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NO. 43. AN ACT RELATING TO THE STATE INFRASTRUCTURE BANK PROGRAM.

(H.456)

It is hereby enacted by the General Assembly of the State of Vermont:

Sec. 1. 10 V.S.A. chapter 12, subchapter 11 is added to read:

Subchapter 11. State Infrastructure Bank Program

280d. DEFINITIONS

As used in this subchapter:

(1) "Agency" means the agency of transportation.

(2) "Authority" means the Vermont economic development authority established under section 213 of this title.

(3) "Board" means the state infrastructure bank board as established under this subchapter.

(4) "Bond act" means any general or special law authorizing a governmental unit to incur indebtedness for all or any part of the cost of a qualified project.

(5) "Bonds" means bonds, notes, or other evidence of indebtedness.

(6) "Borrower obligations" means government obligations or a promissory note of a private enterprise issued to evidence a loan.

(7) "Cost" as applied to any qualified project, means any or all costs, whenever incurred, approved by the agency, of carrying out a qualified project, including, without limitation, costs for preliminary planning or legal, fiscal and economic investigations, reports and studies to determine the economic or engineering feasibility of a qualified project; engineering and architectural reports, studies, surveys, designs, plans, working drawings and specifications necessary in the construction of a qualified project; construction; expansion; facilities; improvement and rehabilitation; acquisition of real property, personal property, materials, machinery or equipment; start-up costs; demolitions and relocations; reasonable reserves and working capital; interest on loans, borrower obligations and notes in anticipation thereof prior to and during construction of such qualified project or prior to the date of such loan, if later; administrative, legal and financing expenses; and other expenses necessary or incidental to the above.

(8) "Financial assistance" means any financial assistance for a qualified project provided by the board under the program, including, without limitation, loans to and leases with qualified borrowers, the establishment of reserves and other security, and guarantees of and credit enhancement for the obligations of governmental units and private enterprises incurred in connection with the financing of qualified projects.

(9) "General revenues" when used with reference to a governmental unit means revenues, receipts, assessments and other monies of a governmental unit, and all rights to receive the same including, without limitation, revenue permitted to be collected by municipalities, project revenue, assessments upon or payments received from any other governmental unit which is a member or service recipient of the governmental unit, proceeds of loans made in accordance with this act and of grants made in accordance with state transportation or highway grant programs, investment earnings, reserves for debt service or other capital or current expenses, receipts from any rate, charge, tax excise or fee, all or a part of the receipts of which are payable or distributable to or for the account of the governmental unit, local aid distributions, if any, and receipts, distributions, reimbursements and other assistance from the state or the United States; provided, however, that general revenues shall not include any monies restricted by law to specific statutorily defined purposes inconsistent with their treatment as general revenues for purposes of this subchapter.

(10) "Government obligations or governmental obligations" means bonds, notes, or other evidence of indebtedness issued by a government unit to evidence a loan.

(11) "Government unit or governmental unit" means any municipality, regional development corporation which is qualified pursuant to chapter 76 of Title 24, or other instrumentality of the state or any of its political subdivisions, which is responsible for the construction, ownership or operation of a qualified project.

(12) "Guarantee" means a contract or contracts entered into by the program pursuant to which the program agrees to guarantee all or a portion of the obligations of a governmental unit or private enterprise incurred to finance a qualified project.

(13) "Highway account" means the highway account of the program, establishedunder this subchapter.

(14) "ISTEA" means the federal Intermodal Surface Transportation Efficiency Act of 1991, P.L. 102-240, as amended.

(15) "Lease" means any form of capital or operating lease for all or a portion of a qualified project between the program and a governmental unit or private enterprise.

(16) "Loan" means any form of financial assistance subject to repayment which is provided by the program to a qualified borrower for all or any part of the cost of a qualified project. A loan may provide for planning, construction, bridge or permanent financing, and be disbursed in anticipation of reimbursement for or direct payment of costs of a qualified project or take the form of a guarantee, line of credit or other form of financial assistance.

