Senate Bill No. 243
(By Senators McCabe, Caruth, Plymale and Prezioso)
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[Introduced February 12, 2009; referred to the Committee on
Finance.]
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A BILL to repeal §13-1-18 of the Code of West Virginia, 1931, as
amended; and to amend and reenact §13-1-4, §13-1-14, §13-1-15,
§13-1-15a, §13-1-16, §13-1-17, §13-1-19 and §13-1-21 of said
code, all relating to updating the code to be consistent with
the current practices and procedures required for issuing
general obligation bonds through competitive sale;
incorporating changes from section ten, article X of the West
Virginia Constitution; not requiring the issuer to designate
the series of bonds in the election order; not requiring the
bond resolution to set forth the date of issuance, the
denominations of the bonds, the medium with which the bonds
are payable or the terms of redemption; allowing issuers to
establish a maximum rate of interest in the bond resolution;
allowing issuers to make semiannual payments on principal and
interest; lengthening the time an issuer is required to begin making debt service payments by a year from the date of
issuance; requiring issuers to register bonds and eliminating
reference to coupon bonds; allowing issuers to accept
electronic bids; and allowing an issuer to publish an
abbreviated sale of notice when advertising the sale of bonds.
Be it enacted by the Legislature of West Virginia:
That §13-1-18 of the Code of West Virginia, 1931, as amended,
be repealed; and that §13-1-4, §13-1-14, §13-1-15, §13-1-15a,
§13-1-16, §13-1-17, §13-1-19 and §13-1-21 of said code be amended
and reenacted, all to read as follows:
ARTICLE 1. BOND ISSUES FOR ORIGINAL INDEBTEDNESS.
§13-1-4. Bond issue proposal to be submitted to voters; election
order.
No debt shall be contracted or bonds issued under this article
until all questions connected with the same shall have been first
submitted to a vote of the qualified electors of the political
division for which the bonds are to be issued, and shall have
received three fifths of all the votes cast for and against the
same:
Provided, That a county board of education may contract
indebtedness and issue bonds for public school purposes when
submitted to a vote of the people of the county if the question of
contracting indebtedness and issuing bonds is approved by a
majority of all the votes cast for and against the same pursuant to
section ten, article X of the Constitution of West Virginia. The governing body of any political division referred to in this
article may, and when requested so to do by a petition in writing,
praying that bonds be issued and stating the purpose and amount
thereof, signed by legal voters of the political division equal to
twenty per cent of the votes cast in a county or magisterial
district for Governor, or in a municipal corporation or school
district for mayor or member of the board of education, as the case
may be, shall, by order entered of record, direct that an election
be held for the purpose of submitting to the voters of the
political division all questions connected with the contracting of
debt and the issuing of bonds. Such order shall state:
(a) The necessity for issuing the bonds, or, if a petition has
been filed as provided herein, that such petition has been filed;
(b) If for the construction of a county-district road or
bridge thereon, a summary of the engineer's report provided for in
the following section setting forth the approximate extent and the
estimated cost of the proposed improvement, and the kind or class
of work to be done thereon;
(c) Purpose or purposes for which the proceeds of bonds are to
be expended;
(d) Valuation of the taxable property as shown by the last
assessment thereof for state and county purposes;
(e) Indebtedness, bonded or otherwise;
(f) Amount of the proposed bond issue;
(g) Maximum term of bonds;
and series
(h) Maximum rate of interest;
(i) Date of election;
(j) If a special election, names of commissioners for holding
same;
(k) If registration of voters is necessary, notice of the
time, place and manner of making same;
(l) (j) That the levying body is authorized to lay a
sufficient levy annually to provide funds for the payment of the
interest upon the bonds and the principal at maturity, and the
approximate rate of levy necessary for this purpose;
(m) (k) In the case of school bonds, that such bonds, together
with all existing bonded indebtedness, will not exceed in the
aggregate five per cent of the value of the taxable property in
such school district ascertained in accordance with section eight,
article X of the Constitution; and that such bonds will be payable
from a direct annual tax levied and collected in each year on all
taxable property in such school district sufficient to pay the
principal and the interest maturing on such bonds in such year,
together with any deficiencies for prior years, within, and not
exceeding thirty-four years, which tax levies will be laid separate
and apart and in addition to the maximum rates provided for tax
levies by school districts on the several classes of property in
section one, article X of the Constitution, but in the same proportions as such maximum rates are levied on the several classes
of property; and said tax may be levied outside the limits fixed by
section one, article X of the Constitution.
