The Vermont Statutes Online
The Statutes below include the actions of the 2024 session of the General Assembly.
NOTE: The Vermont Statutes Online is an unofficial copy of the Vermont Statutes Annotated that is provided as a convenience.
Title 24: Municipal and County Government
Chapter 119: Vermont Bond Bank
- Subchapter 001: GENERAL PROVISIONS
§ 4551. Definitions
As used in this chapter:
(1) “Bank” means the Vermont Bond Bank established by section 4571 of this title.
(2) “Bonds” means bonds of the Bank issued under this chapter.
(3) “County” means any county of the State.
(4) “General Fund” means the fund established under section 4676 of this title.
(5) “Governmental unit” means any county, municipality, or public body.
(6) “Issue,” when used in reference to bonds or notes, means the physical delivery thereof or the effectuation thereof in book entry form, in each case against payment therefor.
(7) “Municipal bond” means a bond or note or evidence of debt or financing arrangement of a governmental unit, including a bond, note, or evidence of debt, constituting a general obligation of a governmental unit, but does not include any bond or note or evidence of debt issued by any other state or any public body or municipal corporation thereof.
(8) “Municipality” means any city, town, village, town school district, incorporated school district, union school district, or other school district, fire district, consolidated sewer district, consolidated water district, or solid waste district organized under the laws of the State, and also includes every municipal corporation identified in subdivision 1751(1) of this title.
(9) “Notes” means any notes of the Bank issued under this chapter.
(10) “Public body” means any public body corporate and politic or any political subdivision of the State established under any law of the State.
(11) “Reserve Fund” means the Vermont Bond Bank Reserve fund established under section 4671 of this title.
(12) “Revenues” means all fees, charges, monies, profits, payments of principal of or interest on municipal bonds and revenue bonds and other investments, gifts, grants, contributions, appropriations, and all other income derived or to be derived by the Bank under this chapter.
(13) “Revenue bond” means a bond or note or evidence of debt constituting an obligation or financing arrangement of a governmental unit authorized under laws of the State and payable solely from revenues derived from the financed asset, enterprise funds, or other specified revenues and the earnings thereon.
(14) “Revenue Bond Reserve Fund” means the Vermont Bond Bank Revenue Bond Reserve Fund established under section 4681 of this title.
(15) “Revenue Fund” means the Vermont Bond Bank Revenue Fund established under section 4683 of this title. (Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970; amended 1971, No. 148 (Adj. Sess.), § 4, Feb. 14, 1972; 1983, No. 12, § 1, eff. March 29, 1983; 1985, No. 127 (Adj. Sess.), § 1, eff. April 21, 1986; 1987, No. 55, §§ 1-4, eff. May 15, 1987; 1987, No. 75, § 3; 1989, No. 111, § 4, eff. June 22, 1989; 2023, No. 72, § 24, eff. June 19, 2023.)
§ 4552. Law governing
It is the intent of the General Assembly that in the event of any conflict or inconsistency in the provisions of this chapter and any other laws pertaining to matters established in this chapter or provided for or in any rules adopted under this chapter or other laws, to the extent of such conflict or inconsistency, the provisions of this chapter shall be enforced and the provisions of the other laws and rules adopted pursuant to this chapter shall be of no effect. (Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970.)
§ 4553. Liberal construction
This chapter shall be construed liberally to effectuate the legislative intent and the purposes of the chapter as complete and independent authority for the performance of each and every act and thing authorized by this chapter and all powers granted by this chapter shall be broadly interpreted to effectuate that intent and purposes and not as a limitation of powers. (Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970.)
§ 4554. Administration expenses
All expenses incurred in carrying out this chapter are payable solely from revenues or funds provided under this chapter and nothing in this chapter authorizes the Bank to incur any indebtedness or liability on behalf of or payable by the State. (Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970.)
§ 4555. Duties of State Treasurer
(a) The State Treasurer may receive from the United States of America or any department or agency thereof any amounts 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 the amounts shall be credited to and deposited in the Reserve Fund or Revenue Bond Reserve Funds, as appropriate, and be available to the Bank.
(b) Any monies in the custody of the State Treasurer whether made available by reason of any grant, allocation, or appropriation by the United States of America or the State or agencies thereof to assist any governmental unit in payment of its municipal bonds or revenue bonds acquired or held by the Bank, or required by the terms of any other law to be paid to holders or owners of municipal bonds or revenue bonds of a governmental unit upon failure or default of a governmental unit to pay the principal of or interest on its municipal bonds or revenue bonds when due and payable, shall, to the extent that those funds or monies are applicable to municipal bonds or revenue bonds of a particular governmental unit and that are then acquired or held by the Bank and as to which that governmental unit has defaulted on payment of principal or interest when due, be paid and deposited by the State Treasurer in the applicable reserve fund or funds and made available to the Bank.
(c) Upon receipt by the State Treasurer of written notice from the Bank, or the corporate trustee exercising rights on behalf of the holders of bonds issued by the Bank, that a governmental unit is in default on the payment of principal or interest on a municipal bond or revenue bond acquired or held by the Bank, the State Treasurer shall immediately withhold all further payment to the governmental unit of any or all funds appropriated and payable by the State to the governmental unit, until the default is cured. During the default period, the State Treasurer shall make direct payment of all, or as much as is necessary, of the withheld amounts to the Bank, or at the Bank’s direction, to the trustee or paying agent for the bonds, so as to cure, or cure insofar as possible, the default as to the bond or the interest on the bond.
(d) Any payments described in subsection (c) of this section made by the State Treasurer to the Bank, or the Bank’s trustee or paying agent for the bond, shall be credited as if made directly by the governmental unit. The payment shall be offset against any appropriation otherwise payable to the governmental unit by the State during each fiscal year. Upon receipt of the payment, the Bank, or the Bank’s trustee or paying agent, shall provide written notice of the payment to the governmental unit.
(e) Nothing in this section shall be construed:
(1) to limit, impair, or impede the rights or remedies granted to the holders of bonds issued by the Bank and the governmental units;
(2) to require the State to continue the payment of State aid or assistance to any governmental unit;
(3) to limit or prohibit the State from repealing or amending any law relating to State aid or assistance, including the manner and time of payment or apportionment, or the amount of aid or assistance;
(4) to create any obligation on the part of the State Treasurer or the State to make any payment on behalf of a defaulting governmental unit other than from funds appropriated and payable to a defaulting governmental unit by the State. (Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970; amended 1987, No. 55, § 5, eff. May 15, 1987; 2015, No. 77 (Adj. Sess.), § 1.)
§ 4556. Cooperation by government agencies; cost
All officers, departments, boards, agencies, divisions, and commissions of the State must render any services to the Bank as are within the area of their respective governmental functions as fixed by law and as may be requested by the Bank and must comply promptly with any reasonable request by the Bank as to the making of any study or review as to desirability, need, cost, or expense with respect to any public project, purpose or improvement, or the financial feasibility thereof or the financial or fiscal responsibility or ability in connection therewith of any governmental unit making application for loan to the Bank and for the purchase by the Bank of municipal bonds or revenue bonds to be issued by that governmental unit. The cost and expense of any services requested by the Bank shall, at the request of the officer, department, board, agency, division, or commission rendering the service, be paid for by the Bank. (Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970; amended 1987, No. 55, § 6, eff. May 15, 1987.)