(17) "Loan agreement" means any agreement entered into between the program and a qualified borrower pertaining to a loan or lease. A loan agreement may contain, in addition to financial terms, provisions relating to the regulation and supervision of a qualified project or any other provisions as the board may reasonably determine. The term "loan agreement" shall include, without limitation, a loan agreement, lease, trust agreement, trust indenture, security agreement, reimbursement agreement, guarantee agreement, bond or note resolution, loan order or similar instrument whether secured or unsecured.

(18) "NHS Act" means the federal National Highway System Designation Act of 1995, P.L. 104-59, as amended.

(19) "Private enterprise" means a private person or entity that has entered into a contract with a public authority to design, finance, construct or operate a qualified project that is within the jurisdiction of such public authority, provided that the public authority is responsible for complying with all applicable requirements of ISTEA and the NHS Act with respect to such qualified project.

(20) "Program" means the state infrastructure bank program established pursuant to this subchapter.

(21) "Project revenues" means all rates, rents, fees, assessments, charges and otherreceipts derived or to be derived by a qualified borrower from a qualified project, and, if so provided in the applicable loan agreement pursuant to this subchapter, from any system of which such qualified project is a part and any other revenue producing facilities under the ownership or control of such qualified borrower, including, without limitation, proceeds of grants, gifts, appropriations and loans, including the proceeds of loans or grants made by the board, investment earnings, reserves for capital and current expenses, proceeds of insurance or condemnation and the sale or other disposition of property; provided, however, the project revenues shall not include any ad valorem taxes levied directly by a governmental unit on any real and personal property.

(22) "Qualified borrower" means any governmental unit or private enterprise which is authorized to construct, operate or own a qualified project.

(23) "Qualified project" means any activity, as defined in Title 23 and Title 49, Code of Federal Regulations.

(24) "Revenues" when used with respect to the board, means any receipts, fees, revenues or other payments received or to be received by the program, including, without limitation, receipts and other payments received by or deposited in the program, payments of principal, interest or other charges on loans, leases, grants, appropriations or other financial assistance from the state or the United States or any political subdivision or instrumentality of either in connection with the program, investment earnings on its funds and accounts, including, without limitation, the program, and any other fees, charges or other income received or receivable by the program.

(25) "Secretary" means the secretary of the state agency of transportation.

(26) "State aid distributions" means any receipts, distributions, reimbursements or other assistance payable by the state to or for the account of a governmental unit.

(27) "Transit account" means the transit account of the program, established pursuant to this subchapter.

(28) "Trust agreement" means any agreement entered into by the program and the state treasurer providing for the issuance, security and payment of bonds issued pursuant to this subchapter. The term "trust agreement" shall include a trust agreement, trustindenture, security agreement, reimbursement agreement, bond or note resolution or other similar instrument.

280e. STATE INFRASTRUCTURE BANK PROGRAM

(a) There is created a state infrastructure bank program, to be a program to assist the improvement, rehabilitation, expansion and construction of transportation projects within the state to contribute to the economic welfare of the state by providing jobs and other economic opportunities for the people of the state and enhancing economic development.

(b)(1) A state infrastructure bank board is established within the Vermont economic development authority to administer the state infrastructure bank program.

(2) The board shall consist of two legislators and nine other members: the state treasurer, the secretary of the agency of transportation or his or her designee, the secretary of the agency of commerce and community development or his or her designee, one member of the authority, one member from the agency of transportation planning division, one member who is a member of the board of a regional development corporation approved under chapter 76 of Title 24, one member who is a member of a regional planning commission created under subchapter 3 of chapter 117 of Title 24, two members at large, one representative appointed by the speaker of the house, and one senator appointed by the committee on committees. Selection of board members shall be made with consideration toward geographic representation from throughout the state. Board members, other than legislators and state agency officials or designees, shall be appointed by the governor, with the advice and consent of the senate, to five-year terms, except that the governor shall stagger initial appointments so that the terms of no more than two members expire during a calendar year. Legislative members shall be appointed on or before January 15 of the first year of each legislative session. A quorum shall consist of six members. Members disqualified from voting shall be considered present for purposes of determining a quorum. No action of the board shall be considered valid unless the action is supported by a majority vote of the members present and voting and then only if at least four members vote in favor of the action.