Any other provision which does not violate any provision of
law, or transgress any principle of public policy, may be
incorporated in the order.
§13-1-14. Resolution authorizing issuance and fixing terms of
bonds.
If
three fifths the required amount of all the votes,
pursuant
to section four of this article, cast for and against the
proposition to incur debt and issue negotiable bonds shall be in
favor of the same, the governing body of the political division
shall, by resolution, authorize the issuance of such bonds in an
amount not exceeding the amount stated in the proposition;
fix the
date thereof; set forth the denominations in which they shall be
issued, which denominations shall be one hundred dollars or
multiples thereof determine establish the
maximum rate or rates of
interest which the bonds shall bear,
which rate or rates of
interest shall be within the maximum rate stated in the proposition
submitted to vote;
and payable semiannually; prescribe the medium
with which the bonds shall be payable require that the bonds shall
be made payable at the office of the
State Treasurer Municipal Bond
Commission and at such other place or places as the body issuing
the same may designate; provide for a sufficient levy to pay the annual interest on the bonds and the principal at maturity; fix the
times within the maximum period, as contained in the proposition
submitted to vote, when the bonds shall become payable, which shall
not exceed thirty-four years from the date thereof; determine
whether all or a portion of the bonds shall be subject to
redemption prior to the maturity thereof;
and, if so, the terms of
the redemption and prescribe a form for executing the bonds
authorized.
§13-1-15. Bonds to be payable in annual or semiannual installments.
Such bonds shall be made payable in annual
or semiannual
installments beginning not more than
two three years after the date
thereof, and the amount payable in each year may be so fixed that,
when the annual interest is added to the principal amount to be
paid, the total amount payable in each year in which part of the
principal is payable shall be as nearly equal as practicable.
Once
principal payments commence, it shall be an immaterial variance if
the difference between the largest and smallest amounts of
principal and interest payable annually
or semiannually during the
term of the bonds shall not exceed
three five per cent of the total
authorized issue. Or, such bonds may be payable in annual
or
semiannual installments beginning not more than
two three years
after the date thereof, each installment being as nearly equal in
principal amount as may be practicable.
§13-1-15a. Bonds may be subject to redemption.
All or a portion of such bonds may be subject to redemption
prior to the maturity thereof, at the option of the body issuing
the same
as established by resolution of the governing body
authorizing the bonds. at such times and prices and on such terms
as shall be designated in the resolution required by section
fourteen of this article The body issuing the bonds may not levy
taxes in connection with the redemption of any bonds in excess of
the taxes that would have been levied for the payment of principal
of and interest on such bonds in such year.
§13-1-16. Recital of certification that bonds are issued in
conformity with Constitution and statutes; effect
thereof with Attorney General's indorsement.
The resolution authorizing the bonds provided for in section
fourteen of this article may direct that they shall contain the
following recital:
"It is certified that this bond is authorized by and is issued
in conformity with the requirements of the Constitution and
Statutes of the State of West Virginia."
Such recital, when such bonds shall have been indorsed by the
Attorney General as provided in section twenty-eight of this
article, shall be deemed an authorized declaration by the governing
body of the political division and to import that there is
Constitutional and statutory authority for incurring the debts and
issuing the bonds; that all the proceedings therefor are regular; that all the acts, conditions and things required to exist, happen
and be performed precedent to and in the issuance of the bonds,
have existed, happened and been performed in due time, form and
manner as required by law; that the amount of the bond and the
issue of which it forms a part, together with all other
indebtedness, does not exceed any limit or limits prescribed by the
Constitution or statutes of this state; and that all questions
connected with incurring the debt and issuing the bonds have been
first submitted to a vote of the people and have received
three
fifths the required amount
of all the votes,
pursuant to section
four of this article, cast for and against the same at an election
regularly called and held for the purpose after notice published
and posted in the manner required by law. If any bond be issued
containing the said recital, and also containing the indorsement of
the Attorney General as aforesaid, it shall be conclusively
presumed that said recital, construed according to the import
hereby declared, is true, and neither the political division nor
any taxpayer thereof shall be permitted to question the validity or
regularity of the obligation in any court or in any action or
proceeding.