- Subchapter 002: ESTABLISHMENT AND ORGANIZATION
§ 4571. Establishment
There is hereby established a body corporate and politic, with corporate succession, to be known as the “Vermont Bond Bank.” The Bank is hereby constituted as an instrumentality exercising public and essential governmental functions, and the exercise by the Bank of the powers conferred by this chapter are deemed to be an essential governmental function of the State. (Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970; amended 2023, No. 72, § 25, eff. June 19, 2023.)
§ 4571a. Reports
The Vermont Bond Bank shall prepare and submit, consistent with 2 V.S.A. § 20(a), a report on activities for the preceding calendar year, pursuant to section 4594 of this title. (Added 2003, No. 122 (Adj. Sess.), § 294i; amended 2023, No. 72, § 26, eff. June 19, 2023.)
§ 4572. Membership; vacancies
The Bank established by section 4571 of this title shall consist of the following five directors: the State Treasurer, or his or her designee, who shall be a director ex officio, and four directors appointed by the Governor with the advice and consent of the Senate for terms of two years. The four directors appointed by the Governor must be residents of the State and must be qualified voters therein for at least one year next preceding the time of appointment. The Governor shall first appoint two directors to serve until February 1, 1971 and two directors to serve until February 1, 1972. Each director shall hold office for the term of his or her appointment and until his or her successor shall have been appointed and qualified. A director shall be eligible for reappointment. Any vacancy in a directorship occurring other than by expiration of term shall be filled in the same manner as the original appointment, except that the advice and consent of the Senate shall not be required if it is not in session, but for the unexpired term only. (Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970; 2011, No. 40, § 52, eff. May 20, 2011.)
§ 4573. Removal from office; oath
Each director may be removed from office by the Governor, for cause, after a public hearing, and may be suspended by the Governor pending the completion of the hearing. Each director before entering upon his or her duties shall take and subscribe an oath to perform the duties of his or her office faithfully, impartially, and justly to the best of his or her ability. A record of the oath shall be filed in the Office of the Secretary of State. (Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970.)
§ 4574. Officers; quorum
The directors shall elect one of their number as chair. The directors shall elect a secretary and a treasurer who need not be directors, and the same person may be elected to serve both as secretary and treasurer. The powers of the Bank are vested in the directors thereof and three directors of the Bank shall constitute a quorum. Action may be taken and motions and resolutions adopted by the Bank at any meeting thereof by the affirmative vote of at least three directors of the Bank. A vacancy in the directorship of the Bank shall not impair the right of a quorum to exercise all the powers and perform all the duties of the Bank. (Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970; amended 1971, No. 148 (Adj. Sess.), § 1, eff. Feb. 14, 1972.)
§ 4575. Bonding of members
Before the issuance of any bonds or notes under this chapter, each director of the Bank shall execute a surety bond in the penal sum of $25,000.00 and the treasurer of the Bank shall execute a surety bond in the penal sum of $50,000.00. Each surety bond shall be conditioned upon the faithful performance of the duties of the office of the director or treasurer, to be executed by a surety company authorized to transact business in the State of Vermont as surety and to be approved by the Attorney General and filed in the office of the Secretary of State. After the issuance of any bonds or notes by the Bank each director of the Bank shall maintain his or her surety bond in force. All costs of the surety bonds shall be borne by the Bank. (Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970.)
§ 4576. Compensation; expenses
The directors of the Bank shall receive a per diem compensation in the amount of $30.00 for each day devoted to official duties and reimbursement for actual expenses necessarily incurred in the discharge of their duties. Notwithstanding any other law, an officer or employee of the State shall not be deemed to forfeit his or her office or employment or any benefits thereof by reason of his or her acceptance of the office of director of the Bank. (Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970; amended 1979, No. 59, § 18, eff. July 1, 1979.)
§ 4577. Staff
The Bank may employ such officers, agents, and employees as it may require and determine their qualifications, terms of office, duties, and compensation all without regard to 3 V.S.A. chapter 13. (Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970.)
- Subchapter 003: POWERS AND PROHIBITIONS
§ 4591. General powers
The Bank has the following powers for carrying out the purposes of this chapter:
(1) to sue and be sued;
(2) to adopt an official seal and alter it at pleasure;
(3) to make and enforce rules for the conduct of its business and for use of its services and facilities;
(4) to maintain an office at any place within the State;
(5) to acquire, hold, use, and dispose of its income, revenues, funds, and monies;
(6) to acquire, rent, lease, hold, use, and dispose of other personal property for its purposes;
(7) to borrow money and to issue its negotiable bonds or notes and to provide for and secure the payment thereof and to provide for the rights of the holders thereof, and to purchase, hold, and dispose of any of its bonds or notes;
(8) to fix and revise from time to time and charge and collect fees and charges for the use of its services or facilities;
(9) to accept gifts or grants of property, funds, money, materials, labor, supplies, or services from the United States of America or from any governmental unit or any person, firm, or corporation, and to carry out the terms or provisions or make agreements with respect to any gifts or grants, and to do any and all things necessary, useful, desirable, or convenient in connection with procuring, acceptance, or disposition of gifts or grants;
(10) to do anything authorized by this chapter, through its officers, agents, or employees or by contracts with any person, firm, or corporation;
(11) to enter into and enforce all contracts necessary, convenient, or desirable for the purposes of the Bank or pertaining to any loan to a governmental unit or any purchase or sale of municipal bonds or revenue bonds or other investments or to the performance of its duties and execution or carrying out of any of its powers under this chapter;
(12) to purchase or hold municipal bonds and revenue bonds at such prices and in such manner as the Bank deems advisable, and to sell municipal bonds and revenue bonds acquired or held by it at such prices without relation to cost and in such manner as the Bank deems advisable, all consistent with the policy of the State as declared in section 2 of this act;
(13) to invest any funds or moneys of the Bank not then required for loan to governmental units and for the purchase of municipal bonds or revenue bonds, in the same manner as permitted for investment of funds belonging to the State or held in the Treasury, except as otherwise provided by this chapter;
(14) to prescribe any form of application or procedure required of a governmental unit for the loan or purchase of its municipal bonds or revenue bonds, and to fix the terms and conditions of that loan or purchase and to enter into agreements with governmental units with respect to any loan or purchase;
(15) to do all things necessary, convenient, or desirable to carry out the powers expressly granted or necessarily implied in this chapter;
(16) to maintain and administer the special funds of the State established pursuant to chapter 120 of this title. (Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970; amended 1985, No. 127 (Adj. Sess.), § 2, eff. April 21, 1986; 1987, No. 55, §§ 7-9, eff. May 15, 1987; 1987, No. 75, § 2.)
§ 4592. Supplementary powers
The Bank, in addition to any other powers granted in this chapter, has the following powers:
(1) In connection with any loan to a governmental unit, to consider the need, desirability, or eligibility of the loan, the ability of the governmental unit to secure borrowed money from other sources and the costs thereof, and the particular public improvement or purpose to be financed by the municipal bonds or revenue bonds to be purchased by the Bank.
(2) To charge for its costs and services in review or consideration of any proposed loan to a governmental unit or purchase of municipal bonds or revenue bonds of a governmental unit, and to charge therefor whether or not the loan is made or the municipal bonds or revenue bonds are purchased.