(3) Board members who are not otherwise compensated in the course of theiremployment shall be compensated and receive reimbursement for necessary expenses in the same manner provided for members of the board of the economic development authority under section 213(e) of this title.

(c)(1) The board shall adopt such rules or guidelines as it deems necessary to carry out the purposes of the program.

(2) A majority vote of board members present and voting shall be necessary to approve a loan or bond issuance.

(3) The secretary of the agency of transportation can veto any approval of the board if he or she presents objections to the board based upon the lack of compliance with federal law governing this program.

(4) The authority shall assign a state infrastructure bank coordinator from the staff of the authority to manage the program. The coordinator shall be responsible for administration of the program in accordance with the policies and rules of the board. The coordinator may have other responsibilities within the authority which are outside this program. The coordinator may examine any records relating to applications and may conduct such program and fiscal audits as the coordinator deems necessary.

280f. APPLICABILITY OF GENERAL PROVISIONS

The definitions under section 212 of this chapter shall not apply to this subchapter.

280g. STATE INFRASTRUCTURE BANK PROGRAM; DUTIES; POWERS

(a) The board, in addition to any other powers and duties conferred or imposed on it by this chapter or any other law, shall have the following powers and duties:

(1) to apply for, receive, administer and comply with the conditions and requirements respecting any grant, gift or appropriation of property, services or monies;

(2) to make loans to or enter into leases with qualified borrowers to finance the costs of qualified projects, to acquire, hold and sell borrower obligations evidencing the loans at such prices and in such manner as the board shall deem advisable, and to pledge borrower obligations to secure bonds issued pursuant to this subchapter;

(3) to enter into guarantees secured solely by, or purchase insurance or other credit enhancement through, amounts on deposit in the program;

(4) to enter into contracts, arrangements and agreements to provide any other form of financial assistance through amounts on deposit in the program that the board may consider appropriate;

(5) to enter into contracts, arrangements and agreements with other persons and execute and deliver all trust agreements, loan agreements and other instruments necessary or convenient to the exercise of the powers granted in this subchapter;

(6) to enter into an agreement, contract or other arrangement directly or indirectly with the agency or authority or with a private enterprise in furtherance of and in accordance with the provisions of ISTEA or the NHS Act, as applicable;

(7) to obtain insurance necessary or convenient to the exercise of the power granted in this subchapter;

(8) to engage accounting, management, legal, financial, consulting and other professional services necessary to the conduct of the program;

(9) to distribute the benefits conferred by this subchapter throughout the state.

(b) In its administration of the program as provided in this subchapter, the program shall comply with applicable federal requirements under ISTEA and the NHS Act and other applicable federal programs. The program shall not be authorized or empowered to be or to constitute a bank, trust company or licensed lender under the jurisdiction or under the control of the department of banking, insurance, securities, and health care administration or the comptroller of the currency or the treasury department of the United States, or to 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 or Vermont.

(c) The agency shall provide technical assistance to either the board, program or the Vermont economic development authority to insure compliance pursuant to subsection (b) of this section.

280h. RECEIPT AND ADMINISTRATION OF PROGRAM FUNDS

(a) The authority shall receive in trust, hold, administer and disburse in and from the program exclusively for the benefit of the beneficiaries the following monies:

(1) federal grants and awards or other federal assistance received by the agency or the state and eligible for deposit therein under applicable federal law;

(2) amounts appropriated by the state to the program for purposes of the program;

(3) loan and lease payments and other payments received by the program in respect of providing financial assistance to qualified borrowers;

(4) investment earnings on monies in the program; and

(5) any other amounts required to be credited to the program by any law or by any resolution, loan agreement or trust agreement or which the state or the secretary shall otherwise determine to deposit therein.

(b) Application of amounts in the program shall be subject to the requirements of this subchapter and the provisions of any applicable loan agreement or trust agreement and, with respect to amounts held pursuant to grants or awards made under 23 U.S.C. 101, et seq., or 49 U.S.C. 5301, et seq., or any other federal law, to the applicable requirements of federal law. The authority shall be the custodian of the fund as provided in this subchapter, and, subject to any applicable trust agreement, the authority is authorized to invest monies held in the program in such investments as may be legal investments for funds of the state, subject, however, with respect to funds deposited in the program pursuant to section 350 of the NHS Act, to the provisions of section 350(e)(3) of the NHS Act.

