12E.9 - AUTHORIZATION OF THE SALE OF RIGHTS IN THE MASTER SETTLEMENT AGREEMENT.
12E.9 AUTHORIZATION OF THE SALE OF RIGHTS IN THE
MASTER SETTLEMENT AGREEMENT.
1. a. The governor or the governor's designee shall sell and
assign all or a portion of the state's share to the authority
pursuant to one or more sales agreements for the purpose of
securitization as described in the program plan and as specified in
section 12E.10. The attorney general shall assist the governor in
the preparation and review of all necessary documentation to effect
such a sale as soon as reasonably practicable.
b. Any sales agreement shall be consistent with the program
plan and this chapter. The terms and conditions of the sale
established in such sales agreement may include but are not limited
to any of the following:
(1) A requirement that the state enforce, at the sole expense of
the authority, the provisions of the master settlement agreement that
require payment of the state's share that has been sold to the
authority under a sales agreement.
(2) A requirement that the state not agree to any amendment of
the master settlement agreement that materially and adversely affects
the authority's ability to receive the state's share that has been
sold to the authority.
(3) An agreement that the anticipated use by the state of bond
proceeds received pursuant to the sales agreement shall be for
capital projects, certain debt service on outstanding obligations
that funded capital projects, payment of attorney fees related to the
master settlement agreement, and to provide a secure and stable
source of funding to the state for purposes designated by section
12E.3A and other provisions of this chapter.
(4) A statement that the net proceeds from the sale of bonds
shall be deposited in the tobacco settlement trust fund established
under section 12E.12 and that in no event shall the amounts in the
trust fund be available or be applied for payment of bonds or any
claim against the authority or any debt or obligation of the
authority.
(5) A requirement that the net proceeds received by the authority
from the sale of any tax-exempt bonds issued to provide funds for
capital projects, certain debt service, and attorney fees related to
the master settlement agreement be paid by the authority to the state
as consideration for the sale of that portion of the state's share,
that such net proceeds be deposited by the state upon receipt in the
tax-exempt bond proceeds restricted capital funds account of the
tobacco settlement trust fund, and that such proceeds are to be held
by the authority solely for the benefit of the state, subject to
annual appropriation by the state in accordance with section 12E.10,
subsection 1, paragraph "b".
(6) A requirement that the net proceeds received by the authority
from the sale of taxable bonds or tax-exempt bonds issued to provide
funds for the purposes specified in section 12E.3A be deposited in
the endowment for Iowa's health account of the tobacco settlement
trust fund as moneys of the authority until transferred to the state
pursuant to section 12E.12, subsection 1, paragraph "b",
subparagraph (3). Each amount transferred shall be the consideration
received by the state for that portion of the state's share.
(7) An agreement that the effective date of the sale is the date
of receipt of the bond proceeds by the authority and the deposits of
the net proceeds of the tax-exempt bonds and any taxable bonds in the
respective accounts of the tobacco settlement trust fund.
2. The sale made under this section shall be irrevocable during
the time when bonds are outstanding under this chapter, and shall be
a part of the contractual obligation owed to the bondholders. The
sale shall constitute and be treated as a true sale and absolute
transfer of the property so transferred and not as a pledge or other
security interest for any borrowing. The characterization of such a
sale as an absolute transfer shall not be negated or adversely
affected by the fact that only a portion of the state's share is
being sold, or by the state's acquisition or retention of an
ownership interest in the residual assets.
3. On or after the effective date of such sale, the state shall
not have any right, title, or interest in the portion of the master
settlement agreement sold and such portion shall be the property of
the authority and not the state, and shall be owned, received, held,
and disbursed by the authority or its trustee or assignee, and not
the state.
4. On or before the effective date of the sale, the state shall
notify the escrow agent under the master settlement agreement of the
sale and shall instruct the escrow agent that subsequent to that
date, all payments constituting the portion sold shall be made
directly to the authority.
5. The authority, the treasurer of state, and the attorney
general shall report to the legislative council and the executive
council on or before the date of the sale, advising them of the
status of the sale, its terms, and conditions. Section History: Recent Form
2000 Acts, ch 1208, §9, 25; 2001 Acts, ch 164, §9, 10, 21; 2008
Acts, ch 1186, §13, 19 Footnotes
Deposit of state's share in healthy Iowans tobacco trust under
§12.65 until effective date of sale; 2001 Acts, ch 164, §20