(3) To establish any terms and provisions with respect to any loan to governmental units through the purchase of municipal bonds or revenue bonds by the Bank, including date and maturities of the bonds, provisions as to redemption or payment prior to maturity, and any other matters that are necessary, desirable, or advisable in the judgment of the Bank.
(4) To conduct examinations and hearings and to hear testimony and take proof, under oath or affirmation, at public or private hearings, on any matter material for its information and necessary to carry out this chapter.
(5) To issue subpoenas requiring the attendance of witnesses and the production of books and papers pertinent to any hearing before the Bank, or before one or more of the directors of the Bank appointed by it to conduct the hearing.
(6) To apply to any court, having territorial jurisdiction of the offense, to have punished for contempt any witness who refuses to obey a subpoena, or who refuses to be sworn or affirmed to testify, or who is guilty of any contempt after summons to appear.
(7) To procure insurance against any losses in connection with its property, operations, or assets in such amounts and from such insurers as it deems desirable.
(8) To the extent permitted under its contracts with the holders of bonds or notes of the Bank, to consent to any modification of the rate of interest, time, and payment of any installment of principal or interest, security, or any other term of bond or note, contract, or agreement of any kind to which the Bank is a party.
(9) To issue its bonds or notes that are secured by neither the Reserve Fund nor the Revenue Bond Reserve Fund, but which may be secured by such other funds and accounts as may be authorized by the Bank from time to time.
(10) To issue bonds, other forms of indebtedness, or other financing obligations or arrangements for projects relating to renewable energy, energy efficiency, climate adaptation, and projects that otherwise result in the reduction of greenhouse gas emissions. (Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970; amended 1987, No. 55, §§ 10, 11, eff. May 15, 1987; 2009, No. 45, § 15k, eff. May 27, 2009; 2023, No. 72, § 27, eff. June 19, 2023.)
§ 4593. Prohibited acts
Under this chapter, a bank may not:
(1) make loans of money to any person, firm, or corporation other than a government or a governmental agency or subdivision, or purchase securities issued by any person, firm, or corporation other than a governmental unit or for investment except as provided in this chapter;
(2) emit bills of credit, or accept deposits of money for time or demand deposit, or administer trust, or engage in any form or manner in, or in the conduct of, any private or commercial banking business, or act as a savings bank or savings and loan association;
(3) be or constitute a bank or trust company within the jurisdiction or under the control of the Department of Financial Regulation of the State, or the Commissioner thereof, or the Comptroller of the Currency of the United States of America or the Department of the Treasury thereof; or
(4) be or constitute a bank, banker, or dealer in securities within the meaning of or subject to the provisions of any securities, securities exchange, or securities dealers law, of the United States of America or of this State or of any other state. (Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970; amended 1989, No. 225 (Adj. Sess.), § 25; 1995, No. 180 (Adj. Sess.), § 38.)
§ 4594. Annual report; audit
On or before the last day of February in each year, the Bank shall make a report of its activities for the preceding calendar year to the Governor and to the General Assembly. Each report shall set forth a complete operating and financial statement covering its operations during the year. The Bank shall cause an audit of its books and accounts to be made at least once in each year by certified public accountants and the cost thereof shall be considered an expense of the Bank and a copy thereof shall be filed with the State Treasurer. The provisions of 2 V.S.A. § 20(d) (expiration of required reports) shall not apply to the report to be made under this subsection. (Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970; amended 2013, No. 142 (Adj. Sess.), § 39.)
§ 4595. Annual budget
(a) On or before December 1 in each year, the Bank shall adopt an annual budget for the succeeding year. The budget shall set forth the general categories of expected expenditures and the amount on account of each and shall include a provision or reserve for contingencies or over expenditures as well as any additional material as the Bank may determine. Copies of the annual budget certified by the Chair of the Bank shall be promptly filed with the State Treasurer and the Director of Budget and Management and the annual budget shall not be effective until it is so filed.
(b) If for any reason the Bank does not adopt the annual budget on or before December 1, the budget for the preceding year shall be in effect for that year until the annual budget for the year is adopted.
(c) The Bank may at any time adopt an amended annual budget for the current calendar year, but the amended annual budget may not supersede any prior budget until it is approved by the State Treasurer as reasonable and necessary, and filed as required in the case of the annual budget. (Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970.)
§ 4596. Care and custody of bonds
The Bank may enter into agreements or contracts with any bank, trust companies, banking or financial institutions within or without the State as may be necessary, desirable, or convenient in the opinion of the Bank for rendering services to the Bank in connection with the care, custody, or safekeeping of municipal bonds, revenue bonds, or other investments held or owned by the Bank and services in connection with the payment or collection of amounts payable as to principal or interest, and for services in connection with the delivery to the Bank of municipal bonds, revenue bonds, or other investments purchased by it or sold by it, and to pay the cost of those services. The Bank may also, in connection with any of the services to be rendered by any banks, trust companies, or banking or financial institutions as to the custody and safekeeping of any of its municipal bonds, revenue bonds, 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 Bank, is necessary or desirable for the purpose of the Bank. (Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970; amended 1987, No. 55, § 12, eff. May 15, 1987.)
- Subchapter 004: FORM AND NATURE OF BONDS AND NOTES
§ 4621. Form of obligation; faith and credit
(a) Bonds and notes issued under this chapter are not in any way a debt or liability of the State and do not create or constitute any indebtedness, liability or obligation of the State nor are they or do they constitute a pledge of the faith and credit of the State but all such bonds and notes, unless funded or refunded by bonds or notes of the Bank, are payable solely from revenues or funds pledged or available for their payment as authorized herein. Each bond and note other than bonds or notes issued in book entry form must contain on its face a statement to the effect that the Bank is obligated to pay the principal thereof and the interest thereon only from revenues or funds of the Bank and that the State is not obligated to pay the principal or interest and that neither the faith and credit nor the taxing power of the State is pledged to the payment of the principal of or the interest on the bonds or notes.
(b) The State does pledge to and agree with the holders of the bonds or notes issued under this chapter, that the State will not limit or restrict the rights hereby vested in the Bank to purchase, acquire, hold, sell, or dispose of municipal bonds, revenue bonds, or other investments or to make loans to governmental units or to establish and collect such fees or other charges as may be convenient or necessary to produce sufficient revenues to meet the expenses of operation of the Bank, and to fulfill the terms of any agreement made with the holders of its bonds or notes or in any way impair the rights or remedies of the holders of those bonds or notes until the bonds and notes, together with interest thereon, and interest on any unpaid installments of interest, and all costs and expenses in connection with any action or proceedings by or on behalf of the holders, are fully met, paid, and discharged. (Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970; amended 1983, No. 12, § 2, eff. March 29, 1983; 1987, No. 55, § 13, eff. May 15, 1987.)
§ 4622. Negotiability of bonds or notes
Whether or not the notes and bonds are of such form and character as to be negotiable instruments under the terms of the Uniform Commercial Code 9A V.S.A. § 1-101 et seq., the notes and bonds are hereby made negotiable instruments within the meaning of and for all the purposes of said Uniform Commercial Code, subject only to the provisions of the notes and bonds for registration or for their issuance in book entry form. (Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970; amended 1983, No. 12, § 3, eff. March 29, 1983.)
