adoption of the resolution, the
institution shall provide written notice to the state treasurer of its refusal to accept
the payment. The refusal to accept payment takes effect on the date the state
treasurer receives the written notice and continues in effect until the date the state
treasurer receives written notice from the institution that the governing board has
adopted a resolution rescinding the refusal to accept payment pursuant to this
section. Notwithstanding any provision of subsections (2) to (7) of this section to the
contrary, the state treasurer shall not make payment of principal of or interest on
intercept bonds on behalf of an institution that provides written notice of its refusal
to accept payment by the state treasurer on its behalf as provided in this paragraph
(a) until the state treasurer receives written notice of the rescission of refusal to
accept payment.

(b) If an institution issues a revenue bond pursuant to this article 5 on or
after June 6, 2016, or issues a refunding bond pursuant to article 54, 56, or 57 of
title 11 on or after June 6, 2016, and the governing board wants the revenue or
refunding bond to be an intercept bond, then:

(I) The maximum total annual debt service payment of the new intercept
bond to be issued plus the debt service payment for all other intercept bonds that
were issued on or after June 4, 2008, by the same governing board, must equal
seventy-five percent or less of the most recent fiscal year general fund
appropriation for stipends and fee-for-service contracts that is reappropriated to
such governing board; and

(II) Except as provided in paragraph (c) of this subsection (1), the governing
board must have:

(A) A credit rating in one of the three highest categories, without regard to
modifiers within a category, from at least one nationally recognized statistical
rating organization and, if more than one such organization has rated an institution,
no credit rating that is in a category below the three highest categories, without
regard to modifiers within a category; and

(B) A debt service coverage ratio of at least one and one-half to one,
measured by dividing the governing board's net revenue available for annual debt
service over such governing board's total amount of annual debt service plus the
annual debt service to be issued by such governing board; and

(III) The pledged revenues for the new intercept bond issue include not less
than:

(A) The net revenues of auxiliaries;

(B) One hundred percent of tuition if the institution is an enterprise, as
defined in section 24-77-102 (3);

(C) Indirect cost recovery revenues, if any;

(D) Facility construction fees designated for bond repayment, if any; and

(E) Student fees and ancillary revenues currently pledged to existing
bondholders; and

(IV) Except as provided in paragraph (c) of this subsection (1), the governing
board has obtained a preapproval certificate from the state treasurer as described
in subparagraph (II) of paragraph (d) of this subsection (1), and obtained approval
from both the capital development committee and the joint budget committee as
specified in subsection (1.5) of this section.

(c) (I) (A) If the state treasurer determines that a governing board does not
meet the requirements set forth in subparagraph (II) of paragraph (b) of this
subsection (1), the state treasurer confirms that the revenue bonds to be issued are
refunding bonds that result in cost savings to the governing board based on a cash
flow analysis, the refunding bonds will refund intercept bonds, and the refunding
bonds will not extend the number of years of repayment, then the requirements set
forth in subparagraphs (II) and (IV) of paragraph (b) of this subsection (1) shall not
apply. No later than fifteen days after receiving a request in writing from a
governing board to use the intercept program, the state treasurer shall notify the
capital development committee, the joint budget committee, the Colorado
commission on higher education, and the office of state planning and budgeting
that the governing board has met the requirements of this sub-subparagraph (A).
The state treasurer may make recommendations to the governing board regarding
the structure of the refunding.

(B) If the state treasurer determines that a governing board does not meet
the requirements set forth in subparagraph (II) of paragraph (b) of this subsection
(1), the state treasurer confirms that the revenue bonds to be issued are refunding
bonds that result in cost savings to the governing board based on a cash flow
analysis, the refunding bonds will either refund revenue bonds that are not
intercept bonds, or the refunding bonds will extend the number of years of
repayment, then the requirements set forth in subparagraph (II) of paragraph (b) of
this subsection (1) shall not apply. No later than fifteen days after receiving a
request in writing from a governing board to use the intercept program, the state
treasurer shall notify the capital development committee, the joint budget
committee, the Colorado commission on higher education, the office of state
planning and budgeting, and the governing board whether or not he or she
recommends the requested use of the intercept program. The governing board
must subsequently seek approval from the capital development committee and the
joint budget committee as set forth in subsection (1.5) of this section. The
notification issued by the state treasurer may include the state treasurer's
recommendations regarding the structure of the refunding.

