§ 11-37-180 — Purchase of local obligations.

The authority, with any funds of the authority available for such a purpose, may purchase and acquire, on terms and in a form determined by the authority, local obligations to finance or refinance the cost of any project. Prior to entering into any agreement with the authority, the local government must demonstrate to the satisfaction of the authority that traditional financing sources are not available for the entire project. Two letters of declination, from financial institutions normally engaged in this financing, satisfy this requirement. The authority may pledge to the payment of any bonds all or any portion of the local obligations purchased. The authority, subject to any pledge, may also sell any local obligations so purchased and apply the proceeds of the sale to the purchase of other local obligations for financing or refinancing the cost of any project or for any other of its corporate purposes. The authority may require, as a condition to the purchase of any local obligation, the local government issuing an obligation to perform any of the following: (1) establish and collect rents, rates, fees, and charges to produce revenue sufficient to pay all or a specified portion of: (a) the costs of operation, maintenance, replacement, renewal, and repairs of the project; (b) any outstanding indebtedness incurred for the purposes of the project, including the principal of and interest on the local obligations issued by the local government to the authority; and (c) any amounts necessary to create and maintain any required reserve, including any rate stabilization fund considered necessary or appropriate by the authority to offset the need, in whole or part, for future increases in rents, rates, fees, or charges. (2) create and maintain a special fund for the payment of the principal of and interest on any local obligations and any other amounts becoming due under any agreement entered into in connection with the local obligation, or for the operation, maintenance, repair, or replacement of the project or any portions of it or other property of the local government, and deposit into any fund amounts sufficient to make any payments as they become due and payable; (3) create and maintain other special funds as required by the authority; and (4) perform other acts, including the conveyance of real and personal property together with all right, title, and interest in the property to the authority, or take other actions considered necessary or desirable by the authority to secure payment of the principal of and interest on the local obligations and to provide for the remedies for the authority or other holder of the local obligations in the event of any default by the local government in the payment, including, without limitation, any of the following: (a) the procurement of insurance, guarantees, letters of credit, and other forms of collateral, security, liquidity arrangements or credit supports for local obligations from any source, public or private, and the payment of premiums, fees, or other charges; (b) the payment of the allocable shares of local governments, as determined by the authority, of any costs, fees, charges, or expenses attributable to insurance, guarantees, letters of credit, and other forms of collateral, security, liquidity arrangements, or credit supports incurred in connection with the issuance of bonds by the authority to acquire local obligations of one or more local governments. The determination of the allocable shares may be made by the authority on any reasonable basis; (c) the combination of one or more projects, or the combination of one or more projects with one or more other undertakings, facilities, utilities, or systems, for the purpose of operations and financing, and the pledging of the revenues from the combined projects, undertakings, facilities, utilities, and systems to secure local obligations issued in connection with the combination or any part of it; (d) the payment of the allocable shares of the local governments, as determined by the authority on any reasonable basis, of rate stabilization funds established or required by the authority in connection with the issuance of bonds by the authority to acquire local obligations of two or more local governments. All local governments issuing and selling local obligations to the authority may perform any acts, take any action, adopt any proceedings, and make and carry out any contracts with the authority which are contemplated by this chapter. The contracts need not be identical among all participants in financings of the authority, but may be structured as determined by the authority according to the needs of the contracting local governments and the authority. All statutes permitting local governments to borrow money and issue bonds (including both general obligation and revenue bonds) may be utilized by any local government borrowing money from the authority to the full extent permitted by the Constitution and the statutes.

Legislative History

HISTORY: 1988 Act No. 682, SECTION 2.