§ 168.00 Agreements for credit enhancement.
a.The finance board of\nany municipality, school district or district corporation (herein a\n"public body") is hereby authorized and empowered to enter into such\nagreements as it deems reasonable and appropriate, with any department\nor agency of the United States of America, the state, or any other\nfinancially responsible party, to facilitate the issuance, sale, resale\nand payment of bonds, notes, or other evidences of indebtedness of such\npublic body, including, but not limited to letters of credit, lines of\ncredit, revolving credit, bond insurance or other credit enhancements.\nSuch agreements may provide for (i) the advance or advances of funds on\nbehalf of such public body to pay the interest on and principal and\npremium of bonds,
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§ 168.00 Agreements for credit enhancement. a. The finance board of\nany municipality, school district or district corporation (herein a\n"public body") is hereby authorized and empowered to enter into such\nagreements as it deems reasonable and appropriate, with any department\nor agency of the United States of America, the state, or any other\nfinancially responsible party, to facilitate the issuance, sale, resale\nand payment of bonds, notes, or other evidences of indebtedness of such\npublic body, including, but not limited to letters of credit, lines of\ncredit, revolving credit, bond insurance or other credit enhancements.\nSuch agreements may provide for (i) the advance or advances of funds on\nbehalf of such public body to pay the interest on and principal and\npremium of bonds, notes or other evidences of indebtedness of such\npublic body on their date or dates of maturity or redemption or when\ninterest is otherwise due, and (ii) the reimbursement of such advance or\nadvances by such public body.\n b. Such agreements may be executed on or before the date of issuance\nof the obligations to be paid pursuant thereto, provided, however, that\nany reimbursement obligation of such public body arising from such\nagreements shall be deemed indebtedness of such public body (i) only as\nof the date that the corresponding advance is made pursuant to paragraph\na of this section, and (ii) only in the amount of the advance made\npursuant to such paragraph. Such agreements may include a pledge by such\npublic body of its faith and credit for the payment of principal of and\ninterest on any indebtedness deemed to be contracted as set forth in\nthis paragraph, and may provide that any such indebtedness arising from\na reimbursement obligation contracted pursuant to this section shall be\npaid in accordance with the terms of such agreement. Such indebtedness\nshall be excluded in ascertaining the power of such public body to\ncontract indebtedness pursuant to title eight and title nine of this\narticle. Such agreements shall also include such terms and conditions as\nthe finance board shall deem appropriate, including provisions for the\npayment of reasonable fees and expenses by such public body in return\nfor a commitment to advance funds pursuant to such agreement. Such fees\nand expenses shall be deemed part of the cost of the object or purpose\nin connection with which they are incurred.\n c. Prior to procurement of any credit or liquidity enhancements, such\npublic body shall, to the extent practicable:\n (1) consider the ability of the credit or liquidity enhancement\nprovider to make required payments as and when due under the terms of\nthe appropriate governing instruments;\n (2) consider the business reputation of the credit or liquidity\nenhancement provider;\n (3) consider the maximum term of the credit or liquidity enhancement\nrelative to the maturity of the bonds, notes or other obligations being\ncredit or liquidity enhanced;\n (4) provide for the right of substitution for the credit or liquidity\nenhancement provider in all agreements, including a provision permitting\nsuch substitution when the rating of the credit or liquidity enhancement\nprovider falls below the probable credit rating of the issue without\nconsidering the credit or liquidity enhancer; and\n (5) consider the cost of the credit or liquidity enhancement relative\nto the savings or other benefit likely to be achieved through the\nutilization of the credit or liquidity enhancement.\n d. Where the credit or liquidity enhancement procured is an\nirrevocable letter of credit or an acquisition arrangement with a\nbanking organization, such instrument shall be:\n (1) issued or confirmed by a bank holding company or its direct\nsubsidiaries, a federally chartered bank or its subsidiaries, or a state\nchartered bank or its subsidiaries, licensed or authorized to do\nbusiness in this state or\n (2) issued or confirmed by an agency or branch of a foreign banking\ninstitution licensed to do business in this state with total worldwide\nassets in excess of five billion dollars.\n e. Any such issuing banking organization referred to in paragraph d of\nthis section shall meet the regulatory guidelines for capital adequacy\nas promulgated by the appropriate federal banking agency as defined in\nthe Federal Deposit Insurance Act, 12 U.S.C. 1813(q).\n f. (1) Where the credit or liquidity enhancement procured is provided\nby an insurance company, such insurer shall be licensed to write\nfinancial guarantee insurance in this state.\n (2) Where the credit or liquidity enhancement procured is from other\nthan an entity described in paragraph d of this section or subdivision\none of this paragraph, the provider shall be a financially responsible\nparty, incorporated or authorized to do business in this state and\nhaving total assets in excess of ten billion dollars.\n g. The failure of a public body to comply with paragraphs c through f\nof this section shall not invalidate or impair any credit or liquidity\nenhancement contract or instrument.\n h. The finance board may, by resolution, delegate its authority under\nthis section to the chief fiscal officer of such public body in which\nevent the chief fiscal officer shall exercise such power until the\nfinance board, by resolution, shall elect to reassume the same.\n