(II) If the state treasurer determines that a governing board meets the
requirements set forth in subparagraph (II) of paragraph (b) of this subsection (1),
the state treasurer confirms that the revenue bonds to be issued are refunding
bonds that result in cost savings to the governing board based on a cash flow
analysis by the state treasurer, the refunding bonds will refund intercept bonds,
and the refunding bonds will not extend the number of years of repayment, then the
requirements set forth in subparagraph (IV) of paragraph (b) of this subsection (1)
shall not apply. No later than fifteen days after receiving a request in writing from a
governing board to use the intercept program, the state treasurer shall notify the
capital development committee, the joint budget committee, the Colorado
commission on higher education, and the office of state planning and budgeting
that the governing board has met the requirements of this subparagraph (II). The
state treasurer may make recommendations to the governing board regarding the
structure of the refunding.

(III) The state treasurer shall develop and issue guidelines that detail how
the state treasurer will determine whether a refunding bond results in cost savings
to the governing board based on a cash flow analysis. The state treasurer may
consult with financial advisors in order to determine whether a refunding bond
results in cost savings to the governing board on a cash flow analysis.

(d) (I) No later than September 1, 2016, and each September 1 thereafter until
the report that is due for state fiscal year 2025-26, which is due no later than March
1, 2026, and each March 1 thereafter for subsequent reports, the state treasurer
shall provide the capital development committee, the joint budget committee, the
Colorado commission on higher education, and the office of state planning and
budgeting with a report that includes:

(A) The credit rating described in sub-subparagraph (A) of subparagraph (II)
of paragraph (b) of this subsection (1) of each governing board that has issued
intercept bonds;

(B) The debt service coverage ratio described in sub-subparagraph (B) of
subparagraph (II) of paragraph (b) of this subsection (1) of each governing board
that has issued intercept bonds;

(C) The total amount of all intercept bonds issued by governing boards,
including the anticipated payment schedule for such intercept bonds; and

(D) The total amount of all revenue bonds issued by governing boards under
section 23-5-101.7 (2), including the anticipated payment schedule for all such
revenue bonds.

(II) The report described in subparagraph (I) of this paragraph (d) is the basis
for the annual preapproval certificate that the state treasurer shall issue to each
governing board that meets the requirements set forth in subparagraph (II) of
paragraph (b) of this subsection (1). In the event a governing board desires to issue
intercept bonds between June 6, 2016, and September 1, 2016, the capital
development committee may request the state treasurer to issue an early
preapproval certificate for such governing board when a preapproval certificate has
not yet been issued. The preapproval certificate must include the total amount of
intercept bonds that the governing board may issue for the period that the
preapproval certificate covers. The total amount of intercept bonds that a
governing board may issue must be calculated based on the lesser of the following,
as of the date of issuance of the preapproval certificate:

(A) The difference between seventy-five percent of the most recent fiscal
year's general fund appropriations for stipends and fee-for-service contracts that
are reappropriated to such governing board and the total annual debt service
payments for intercept bonds of such governing board; or

(B) The total amount of additional revenue bonds a governing board could
issue while maintaining the requirements set forth in subparagraph (II) of paragraph
(b) of this subsection (1).

(III) The preapproval certificate described in subparagraph (II) of this
paragraph (d) may be amended if requested by the capital development committee
as specified in subparagraph (II) of paragraph (a) of subsection (1.5) of this section.

