CHAPTER 109
MUNICIPAL BOND ISSUES

Table of Contents

Sec. 7-374. Bonded indebtedness of municipalities.

      Sec. 7-374. Bonded indebtedness of municipalities. (a) Definitions. As used in this section, "town" includes each town, consolidated town and city and consolidated town and borough; "municipality" excludes each town and includes each other independent and dependent political and territorial division and subdivision.

      (b) Limitation of indebtedness. No town and no municipality coterminous with or within such town shall incur any indebtedness in any of the following classes through the issuance of bonds which will cause the aggregate indebtedness, in that class, of such town and of all municipalities coterminous with and within such town, jointly, to exceed the multiple stated below for each class times the aggregate annual receipts of such town and of all municipalities coterminous with and within such town, jointly, from taxation for the most recent fiscal year next preceding the date of issue: (1) All debt other than debt for urban renewal projects, water pollution control projects, school building projects, as defined in section 10-289, and the funding of an unfunded past benefit obligation, as defined in section 7-374c, two and one-quarter; (2) debt for urban renewal projects, three and one-quarter; (3) debt for water pollution control projects, three and three-quarters; (4) debt for school building projects, as defined in section 10-289, four and one-half; (5) debt for the funding of an unfunded past benefit obligation, as defined in section 7-374c, three; and (6) total debt including subdivisions (1), (2), (3), (4) and (5) of this subsection, seven. In the computation of annual receipts from taxation, there shall be included as such receipts interest, penalties, late payment of taxes and payments made by the state to such town and to municipalities coterminous with and within such town under section 12-129d and section 7-528. In computing such aggregate indebtedness, there shall be excluded each bond, note and other evidence of indebtedness (i) issued in anticipation of taxes; (ii) issued for the supply of water, for the supply of gas, for the supply of electricity, for the construction of subways for cables, wires and pipes, for the construction of underground conduits for cables, wires and pipes, for the construction and operation of a municipal community antenna television system and for two or more of such purposes; (iii) issued in anticipation of the receipt of proceeds from assessments which have been levied upon property benefited by any public improvement; (iv) issued in anticipation of the receipt of proceeds from any state or federal grant for which the town or municipality has received a written commitment or for which an allocation has been approved by the State Bond Commission or from a contract with the state, a state agency or another municipality providing for the reimbursement of capital costs but only to the extent such indebtedness can be paid from such proceeds; (v) issued for water pollution control projects in order to meet the requirements of an abatement order of the Commissioner of Environmental Protection, provided the municipality files a certificate signed by its chief fiscal officer with the commissioner demonstrating to the satisfaction of the commissioner that the municipality has a plan for levying a system of charges, assessments or other revenues which are sufficient, together with other available funds of the municipality, to repay such obligations as the same become due and payable; and (vi) upon placement in escrow of the proceeds of refunding bonds, notes or other obligations or other funds of the municipality in an amount sufficient, together with such investment earnings thereon as are to be retained in said escrow, to provide for the payment when due of the principal of and interest on such bond, note or other evidence of indebtedness. "Urban renewal project", as used in this section, shall include any project authorized under title 8, the bonds for which are not otherwise, by general statute or special act, excluded from the computation of aggregate indebtedness or borrowing capacity. In the case of a town that is a member of a regional school district, a portion of the aggregate indebtedness of such regional school district shall be included in the aggregate indebtedness of such town for school building projects for the purposes of this section. Such portion shall be determined by applying to the indebtedness of the district, other than indebtedness issued in anticipation of the receipt by the district of payments by its member towns or the state for the operations of such district's schools and of proceeds from any state or federal grant for which the district has received a written commitment or for which an allocation has been approved by the State Bond Commission or from a contract with the state, a state agency or another municipality providing for the reimbursement of capital costs but only to the extent such indebtedness can be paid from such proceeds, such member town's percentage share of the net expenses of such district for the most recent fiscal year next preceding the date of issue payable by such town as determined in accordance with subsection (b) of section 10-51.

