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H. B. No. 615 As IntroducedAs Introduced
129th General Assembly | Regular Session | 2011-2012 |
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Representatives Goyal, Letson
Cosponsors:
Representatives Fende, Yuko, O'Brien, Antonio, Stinziano, Gerberry, Garland, Lundy, Reece, Murray, Mallory, Driehaus, Boyce, Fedor, Celebrezze, Heard
A BILL
To enact sections 134.01, 134.02, 134.03, 134.031,
134.04, 134.041, 134.042, 134.05, 134.06, 134.07,
134.08, 134.09, and 134.10 of the Revised Code to
create the Ohio bond bank to assist political
subdivisions with borrowing and with the
acquisition of property by acting as a financing
conduit.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:
Section 1. That sections 134.01, 134.02, 134.03, 134.031,
134.04, 134.041, 134.042, 134.05, 134.06, 134.07, 134.08, 134.09,
and 134.10 of the Revised Code be enacted to read as follows:
Sec. 134.01. For purposes of sections 134.01 to 134.10 of
the Revised Code:
(A) "Bank" means the Ohio bond bank established in section
134.02 of the Revised Code.
(B) "Board" means the board of directors established in
section 134.03 of the Revised Code.
(C) "Holder" means a person who is the bearer of any
outstanding bond or note registered to bearer or not registered,
or who is the registered owner of any outstanding bond or note
that is registered other than to bearer.
(D) "Qualified entity" means a subdivision as defined under
section 133.01 of the Revised Code and any nonprofit corporation
authorized to issue securities for or on behalf of any
subdivision.
(E) "Security" means any of the following:
(1) A bond, note, or evidence of indebtedness issued by a
qualified entity;
(2) A lease or other evidence of participation in the
lessor's interest in and rights under a lease with a qualified
entity;
(3) An obligation of a qualified entity under an agreement
between the qualified entity and the bank.
Sec. 134.02. (A) If the provisions of this chapter are
inconsistent with the provisions of any other law, general,
special, or local, the provisions of this chapter shall control.
(B) The Ohio bond bank is hereby created to provide low-cost
financial assistance to qualified entities. The bank is a separate
body corporate and politic, constituting an instrumentality of
this state, but it is not a state agency. The bank is separate
from this state in its corporate and sovereign capacity. All
expenses incurred by the Ohio bond bank in carrying out its
purpose are payable solely from revenues of the bank or funds
appropriated to the bank, and nothing in sections 134.01 to 134.10
of the Revised Code shall be construed to authorize the bank to
incur a liability on behalf of or payable by this state.
(C) The bank is granted all powers necessary or convenient to
perform its purpose, including but not limited to the power to do
any of the following:
(1) Buy and sell bonds, notes, or other evidence of
indebtedness issued by a qualified entity;
(2) Loan money to a qualified entity;
(3) Purchase property and sell or lease it to a qualified
entity;
(4) Issue bonds, notes, or other evidence of indebtedness or
borrow money;
(5) Render services consistent with the bank's purpose and
charge a reasonable fee for such services;
(6) Charge fees for applications submitted by qualified
entities;
(7) Accept gifts or grants of property, money, or services;
(9) Adopt an official seal;
(11) Perform any action necessary or convenient for the
bank's day-to-day operations, such as buying, selling, leasing,
holding, or using property; entering into contracts; employing or
retaining attorneys, accountants, financial advisors, or other
professionals and personnel; and procuring insurance;
(12) Adopt bylaws governing its operations, procedures, and
policies as may be necessary to assist with the furtherance of the
bank's purpose.
(D) The bank shall maintain an operating fund and such other
funds as it considers necessary or convenient to execute the
bank's purpose.