§ 4623. Bonds or notes as legal investment
Notwithstanding any other law, the State and all public officers, governmental units, and agencies thereof, all banks, trust companies, savings banks and institutions, building and loan associations, savings and loan associations, investment companies, and other persons carrying on a banking business, all insurance companies, insurance associations, and other persons carrying on an insurance business, and all executors, administrators, guardians, trustees, and other fiduciaries may legally invest any sinking funds, monies, or other funds belonging to them or within their control in any bonds or notes issued under this chapter, and these bonds or notes are authorized security for any and all public deposits. (Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970.)
§ 4624. Tax exemption
All property of the Bank is public property devoted to an essential public and governmental function and purpose and is exempt from all taxes and special assessments of the State or any subdivision thereof. All bonds or notes issued under this chapter are issued by a body corporate and public of this State and for an essential public and governmental purpose and those bonds and notes, and the interest thereon and the income therefrom, and all fees, charges, funds, revenues, income, and other monies pledged or available to pay or secure the payment of those bonds or notes, or interest thereon, are exempt from taxation except for transfer inheritance and estate taxes. (Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970.)
- Subchapter 005: SALE AND ISSUANCE OF BONDS AND NOTES
§ 4641. Loans to governmental units
The Bank, for the purpose of this chapter, may lend money to governmental units through the purchase by the Bank of municipal bonds or revenue bonds of governmental units. The Bank, under this chapter, may issue its bonds and notes and may otherwise assist governmental units as provided in this chapter. (Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970; amended 1971, No. 148 (Adj. Sess.), § 5, Feb. 14, 1972; 1987, No. 55, § 14, eff. May 15, 1987.)
§ 4642. Amount and purpose; general obligation
(a) The Bank may issue its bonds or notes in such principal amounts as it shall deem necessary to provide funds for any purposes under this chapter, including:
(1) The making of loans;
(2) The payment, funding or refunding of the principal of, or interest or redemption premiums on, any bonds or notes issued by it whether the bonds or notes or interest to be funded or refunded have or have not become due;
(3) The establishment or increase of reserves to secure or to pay bonds or notes or interest thereon and all other costs or expenses of the Bank incident to and necessary or convenient to carry out its corporate purposes and powers.
(b) Except as otherwise provided in this chapter or by the Bank, every issue of bonds or notes shall be general obligations payable out of any revenues or funds of the Bank, subject only to any agreements with the holders of particular bonds or notes pledging any particular revenues or funds. Any bonds or notes may be additionally secured by a pledge of any grant or contributions from the United States of America or the State or any governmental unit or any person, firm, or corporation or a pledge of any income or revenues, funds, or monies of the Bank from any source whatsoever. (Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970.)
§ 4643. Form of issuance
(a) Bonds or notes of the Bank shall be authorized by resolution of the Bank and may be issued in one or more series and shall bear such date or dates, mature at such time or times, bear interest at such rate or rates of interest per annum or within such maximum rate, be in such denomination or denominations, be issued in coupon form payable to bearer, in registered form or in book entry form, carry such conversion or registration privileges, have such rank or priority, be executed in such manner, be payable from such sources in such medium of payment at such place or places within or without the State, and be subject to such terms of redemption, with or without premium, as the resolution provides.
(b) The State Treasurer may, at the direction of the Bank, act as transfer agent or registrar for the exchange or transfer of registered bonds and notes or maintain records so that bonds and notes in book entry form may be effected and the Bank may contract with or otherwise designate a bank, trust company, or other person to maintain records so that bonds and notes in book entry form may be effected. Such bank, trust company, or other person, which may include the federal government or any of its agencies or instrumentalities or any officer, agency, or instrumentality of the State, may be located or have its principal office inside or outside the State. Bonds and notes in book entry form shall be effected by means of entries on the records of the State Treasurer or other designated person that shall reflect the description of the issue, the principal amount, the interest rate, the maturity date, and the owner of the bonds or notes and such other information as is deemed appropriate. The State Treasurer or other designated person may effect conversion between book entry bonds and notes and registered bonds and notes for owners of bonds or notes who request such a change. The State Treasurer or other designated transfer agent or registrar shall issue a confirmation of the transaction in the form of a written advice.
(c) [Repealed.] (Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970; amended 1983. No. 12, § 4, eff. March 29, 1983; 2015, No. 29, § 15.)
§ 4644. Sale price
Bonds or notes of the Bank may be sold at public or private sale at such price as the Bank determines. (Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970.)
§ 4645. Administrative consent or conditions not required
Bonds or notes may be issued under this chapter without obtaining the consent of any department, division, commission, board, bureau, or agency of the State, and without any other proceeding or the happening of any other conditions or things than those specifically required by this chapter. (Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970.)
§ 4646. Approval of Governor and Treasurer
No resolution or other action of the Bank providing for the issuance of bonds may be adopted or otherwise made effective without the prior approval in writing of the Governor and the State Treasurer. The powers conferred by this section on the Governor and the State Treasurer shall be exercised with due regard for the rights of the holders of bonds of the Bank at any time outstanding, and nothing in, or done pursuant to, this section shall in any way limit, restrict, or alter the obligation or powers of the Bank or any director, officer, or representative of the Bank to carry out and perform in every detail each and every covenant, agreement, or contract at any time made or entered into by or on behalf of the Bank with respect to its bonds or for the benefit, protection, or security of the holders thereof. (Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970.)
§ 4647. Payment or refunding of notes
The Bank may from time to time issue its notes under this chapter and pay and retire or fund or refund the notes from proceeds of bonds or of other notes, or from any other funds or monies of the Bank available for that purpose in accordance with any contract between the Bank and the holders of the notes. Unless provided otherwise in any contract between the Bank and the holders of notes, and unless the notes are otherwise paid, funded, or refunded, the proceeds of any bonds of the Bank issued among other things, to fund any outstanding notes, shall be held, used, and applied by the Bank to the payment and retirement of the principal of the notes and the interest due and payable thereon. (Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970.)
