Sec. 7-370b. Authority to establish credit facilities. - Connecticut Statutes

      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.