280i. DISBURSEMENT AND USE OF FUNDS

(a) Subject to limitations under ISTEA and the NHS Act and other federal laws, other laws respecting the use of particular monies in the program, and the provisions of any applicable trust agreement, amounts in the program may be used only:

(1) to provide financial assistance, including through loans and leases, to finance or refinance the costs of qualified projects and to provide for all or any part of the interest costs on loans made by the program during the construction of such qualified projects;

(2) to guarantee or purchase insurance or other credit enhancement for bonds of qualified borrowers issued to finance the costs of qualified projects;

(3) to provide reserves for or otherwise secure bonds issued pursuant to thissubchapter and to provide insurance or other credit enhancement for such bonds;

(4) to provide a subsidy for, or to otherwise assist, qualified borrowers in the payment of debt service costs on loans made by the program;

(5) to provide reserves for, or to otherwise secure, amounts payable by qualified borrowers on loans made by and leases with the program in the event of default by a particular qualified borrower or, on a parity basis, by any qualified borrower;

(6) to earn interest on the fund; and

(7) for the costs of administering the program; provided, however, that not more than two percent of the federal funds contributed to the program pursuant to section 350 of the NHS Act may be expended for such administrative costs.

(b) For necessary and convenient administration of the fund, the program shall establish the highway account and the transit account, as provided in section 280n of this title, and one or more additional accounts and sub-accounts within the Vermont economic development authority as shall be necessary to meet the requirements of the NHS Act and any other applicable federal law requirements or as the program shall otherwise deem necessary or desirable in order to implement the provisions of this subchapter or to comply with any trust agreement. The program may also establish in any trust agreement or otherwise, as the secretary shall determine, one or more other funds and accounts for revenues and other funds not required to be held in the program, and to apply and disburse such funds for the purposes of the program.

280j. POWERS AND DUTIES OF THE SECRETARY

The secretary is authorized and directed to take all necessary or incidental actions to secure for the state the benefits of ISTEA and the NHS Act, and any similar programs, including exercise of the powers:

(1) to cooperate with appropriate federal agencies in all matters related to the administration of the program as contemplated by 23 U.S.C. 129(a)(7) and section 350 of the NHS Act;

(2) to prepare and submit to the appropriate federal agencies applications for grants and to enter into grant agreements, cooperative agreements, operating agreements andother agreements with the United States relating to the purposes of the program; and

(3) to prepare and submit to the appropriate federal agencies and the Vermont general assembly, annual and other reports and audits, in form and content satisfying federal requirements, relating to the program.

280k. POWERS AND DUTIES OF THE PROGRAM

The program is authorized and directed to take all necessary or incidental actions to secure for the state the benefits of ISTEA and the NHS Act, and any similar programs, including exercise of the powers:

(1) to establish and collect such fees, charges, and interest rates in compliance with federal requirements and as the board determines to be reasonable, and to hold, apply and disburse such funds within or without the program to implement the purposes of this subchapter;

(2) to establish, jointly with the authority, fiscal controls and accounting procedures for the program.

280l. APPLICATIONS FOR FINANCIAL ASSISTANCE

(a) Any qualified borrower may file an application with the board to obtain financial assistance from the program. The application shall be filed in such manner and contain or be accompanied by such information as the program may require.

(b) In addition to other requirements prescribed by the board, an application shall:

(1) describe the nature and purpose of the proposed transportation project, including the need for the project and the reasons why the project is in the public interest;

(2) state the estimated costs of the project and the proposed sources of funding, if any, in addition to the financial assistance being sought from the program;

(3) state the economic development benefit;

(4) demonstrate that the project has the support of the regional planning commission or the metropolitan planning organization, as the case may be, in which the project is located, which support shall not be given unless the project is in conformance with the regional plan;

(5) demonstrate conformance with agency of transportation design standards andlevel of improvement policies; and

(6) demonstrate that the public benefits of the project outweigh its public costs.