§ 4648. Terms of agreement with bond or noteholder
In any resolution of the Bank authorizing, or relating to the issuance of any bonds or notes, the Bank, in order to secure the payment of the bonds or notes and in addition to its other powers, may covenant and contract with the holders of the bonds or notes:
(1) to pledge to any payment or purpose all or any part of its revenues to which its right then exists or may thereafter come into existence, and the monies derived therefrom, and the proceeds of any bonds or notes;
(2) to covenant against pledging all or any part of its revenues, or against permitting or suffering any lien on those revenues or its property;
(3) to covenant as to the use and disposition of any payments of principal or interest received by the Bank on municipal bonds, revenue bonds, or other investments held by the Bank;
(4) to covenant as to establishment of reserves or sinking funds, the making of provision for them, and the regulation and disposition thereof;
(5) to covenant with respect to or against limitations on any right to sell or otherwise dispose of any property of any kind;
(6) to covenant as to any bonds and notes to be issued and their limitations and their terms and conditions and as to the custody, application, and disposition of their proceeds;
(7) to covenant as to the issuance of additional bonds or notes or as to limitations on the issuance of additional bonds or notes and on the incurring of other debts;
(8) to covenant as to the payment of the principal of or interest on the bonds or notes, as to the sources and methods of payment, as to the rank or priority of any bonds or notes with respect to any lien or security or as to the acceleration of the maturity of any bonds or notes;
(9) to provide for the replacement of lost, stolen, destroyed, or mutilated bonds or notes;
(10) to covenant against extending the time for the payment of bonds or notes or interest thereon;
(11) to covenant as to the redemption of bonds or notes and privileges of exchange thereof for other bonds or notes of the Bank;
(12) to covenant as to any charges to be established and charged, the amount to be raised each year or other period of time by charges or other revenues and as to the use and disposition to be made thereof;
(13) to covenant to create or authorize the creation of special funds or monies to be held in pledge or otherwise for operating expenses, payment or redemption of bonds or notes, reserves, or other purposes and as to the use and disposition of the monies held in those funds;
(14) to establish the procedure, if any, by which the terms of any contract or covenant with or for the benefit of the holders of bonds or notes may be amended or abrogated, the amount of bonds or notes the holders of which must consent thereto, and the manner in which the consent may be given;
(15) to covenant as to the custody of any of its properties or investments, the safe-keeping thereof, the insurance to be carried thereon, and the use and disposition of insurance monies;
(16) to covenant as to the time or manner of enforcement or restraint from enforcement of any rights of the Bank arising by reason of or with respect to nonpayment of any principal or interest of any municipal bonds or revenue bonds;
(17) to provide for the rights and liabilities, powers, and duties arising upon the breach of any covenant, condition, or obligation and to prescribe the events of default and the terms and conditions upon which any or all of the bonds, notes, or other obligations of the Bank shall become or may be declared due and payable before maturity and the terms and conditions upon which the declaration and its consequences may be waived;
(18) to vest in a trustee or trustees within or without the State such property, rights, powers, and duties in trust as the Bank may determine, which may include any of the rights, powers, and duties of any trustee appointed by the holders of any bonds or notes and to limit or abrogate the right of the holders of any bonds of the Bank to appoint a trustee under this chapter or limiting the rights, powers, and duties of the trustee;
(19) to pay the costs or expenses incident to the enforcement of the bonds or notes or of the resolution or of any covenant or agreement of the bank with the holders of its bonds or notes;
(20) to agree with any corporate trustee that may be any trust company or bank having the powers of a trust company within or without the State, as to the pledging or assigning of any revenues or funds to which the Bank has any rights or interest, and may further provide for such other rights and remedies exercisable by the trustee as may be proper for the protection of the holders of any bonds or notes of the Bank and not otherwise in violation of law, and the agreement may provide for the restriction of the rights of any individual holder of bonds or notes of the Bank;
(21) to appoint and to provide for the duties and obligations of a paying agent or paying agents, or such other fiduciaries as the resolution may provide within or without the State;
(22) to limit the rights of the holders of any bonds or notes to enforce any pledge or covenant securing bonds or notes; and
(23) to make covenants other than and in addition to the covenants expressly authorized in this section, of like or different character, and to make covenants to do or refrain from doing such things as may be necessary, or convenient and desirable, in order to better secure bonds or notes or which, in the absolute discretion of the Bank, will tend to make bonds or notes more marketable, notwithstanding that the covenants or things may not be enumerated in this section. (Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970; amended 1987, No. 55, §§ 15, 16, eff. May 15, 1987.)
§ 4649. Purchase and disposition of own obligations
The Bank may purchase bonds or notes of the Bank out of any of its funds or money available therefor. 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. (Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970.)
§ 4650. Interest rates
Notwithstanding section 1759 of this title, or any other law applicable to or constituting any limitation on the maximum rate of interest per annum payable on bonds or notes, or as to annual interest cost to maturity of money borrowed or received upon issuance of bonds or notes, or purporting to regulate lenders every governmental unit may contract to pay interest on, or an interest cost per annum for, money borrowed from the Bank and evidenced by its municipal bonds purchased by the Bank notwithstanding any statutory limitation as to rate of interest per annum payable or as to annual interest cost to maturity of money borrowed by such governmental unit. Every governmental unit may contract with the Bank with respect to the loan or purchase and the contract shall contain the terms and conditions of the loan or purchase. Every governmental unit may pay fees and charges required to be paid to the Bank for its services. Notwithstanding sections 1759-1765 of this title or of any other law applicable to or constituting any limitation on the sale of municipal bonds or revenue bonds or notes, or purporting to regulate lenders any governmental unit may sell municipal bonds or revenue bonds or notes to the Bank without limitations as to denomination and the municipal bonds or revenue bonds or notes may be fully registered, registrable as to principal or in bearer form, may bear interest at a rate or rates in accordance with this section, may be evidenced in that manner and may contain other provisions not inconsistent herewith, and may be sold to the Bank without advertisement at a price of par and accrued interest, all as provided in the proceedings of the governing body of the governmental unit under which the municipal bonds or revenue bonds or notes are issued. (Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970; amended 1987, No. 55, § 17, eff. May 15, 1987; 1987, No. 203 (Adj. Sess.), § 20, eff. May 27, 1988.)
§ 4651. Exchange of coupon bonds
The governing body of the governmental unit may provide for the exchange of coupon bonds for fully registered bonds and of fully registered bonds for coupon bonds and for the exchange of the bonds after issuance for bonds of larger or smaller denominations, all according to the proceedings authorizing their issuance, provided the bonds in changed form or denominations are exchanged for the surrendered bonds in the same aggregate principal amounts and in a manner that no overlapping interest is paid, and the bonds in changed form or denominations bear interest at the same rate or rates and mature on the same date or dates as the bonds for which they are exchanged. When any exchange is made under this section the bonds surrendered by the holders at the time of the exchange shall be cancelled. The exchange may be made only at the request of the holders of the bonds to be surrendered. The governmental unit may require all expenses incurred in connection with the exchange to be paid by the holders. If any of the officers whose signatures appear on the bonds or coupons cease to be officers before the delivery of the bonds, their signatures shall be valid for all purposes, as if they had remained in office. (Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970.)
§ 4652. Waiver of defenses; rights of holder
On the sale and issuance of any municipal bonds or revenue bonds to the Bank by any governmental unit, that governmental unit is deemed to agree that on the failure of that governmental unit to pay interest or principal on any of the municipal bonds or revenue bonds owned or held by the Bank when payable, all defenses to nonpayment are waived; and further, with respect to municipal bonds that constitute general obligation bonds supported by the full faith and credit of the municipality, upon nonpayment and demand on that governmental unit for payment, if funds are not available in its treasury to make payment, the governing body of that governmental unit shall forthwith assess a tax on the grand list of the governmental unit, sufficient to make payment with 12 percent interest thereon, and cause the tax to be collected within 60 days; and further, with respect to municipal bonds that do not constitute general obligation bonds supported by the full faith and credit of the municipality and revenue bonds, upon nonpayment and demand on that governmental unit for payment, such governmental unit shall make payment together with interest thereon of 12 percent, which shall be due and payable within 60 days; and further, notwithstanding any other law, including any law under which the municipal bonds or revenue bonds were issued by that governmental unit, the Bank upon nonpayment is constituted a holder or owner of the municipal bonds or revenue bonds as being in default. Also, notwithstanding any other law as to time or duration of default or percentage of holders or owners of bonds entitled to exercise rights of holders or owners of bonds in default, or to invoke any remedies or powers thereof or of any trustee in connection therewith or of any board, body, agency, or commission of the State having jurisdiction in the matter or circumstance, the Bank may thereupon avail itself of all other remedies, rights, and provisions of law applicable in that circumstance, and the failure to exercise or exert any rights or remedies within any time or period provided by law may not be raised as a defense by the governmental unit. All of the bonds of the issue of municipal bonds or revenue bonds of a governmental unit on which there is nonpayment, are for all of the purposes of this section deemed to be due and payable and unpaid. The Bank may carry out the provisions of this section and exercise all of the rights and remedies and provisions of law provided or referred to in this section. (Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970; amended 1987, No. 15, § 18, eff. May 15, 1987; 2023, No. 72, § 28, eff. June 19, 2023.)