Sec. 134.03. (A) The bank shall be governed by a board of
directors composed of the following:
(1) The treasurer of state, who shall be the chairperson;
(2) The director of budget and management;
(3) Five residents of this state having substantial expertise
in buying, selling, or trading public securities, in public
administration, or in public facilities management, to be
appointed by the governor. Appointed directors shall serve for a
term of three years, may be reappointed for an unlimited number of
terms, and shall hold office from the date of the appointment
until the end of the term for which the director was appointed. An
appointed director shall continue in office subsequent to the
expiration date of the director's term until the director's
successor takes office or until a period of sixty days has
elapsed, whichever occurs first. A director appointed to fill a
vacancy occurring before the expiration of the term for which the
director's predecessor was appointed shall hold office for the
remainder of the term. A vacancy in an unexpired term shall be
filled in the same manner as the original appointment. The
governor may remove an appointed director for malfeasance,
misfeasance, or nonfeasance after a hearing in accordance with
Chapter 119. of the Revised Code.
(B) Directors shall serve without compensation but shall
receive reimbursement for their reasonable and necessary expenses
incurred in the conduct of the board's business. Directors shall
file financial disclosure statements described in division (A) of
section 102.02 of the Revised Code. Each director, and the chief
executive officer appointed under section 134.031 of the Revised
Code, shall execute a surety bond in an amount specified by the
treasurer of state. Each surety bond shall be conditioned upon the
faithful performance of the duties of the office of director and
chief executive officer, respectively. In lieu of such surety
bonds, the bank may execute a blanket surety bond covering each
director, the chief executive officer, and any other officers or
employees of the bank. The surety bonds shall be issued by a
surety company authorized to transact business in this state. The
cost of the surety bonds shall be paid by the bank. Neither a
director nor a person executing bonds or notes issued under this
article is personally liable on the bonds or notes.
(C) A majority of all directors constitutes a quorum, and no
action may be taken without the concurrence of a majority of the
directors. The board of directors is a public body for the
purposes of section 121.22 of the Revised Code. The minutes of the
meeting prepared under that section shall state the name of each
director who was physically present at the meeting, participated
in the meeting remotely, or was absent. Records of the bank are
public records for the purposes of section 149.43 of the Revised
Code.
(D) Each fiscal year, the bank's books and accounts shall be
audited by a certified public accounting firm or the auditor of
state, as selected by the bank. If the audit is to be conducted by
a certified public accounting firm, the firm may not be selected
without a review of the firm's proposal and approval of the firm
by the auditor of state. The cost of the audit shall be considered
an expense of the bank, and a copy of the audit shall be made
available to the public.
(E) Within ninety days after the end of each fiscal year, the
board, with the assistance of the chief executive officer, shall
submit to the governor and the general assembly a report of the
activities of the bank during the preceding fiscal year.
Sec. 134.031. The board shall elect a vice chairperson and
appoint and establish the duties and compensation of a chief
executive officer. The chief executive officer shall do all of the
following:
(A) Serve as both secretary and treasurer;
(B) Administer, manage, and direct the employees of the bank;
(C) Approve all amounts for salaries, allowable expenses of
the bank or of any employee or consultant of the bank, and
expenses incidental to the operation of the bank;
(D) Attend meetings of the board and keep a record of the
proceedings of the board;
(E) Maintain all books, documents, and papers filed with the
bank, the minutes of the board, and the bank's official seal. The
chief executive officer may cause copies to be made of all minutes
and other records and documents of the bank and may give
certificates under seal of the bank to the effect that those
copies are true copies, and all persons dealing with the bank may
rely upon those certificates.
(F) Establish an office for the bank in Columbus;
(G) Adopt an annual budget;
(H) Perform other duties fixed by the board.
Sec. 134.04. (A) Bonds or notes of the bank shall be
authorized by resolution of the board. Upon the adoption of a
resolution authorizing the issuance of bonds or notes, the bank
may publish notice of the adoption once each week for two weeks in
a newspaper of general circulation in the city of Columbus. If
notice is published as provided in this section, any action or
proceeding in any court to set aside the resolution authorizing
the issuance of bonds or notes of the bank under this chapter or
to obtain any relief upon the ground that the resolution is
invalid must be filed within thirty days following the first
publication of notice of the adoption of the resolution. After the
expiration of this thirty-day period, no right of action shall be
asserted nor shall the validity of the resolution or any of its
provisions be open to question in any court or agency upon any
grounds.