(c) Before any financial assistance under this chapter is approved for an agency of transportation project, the applicant shall demonstrate that:

(1) the project is part of the state's current year transportation capital program approved by the general assembly under section 10g(c) of Title 19; or

(2) if the legislature is not in session, the project is approved by a committee, comprised of the joint fiscal committee, the chair of the house committee on transportation or his or her designee, and the chair of the senate committee on transportation or his or her designee.

280m. LOAN AND LEASE TERMS

(a) The board shall determine the form and content of any borrower obligation, including the term and rate or rates of interest on any loan or lease.

(b) Notwithstanding subsection (a) of this section, loans and leases financed through the application of federal monies pursuant to 23 U.S.C. 129 or section 350 of the NHS Act shall:

(1) bear interest at or below market rates or otherwise as may be specified therein;

(2) have a repayment term of not longer than 30 years;

(3) be subject to repayment commencing not later than five years after the facility financed with the proceeds of such loan has been completed or, in the case of a highway project, the facility has opened to traffic; and

(4) be made only after all federal environmental requirements applicable to the qualified project have been complied with and all federal environmental permits obtained.

(c) Notwithstanding any provisions of this subchapter to the contrary, the secretary may waive any of the requirements contained in this section if such waiver would not cause the loan or the program to violate the requirements of ISTEA or the NHS Act or any other applicable federal requirement.

280n. PROGRAM FUND; ACCOUNTS

(a) A state infrastructure bank program fund is created as a special fund subject to theprovisions of subchapter 5 of chapter 7 of Title 32. The fund shall be administered by the authority for the purposes of the program, in accordance with the provisions of this subchapter.

(b) The state infrastructure bank program fund shall receive funds from the following sources:

(1) any amounts required under section 350 of the NHS Act or any other federal law or program to be deposited in the highway account and such funds shall not be commingled with any other amounts on deposit in the program;

(2) any amounts required under section 350 of the NHS Act or any other federal law or program to be deposited in the transit account and such funds shall not be commingled with any other amounts on deposit in the program;

(3) any other state or federal funds appropriated for the program by the general assembly, any repayments of principal and interest of program loans, any private monies related to the administration and operation of the program;

(4) any grants received for the benefit of the program.

(c) Notwithstanding section 588(4)(A) of Title 32, monies may be disbursed from the fund for program purposes without an annual appropriation.

(d) The liabilities or obligations of the authority with regard to its activities under the program shall not extend beyond the funds which are deposited in the state infrastructure bank program fund, and shall not constitute a debt or pledge of the faith and credit of the state or any subdivision of the state.

(e) Any monies held in the program shall be used solely as provided in this subchapter, subject to the applicable federal requirements.

(f) Expenditures from the program shall be made for the following purposes:

(1) for the payment of the principal, including sinking fund payments of and premium, if any, and interest on bonds of the authority in connection with the program, as described in section 280o of this title, issued for the purpose of financing or refinancing any cost of a qualified project;

(2) for providing financial assistance to qualified borrowers to finance qualifiedprojects;

(3) for the maintenance of, or provision for, any reserves, additional security, insurance or other form of credit enhancement required or provided for in any trust agreement entered into pursuant to section 280q of this title to secure such bonds; and

(4) administration costs of the program or for any of the foregoing.

280o. ISSUANCE OF REVENUE BONDS

(a) The authority may issue bonds to finance or refinance any cost of a qualified project or provide other financial assistance, the proceeds of which are to be deposited in the program, or used to refinance existing obligations (whether obligations of the authority or another entity), used to fund the cost of a qualified project.

(b) Such bonds shall be special revenue bonds of the state payable solely from revenues, credited to the program.

(c) Notwithstanding the provisions of any law to the contrary, such bonds shall not be general obligations of the state.

(d) Bonds may be issued provided that such issuance meets the requirements of section 244 and subsections (b), (c), (d), (f) and (g) of section 254 of this title.

(e) Sections 250, 252 and subsections (b), (c), and (d) of section 253 of this title shall also apply to bonds issued under this subchapter, except that any reference to industrial facilities therein shall also apply to eligible projects under this subchapter.

