Substitute Senate Bill No. 614
Public Act No. 00-122
An Act Concerning Certain Empowerment Zones.
Be it enacted by the Senate and House of Representatives in General Assembly convened:
Section 1. (NEW) Any municipality in the state which meets the requirements for the issuance of enterprise zone facility bonds complying with the provisions of Section 1391 to 1397C of the Internal Revenue Code of 1986, as amended, through its designation as an urban empowerment zone by the Secretary of Housing and Urban Development pursuant to the Code, may issue such bonds, provided such bonds comply with the requirements imposed by the Code, U.S. Treasury Regulations and other federal law related to the issuance of tax-exempt bond financing to provide funding for an enterprise zone business with qualified zone property as defined in such law.
Sec. 2. (NEW) For the purpose of carrying out a financing authorized under sections 1 to 6, inclusive, of this act a municipality may issue bonds which are payable solely from and secured by a pledge of and lien upon any or all of the income, proceeds, revenues and property provided as security for the repayment of loans by borrowers financing enterprise zone facilities or by lenders relending bond proceeds in a "loans to lenders" program or any combination thereof as provided in the Internal Revenue Code. Bonds issued pursuant to sections 1 to 6, inclusive, of this act shall be special obligations of the municipality and shall not be payable from or charged upon any funds other than the revenues pledged to the payment thereof, nor shall the municipality issuing the same be subject to any liability thereon except to the extent of such pledged revenues. No holder or holders of any bonds shall have the right to compel any exercise of the taxing power of the municipality to pay any bonds or the interest thereon, or to enforce payment thereon against any property of the municipality and the bonds shall not constitute a charge, lien or encumbrance, legal or equitable, upon any property of the municipality. The substance of such limitation shall be plainly stated on the face of each bond. Bonds issued pursuant to sections 1 to 6, inclusive, of this act shall not be subject to any statutory limitation on the indebtedness of the municipality and such bonds when issued shall not be included in computing the aggregate indebtedness of the municipality in respect to and to the extent of any such limitation.
Sec. 3. (NEW) (a) Any bonds payable and secured as provided in sections 1 to 6, inclusive, of this act shall be authorized by a resolution adopted by the legislative body of the municipality, notwithstanding the provisions of any statute, local law or charter governing the authorization and issuance of bonds generally by such municipality. Such bonds shall: (1) Be issued and sold in such manner, bear interest at such rate or rates, including variable rates, as determined in the proceedings authorizing the issuance of the bonds; (2) provide for the payment of interest on such dates, whether before or at maturity; (3) be issued at, above or below par; (4) mature at such time or times not exceeding thirty years from their date; (5) have such rank or priority, be payable in such medium of payment, be issued in such form, including, without limitation, registered or book-entry form, carry such registration and transfer privileges and be made subject to purchase or redemption before maturity at such price or prices and under such terms and conditions, including the condition that such bonds be subject to purchase or redemption on the demand of the owner thereof, and contain such other terms and particulars as the legislative body of the municipality or the board, officers or agency delegated such authority by the legislative body of the municipality shall determine.
(b) The proceedings under which bonds are authorized to be issued may, subject to the provisions of the general statutes, contain any or all of the following: (1) Provisions respecting custody of the proceeds from the sale of the bonds, including any requirements that such proceeds be held separate from or not be commingled with other funds of the municipality; (2) provisions for the investment and reinvestment of bond proceeds until such proceeds are used to pay project costs and for the disposition of any excess bond proceeds or investment earnings thereon; (3) provisions for the execution of reimbursement agreements, or similar agreements, in connection with credit facilities, including, but not limited to, letters of credit or policies of bond insurance, remarketing agreements, debt service reserve fund surety bonds and interest rate swap agreements; (4) provisions for the collection, custody, investment, reinvestment and use of the pledged revenues or other receipts, funds or moneys pledged for payment of the bonds as provided in sections 1 to 6, inclusive, of this act; (5) provisions regarding the establishment and maintenance of reserves, sinking funds and any other funds and accounts and the regulation and disposition thereof, including requirements that any such funds and accounts be held separate from or not be commingled with other funds of the municipality; (6) covenants for the establishment or maintenance requirements with respect to facilities and properties; (7) provisions for the issuance of additional bonds on a parity with bonds issued prior to the issuance of such additional bonds, including establishment of coverage requirements, if appropriate, with respect to such bonds; (8) provisions regarding the rights and remedies available to the bond owners or any trustee under any contract, loan agreement, document, instrument or trust indenture in case of a default, including the right to appoint a trustee to represent their interests upon occurrence of any event of default, as defined in any such default proceedings, provided if any bonds are secured by a trust indenture, the respective owners of such bonds shall have no authority except as set forth in such trust indenture to appoint a separate trustee to represent them; and (9) other provisions or covenants of like or different character from the foregoing which are consistent with sections 1 to 6, inclusive, of this act and which the legislative body of the municipality or the board, officers or agency delegated such authority by the legislative body of the municipality shall determine in such proceedings are necessary, convenient or desirable in order to better secure the bonds, or will tend to make the bonds more marketable, and which are in the best interests of such municipality.