§ 4653. Bond anticipation notes
Notwithstanding any law applicable to any governmental unit as to the period for temporary financing of any public improvement or purpose by issuance of its notes in anticipation of the issuance of permanent bonds or as to the renewal of bond anticipation notes, the Bank may purchase and the governmental unit may issue bond anticipation notes and may renew them from time to time provided that the bond anticipation notes, including renewals thereof, mature in such amounts and in such years not exceeding five years from the date of the original issuance as is agreed between the Bank and the governmental unit. In connection with the transaction and purchase of bond anticipation notes, the Bank may by agreement with the governmental unit impose any terms, conditions, and limitations as in its opinion are proper and for the purposes and security of the Bank and the holders of its bonds or notes. The failure of any governmental unit to comply with that agreement constitutes a failure of the governmental unit to pay principal of and interest on the bond anticipation notes under section 4652 of this title, and the Bank shall thereupon enforce all such rights, remedies, and provisions of law as it has under this section or are elsewhere provided. (Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970.)
§ 4654. Marketability; certification
All municipal bonds, revenue bonds, or other investments of monies of the Bank provided for under this chapter must at all times be purchased in negotiable form, subject to provision for any registration in the name of the Bank or for issuance in book entry form pursuant to section 1881 of this title. All municipal bonds and revenue bonds at any time purchased by the Bank must upon delivery to the Bank be accompanied by an approving opinion of bond counsel. (Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970; amended 1971, No. 148 (Adj. Sess.), § 6, eff. Feb. 14, 1972; 1987, No. 55, § 19, eff. May 15, 1987.)
§ 4655. Presumption of validity
After issuance, all bonds or notes of the Bank shall be conclusively presumed to be fully authorized and issued by all the laws of this State, and any person or governmental unit shall be stopped from questioning their authorization, sale, issuance, execution, or delivery by the Bank. (Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970.)
- Subchapter 006: SPECIAL FUNDS
§ 4671. Reserve fund
(a) The Bank shall establish and maintain a special fund called the “Vermont Municipal Bond Bank Reserve Fund” in which there shall be deposited:
(1) All monies appropriated by the State for the purpose of the Fund;
(2) All proceeds of bonds required to be deposited therein by terms of any contract between the Bank and its bondholders or any resolution of the Bank with respect to the proceeds of bonds; and
(3) Any other monies or funds of the Bank that it determines to deposit therein.
(b) Monies in the Reserve Fund shall be held and applied solely to the payment of the interest on and principal of presently outstanding bonds of the Bank and any bonds issued on a parity therewith and any bonds issued to refund such bonds, all as they become due and payable and for the retirement of bonds. Money may not be withdrawn if it reduces the amount in the Reserve Fund to an amount less than the “required debt service reserve,” as defined in this subsection, except for payment of interest then due and payable on bonds and the principal of bonds then maturing and payable and for the retirement of bonds in accordance with the terms of any contract between the Bank and its bondholders and for which payments other monies of the Bank are not then available. As used in this subsection “required debt service reserve” means, as of any date of computation, the amount or amounts required to be on deposit in the Reserve Fund as provided by resolution of the Bank. Required debt service reserve shall not be required by resolution of the Bank to exceed “maximum debt service.” As used in this subsection “maximum debt service” means, as of any date of computation, the largest amount of money required by the terms of all contracts between the Bank and its bondholders to be raised in any succeeding calendar year for the payment of interest on and maturing principal of outstanding bonds and payments required by the terms of any contracts to sinking funds established for the payment or redemption of bonds, all calculated on the assumption that the bonds will cease to be outstanding after date of the computation by reason of the payment of the bonds at their respective maturities and the payments of the required moneys to sinking funds and the application thereof in accordance with the terms of all contracts to the retirement of bonds. (Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970; amended 1971, No. 148 (Adj. Sess.), § 7, eff. Feb. 14, 1972; 1987, No. 55, § 20, eff. May 15, 1987.)
§ 4672. Withdrawal or transfer
Monies in the Reserve Fund or the Revenue Bond Reserve Fund at any time in excess of such fund’s required debt service reserve, whether by reason of investment or otherwise, may, subject to the terms of any contract between the Bank and its bondholders or any resolution of the Bank, be withdrawn at any time by the Bank and transferred to any other fund or account of the Bank. (Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970; amended 1987, No. 55, § 21, eff. May 15, 1987.)
§ 4673. Investment
(a) Monies at any time in the Reserve Fund may be invested in the same manner as permitted for investment of funds belonging to the State or held in the Treasury.
(b) For purposes of valuation, investments in the Reserve Fund shall be valued at par if purchased at par or at amortized value, as such term is defined by resolution of the Bank, if purchased at other than par. (Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970; amended 1971, No. 148 (Adj. Sess.), § 8, eff. Feb. 14, 1972.)
§ 4674. Relation to bond sales
Notwithstanding any other provision of this chapter, bonds shall not be issued by the Bank unless there is in the Reserve Fund or Revenue Bond Reserve Fund, as applicable to such bonds, the required debt service reserve for all bonds then issued and outstanding and the bonds to be issued, provided, however, that the Bank may satisfy this requirement by depositing so much of the proceeds of the bonds to be issued, upon their issuance, as is needed to achieve the required debt service reserve. The Bank may at any time issue its bonds or notes for the purpose of increasing the amount in the Reserve Fund or the Revenue Bond Reserve Fund to the required debt service reserve, or to meet such higher or additional reserve as may be fixed by the Bank with respect to the fund. (Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970; amended 1987, No. 55, § 22, eff. May 15, 1987.)
§ 4675. Annual appropriation
In order to assure the maintenance of the required debt service reserve in each reserve fund established pursuant to this chapter, there shall be appropriated annually and paid to the Bank for deposit in each reserve fund, such sum as shall be certified by the Chair of the Bank to the Governor or to the Governor-Elect, as is necessary to restore such fund to an amount equal to the required debt service reserve. The Chair shall annually, on or before February 1, make and deliver to the Governor or to the Governor-Elect, his or her certificate stating the sum required to restore the fund to the amount aforesaid, and the Governor or Governor-Elect shall, on or before March 1, submit a request for appropriations for the sum so certified, and the sum so certified shall be appropriated and paid to the Bank during the then current State fiscal year. (Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970; amended 1987, No. 55, § 23, eff. May 15, 1987; 2011, No. 40, § 55b, eff. May 20, 2011.)