(IV) The preapproval certificate described in subparagraph (II) of this
paragraph (d) may include the state treasurer's recommendations regarding the
structure of any intercept bonds to be issued.

(1.5) (a) (I) A governing board desiring to issue intercept bonds shall present
the state treasurer's preapproval certificate, described in paragraph (d) of
subsection (1) of this section, to the capital development committee and request
approval from the capital development committee. The request must include:

(A) A description of the project or projects that the governing board seeks to
finance through the issuance of intercept bonds;

(B) The maximum amount of intercept bonds the governing board seeks to
issue for the project or projects;

(C) The anticipated terms of the intercept bonds including the maximum
anticipated annual debt service payment; and

(D) If available, a copy of the governing board's resolution that authorizes
the issuance of revenue bonds.

(II) If there are actual or anticipated changes to the financial position and
credit rating of the governing board that may affect the governing board's
compliance with paragraph (b) of subsection (1) of this section since the
preapproval certificate was issued by the state treasurer, the governing board shall
provide the capital development committee with documentation regarding such
changes. The capital development committee may request the state treasurer to
prepare an amended preapproval certificate on the basis of the additional
documentation.

(b) No later than thirty days after the request for approval described in
paragraph (a) of this subsection (1.5) during a regular legislative session of the
general assembly, or no later than forty-five days after the request for approval
described in paragraph (a) of this subsection (1.5) during any period that the general
assembly is not in regular legislative session, the capital development committee
shall review the request for approval and forward a letter to the joint budget
committee setting forth its approval or disapproval for such governing board to use
the intercept program and, if approved, any recommendations the capital
development committee may have regarding the maximum amount of intercept
bonds that may be issued by such governing board.

(c) No later than forty-five days after receipt of the letter from the capital
development committee during the period of October 10 to April 10 of any calendar
year, or no later than ninety-five days after receipt of the letter from the capital
development committee during the period of April 11 to October 9 of any calendar
year, the joint budget committee shall review the project or projects and the
governing board's request to finance the project or projects through the issuance of
intercept bonds. The joint budget committee shall forward a letter to the state
treasurer, the office of state planning and budgeting, the Colorado commission on
higher education, and the governing board setting forth the committee's approval
or disapproval for such governing board to use the intercept program and the
maximum amount of intercept bonds that may be issued by such governing board.

(d) Except as provided in paragraph (c) of subsection (1) of this section, no
governing board may issue intercept bonds until the joint budget committee issues
the approval letter described in paragraph (c) of this subsection (1.5).

(e) The capital development committee shall develop instructions on the
format for requests for approval to issue intercept bonds. Such instructions must
be developed in consultation with the joint budget committee, the Colorado
commission on higher education, and the office of state planning and budgeting. If
a request to issue intercept bonds does not relate to a new capital construction,
capital renewal, or controlled maintenance project, the guidelines may allow the
governing board to submit the request directly to the capital development
committee.

(f) The capital development committee may request input from the state
treasurer on all requests from a governing board to expand or restructure intercept
bonds.

(2) Whenever the paying agent has not received payment of principal of or
interest on intercept bonds on the business day immediately prior to the date on
which such payment is due, the paying agent shall so notify the state treasurer and
the institution by telephone, facsimile, or other similar communication, followed by
written verification, of such payment status. The state treasurer shall immediately
contact the institution and determine whether the institution will make the payment
by the date on which it is due.

(3) If an institution indicates that it will not make a payment by the date on
which it is due, or if the state treasurer is unable to contact the institution, the state
treasurer shall forward the amount in immediately available funds necessary to
make the payment of the principal of or interest on the intercept bonds to the
paying agent. The state treasurer shall recover the amount forwarded by
withholding amounts from the institution's payments of the state's fee-for-service
contract with the institution, from any other state support for the institution, and
from any unpledged tuition or other moneys collected by the institution.