(c) Any provisions which may be included in proceedings authorizing the issuance of bonds under sections 1 to 6, inclusive, of this act may be included in an indenture of trust duly approved in accordance with sections 1 to 6, inclusive, of this act which secures the bonds, and in such case the provisions of such indenture shall be deemed to be a part of such proceedings as though they were expressly included therein. Any pledge made by a municipality for the issuance of bonds hereunder shall be valid and binding from the time when the pledge is made, and any revenues or other receipts, funds or moneys so pledged and thereafter received by a municipality shall be subject immediately to the lien of such pledge without any physical delivery thereof or further act. The lien of any such pledge shall be valid and binding as against all parties having claims of any kind in tort, contract or otherwise against the municipality, irrespective of whether such parties have notice of such lien. Neither the resolution nor any other instrument by which a pledge is created need be recorded. The municipality may enter into a trust indenture with a corporate trustee, which may be any trust company or bank having the powers of a trust company within or without the state, containing such provisions for protecting and enforcing the rights and remedies of the bond owners as may be reasonable and proper and not in violation of law, including covenants setting forth the duties of the municipality in relation to the exercise of its powers pursuant to sections 1 to 6, inclusive, of this act and the custody, safeguarding and application of all moneys. The municipality may provide by such trust indenture for the payment of the pledged revenues or other receipts, funds or moneys to the trustee under such trust indenture or to any other depository, and for the method of disbursement thereof, with such safeguards and restrictions as it may determine. All expenses incurred in carrying out such trust indenture may be treated as project costs. As used in sections 1 to 6, inclusive, of this act, "bonds" means any bonds, including refunding bonds, notes, bond anticipation notes, interim certificates, debentures or other obligations of indebtedness.
Sec. 4. (NEW) It is hereby determined that the powers conferred in sections 1 to 6, inclusive, of this act are in all respects for the benefit of the people of the state and for the improvement of their health, safety, welfare, comfort and security and that the purposes of sections 1 to 6, inclusive, of this act are public purposes and that a municipality will be performing an essential governmental function in the exercise of the powers conferred upon it by sections 1 to 6, inclusive, of this act.
Sec. 5. (NEW) A municipality may issue bonds the interest on which may be includable under the Internal Revenue Code, as from time to time amended, in the gross income of the holders of such bonds to the same extent and in the same manner that interest on bills, bonds, notes or other obligations of the United States is includable in the gross income of the holders thereof under said Code, for the purpose of financing certain costs of issuance or other costs related to providing tax-exempt bond financing for funding an enterprise zone business with qualified zone property as set forth in section 1 of this act, based upon a finding by the board, officers or agency delegated the authority to issue and sell the bonds that the issuance of such bonds on a taxable basis is in the best interest of the municipality and in furtherance of the purposes of sections 1 to 6, inclusive, of this act.
Sec. 6. (NEW) The bonds of a municipality issued under sections 1 to 6, inclusive, of this act are hereby made securities in which all public officers and bodies of this state and all municipalities and municipal subdivisions, all insurance companies and associations and other persons carrying on an insurance business, all banks, bankers, trust companies, savings banks and savings associations, including savings and loan associations, investment companies and other persons carrying on a banking business, all administrators, guardians, executors, trustees and other fiduciaries, and all other persons whatsoever who are now or may hereafter be authorized to invest in bonds or in other obligations of the state, may properly and legally invest funds, including capital, in their control or belonging to them. The bonds are also hereby made securities which may be deposited with and may be received by all public officers and bodies of the state and all municipalities for any purpose for which the deposit of bonds or other obligations of the state is now or may hereafter be authorized. Whether or not the bonds are of such form and character as to be negotiable instruments under the terms of the Uniform Commercial Code, the bonds are hereby made negotiable instruments within the meaning of and for all purposes of the Uniform Commercial Code, subject only to the provisions of the bonds for registration.
Sec. 7. This act shall take effect from its passage.
Approved May 26, 2000