(B) Bonds and notes of the bank are negotiable instruments
and securities under Chapters 1303. and 1308. of the Revised Code.
A bond or note of the bank is not a debt, liability, loan of the
credit, or pledge of the faith and credit of this state or of any
qualified entity. Each bond or note shall state on its face that
the bank is obligated to pay principal and interest, and
redemption premiums if any, and that the faith, credit, and taxing
power of this state are not pledged to the payment of the bond or
note. The bank may issue its bonds or notes in principal amounts
that it considers necessary to provide funds for its purpose
unless otherwise limited by act of the general assembly.
Unless otherwise specified by the board, every issue of bonds
or notes is a general obligation of the bank payable out of the
revenue or funds of the bank, subject only to agreements with the
holders of a particular series of bonds or notes pledging a
particular revenue or fund. Bonds or notes may be additionally
secured by a pledge of a grant or contributions from the United
States, a qualified entity, or a person or a pledge of income or
revenues, funds, or money of the bank from any source.
The rate or rates of interest on the bonds or notes may be
fixed or variable. Variable rates shall be determined in the
manner and in accordance with the procedures set forth in the
resolution authorizing the issuance of the bonds or notes. Bonds
or notes bearing a variable rate of interest may be converted to
bonds or notes bearing a fixed rate or rates of interest, and
bonds or notes bearing a fixed rate or rates of interest may be
converted to bonds or notes bearing a variable rate of interest,
to the extent and in the manner set forth in the resolution
pursuant to which the bonds or notes are issued. Interest on bonds
or notes may be payable at any interval and may be compounded, as
specified in the resolution. At the option of the holders, the
bonds or notes may be made subject to mandatory redemption by the
bank at the times and under the circumstances set forth in the
resolution.
(C) Bonds or notes issued under this chapter may be secured
by a trust agreement by and between the board and a corporate
trustee, which may be any trust company or bank having the powers
of a trust company. The trust agreement or the resolution
providing for the issuance of the bonds or notes may contain
provisions for protecting and enforcing the rights and remedies of
the holders of any such bonds or notes as may be reasonable and
proper and not in violation of law. The trust agreement or
resolution may set forth the rights and remedies of the holders of
any bonds or notes and of the trustee and may restrict the
individual right of action by the holders. The trust agreement or
resolution may contain such other provisions as the board may
consider reasonable and proper for the security of the holders of
any bonds or notes. All expenses incurred in carrying out the
provisions of the trust agreement or resolution may be paid from
revenues or assets pledged or assigned to the payment of the
principal of and the interest on bonds and notes or from any other
funds available to the board.
(D) Unless a judicial action or proceeding challenging the
validity of the bonds or notes is commenced by personal service on
the chief executive officer before the initial delivery of the
bonds or notes, the proceedings relating to them are incontestable
and shall be conclusively considered to be and to have been
issued, secured, entered into, payable, sold, executed, and
delivered, and the proceedings relating to them taken, in
conformity with all legal requirements if all of the following
apply:
(1) They state that they are issued or entered into under or
pursuant to Chapter 134. of the Revised Code and comply on their
face with the provisions of that chapter;
(2) They are issued or entered into for a lawful purpose and
within any limitations prescribed by law;
(3) Their purchase price, if any, has been paid in full;
(4) The transcript of the proceedings of the board contains a
statement by the chief executive officer that all the proceedings
were held in compliance with law, which statement creates a
conclusive presumption that the proceedings were held in
compliance with all laws, including, as applicable, section 121.22
of the Revised Code, and rules.
