§ 116D-26. Issuance of special obligation bonds and bond anticipation notes. - North Carolina Statutes

§ 116D‑26.  Issuance of special obligation bondsand bond anticipation notes.

(a)        Authority. – The Board of Governors may issue, subject tothe approval of the Director of the Budget, at one time or from time to time,special obligation bonds of the Board of Governors for the purpose of payingall or any part of the cost of acquiring, constructing, or providing a specialobligation project. Before issuing special obligation bonds, the Board ofGovernors shall first adopt a resolution (i) setting forth the designation bythe Board of Governors that the buildings or facilities to be financed by thebond issue are the special obligation bond project being financed and (ii)designating the obligated resources that will secure and be the source ofpayment of the special obligation bonds to be issued. The Board of Governorsshall not issue any special obligation bonds unless the Board of Governorsfinds that sufficient obligated resources are reasonably expected to beavailable (i) to pay the principal and interest on the special obligation bondsproposed to be issued, (ii) to create and maintain any reserves for the paymentof the special obligation bonds, to the extent the Board of Governors isrequired to maintain reserves for this purpose by the terms of the trustagreement or resolution authorizing the issuance of the special obligationbonds, and (iii) to provide for the maintenance and operation of the facilitiesthat are to generate the obligated resources to the extent the Board ofGovernors is required to maintain those facilities by the terms of the trustagreement or resolution authorizing the issuance of the special obligationbonds. Notwithstanding any other provision of this Article, the proceeds ofspecial obligation bonds to be secured by obligated resources derived from theoperation of or activities at one institution may not be applied to finance aspecial obligation project to be located at another institution.

(b)        Approval Required. – The Board of Governors shall not issueany special obligation bonds for a project at an institution unless the boardof trustees of that institution has approved the issuance of bonds for thatproject. The Board of Governors shall not issue special obligation bonds underthis Article until the effective date of legislation enacted by the GeneralAssembly authorizing the undertaking of the special obligation bond project tobe financed and fixing the maximum aggregate principal amount of specialobligation bonds that shall be issued for that purpose. In submitting proposedspecial obligation bond projects to the General Assembly for approval, theBoard of Governors shall submit information on the need for each project,project costs, estimates of increased operating costs upon completion,estimated debt service requirements, and the sources and amounts of obligatedresources to be pledged for the repayment of the bonds. If the obligatedresources to repay the bonds or to operate the proposed project potentiallyinvolve increased costs to students or to the General Fund, these costs shallbe identified in the Board of Governors' submission.

Except as provided in this Article, special obligation bond projectsmay be undertaken, special obligation bonds may be issued, and other powersvested in the Board of Governors under this Article may be exercised by theBoard without obtaining the consent of any department, division, commission,board, bureau, or agency of the State and without any other proceedings or thehappening of any other conditions or things other than those proceedings,conditions, or things which are specifically required by this Article.

(c)        Term; Form. – The special obligation bonds of each issueshall be dated, shall mature at any times not exceeding 30 years from theirdates, shall bear interest at any rates as may be determined by the Board ofGovernors, and may be redeemable before maturity at the option of the Board, atany prices and under any terms and conditions as may be fixed by the Boardprior to the issuance of the special obligation bonds. The Board of Governorsshall determine the form and manner of execution of the special obligationbonds and shall fix the denominations of the special obligation bonds and theplaces of payment of principal and interest, which may be at any bank or trustcompany within or without the State. Notwithstanding any of the otherprovisions of this Article or any recitals in any special obligation bondsissued under the provisions of this Article, all special obligation bonds shallbe negotiable instruments under the laws of this State, subject only to theprovisions for registration in a resolution authorizing the issuance of thespecial obligation bonds or a trust agreement securing the bonds. The Board ofGovernors may sell the special obligation bonds in any manner, at public orprivate sale, and for any price, as it may determine to be for its bestinterests.