(4) The amounts forwarded to the paying agent by the state treasurer
pursuant to subsection (3) of this section shall be applied by the paying agent
solely to the payment of the principal of or interest on such intercept bonds. The
state treasurer shall notify the department of higher education and the general
assembly of amounts withheld and payments made pursuant to this section.
Institutions that have a debt service payment forwarded to the paying agent by the
state treasurer shall not request a supplemental general fund appropriation or
budget amendment for the amount forwarded in order to replace withheld fee-for-service revenue.

(5) (a) Any governing board with an intercept bond issue for which this
section applies shall file with the state treasurer within thirty days of its public
release a copy of the resolution that authorizes the issuance of intercept bonds; a
copy of the official statement or other offering document for the intercept bonds;
the agreement, if any, with the paying agent for the intercept bonds; and the name,
address, and telephone number of the paying agent. A copy of the official
statement or other offering document for the intercept bonds must also be
submitted within thirty days of its public release to the office of state planning and
budgeting, the Colorado commission on higher education, the capital development
committee, and the joint budget committee.

(b) On the day a preliminary official statement is publicly released for an
intercept bond to be issued, the governing board shall notify the state treasurer,
the office of state planning and budgeting, the Colorado commission on higher
education, the capital development committee, and the joint budget committee by
providing an electronic link to or an electronic copy of the preliminary official
statement.

(c) The failure of any governing board to file any information required in this
subsection (5) does not affect the state treasurer's obligations set forth in this
section.

(6) As provided in section 11 of article II of the state constitution, the state
hereby covenants with the purchasers and owners of intercept bonds that it will not
repeal, revoke, or rescind the provisions of this section or modify or amend this
section so as to limit or impair the rights and remedies granted by this section;
except that nothing in this subsection (6) shall be deemed or construed to require
the state to continue the payment of state assistance to any institution or to limit or
prohibit the state from repealing, amending, or modifying any law relating to the
amount of state assistance to institutions or the manner of payment or the timing
thereof. Nothing in this section shall be deemed or construed to create a debt of the
state with respect to such intercept bonds within the meaning of any state
constitutional provision or to create any other liability except to the extent provided
in this section.

(7) Whenever the state treasurer is required by this section to make a
payment of principal of or interest on intercept bonds on behalf of an institution,
the department of higher education shall initiate an audit of the institution to
determine the reason for the nonpayment and to assist the institution, if necessary,
in developing and implementing measures to ensure that future payments will be
made when they are due.

(8) As used in this section, unless the context otherwise requires:

(a) Cash flow analysis means a comparison made by the state treasurer of
a governing board's annual debt service currently being paid on the revenue bonds
or intercept bonds to be refunded versus annual debt service to be paid on the
intercept bonds being issued to effectuate the refunding and the resulting debt
service savings or dissavings that are generated. The cash flow analysis must
consider the universe of refunding candidates and refunding bond statistics
including the true interest cost, average life of refunded and refunding bonds,
average annual debt service, gross debt service, and the expected present value
savings on the refunding.

(b) Governing board means the governing body of a state institution of
higher education.

(c) Intercept bonds means revenue bonds, refunding bonds, or other
obligations issued pursuant to this section.

(d) Intercept program means the program set forth in this section.

(e) State institution of higher education or institution has the same
meaning as set forth in section 23-18-102 (10).

Legislative History

Source: L. 2008: Entire section added, p. 2160, � 1, effective June 4. L. 2013: IP(1)(b) and (1)(b)(I) amended and (1)(c) added, (SB 13-199), ch. 146, p. 470, � 1, effective April 26. L. 2016: Entire section amended, (SB 16-204), ch. 222, p. 841, � 1, effective June 6. L. 2022: IP(1)(b) and (1)(b)(III)(B) amended, (SB 22-121), ch. 76, p. 386, � 2, effective April 7. L. 2025: (1)(d)(I) amended, (HB 25-1313), ch. 405, p. 2311, � 4, effective August 6.