§ 4676. General Fund
(a) The Bank shall establish and maintain a fund called the “General Fund” in which there shall be deposited:
(1) fees received or charges made by the Bank for use of its services or facilities;
(2) any monies which the Bank shall transfer thereto from the reserve fund pursuant to section 4672 of this title from the Reserve Fund established pursuant to section 4671 of this title;
(3) monies received by the Bank as payments of principal of or interest on municipal bonds purchased by the Bank, or received as proceeds of sale of any municipal bonds or investment obligations of the Bank, or received as proceeds of sale of bonds or notes of the Bank, and required under the terms of any resolution of the Bank or contract with the holders of its bonds or notes to be deposited therein;
(4) any monies required under the terms of any resolution of the bank or contract with the holders of its bonds or notes to be deposited therein; and
(5) any monies transferred thereto from any other fund or made available for the purpose of the Fund by the State or for the operating expenses of the Bank; provided, however, that no such deposit or transfer shall be required if such action would impair in any way any contracts between the Bank and its bondholders or noteholders.
(b) any monies in the General Fund may, subject to any contracts between the Bank and its bondholders or noteholders, be transferred to the Reserve Fund established pursuant to section 4671 of this title, or if not so transferred, shall be used for the payment of the principal of or interest on bonds or notes of the Bank presently outstanding and any bonds or notes on a parity therewith, and any bonds or notes issued to refund such bonds or notes, all when they become due and payable, whether at maturity or upon redemption including payment of any premium upon redemption prior to maturity, and any monies in the General Fund may be used to make loans to governmental units under this chapter and for all other purposes of the Bank including payment of its operating expenses. (Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970; amended 1987, No. 55, § 24, eff. May 15, 1987; 2023, No. 72, § 29, eff. June 19, 2023.)
§ 4677. Operating expenses
No amount may be paid out of the General Fund or from any account therein, which account the Bank may establish therein for the purpose of payment of its operating expenses, for operating expenses of the Bank in any year in excess of the amount provided for the operating expenses of the Bank by the annual budget then in effect with respect to that year or any amendment thereof in effect at the time of the payment. (Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970.)
§ 4678. Special accounts
The Bank may establish in the General Fund accounts, subaccounts or special accounts that in its opinion are necessary, desirable, or convenient for its purposes. (Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970.)
§ 4679. Additional accounts
The Bank may establish additional reserves or other funds or accounts as may be, in its discretion, necessary, desirable, or convenient to further the accomplishment of its purposes or to comply with the provisions of any of its agreements or resolutions. (Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970.)
§ 4680. Application of funds; excess
Money or investments in any fund or account of the Bank established or held for any bonds, notes, indebtedness, or liability to be paid, funded, or refunded by issuance of bonds or notes shall, unless the resolution authorizing the bonds or notes provides otherwise, be applied to the payment or retirement of the bonds, notes, indebtedness, or liability, and to no other purpose. If in any fund or account there are any monies in excess of the amount required for payment, funding, or refunding, the monies may be removed from that fund or account but only to the extent that the monies or investments thereafter remaining in the fund or account are not less than the outstanding bonds, notes, indebtedness, or liability of the Bank to be paid, funded, or refunded and for which that fund or account was established or held. (Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970.)
§ 4681. Revenue Bond Reserve Fund
(a) The Bank shall establish and maintain a special fund called the “Vermont Municipal Bond Bank Revenue Bond Reserve Fund” in which there shall be deposited:
(1) all monies appropriated by the State for the purpose of such Fund;
(2) all proceeds of bonds required to be deposited therein by terms of any contract between the Bank and its bondholders or any resolution of the Bank with respect to the proceeds of bonds; and
(3) any other moneys or funds of the Bank which it determines to deposit therein; provided, however, that no such deposit shall be made if such action would impair in any way any contracts between the Bank and its bondholders or noteholders.
(b) Monies in the Revenue Bond Reserve Fund shall be held and applied solely to the payment of the interest on and principal of bonds of the Bank as provided by resolution of the Bank as they become due and payable and for the retirement of bonds. Money may not be withdrawn from the Revenue Bond Reserve Fund if it reduces the amount in the Revenue Bond Reserve Fund to an amount less than the “required debt service reserve,” as defined in this subsection, except for payment of interest then due and payable on bonds and the principal of bonds then maturing and payable and for retirement of bonds in accordance with the terms of any contract between the Bank and its bondholders and for which payments other monies of the Bank are not then available. As used in this subsection “required debt service reserve” means, as of any date of computation, the amount or amounts required to be on deposit in the Revenue Bond Reserve Fund as provided by resolution of the Bank. Required debt service reserve shall not be required by resolution of the Bank to exceed “maximum debt service reserve.” As used in this subsection “maximum debt service reserve” means, as of any date of computation, the largest amount of money required by the terms of all contracts between the Bank and its bondholders to be raised in any succeeding calendar year for the payment of interest on and maturing principal of outstanding bonds and payments required by the terms of any contracts to sinking funds established for the payment or redemption of bonds, all calculated on the assumption that the bonds will cease to be outstanding after date of the computation by reason of the payment of the bonds at their respective maturities and the payments of the required monies to sinking funds and the application thereof in accordance with the terms of all contracts to the retirement of bonds.
(c) Nothing contained in this section shall require the deposit of monies or funds in the Revenue Bond Reserve Fund which are required to be deposited in the Reserve Fund established pursuant to section 4671 of this chapter. (Added 1987, No. 55, § 25, eff. May 15, 1987.)
§ 4682. Investment of Revenue Bond Reserve Fund
(a) Monies at any time in the Revenue Bond Reserve Fund may be invested in the same manner as permitted for investment of funds belonging to the State or held in the Treasury.
(b) For purposes of valuation, investments in the Revenue Bond Reserve Fund shall be valued at the lowest of the par value, cost to the Bank or market value of such investments. Valuation on any particular date shall include the amount of interest then earned or accrued to that date on any monies or investments in the Revenue Bond Reserve Fund. (Added 1987, No. 55, § 26, eff. May 15, 1987.)
§ 4683. Revenue Fund
(a) The Bank shall establish and maintain a fund called the “Revenue Fund” in which there shall be deposited:
(1) fees received or charges made by the Bank for use of its services or facilities;
(2) any monies that the Bank shall transfer thereto pursuant to section 4672 of this title from the Revenue Bond Reserve Fund established pursuant to section 4681 of this title;
(3) monies received by the Bank as payments of principal of or interest on municipal bonds or revenue bonds purchased by the Bank, or received as proceeds of sale of any municipal bonds or revenue bonds or investment obligations of the Bank, or otherwise in repayment of loans made by the Bank, or received as proceeds of sale of bonds or notes of the Bank, and required under the terms of any resolution of the Bank or contract with the holders of its bonds or notes to be deposited therein;
(4) any monies required under the terms of any resolution of the Bank or contract with the holders of its bonds or notes to be deposited therein; and
(5) any monies transferred thereto from any other fund or made available for the purpose of the Fund by the State or for the operating expenses of the Bank; provided, however, that no such deposit or transfer shall be made if such action would impair in any way any contracts between the Bank and its bondholders or noteholders.