§13-1-17. Bonds may shall be registered. coupon bonds may be
registered as to principal.
The bonds issued hereunder may be registered or coupon bonds
shall be issued only in fully registered form and shall carry such registration privileges as set forth in the resolution authorizing
the bonds. Coupon bonds may be registered as to the principal in
the owner's name by the State Treasurer on books which shall be
kept at its office for the purpose and the registration shall also
be noted on the bonds, after which no transfer shall be valid
unless made by the State Treasurer on the books of registration and
similarly noted on the bonds. Bonds registered as to principal may
be discharged from registration by being transferred to bearer,
after which they shall be transferable by delivery; but may again,
and from time to time, be registered as to the principal amount as
before. The registration of coupon bonds as to the principal sum
shall not affect the negotiability of the interest coupons, but
title to the same shall pass by delivery
§13-1-19. Signing, sealing and delivery of bonds.
All bonds issued under this article by any county shall be
signed by the president of the county court and countersigned by
the clerk of such court; bonds issued by any municipality shall be
signed by the mayor or other chief executive and countersigned by
the clerk, recorder or secretary; bonds issued by a district or
independent school district shall be signed by the president of the
board of education and countersigned by the secretary thereof. The
seal of the political division shall be affixed to such bonds.
Interest coupons shall be signed by the facsimile signatures of
such officers. The delivery of any bonds or coupons so executed at any time thereafter shall be valid, although before the date of
delivery the person signing such bonds or coupons shall have ceased
to hold office.
§13-1-21. Advertisement and sale of bonds.
The governing body of the political division issuing such
bonds shall sell the same and collect the proceeds, which proceeds
shall be deposited with its treasurer. The governing body of the
political division shall advertise such bonds for sale, on sealed
bids or electronic bids if the governing body elects to utilize an
electronic bidding procedure, which advertisement shall be
published as a Class II legal advertisement in compliance with the
provisions of article three, chapter fifty-nine of this code, and
the publication area for such publication shall be the political
division. The first publication shall be made at least fourteen
days before the date fixed for the reception of bids. Such
advertisement shall also be published in a financial paper
published either in the city of New York or the city of Chicago, or
in a newspaper published in a city of this state having a
population of not less than twenty thousand inhabitants, according
to the last federal census the Bond Buyer or similar publication
and such advertisement may be published electronically: Provided,
That all advertisements required by this section may consist of an
abbreviated notice of the sale of the bonds. The governing body
may reject any and all bids. If the bonds be not sold pursuant to such advertisement, they may within one hundred twenty days after
the date advertised for the reception of bids, be sold by the
governing body at private sale, but no private sale shall be made
at a price less than the highest bid which shall have been
received. If not sold, such bonds shall be readvertised in the
manner herein provided. In no event shall bonds be sold for less
than their par value.
NOTE: The purpose of this bill is to modernize article one,
chapter thirteen of the code to enable it to be consistent with the
current practices and procedures required for issuing general
obligation bonds through competitive sale. The bill's updates
include: incorporating changes from section ten, article X of the
West Virginia Constitution; not requiring the issuer to designate
the series's of bonds in the election order; not requiring the bond
resolution to set forth the date of issuance, the denominations of
the bonds, the medium with which the bonds are payable or the terms
of redemption; allowing issuers to establish a maximum rate of
interest in the bond resolution; allowing issuers to make
semiannual payments on principal and interest; increasing the time
an issuer is required to begin making debt service payments from
two years to three years from the date of issuance; requiring
issuers to register bonds and eliminating reference to coupon
bonds; allowing issuers to accept electronic bids if the issuer
elects to utilize an electronic bidding procedure; and allowing an
issuer to publish an abbreviated sale of notice when advertising
the sale of bonds.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.