§ 6-62-1114 - Deposit and investment of proceeds.
6-62-1114. Deposit and investment of proceeds.
(a) The proceeds from the sale of the State of Arkansas Higher Education General Obligation Bonds shall be deposited by the recipient, as received, into trust funds or accounts in the name of the Arkansas Development Finance Authority established pursuant to the resolution or trust indenture authorizing or securing the bonds to accomplish the purposes of this subchapter in amounts or portions as set forth in the resolution or trust indenture securing the bonds.
(b) (1) The holder of the trust funds shall establish separate accounts and subaccounts within the applicable fund to correspond to the applicable series of bonds.
(2) In addition and under the resolution or trust indenture authorizing or securing the bonds, there may be created other funds, accounts, or subaccounts as the authority may determine to be necessary or desirable to accomplish the purposes of this subchapter.
(c) All procedures and methods for application of proceeds of any series of bonds to the financing of project costs shall be developed in consultation with the Arkansas Higher Education Coordinating Board and the Chief Fiscal Officer of the State, set forth in the resolution or trust indenture authorizing or securing the bonds, and maintained as part of the records of the authority.
(d) The holder and administrator of funds, comprised in whole or in part of proceeds of bonds or disbursements from funds established under this subchapter, shall be required by appropriate provision of the resolution or trust indenture authorizing or securing the bonds issued to assist the authority in preparing any report related to the bonds that may be required by this subchapter or other applicable federal or state law.
(e) The proceeds from the sale of the bonds and any money held in any funds created under or authorized by this subchapter may be invested and reinvested in accordance with the resolution or trust indenture authorizing or securing the bonds issued and shall be invested by or at the direction of the authority to the fullest extent practicable pending disbursement for the purposes intended in any of the following:
(1) Direct obligations of the United States, including obligations issued or held in book entry form on the books of the United States Department of the Treasury, or obligations the principal of and interest on which are unconditionally guaranteed by the United States;
(2) Bonds, debentures, notes, or other evidences of indebtedness issued or guaranteed by any United States government agency if the obligations are backed by the full faith and credit of the United States;
(3) Non full faith and credit senior debt obligations issued or guaranteed by United States government agencies;
(4) Money market funds investing exclusively in the investments described in subdivisions (e)(1)-(3) of this section;
(5) (A) Certificates of deposit providing for deposits secured at all times by collateral described in subdivisions (e)(1)-(3) of this section.
(B) The certificates must be issued by commercial bank deposits which are insured by the Federal Deposit Insurance Corporation and collateral of which must be held by a third party.
(C) The holder of the trust funds must have a perfected first security interest in the collateral;
(6) Certificates of deposit, savings accounts, deposit accounts, or money market deposits, all of which are fully insured by the Federal Deposit Insurance Corporation;
(7) Bonds or notes issued by this state, any municipality, county, or school district in this state or by any agency or instrumentality of this state;
(8) Investment agreements with financial institutions or insurance companies that are rated in one (1) of the two (2) highest rating categories of a nationally recognized rating agency;
(9) (A) Repurchase agreements providing for the transfer of securities from a dealer bank or securities firm to the holder of the trust funds and the transfer of cash from the holder of the trust funds to the dealer bank or securities firm with an agreement that the dealer bank or securities firm will repay the cash plus a yield to the holder of the trust funds in exchange for the securities at a specified date.
(B) Repurchase agreements shall satisfy the following criteria:
(i) Repurchase agreements must be between the holder of the trust funds and a dealer bank or securities firm described as follows:
(a) Dealers with at least one hundred million dollars ($100,000,000) in capital; or
(b) Banks whose deposits are insured by the Federal Deposit Insurance Corporation; and
(ii) The written repurchase agreement contract must include the following:
(a) Securities that are acceptable for transfer are those listed in subdivisions (e)(1)-(3) of this section;
(b) The term of the repurchase agreement may not exceed thirty (30) calendar days;
(c) The collateral must be delivered to the holder of the trust funds, a trustee if a trustee is not supplying the collateral, or a third party acting as agent for the trustee if the trustee is supplying the collateral before or simultaneously with payment; and
(d) (1) The securities must be valued weekly, marked-to-market at current market price plus accrued interest.
(2) (A) The value of collateral must be equal to one hundred three percent (103%) of the amount of cash transferred by the holder of the trust funds to the dealer bank or security firm under the repurchase agreement plus accrued interest.
(B) If the value of securities held as collateral declines below one hundred three percent (103%) of the value of the cash transferred by the holder of the trust funds, then additional cash or acceptable securities, or both, must be transferred and held by the holder of the trust funds; and
(10) Any other investment authorized by state law.