(b) Any monies in the Revenue Fund may, subject to any contracts between the Bank and its bondholders or noteholders, be transferred to the Revenue Bond Reserve Fund, or if not so transferred, shall be used for the payment of the principal of or interest on bonds or notes of the Bank as provided by resolution of the Bank when they become due and payable, whether at maturity or upon redemption including payment of any premium upon redemption prior to maturity, and any monies in the Revenue Fund may be used for making loans to governmental units under this chapter and for all other purposes of the Bank including payment of its operating expenses. (Added 1987, No. 55, § 27, eff. May 15, 1987; amended 2023, No. 72, § 30, eff. June 19, 2023.)
§ 4684. Revenue Fund operating expenses
No amount may be paid out of the Revenue Fund or from any account therein, which account the Bank may establish therein for the purpose of payment of its operating expenses, for operating expenses of the Bank in any year in excess of the amount provided for the operating expenses of the Bank by the annual budget then in effect with respect to that year or any amendment thereof in effect at the time of the payment. (Added 1987, No. 55, § 28, eff. May 15, 1987.)
§ 4685. Special accounts in Revenue Fund
The Bank may establish in the Revenue Fund accounts, subaccounts, or special accounts which in its opinion are necessary, desirable, or convenient for its purposes. (Added 1987, No. 55, § 29, eff. May 15, 1987.)
- Subchapter 007: PROTECTION OF BOND AND NOTEHOLDERS
§ 4701. Rights of holders paramount
In order to carry out its purpose under this chapter of making loans to governmental units, by purchase of the municipal bonds or revenue bonds of those governmental units, and by receipt of its income from service charges and from payments of interest on the maturing principal of municipal bonds or revenue bonds purchased and held by it, and in order to produce revenues or income to the Bank sufficient at all times to meet its costs and expenses of operation under this chapter and to pay the principal of and interest on its outstanding bonds and notes when due, the Bank must at all times, and to the greatest extent possible, so plan to issue its bonds and notes and so lend money to governmental units by the purchase of municipal bonds or revenue bonds of governmental units so that the purpose is achieved without in any way jeopardizing any rights of the holders of bonds or notes of the Bank or affecting other matters under this chapter. (Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970; amended 1987, No. 55, § 30, eff. May 15, 1987.)
§ 4702. Default in payment
If the Bank defaults in the payment of principal or interest on any issue of notes or bonds after they become due, whether at maturity or upon call for redemption, and the default continues for thirty days, or if the Bank fails or refuses to comply with this chapter or defaults in any agreement made with the holders of any issue of notes or bonds, the holders of 25 per centum in aggregate principal amount of the outstanding notes or bonds of that issue, by instrument filed in the Office of the Clerk of the County of Washington and executed in the same manner as a deed to be recorded, may appoint a trustee to represent the holders of those notes or bonds for the purposes herein provided. (Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970.)
§ 4703. Powers of trustee on default
A trustee appointed under section 4702 of this title may, and shall in the trustee’s name, upon written request of the holders of 25 per centum in principal amount of the outstanding notes or bonds:
(1) By suit, action, or proceeding, enforce all rights of the noteholders or bondholders, including the right to require the Bank to collect rates, charges, and other fees and to collect interest and amortization payments on loans made to governmental units and on municipal bonds, revenue bonds, and notes held by it adequate to carry out any agreement as to, or pledge of, the rates, charges, and other fees and of the interest and amortization payments, and to require the Bank to carry out any other agreements with the holders of the notes or bonds and to perform its duties under this chapter;
(2) Bring suit upon the notes or bonds;
(3) By action or suit, require the Bank to account as if it were the trustee of an express trust for the holders of the notes or bonds;
(4) By action or suit in equity, enjoin anything that may be unlawful or in violation of the rights of the holders of the notes or bonds;
(5) Declare all the notes or bonds due and payable, and if all defaults are made good, then with the consent of the holders of 25 per centum of the principal amount of the outstanding notes or bonds, annul the declaration and its consequences;
(6) The trustee shall in addition to the foregoing have all the powers necessary for the exercise of any functions specifically set forth herein or incident to the general representation of bondholders or noteholders in the enforcement and protection of their rights. (Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970; amended 1987, No. 55, § 31, eff. May 15, 1987; 2023, No. 72, § 31, eff. June 19, 2023.)
§ 4704. Superior Court jurisdiction
The Superior Courts have jurisdiction of any suit, action, or proceeding by a trustee on behalf of noteholders or bondholders. The venue of any suit, action, or proceeding shall be laid in the County of Washington. (Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970; 1973, No. 193 (Adj. Sess.), § 3, eff. April 9, 1974.)
§ 4705. Notice on default
Before declaring the principal of notes or bonds due and payable, the trustee must first give 30 days’ notice in writing to the Governor, the Bank, the State Treasurer, and the Attorney General of the State. (Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970.)
§ 4706. Personal liability
Neither the members of the Bank nor any person executing bonds or notes issued under this chapter are liable personally on the bonds or notes. (Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970.)
§ 4707. Exemption from execution and sale
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 it nor may any judgment against the Bank be a charge or lien upon its property, but nothing herein contained shall apply to or limit the rights of the holder of any bonds or notes to pursue any remedy for the enforcement of any pledge or lien given by the Bank on its revenues or other monies. (Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970.)
§ 4708. Pledge of revenues; lien thereof
Any pledge of revenues or other monies made by the Bank is binding from the time when the pledge is made. Revenues or other monies so pledged and thereafter received by the Bank shall immediately be subject to the lien of the pledge without any physical delivery thereof or further act, and the lien of any pledge is binding against all parties having claims of any kind in tort, contract, or otherwise against the Bank, irrespective of whether the parties have notice thereof. Neither the resolution nor any other instrument by which a pledge is created need be filed or recorded except in the records of the Bank. (Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970.)
§ 4709. Federal insurance or guaranty
The Bank may obtain from any department or agency of the United States of America any available insurance or guaranty for the payment or repayment of interest or principal, or both, or any part thereof, on any bonds or notes issued by the Bank, or on any municipal bonds or revenue bonds of governmental units purchased or held by the Bank, and notwithstanding any other provisions of this chapter may enter into any agreement or contract with respect to any insurance or guaranty except to the extent that it would in any way impair or interfere with the ability of the Bank to perform and fulfill the terms of any agreement made with the holders of the bonds or notes of the Bank. (Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970; amended 1971, No. 148 (Adj. Sess.), § 2, eff. Feb. 14, 1972; 1987, No. 55, § 32, eff. May 15, 1987.)
§ 4710. Surety for deposits by Bank
All banks, trust companies, savings banks, investment companies, and other persons carrying on a banking business are hereby authorized to give to the Bank a good and sufficient undertaking with such sureties as shall be approved by the Bank to the effect that the Bank or banking institution as hereinbefore described shall faithfully keep and pay over to the order of or upon the warrant of the Bank or its authorized agent all such funds as may be deposited with it by the Bank and agreed interest thereon under or by reason of this chapter, at such times or upon such demands as may be agreed with the Bank or in lieu of these sureties, deposit with the Bank or its authorized agent or any trustee therefor or for the holders of any bonds, as collateral, such securities as the Bank may approve. The deposits of the Bank may be evidenced by an agreement in such form and upon such terms and conditions as may be agreed upon by the Bank and the depository bank or banking institution. (Added 1969, No. 216 (Adj. Sess.), § 3, eff. March 27, 1970.)
