Sec. 7-370b. Authority to establish credit facilities.
Sec. 7-370b. Authority to establish credit facilities. In connection with or incidental to the carrying or selling and issuance of bonds or notes, any municipality, as
defined in section 7-369, may obtain from any commercial bank, insurance company,
subsidiary of such bank or insurance company or qualified public depository, as defined
in section 36a-330, authorized to do business within or without this state a letter of
credit, line of credit or other credit facility upon such terms and conditions as shall be
approved by the municipality, for the purpose of providing funds for the payment of such
bonds redeemed, repurchased or defeased prior to maturity or for providing additional
security for such bonds, notes or other obligations. In connection therewith, such municipality may authorize the execution of reimbursement agreements, remarketing
agreements, standby bond purchase agreements, interest rate swap agreements and any
other necessary or appropriate agreements. If such municipality is required to draw upon
any credit facility to redeem bonds prior to maturity, such municipality shall repay the
amount of each loan made pursuant to such credit facility within one year from the date
it is incurred from the proceeds of refunding bonds, notes or other obligations or from
any other available funds. Interest rate swap agreements may include such contracts as
the municipality may determine to be necessary or appropriate to place the obligation
of the municipality, as represented by the bonds or notes, in whole or in part, on such
interest rate or cash flow basis as the municipality may determine, including without
limitation, insurance agreements, forward payment conversion agreements, futures contracts, contracts providing for payments based on levels of, or changes in, interest rates
or market indices, contracts to manage interest rates risk, including without limitation,
interest rate floors or caps, options, puts, calls and similar arrangements. Agreements
entered into by any municipality under this section shall contain such payment, security,
default, remedy and other terms and conditions as the municipality may deem appropriate and shall be entered into with such party or parties as the municipality may select
on the basis of negotiation or competitive bid, after giving due consideration, where
applicable, to the creditworthiness of the counter party or counter parties, including any
rating by a nationally recognized rating agency, the impact on any rating on outstanding
bonds or notes and any other criteria as the municipality may deem appropriate, provided
(1) the unsecured long-term obligations of the counter party shall be rated in a category
no lower than AA by at least one nationally recognized rating agency, or (2)(A) the
unsecured long-term obligations of the counter party shall be rated in a category no
lower than A by at least one nationally recognized rating agency, (B) the counter party
shall provide credit enhancement through collateral, and (C) the counter party shall be
a qualified public depository, as defined in section 36a-330. Such municipality may
pledge its full faith and credit to its payment obligations, including netting payments,
under any agreement entered into pursuant to this section to the extent the full faith and
credit of the municipality is pledged to secure the applicable bonds or notes, or to pledge
all or any part of the collateral that secures the applicable bonds or notes to the extent
permissible under its contracts with bondholders.
(P.A. 83-408, S. 1, 6; P.A. 86-350, S. 6, 28; P.A. 02-108, S. 1; May 9 Sp. Sess. P.A. 02-5, S. 22.)
History: P.A. 86-350 made a variety of changes for purposes of clarification, updating the statutes to conform to current
financial practices and to conform to anticipated changes in federal tax policy; P.A. 02-108 added provisions for interest
rate swap agreements and made technical and conforming changes, effective May 29, 2002; May 9 Sp. Sess. P.A. 02-5
added provision allowing certain bond transactions with qualified public depositories and added provisions re qualifications
of counter parties to certain agreements, effective August 15, 2002.