Sec. 134.041. (A) Bonds or notes of the bank may be sold by
competitive bid or private sale at a price determined by the
board. If bonds or notes of the bank are to be sold by competitive
bid on the best bid, the bank shall advertise for bids in a
newspaper of general circulation in Franklin county, in the manner
and at the time or times determined by the board. Any
advertisement for competitive bids shall state all of the
following pertaining to the bonds or notes:
(1) The total or maximum principal amount;
(2) The amounts and dates of principal payments, how and by
whom they shall be determined, and any provisions for call or
redemption prior to maturity;
(3) The maximum rate or rates of interest if any, any other
limitations on interest or interest rates or the manner of
determining the interest rate or rates, and any maximum permitted
discount;
(4) The dates of payment of interest;
(5) The day, hour, and place for receipt of bids, and the
manner in which bids may be presented;
(6) The basis on which the best bid will be determined,
including, with respect to interest cost, the basis for
determining interest cost if other than net interest cost
determined by computing the interest payable to the stated
maturity date or dates, plus any discount or minus any premium
bid;
(7) The bid security, if any, as determined by the board, to
be submitted with or otherwise provided or evidenced in connection
with a bid;
(8) Any other information, or terms of sale determined or
confirmed by the board pertinent to the sale.
(B) A prospective bidder may present a bid for the bonds or
notes based upon their bearing interest that does not exceed the
maximum rate or rates of interest, if any, specified in the
advertisement or request. In connection with its bid, every bidder
shall submit or otherwise provide or evidence any bid security in
the form and amount specified in the advertisement or request. Any
bid security of the best bidder shall be retained or not released
pending delivery of the bonds or notes to the best bidder. After
the award of the bonds or notes to the best bidder, the board
shall return or release any bid security of other bidders.
Sec. 134.042. The bank may issue its notes and pay and
retire the principal of the notes or pay the interest due thereon
or fund or refund the notes from proceeds of bonds or other notes
or from other funds or money of the bank available for that
purpose in accordance with a contract between the bank and the
holders of the notes.
The bank may purchase bonds or notes of the bank out of its
funds or money available for the purchase of its own bonds and
notes. The bank may hold, cancel, or resell the bonds or notes
subject to, and in accordance with, agreements with holders of its
bonds or notes. Unless canceled, bonds or notes so held shall be
considered to be held for resale or transfer and the obligation
evidenced by the bonds or notes shall not be considered to be
extinguished.
A pledge of revenues or other money made by the bank is
binding from the time the pledge is made. Revenues or other money
so pledged and thereafter received by the bank are immediately
subject to the lien of the pledge without any further act, and the
lien of a pledge is binding against all parties having claims of
any kind in tort, contract, or otherwise against the bank,
regardless of whether the parties have notice of the lien. Neither
the resolution authorizing the pledge, nor any other instrument by
which a pledge is created, needs to be filed or recorded except in
the records of the bank.
Sec. 134.05. (A) If the bank defaults in the payment of
principal or interest on an issue of bonds or notes, whether at
maturity or upon call for redemption, and the default continues
for thirty days, or the bank defaults in an agreement made with
the holders of an issue of bonds or notes, and there is no trustee
under a trust agreement, the holders of twenty-five per cent in
the aggregate principal amount of the outstanding bonds or notes
of that issue, by instrument filed in the office of the county
recorder of Franklin county and executed in the same manner as a
deed to be recorded, may appoint a trustee to represent the
holders of those bonds or notes. The trustee shall, in the
trustee's name, upon written request of the holders of twenty-five
per cent in principal amount of the outstanding bonds or notes, do
all of the following:
(1) By civil action enforce all rights of the holders,
including the right to require the bank to do both of the
following:
(a) Collect rates, charges, and other fees and to collect
interest and principal payments on securities held by it adequate
to carry out an agreement as to, or pledge of, the rates, charges,
and other fees and of the interest and principal payments;
(b) Carry out any other agreements with the holders of the
bonds or notes and to perform its duties under this article.
(2) Bring a civil action upon the bonds or notes;
(3) By civil action require the bank to account as if it were
the trustee of an express trust for the holders of the bonds or
notes;
(4) By civil action enjoin anything that may be unlawful or
in violation of the rights of the holders of the bonds or notes;
(5) Declare all the bonds or notes due and payable, and if
all defaults are made good, then with the consent of the holders
of twenty-five per cent of the principal amount of the outstanding
bonds or notes annul the declaration and its consequences. Before
declaring the principal of bonds or notes due and payable, the
trustee must first give not less than thirty days notice in
writing to the chairperson of the board and the attorney general.