      (1949 Rev., S. 807; 1949, 1953, 1955, S. 363d; March, 1958, P.A. 8, S. 5; 24, S. 5; 1959, P.A. 218; 1963, P.A. 604, S. 1; February, 1965, P.A. 53, S. 1; 461, S. 6; 574, S. 7; 1969, P.A. 536, S. 1; 584, S. 1; 1971, P.A. 69, S. 1; 1972, P.A. 36, S. 1; P.A. 78-154, S. 15; P.A. 85-543, S. 5, 7; P.A. 87-584, S. 9, 18; P.A. 89-377, S. 7, 8; June Sp. Sess. P.A. 90-1, S. 8, 10; P.A. 93-158, S. 2, 11; P.A. 99-97, S. 2, 6; 99-182, S. 2, 3; June Sp. Sess. P.A. 05-1, S. 32.)

      History: 1959 act changed reference in Subsec. (b) from 10-282 to 10-289; 1963 act changed method of determining limitation under Subsec. (b) in each category; 1965 acts amended Subsec. (a) to delete obsolete reference to real estate owned by the county and amended Subsec. (b) to specify annual receipts used as basis be those reported pursuant to Sec. 12-13, to provide such receipts be averaged as provided in Sec. 10-268 instead of Sec. 12-13, to add exception re towns whose fiscal years end July first and to require in computation of tax receipts inclusion of payments by state to town and to municipalities coterminous with and within town; 1969 acts replaced previous provision re bonds which cause aggregate indebtedness of more than two and one-quarter times annual taxation receipts with limit on indebtedness to not more than seven times annual tax receipts and deleted provision for determination based on averaging three years' receipts; 1971 act replaced previous limits with new formula set forth in Subdivs. (1) to (5), included in computation of receipts interest, penalties and late payments, excluded from computation of indebtedness bonds on anticipation of proceeds from assessments on property, deleting provision re bonds "payable solely out of the proceeds of assessments ...," and bonds issued in anticipation of receipt of state or federal grants and defined "urban renewal project"; 1972 act added reference to Sec. 12-24c; P.A. 78-154 replaced "sewers" with "water pollution control projects" in Subsec. (b); P.A. 85-543 amended Subsec. (b) to provide that debt limits for bond issues of towns and municipalities shall be based on their aggregate annual receipts from taxation; P.A. 87-584 amended Subsec. (b) by deleting reference to Secs. 12-24a and 12-24c and inserting references to Secs. 12-129d and 7-528 and Sec. 4 of public act 87-584; P.A. 89-377 amended Subdiv. (iii) of Subsec. (b) to include indebtedness related to allocations which have been approved by the state bond commission and added Subdiv. (iv) of Subsec. (b) to include debt for water pollution control projects related to abatement orders; June Sp. Sess. P.A. 90-1 amended Subsec. (b) to provide that the exemption from the debt limitation for projects under abatement orders of the commissioner of environmental protection will be allowed only when the municipality has satisfied the commissioner that it has a repayment plan for such debt; P.A. 93-158 amended Subsec. (a) by deleting definitions of "grand list" and "serial bonds", amended Subsec. (b) by deleting exclusion of fair market value in determining maximum debt and deleting Subpara. (ii) excluding "each bond, not or other evidence of indebtedness", and relettering the subparagraphs and inserting new Subpara. (vi) excluding from aggregate indebtedness bonds for which there has been placed in escrow an amount sufficient to pay the interest and principal thereon and adding provision for the amount of aggregate indebtedness of regional school districts and deleted former Subsec. (c) detailing inapplicability of section to issuance of specified serial bonds, effective June 23, 1993; P.A. 99-97 amended Subsec. (b) to provide that the aggregate indebtedness of regional school districts is calculated by allowing the debt shown on a member community's balance sheet to be net of applicable anticipated school construction grants from the state, effective June 3, 1999; P.A. 99-182 amended Subsec. (b) to add Subdiv. (5) re debt for the funding of unfunded past benefit obligation, effective June 23, 1999; June Sp. Sess. P.A. 05-1 amended Subsec. (b) to add "for the construction and operation of a municipal community antenna television system", effective July 1, 2005.

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