(f) Bonds may be secured by a trust agreement entered into by the authority, which trust agreement may pledge or assign, in whole or in part, any loan agreements or governmental obligations, and all or any part of the monies credited to the program, subject to applicable federal requirements, and any funds or accounts established under a trust agreement, any contract or other rights to receive the same, whether then existing or coming into existence and whether then held or thereafter acquired, and the proceeds thereof.

280p. ADDITIONAL SECURITY AGREEMENTS, INSURANCE AND

CREDIT ENHANCEMENTS

The authority is also authorized to enter into additional security, insurance or otherforms of credit enhancement which may be secured on a parity or subordinate basis with the bonds. A pledge in any such trust agreement or credit enhancement agreement shall be valid and binding from the time such pledge shall be made without any physical delivery or further act, and the lien of such pledge shall be valid and binding as against all parties having claims of any kind in tort, contract or otherwise, irrespective of whether such parties have notice thereof. Any such pledge shall be perfected by filing of the trust agreement or credit enhancement agreement in the records of the authority, and no filing need be made under any other provision of law. Any such trust agreement or credit enhancement agreement may establish provisions defining defaults and establishing remedies and other matters relating to the rights and security of the holders of the bonds or other secured parties as determined by the authority, including provisions relating to the establishment of reserves, the issuance of additional or refunding bonds, whether or not secured on a parity basis, the application of receipts, monies or funds pledged pursuant to such agreement, hereinafter referred to as "pledged funds," and other matters deemed necessary or desirable by the authority for the security of such bonds, and may also regulate the custody, investment and application of monies.

280q. LOANS TO QUALIFIED BORROWERS TO FINANCE QUALIFIED

PROJECTS

(a) Any qualified borrower may apply to the program for a loan to assist in financing the cost of a qualified project. At the option of the board, and subject to applicable federal requirements, a loan may be made as secured loans or as unsecured general obligations of a qualified borrower. Each loan shall be made pursuant to a loan agreement between the program and the qualified borrower acting by and through the officer or officers, board, committee or other body authorized by law, or otherwise its chief executive officer.

(b) A qualified borrower may receive, apply, pledge, assign and grant security interests in project revenues, and, in the case of a governmental unit, its general revenues to secure its obligations under loan agreements and borrower obligations as provided in this subchapter and may fix, revise, charge and collect fees, rates, rents, assessments and othercharges of general or special application for the operation or services of any qualified project, the system of which it is a part and any other revenue producing facilities from which the qualified borrower derives project revenues to meet its obligations under any loan agreements or borrower obligation, or otherwise to provide for the construction, maintenance and operation of a qualified project.

(c) For the purposes of entering into a loan and establishing the authorized terms and conditions thereof and for issuing any government obligations, a governmental unit shall be deemed to have the powers expressly granted to governmental units in this subchapter and the powers granted to the governmental unit in any bond act applicable to it specifically or as a member of a class of governmental instrumentalities. Liberal construction shall be given in support of the broadest interpretation of governmental unit powers derived from either this subchapter or any bonds act, provided that nothing in this subchapter shall be construed as affecting the manner of voting and other procedures of any governmental unit by the governing body thereof or any limitations on indebtedness of governmental units.

280r. POWERS AND PRIVILEGES OF GOVERNMENT UNITS

In order to provide for the collection and enforcement of fees, rates, rents, assessments and other charges for the operation of any qualified project, the system of which it is a part and any other revenue producing facilities from which the governmental unit derives project revenues, in addition to any other authority provided by law or any applicable bond act, governmental units are hereby granted all the powers and privileges granted to them by law with respect to any similar fee, rate, rent, assessment or other charge. Any governmental unit may enter into agreements with the agency:

(1) regarding the operation of a pricing system for the services producing facilities from which the governmental unit derives project revenues. Such agreements may include, without limitation, provisions defining the costs of such services, the qualified project and such local system and other facilities, and covenants or agreements regarding the fixing and collection of fees, rates, rents, assessments and other charges for such costs and the maintenance of such pricing system at levels sufficient to pay or provide for allsuch costs and any payments due the department under any loan agreement or governmental obligations;

(2) regarding the operation of an enterprise fund established for any qualified project, and the system of which it is a part and any other revenue producing facilities from which the governmental unit derives project revenues. Such agreements may include, without limitation, fiscal and accounting controls and procedures, provisions regarding the custody, safeguarding and investment of project revenues and other amounts credited thereto, the establishment of reserves and other accounts and funds and the application of any surplus funds.