The civil action shall be brought in the court of common
pleas of Franklin county. The trustee has all the powers necessary
for the exercise of functions specifically set out or incident to
the general representation of holders in the enforcement and
protection of their rights.
Sec. 134.06. (A) A qualified entity may sell its securities
to the bank at a negotiated, private sale, without limitation as
to denomination, at such price or prices as may be determined by
the bank and the qualified entity. Contracts shall contain the
terms and conditions of the loan or purchase and may be in any
form agreed to by the bank and the qualified entity, including a
customary form of bond ordinance or resolution. Every qualified
entity is authorized and empowered to pay fees and charges
required to be paid to the bank for its services.
(B) A qualified entity may assign or sell a lease or purchase
contract for property to the bank, enter into a lease or purchase
contract for property with the bank, or buy property from or sell
property to the bank at any price and under any other terms and
conditions as may be determined by the bank and the qualified
entity.
(C) All securities at any time purchased, held, or owned by
the bank shall at all times be purchased and held in the name of
the bank. All securities at any time purchased by the bank, upon
delivery to the bank, shall, unless waived by the board, be
accompanied by all documentation required by the board that shall
include an approving opinion of recognized bond counsel,
certification and guarantee of signatures, and certification as to
no litigation pending as of the date of delivery of the securities
challenging the validity or issuance of such securities.
Sec. 134.07. (A) Upon the sale and delivery by a qualified
entity of any securities to the bank, the qualified entity shall
be considered to have agreed that, upon its failure to pay
interest or principal on the securities owned or held by or
arising from an agreement with the bank when payable, all
statutory defenses to nonpayment are waived.
If a department or agency of this state is the custodian of
money payable to the qualified entity under chapter 3306. or
sections 321.24, 323.156, 4503.068, 5727.85, 5727.86, 5747.46 to
5747.48, 5747.50 to 5747.53, or 5751.20 to 5751.22 of the Revised
Code, at any time the department or agency shall withhold the
payment of that money from that qualified entity and pay the money
to the bank for the purpose of paying principal of and interest on
bonds of the bank after written notice to the department or agency
head from the bank that the qualified entity is in default on the
payment of principal or interest on the securities of the
qualified entity then held or owned by or arising from an
agreement with the bank. Withholding payment from the qualified
entity and payment to the bank under this division may be done
only if doing so would not adversely affect the validity of the
security in default.
(B) A qualified entity that has complied with all statutory
requirements for the issuance of its bonds, in lieu of issuing
bonds at that time and without the need for complying with any
other law applicable to the issuance of bonds, notes, or other
evidences of indebtedness, may issue its notes in anticipation of
the issuance of bonds to the bank, and the bank may purchase the
bond anticipation notes. The bond anticipation notes may be issued
on terms set forth in a resolution authorizing their issuance and
in any amount equal to or less than the amount of bonds authorized
to be issued. The qualified entity may renew or extend the bond
anticipation notes from time to time on terms agreed to with the
bank, and the bank may purchase the renewals or extensions. The
amount of the accrued interest on the date of renewal or extension
may be paid or added to the principal amount of the note being
renewed or extended. The bond anticipation notes of the qualified
entity, including any renewals or extensions, must mature in the
amounts and at the times agreed to by the qualified entity and the
bank, not to exceed five years from the date of the original
issuance of the bond anticipation notes. The bond anticipation
notes must be finally paid, and interest on the bond anticipation
notes may be finally paid, with the proceeds of the bonds issued
by the qualified entity. In connection with the issuance of bonds,
part or all of the proceeds of which will be used to retire the
bond anticipation notes, it is not necessary for the qualified
entity to repeat the procedures for the issuance of bonds, as the
procedures followed before the issuance of the bond anticipation
notes are for all purposes sufficient to authorize the issuance of
the bonds.
