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11-377. Form of bonds; interest rates; redemption; payment of principal and interest; additional security; definition

A. Bonds issued under this article shall be fully negotiable within the meaning and for all purposes provided by title 47. They may be in one or more series, may bear such dates, may be payable in such medium of payment and at such places, may carry such registration privileges, may have that priority or lien position between bondholders, shall be executed in such manner, may contain such other terms, covenants and conditions, and may be in such form as the board of supervisors by resolution prescribes. The final payment shall be due not more than thirty years from the date of issuance, as the board of supervisors may prescribe. Any or all of such bonds shall be callable at such times, on such terms and in such manner as the board of supervisors by resolution prescribes.

B. Any or all of the bonds may be sold by calling for bids at public sale or through an on-line bidding process or an accelerated bidding process. If sold under an accelerated bidding process, the bonds shall be sold at the lowest cost the board of supervisors deems then available after having received at least three pricing quotations from recognized purchasers of bonds of the type being sold. If sold at public sale or through an on-line bidding process, the bonds shall be sold to the bidder making the best bid. If bonds are sold through an on-line bidding process, bids for the bonds that are entered into the system may be concealed until a specified time or disclosed in the on-line bidding process, may be subject to improvement in favor of the county before a specified time and may be for an entire issue or specified maturities according to the manner, terms and notice provisions ordered by the board of supervisors.

C. The bonds may be sold below, at or above par. If an issue of bonds is sold below par, the aggregate amount of discount plus interest to be paid on the bonds must not exceed the amount of interest that would be payable on the bonds over the maturity schedule prescribed by the board of supervisors at the maximum rate set out in the resolution calling the election at which the bonds were voted.

D. If sold at public sale, the board of supervisors shall call for bids for the bonds by giving notice thereof at least once a week for two successive weeks within a county having a population of five hundred thousand persons or more according to the most recent United States decennial census, and once a week for four successive weeks in a newspaper of general circulation within a county having a population of less than five hundred thousand persons according to the most recent United States decennial census. The notice shall be in the form prescribed by the board of supervisors. The bids shall be for the entire bond issue unless the board of supervisors by resolution allows bidding therefor in parcels of less than the entire issue.

E. Notwithstanding any other provision of this section, bonds may be sold to natural persons residing in this state by negotiated sale on terms the board of supervisors deems to be the best then available and may bear interest payable at times determined by the board of supervisors. The bonds may be sold below, at or above par, provided that if the bonds are sold below par, the aggregate amount of discount plus interest to be paid on the bonds must not exceed the amount of interest that would be payable on the bonds over the maturity schedule prescribed by the board of supervisors at the maximum rate set out in the resolution calling the election at which the bonds were voted.

F. Bonds issued by a county may bear interest at any rate or rates not in excess of the maximum rate of interest set forth in the resolution calling the election, payable at the times determined by the board of supervisors, provided that each such bond may be evidenced by one instrument, or if commercial paper, by a succession of instruments each bearing interest payable only at maturity. Bonds or commercial paper issued under this article are subject to the following:

1. The bonds may bear interest at a fixed, variable or combination rate, none of which exceeds the maximum rate of interest set forth in the resolution calling the election.

2. A variable rate shall be based on any objective measure of the current value of money borrowed such as the announced prime rate of a bank, the rates borne by obligations of the United States or an index or other formula provided for by the board of supervisors. The board of supervisors shall employ a recognized agent in municipal bonds to market and remarket the bonds or commercial paper issued and to establish an interest rate in accordance with the approved index or formula.

3. The board of supervisors may grant to the owner of any bond a right to tender or may require the tender of the bond for payment or purchase at one or more times before maturity and may enter into appropriate agreements with any bank, financial institution, insurance company or indemnity company for the purchase of bonds so tendered. This agreement may provide that while the bonds are held by the bank, financial institution, insurance company or indemnity company the bonds may bear interest at a rate higher than when the bonds are held by other owners, but not in excess of the maximum rate of interest set forth in the resolution calling the election.

4. If bonds are tendered before maturity under an agreement to pay for or purchase bonds when so tendered, the county may provide for the purchase and resale of those bonds pursuant to the tenders without extinguishing the obligation represented by them or incurring a new obligation on the resale, whether or not those bonds are represented by the same instruments when purchased as when resold.

5. Compensation for the resale of the bonds shall not be based on or measured by the difference between the price at which the bonds are purchased and the price at which the bonds are resold.

6. The board of supervisors may:

(a) Contract with a bank, financial institution, insurance company or indemnity company to provide additional security for the bonds in the form of a line of credit, letter of credit, insurance policy or other security.

(b) Pay the costs of this additional security from amounts provided in the bond issue or from other available sources and may enter into reimbursement obligations in connection with the cost of the additional security.

7. Any reimbursement obligation entered into with the bank, financial institution, insurance company or indemnity company shall not provide for the payment of interest in excess of the maximum rate of interest set forth in the resolution calling the election. The reimbursement obligation does not constitute a general obligation of the county and is payable from the same source as the bonds, or from other available revenues, as determined by the board of supervisors.

8. Variable rate bonds and commercial paper may be sold at competitive public sale, through an on-line bidding process or at negotiated sale. A competitive public sale may be accomplished pursuant to a notice of sale published at the times and in the manner provided in subsection D. This notice shall provide the terms and conditions determined by the board of supervisors.

9. If bonds are to be issued in the form of commercial paper, the board of supervisors shall first provide for the establishment of the schedule for the maturities of the bonds within the maximum period permitted by the voted proposition. The individual instruments representing the bonds may mature over shorter periods and may be retired with proceeds of subsequent instruments or with the proceeds of definitive bonds, but they shall be finally paid according to the schedule of bond maturities or earlier.

10. Bonds issued in the form of commercial paper may be sold through an agent in the form of instruments that mature at intervals the agent determines to be most advantageous to the issuer after giving public notice to potential investors as determined by the board of supervisors.

11. Bonds may be issued as compound interest bonds bearing interest payable only at maturity but compounded periodically until that date at a fixed rate no higher than the rate set forth in the resolution calling the election.

G. Pending preparation of the definitive bonds, interim receipts or certificates may be issued to the purchaser of the bonds in such form and with such provisions as the board of supervisors prescribes.

H. The principal of and interest upon the bonds shall be payable primarily from the proceeds of revenues derived from taxes, fees, charges and other monies collected by the state and returned to such counties for street and highway purposes pursuant to the law.

I. As additional security for the payment of such bonds, a county, by resolution submitted to the qualified electors at a special election called for such purpose, and upon the approval of such resolution by a majority of the voters voting at such election, may pledge its full faith and credit for the payment of the bonds, and if such pledge is made, and the revenues pledged to the payment of such bonds are at any time insufficient therefor, the county shall be obligated to pay such bonds with interest to the same extent as other general obligation bonds of the county, and shall be reimbursed from subsequent revenues received by the county from taxes, fees, charges and other monies collected by the state and returned to such county for street and highway purposes pursuant to law.

J. For purposes of this section, "on-line bidding process" means a procurement process in which the governing body receives bids electronically over the internet in a real-time, competitive bidding event.