280s. BORROWER OBLIGATIONS

(a) Subject to the provisions of this subchapter, governmental obligations issued by a governmental unit shall conform to the requirements of subchapter 4 of this chapter.

(b) Notwithstanding any law to the contrary, if a governmental unit has authorized a loan in accordance with this act and the issuance of governmental obligations under any bond act, the governmental unit may, subject to the loan agreement and the approval of the board, issue notes to the authority or any other person in anticipation of the receipt of the proceeds of the loan. The issue of such notes shall be governed by the provisions of this subchapter relating to the issue of governmental obligations other than notes, to the extent applicable, provided the maturity date of such notes shall not exceed three years from the date of issue of such notes or the expected date of completion of the project financed thereby, as determined by the board, if later. Notes issued for less than the maximum maturity date may be renewed by the issue of other notes maturing no later than the maximum maturity date.

(c) A governmental unit may issue governmental obligations to refund or pay at maturity or earlier redemption any governmental obligations outstanding under any loan agreement or to refund or pay any other debt of the governmental unit issued to finance the qualified project to which such loan agreement pertains. Governmental obligations for refunding may be issued in sufficient amounts to pay or provide for the principal of the obligations refunded, any redemption premium thereon, any interest accrued and to accrueto the date of payment of such obligations, the costs of issuance of such refunding obligations and any reserves required by the applicable loan agreement. An issue of refunding governmental obligations, the amount and dates of maturity or maturities and other details thereof, the security thereof and the rights, duties and obligations of the governmental unit with respect thereto shall be governed by the provisions of this act relating to the issue of governmental obligations other than refunding obligations as the same may be applicable.

(d) Except as otherwise provided in this subchapter, the applicable bond act, or by agreement between the board and a governmental unit, all governmental obligations shall be general obligations of the governmental unit issuing the same for which its full faith and credit are pledged and for the payment of which all taxable property in the governmental unit shall be subject to ad valorem taxation without limitation as to rate or amount except as otherwise provided by law.

280t. SECURITY AGREEMENTS SECURING BORROWER OBLIGATIONS;

PLEDGES OF GENERAL REVENUES OR PROJECT REVENUES

(a) Governmental obligations may be secured by one or more security agreements between the governmental unit and a corporate trustee, which may be a trust company or bank having the powers of a trust company within or without the state, or directly between the board and the governmental unit. A borrower obligation, other than governmental obligations, may be secured by one or more security agreements between the board and the qualified borrower. Any security agreements entered into pursuant to this section shall be in such form and shall be executed as provided in the applicable loan agreement or as otherwise agreed to between the board and the qualified borrower.

(b) Any security agreement directly or indirectly securing governmental obligations, other than governmental obligations issued in accordance with this subchapter, may pledge or assign, and create security interests in, all or any part of the general revenues of the governmental unit. Any security agreement securing borrower obligations issued in accordance with this section may pledge or assign, and create security interests in, all or any part of the project revenues of the qualified borrower, but, in the case of agovernmental unit, shall not otherwise pledge or assign any other general revenues of the governmental unit unless otherwise authorized by the applicable bond act. Any security agreement may contain such provisions for protecting and enforcing the rights, security and remedies of the board, or the holders of the borrower obligations, as may be determined by the board and the qualified borrower, including, without limitation, provisions defining defaults and providing for remedies, including the acceleration of maturities and (1) in the case of borrower obligations issued under this section, the appointment of a receiver of the project financed thereby and the system of which it is a part and (2) in the case of public entities, the use of a state aid intercept mechanism; and covenants setting forth the duties of, and limitations on, the qualified borrower in relation to the custody, safeguarding, investment and application of monies, including general revenues and project revenues, the issue of additional and refunding borrower obligations and other bonds, notes, or obligations on a parity or superior thereto, the establishment of reserves, the establishment of sinking funds for the payment of borrower obligations, and the use of surplus proceeds. A security agreement securing borrower obligations issued in accordance with this section also may include covenants and provisions not in violation of law regarding the acquisition, construction, operation and carrying out of the qualified project financed by such obligations, the system of which it is a part and any other revenue producing facilities from which the qualified borrower may pledge or assign any of its project revenues as appropriate, as security for payments made thereon.

