§ 159-79. Variable rate demand bonds and notes.
§ 159‑79. Variable rate demand bonds and notes.
(a) (See note)Notwithstanding any provisions of this Chapter to the contrary, includingparticularly, but without limitation, the provisions of G.S. 159‑65, G.S.159‑123 to G.S. 159‑127, inclusive, G.S. 159‑130, G.S. 159‑138,G.S. 159‑162, G.S. 159‑164 and G.S. 159‑172, a unit of localgovernment, in fixing the details of general obligation bonds to be issuedpursuant to this Article or general obligation notes to be issued pursuant toArticle 9 of this Chapter, may provide that such bonds or notes
(1) May be made payable from time to time on demand or tenderfor purchase by the owner provided a Credit Facility supports such bonds ornotes, unless the Commission specifically determines that a Credit Facility isnot required upon a finding and determination by the Commission that theproposed bonds or notes will satisfy the conditions set forth in G.S. 159‑52;
(2) May be additionally supported by a Credit Facility;
(3) May be made subject to redemption prior to maturity, with orwithout premium, on such notice, at such time or times, at such price or pricesand with such other redemption provisions as may be stated in the resolutionfixing the details of such bonds or notes or with such variations as may be permittedin connection with a Par Formula provided in such resolution;
(4) May bear interest at a rate or rates that may vary aspermitted pursuant to a Par Formula and for such period or periods of time, allas may be provided in such resolution; and
(5) May be made the subject of a remarketing agreement wherebyan attempt is made to remarket the bonds to new purchases prior to theirpresentment for payment to the provider of the Credit Facility or to theissuing unit.
(a) (For effective date, seenote) Notwithstanding any provisions of this Chapter to thecontrary, including particularly, but without limitation, the provisions ofG.S. 159‑65, G.S. 159‑112, G.S. 159‑123 to G.S. 159‑127,inclusive, G.S. 159‑130, G.S. 159‑138, G.S. 159‑162, G.S. 159‑164and G.S. 159‑172, a unit of local government, in fixing the details ofgeneral obligation bonds to be issued pursuant to this Article, generalobligation notes to be issued pursuant to Article 9 of this Chapter, or projectdevelopment financing debt instruments or notes to be issued pursuant toArticle 6 of this Chapter, may provide that the instruments or notes:
(1) May be made payable from time to time on demand or tenderfor purchase by the owner provided a Credit Facility supports such bonds ornotes, unless the Commission specifically determines that a Credit Facility isnot required upon a finding and determination by the Commission that theproposed bonds or notes will satisfy the conditions set forth in G.S. 159‑52;
(2) May be additionally supported by a Credit Facility;
(3) May be made subject to redemption prior to maturity, with orwithout premium, on such notice, at such time or times, at such price or pricesand with such other redemption provisions as may be stated in the resolutionfixing the details of such bonds or notes or with such variations as may bepermitted in connection with a Par Formula provided in such resolution;
(4) May bear interest at a rate or rates that may vary aspermitted pursuant to a Par Formula and for such period or periods of time, allas may be provided in such resolution; and
(5) May be made the subject of a remarketing agreement wherebyan attempt is made to remarket the bonds to new purchases prior to theirpresentment for payment to the provider of the Credit Facility or to theissuing unit.
(b) No Credit Facility, repayment agreement, Par Formula orremarketing agreement shall become effective without the approval of theCommission.
(c) As used in this section, the following terms shall have thefollowing meanings:
(1) "Credit Facility" means an agreement entered intoby an issuing unit with a bank, savings and loan association or other bankinginstitution, an insurance company, reinsurance company, surety company or otherinsurance institution, a corporation, investment banking firm or otherinvestment institution, or any financial institution providing for promptpayment of all or any part of the principal (whether at maturity, presentmentor tender for purchase, redemption or acceleration), redemption premium, ifany, and interest on any bonds or notes payable on demand or tender by theowner issued in accordance with this section, in consideration of the issuingunit agreeing to repay the provider of such Credit Facility in accordance withthe terms and provisions of a repayment agreement. A bank may include a foreignbank or branch or agency thereof the obligations of which bear the highestrating of at least one nationally‑recognized rating service and do notbear a rating below the highest rating of any nationally‑recognizedrating service which rates such particular obligations.
(2) "Par Formula" shall mean any provision or formulaadopted by the issuing unit to provide for the adjustment, from time to time,of the interest rate or rates borne by any such bonds or notes so that thepurchase price of such bonds or notes in the open market would be as close topar as possible.
(d) If the aggregate principal amount repayable by the issuingunit under a repayment agreement is in excess of the aggregate principal amountof bonds or notes secured by the related Credit Facility, whether as a resultof the inclusion in the Credit Facility of a provision for the payment ofinterest for a limited period of time or the payment of a redemption premium orfor any other reason, then the amount of unissued bonds or notes during theterm of such repayment agreement shall not be less than the amount of suchexcess, unless the payment of such excess is otherwise provided for byagreement of the issuing unit subject to the approval of the Commission. Indetermining whether or not to grant such approval, the Commission shallconsider, in addition to such other factors it may deem relevant, the abilityof the issuing unit to pay such excess from other sources without incurringadditional indebtedness secured by a pledge of the faith and credit of theissuing unit or levying additional taxes and the adequacy of such other sourcesto accomplish such purpose.
(e) Any bonds or notes issued pursuant to this section may besold by the Commission at public or private sale according to such proceduresas the Commission may prescribe and at such prices as the Commission determinesto be in the best interest of the issuing unit, subject to the approval of thegoverning board of the issuing unit or one or more persons designated byresolution of the governing board of the issuing unit to approve such prices. (1987, c. 585, s. 1; 2003‑403, s. 5.)