(C) In connection with the purchase of bond anticipation
notes, the bank, by agreement with the qualified entity, may
impose any terms, conditions, and limitations as in its opinion
are proper for the security of the bank and the holders of its
bonds or notes. If the qualified entity fails to comply with the
agreement or to issue its bonds to retire its bond anticipation
notes, the bank may enforce all rights and remedies provided in
the agreement or at law, including an action in mandamus to compel
the issuance of bonds by the qualified entity.
Sec. 134.08. All property of the bank is public property
devoted exclusively to a public purpose and is exempt from
taxation.
All property of the bank is exempt from levy and sale by
virtue of an execution, and no execution or other judicial process
may issue against the property. A judgment against the bank may
not be a charge or lien upon its property.
Nothing in this section applies to or limits the rights of
the holder of bonds or notes to pursue a remedy for the
enforcement of a pledge or lien given by the bank on its revenues
or other money.
Sec. 134.09. (A) The bank may obtain from a department or
agency of the United States, or a nongovernmental insurer,
insurance or a guaranty for the payment or repayment of interest
or principal, or both, or any part of interest or principal, on
bonds or notes issued by the bank, or on securities purchased or
held by the bank.
(B) The treasurer of the state, as chairperson of the board,
is authorized to receive from the United States of America or any
department or agency thereof any amount of money as and when
appropriated, allocated, granted, turned over, or in any way
provided for the purposes of the bank or this chapter, and, unless
otherwise directed by the federal authority, shall be credited to
and deposited in the bank's operating fund.
Sec. 134.10. (A) A financial institution may give to the
bank a good and sufficient undertaking with such sureties as are
approved by the bank to the effect that the financial institution
shall faithfully keep and pay over to the order of or upon the
warrant of the bank or its authorized agent all those funds
deposited with it by the bank and agreed interest under or by
reason of this chapter, at such times or upon such demands as may
be agreed with the bank. In lieu of such sureties, a financial
institution may deposit with the bank, its authorized agent, or a
trustee for the holders of bonds, as collateral, those securities
as the board may approve. The deposits of the bank may be
evidenced by an agreement in the form and upon the terms and
conditions that may be agreed upon by the bank and the financial
institution.
(B) The board may enter into agreements or contracts with a
financial institution as may be necessary, desirable, or
convenient in the opinion of the board for rendering services in
connection with the care, custody, or safekeeping of securities or
other investments held or owned by the bank, for rendering
services in connection with the payment or collection of amounts
payable as to principal or interest, and for rendering services in
connection with the delivery to the bank of securities or other
investments purchased by it or sold by it, and to pay the cost of
those services. The board may also, in connection with any of the
services to be rendered by a financial institution as to the
custody and safekeeping of its securities or investments, require
security in the form of collateral bonds, surety agreements, or
security agreements in such form and amount as, in the opinion of
the board, is necessary or desirable.
(C) Bonds and notes issued under this chapter are:
(1) Lawful investments for banks, savings and loan
associations, credit union share guaranty corporations, trust
companies, trustees, fiduciaries, insurance companies, including
domestic for life and domestic not for life, trustees or other
officers having charge of sinking and bond retirement or other
funds of the state, subdivisions, and taxing districts, the
commissioners of the sinking fund of the state, the administrator
of workers' compensation, the state teachers, public employees,
and school employees retirement systems, and the Ohio police and
fire pension fund, notwithstanding any other provisions of the
Revised Code or rules adopted pursuant to those provisions by any
agency of this state with respect to investments by them;
(2) Eligible as security for the repayment of the deposit of
public moneys.
Section 2. Appointments to the board of directors created in
section 134.03 of the Revised Code, as enacted by this act, shall
be made not later than thirty days after the effective date of
this act. Notwithstanding that section, of the first three
directors appointed, one shall serve a term of one year, and two
shall serve a term of two years. The board shall elect a vice
chairperson and appoint and establish the duties and compensation
of a chief executive officer under section 134.031 of the Revised
Code within sixty days after the effective date of this act.
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