(c) Any pledge of general revenues or project revenues made by a qualified borrower shall be valid and binding and shall be deemed continuously perfected for the purposes of the state commercial code, Title 9 and Title 9A, and any other law from the time made. The general revenues, project revenues, monies, rights and proceeds so pledged and then held or thereafter acquired or received by the qualified borrower shall immediately be subject to the lien of such pledge without any physical delivery or segregation thereof or further act, and the lien of such pledge shall be valid and binding against all parties having claims of any kind in tort, contract or otherwise, regardless of whether such parties have notice thereof. Neither the security agreement or any other agreement by which a pledgeis created need be filed or recorded except in the records of the governmental unit and no filing need be made under the provisions of the state commercial code.

(d) In the case of a governmental unit, a pledge of general revenues or project revenues in accordance with this subchapter shall constitute a sufficient appropriation thereof for the purposes of any provisions for appropriation for so long as such pledge shall be in effect and, notwithstanding any law to the contrary, such revenues shall be applied as required by the pledge and the security agreement evidencing the same without further appropriation.

280u. GUARANTEES; OTHER CREDIT ENHANCEMENT

(a) The board may provide guarantees secured solely by, or purchase of insurance or other enhancements through, amounts on deposit in the program, to qualified borrowers in accordance with the provisions of this section.

(b) All of the assets and obligations directly covered by guarantees or other forms of credit enhancement shall be assets or obligations of governmental units or private entities which are, without guarantee or enhancement, listed by a nationally recognized statistical rating organization at a rating not below the third highest rating of such organization.

(c) The assets and obligations which may be directly covered by guarantees issued by the board are:

(1) bonds, debentures, notes, evidence of debt, loans and interest therein, of qualified borrowers, the proceeds of which are to be used for a qualified project; and

(2) leases of personal, real, or mixed property to be used for a qualified project.

(d) The program may charge and collect premiums or other fees for the guarantees or other credit enhancement provided pursuant to this subchapter, including fees for services performed in connection with the approval and processing of the guarantees or the credit enhancement provided pursuant to this subchapter.

280v. TERMINATION OF THE PROGRAM; REMAINING ASSETS

AND LIABILITIES

The program shall continue until terminated by law, provided, however, that no such law shall take effect so long as there shall be outstanding bonds secured by the fund unlessadequate provision has been made for the payment or satisfaction thereof. Upon termination of the program, assets which remain after provision for the payment or satisfaction of all bonds issued pursuant to this subchapter shall vest in the state, in the transportation fund and general fund in equal proportion to the percentages of funds initially invested in the bank. For the purpose of this section only, federal transportation funds invested in the bank shall be considered state transportation funds.

280w. RECORDS OF RECEIPTS, EXPENDITURES AND DISBURSEMENTS;

ANNUAL REPORTS

The authority, in cooperation with the agency, shall, at all times keep full and accurate accounts of all receipts, expenditures and disbursements from the program and all assets and liabilities of the program incurred pursuant to this subchapter which shall be open to inspection by any officer or duly appointed agent of the state.

280x. OBLIGATIONS; CREDIT OF THE STATE NOT PLEDGED

Obligations issued under the provisions of this subchapter shall not be deemed to constitute a debt or liability of the state. Each obligation issued under this subchapter shall contain on the face thereof a statement to the effect that the authority shall not be obligated to pay the same nor the interest thereon except from the revenues or assets pledged therefor, 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 such obligations.

280y. PUBLIC RECORDS

The authority shall establish policies and procedures to ensure that information relating to the cost of any qualified project is considered a public record, and subject to the provisions of subchapter 2 of chapter 5 of Title 1.

Approved: June 5, 1997