§ 5-1-14-17.2 — Bond financing; swap agreement restrictions

Indiana § 5-1-14-17.2

• Jurisdiction: Indiana
• Title 5: STATE AND LOCAL ADMINISTRATION
• Art. 1: BONDS AND OTHER OBLIGATIONS
• Ch. 14: Miscellaneous Provisions

Text

2. (a) This section does not apply to a
political subdivision or other local entity when the political subdivision
or other local entity participates in a program sponsored by the Indiana
bond bank in which the actions of the Indiana bond bank are subject to
this section.
(b) As used in this section, "issuing body" includes:
(1) the state of Indiana and its agencies, commissions, and
authorities;
(2) the Indiana bond bank established under IC 5-1.5-2;
(3) a political subdivision, school corporation, hospital
association, municipal corporation, and special taxing district;
(4) a local public improvement bond bank established under IC 5-1.4-2; and
(5) any entity that has issued bonds payable directly or indirectly
from taxes or lease rentals payable by any of the entities listed in
subdivisions (1) through (4).
(c) This section provides restrictions on any issuing body entering
into a swap agreement and does not authorize an issuing body to enter
into a swap agreement separate from any other authority the issuing
body has for entering into a swap agreement.
(d) For an issuing body that is authorized by another law to enter
into swap agreements, the issuing body:
(1) may enter into a swap agreement only in connection with the
financing activities of the issuing body as provided in this section;
and
(2) may not enter into a swap agreement as an investment.
(e) An issuing body may enter into one (1) or more swap agreements
in connection with the financing activities of the issuing body only
under the following conditions:
(1) If in connection with or in anticipation of the issuance of an
obligation, entering into the swap agreement would not cause the
percentage determined in STEP FOUR of the following STEPS to
exceed twenty percent (20%):
STEP ONE: Determine the aggregate amount of the outstanding
notional amounts of the issuing body's outstanding swap
agreements.
STEP TWO: Determine the difference between:
(i) the aggregate amount of all the outstanding obligations of
the issuing body; minus
(ii) the aggregate amount of the outstanding obligations of the
issuing body for which no tax revenues nor special
assessments were pledged as a means to repay the
obligations.
STEP THREE: Determine the sum of:
(i) the STEP TWO result; plus
(ii) the amount of obligations not yet issued but for which one
(1) or more swap agreements have been entered into by the
issuing body.
STEP FOUR: Determine the quotient of:
(i) the STEP ONE result; divided by
(ii) the STEP THREE result.
Multiply the quotient by one hundred (100) to convert the
quotient to a percentage.
For purposes of the calculation, if more than one (1) swap
agreement has been entered into in connection with or in
anticipation of specified principal amounts and maturities of the
same obligations, only the swap agreement with the highest
outstanding notional amount is to be included in the calculation
of the aggregate outstanding notional amounts of outstanding
swap agreements. However, if the issuing body, except the
Indiana finance authority, receives prior approval for entering into
a particular swap agreement from the Indiana finance authority,
an issuing body may enter into the swap agreement in excess of
the threshold. In the case of the Indiana finance authority, the
authority may enter into a swap agreement in excess of the
threshold only after review by the budget committee.
(2) The issuing body, except the Indiana finance authority, has
adopted a comprehensive swap agreement policy at a public
meeting that:
(A) includes provisions governing the adoption of swap
agreements;
(B) is not less restrictive than the swap agreement policy
governing the adoption of swap agreements that is in place for
the Indiana finance authority at the time the issuing body adopts
the comprehensive swap agreement policy; and
(C) is submitted to the Indiana finance authority for a
determination that it complies with this subdivision.
(3) Each swap agreement is approved by a resolution of the
governing board of the issuing body at a public meeting and the
resolution includes a thorough analysis of the risk the issuing
body is assuming by entering into the swap agreement.
(f) On an annual basis, an issuing body shall report to the governing
board of the issuing body the status and terms and conditions of all
outstanding swap agreements. The issuing body shall provide a final
report to the governing board of the issuing body upon termination or
expiration of each swap agreement.
(g) A swap agreement shall be considered as being entered into in
connection with the financing activities of an issuing body if:
(1) the swap agreement is entered into not later than one hundred
eighty (180) days after the issuance of the obligation and
specifically indicates the swap agreement's relationship to the
obligation;
(2) the issuing body designates the swap agreement as having a
relationship to the obligation;
(3) the swap agreement amends, modifies, or reverses a swap
agreement described in subdivision (1) or (2); or
(4) the terms of the swap agreement bear a reasonable
relationship to the terms of the obligation.

Legislative History

As added by P.L.218-2011, SEC.2.