(d)        Proceeds; Additional Bonds. – The proceeds of the specialobligation bonds of each issue shall be used solely for the purpose for whichthe bonds have been authorized and shall be disbursed in the manner and undersuch restrictions, if any, as the Board of Governors may provide in theresolution authorizing the issuance of the bonds or in the trust agreementsecuring them. Unless otherwise provided in the authorizing resolution or inthe trust agreement securing the special obligation bonds, if the proceeds ofthe special obligation bonds, by error of estimates or otherwise, are less thanthe cost of the special obligation bond project, additional bonds may in likemanner be issued to provide the amount of the deficit and shall be deemed to beof the same issue and shall be entitled to payment from the same fund withoutpreference or priority of the bonds first issued for the same purpose.

The resolution providing for the issuance of special obligation bonds,and any trust agreement securing them, may also contain limitations upon theissuance of additional special obligation bonds as the Board of Governorsconsiders proper, and the additional special obligation bonds must be issuedunder the restrictions and limitations prescribed by the resolution or trustagreement.

(e)        Temporary Bonds; Notes. – Before preparing definitive bonds,the Board of Governors may, under like restrictions, issue interim receipts ortemporary bonds exchangeable for definitive bonds when the bonds have beenexecuted and are available for delivery. The Board may also provide for thereplacement of any bonds which become mutilated, destroyed, or lost.

The Board of Governors may enter into or negotiate a note with anacceptable bank or trust company in lieu of issuing special obligation bondsfor the financing of special obligation bond projects covered under thisArticle. The terms and conditions of any note of this nature shall be in accordancewith the terms and conditions surrounding issuance of the special obligationbonds.

(f)         Bond Anticipation Notes. – The Board of Governors mayissue, subject to the approval of the Director of the Budget, at one time orfrom time to time, bond anticipation notes of the Board of Governors inanticipation of the issuance of special obligation bonds authorized by thisArticle. The principal of and the interest on these notes shall be payablesolely from the proceeds of special obligation bonds or renewal notes or, inthe event bond or renewal note proceeds are not available, from the obligatedresources designated for their payment. The notes of each issue shall be dated,shall mature at any times not exceeding 30 years from their dates, shall bearinterest at any rates as may be determined by the Board of Governors, and maybe redeemable before maturity, at the option of the Board of Governors, at anyprices and under any terms and conditions as may be fixed by the Board ofGovernors prior to the issuance of the notes. If the Board of Governors issuesa bond anticipation note for a term in excess of three years, no individualproject may be funded from the proceeds of the note for longer than threeyears. The Board shall determine the form and the manner of execution of thenotes and shall fix the denominations of the notes and the places of payment ofprincipal and interest, which may be at any bank or trust company within orwithout the State. Notwithstanding any of the other provisions of this Articleor any recitals in any notes issued under the provisions of this Article, allnotes shall be negotiable instruments under the laws of this State, subjectonly to the provisions for registration in a resolution authorizing theissuance of the notes or any trust agreement securing the bonds in anticipationof which the notes are being issued. The Board of Governors may sell the notesin any manner, at public or private sale, and for any price, as it maydetermine to be for its best interests.

The proceeds of the notes shall be used solely for the purpose forwhich the special obligation bonds have been authorized, and the note proceedsshall be disbursed in any manner and under any restrictions as the Board ofGovernors may provide in the resolution authorizing the issuance of the notesor bonds or in the trust agreement securing the special obligation bonds.

The resolution providing for the issuance of notes, and any trustagreement securing the special obligation bonds in anticipation of which thenotes are being authorized, may also contain limitations upon the issuance ofadditional notes as the Board of Governors considers proper, and suchadditional notes shall be issued under the restrictions and limitationsprescribed by the resolution or trust agreement. The Board may also provide forthe replacement of any notes which shall become mutilated, destroyed, or lost.

Except as provided in this Article, notes may be issued under thisArticle and other powers vested in the Board of Governors under this Articlemay be exercised by the Board without obtaining the consent of any department,division, commission, board, bureau, or agency of the State and without anyother proceedings or the happening of any other conditions or things than thoseproceedings, conditions, or things which are specifically required by thisArticle.

Unless the context indicates otherwise, the word "bonds",wherever used in this Article, include the words "bond anticipationnotes." (2000‑3, s. 1.2;2003‑357, s. 1.)