Section 12-110 - Bonds. - Maryland Statutes

§ 12-110. Bonds.
 

(a)  Authorized.- Notwithstanding any limitation of law, a public body may issue and sell bonds periodically to accomplish the legislative purposes of this subtitle. 

(b)  Issuance and use.-  

(1) A public body may issue and sell bonds to: 

(i) subject to paragraph (2) of this subsection, finance the costs of the acquisition or improvement of a facility for a facility user, including working capital; 

(ii) refund outstanding bonds; 

(iii) pay the costs of preparing, printing, selling, and issuing the bonds; 

(iv) fund reserves; and 

(v) pay the interest on the bonds in the amount and for the period the public body considers reasonable. 

(2) (i) A public body may not issue bonds to acquire working capital unless the bonds are secured by a letter of credit or an interest in property. 

(ii) Working capital acquired by issuing bonds may not exceed 25% of the principal amount of the bonds. 

(c)  Nature of bonds issued.-  

(1) Bonds are limited obligations and are not a pledge of the faith and credit or taxing power of the public body. 

(2) Bonds issued by an authority are issued on behalf of the public body that established the authority. 

(3) Bonds issued by the Maryland Industrial Development Financing Authority: 

(i) are issued on behalf of the State; and 

(ii) shall be issued in accordance with the Maryland Industrial Development Financing Authority Act, Title 5, Subtitle 7 of this article. 

(d)  Form; execution; maturity.-  

(1) A bond: 

(i) may be in bearer form; 

(ii) may be registrable as to principal alone or as to both principal and interest; and 

(iii) is a "security" as defined by § 8-102 of the Commercial Law Article, whether or not the bond is one of a class or series or is divisible into a class or series of instruments. 

(2) (i) A bond shall be signed by the chief executive or by an officer designated by resolution of the public body. 

(ii) A bond may be executed by facsimile signature in accordance with § 2-303 of the State Finance and Procurement Article. 

(iii) The seal of the public body shall be affixed to the bond and attested by the clerk or similar administrative officer of the public body designated by resolution. 

(iv) An officer's signature or countersignature on a bond or coupon remains valid even if the officer leaves office before the bond is delivered. 

(3) (i) Except as provided in subparagraph (ii) of this paragraph, a bond shall mature not later than 30 years after its date of issue. 

(ii) If a bond is secured by a mortgage insured by a unit of the federal government, the bond shall have a term of maturity that does not exceed the term of the insurance. 

(e)  Acquisition and improvement of facilities.-  

(1) A public body may acquire or improve a facility with bond proceeds: 

(i) by leasing the facility to a facility user; 

(ii) by selling the facility to a facility user under an installment sale agreement; 

(iii) by lending bond proceeds to a facility user to be used to finance a facility; or 

(iv) in any other manner that the public body considers appropriate to accomplish the legislative purposes of this subtitle. 

(2) (i) The lease of a facility under this subtitle may authorize or require the facility user to acquire the facility on payment of the principal of and interest on the bonds applicable to the facility user. 

(ii) The consideration for the acquisition of the facility may be nominal. 
 

[An. Code 1957, art. 41, §§ 14-101(g), 14-104(a)-(c), 14-106(a)-(c); 2008, ch. 306, § 2.]