§ 63A-9. Bonds and notes. - North Carolina Statutes

§63A‑9.  Bonds and notes.

(a)        The Authority mayprovide for the issuance, at one time or from time to time, of bonds and notes,including bond anticipation notes and renewal notes, of the Authority to carryout its corporate purposes including financing the costs of projects. Theprincipal of and interest on the bonds or notes shall be payable from fundsprovided under this Chapter for their payment. A bond anticipation note may bemade payable from the proceeds of bonds or renewal notes or, in the event bondor renewal note proceeds are not available, from any available Authorityrevenues or other funds provided for this purpose. Bonds and notes may also bepaid from the proceeds of any credit facility.

All bonds, notes, or refundingbonds or notes of the Authority are subject to this section and G.S. 63A‑10.All bonds, notes, or refunding bonds or notes to finance or refinance a specialuser project are also subject to G.S. 63A‑11.

The bonds and notes of eachissue shall be dated and may be made redeemable prior to maturity at the optionof the Authority or otherwise, at one or more prices, on one or more dates, andupon the terms and conditions set by the Authority. The bonds or notes may alsobe made payable from time to time on demand or tender for purchase by the ownerupon terms and conditions set by the Authority.

A bond or note shall bearinterest at a rate or rates, including variable rates, as determined by theLocal Government Commission with the approval of the Authority. A bond or notemay be secured by a reserve fund created for that purpose and funded fromproceeds of the bond or note, revenues, or any other source of funds availableto the Authority.

(b)        In fixing thedetails of bonds or notes, the Authority may provide that the bonds or notes may:

(1)        Be payable from timeto time on demand or tender for purchase by the owner of the bond or note if acredit facility supports the bond or note, unless the Local GovernmentCommission specifically determines that a credit facility is not required becausethe absence of a credit facility will not materially and adversely affect thefinancial position of the Authority and the marketing of the bonds or notes ata reasonable interest cost to the Authority.

(2)        Be additionallysupported by a credit facility.

(3)        Be made subject toredemption or a mandatory tender for purchase prior to maturity.

(4)        Be capitalappreciation bonds.

(5)        Bear interest at arate or rates that may vary, including variations permitted pursuant to a parformula.

(6)        Be made the subjectof a remarketing agreement whereby an attempt is made to remarket the bonds ornotes to new purchasers prior to their presentment for payment to the providerof the credit facility or to the Authority.

(c)        Notes and bondsshall mature at the times determined by the Authority, not to exceed 40 yearsfrom the date of issue. The Authority shall determine the form and manner ofexecution of a bond or note, including any interest coupons to be attached tothe bond or note. The Authority shall fix the denominations and places ofpayment of principal and interest of the bond or note. The principal of andinterest on a bond or note may be paid at any bank or trust company, whetherlocated inside or outside the United States of America.

(d)        The validity of abond, note, or coupon that has the signature or facsimile signature of a personwho was an officer when the bond, note, or coupon was signed or the facsimilesignature attached but who is not that officer when the bond, note, or couponis delivered is not affected by the change in officers. A bond, note, or couponmay bear the signature or facsimile signature of a person who will be theproper officer to sign the bond, note, or coupon when it is executed but who isnot the officer on the date of the bond, note, or coupon.

(e)        The Authority mayprovide for any of the following:

(1)        Authentication of abond or note by a trustee or other authenticating agent.

(2)        Issuance of a bondor note as a certificated obligation, an uncertificated obligation, or both.

(3)        Issuance of a bondor note in coupon form, in registered form, or both.

(4)        Registration of acoupon bond or note as to principal alone or as to both principal and interest.

(5)        The reconversion ofa bond or note registered as to both principal and interest into a coupon bondor note.

(6)        The interchange ofregistered and coupon bonds or notes.

(7)        A system forregistration in accordance with Chapter 159E of the General Statutes.

(8)        Replacement of abond or note that has been mutilated, lost, or destroyed.

(f)         The Authority maynot issue a bond or note under this Chapter, other than an obligation permittedunder G.S. 63A‑4(a)(22), unless its issuance is approved by the LocalGovernment Commission, and it is sold by the Local Government Commission. Toobtain approval of a bond or note, the Authority shall file an application forapproval with the Local Government Commission. The application shall containthe information required by the Local Government Commission.

In determining whether toapprove a proposed bond or note issue of the Authority, the Local GovernmentCommission shall consider the following:

(1)        For bonds or notesto finance airport projects, the criteria for its approval of revenue bondsunder G.S. 159‑86.

(2)        For bonds or notesto finance special user projects, the criteria used for its approval ofindustrial bonds under G.S. 159C‑8.

(3)        The effect of theproposed financing upon any proposed or scheduled sale of obligations by theState, another State agency, or a unit of local government.

The Local Government Commissionshall approve the proposed bond or note issue if it determines that theproposed financing for the issue meets the criteria and will effect thepurposes of this Chapter.

When the Local GovernmentCommission approves a bond or note issue of the Authority, the Authority maysubmit a written request to the Local Government Commission to sell theapproved bonds or notes. Upon receiving a written request, the Local GovernmentCommission shall consult with the Authority on the manner in which the bonds ornotes will be sold and the price or prices at which the bonds or notes will besold. With the approval of the Authority, the Local Government Commission shallsell the bonds or notes either at public or private sale in the manner and at theprices determined to be in the best interest of the Authority and to effect thepurposes of this Chapter.

Bonds or notes may be issuedunder this Chapter without obtaining, except as otherwise expressly provided inthis Chapter, the consent of any department, division, commission, board, body,bureau, or other agency of the State or without any other proceedings orconditions except as specifically authorized by this Chapter or by theprovisions of the resolution authorizing the issuance of, or any trustagreement securing, the bonds or notes.

(g)        Each bond or notethat is represented by an instrument shall contain a statement signed by theSecretary of the Local Government Commission, or an assistant designated by theSecretary, certifying that the issuance of the bond or note has been approvedunder this Chapter. The signature may be a manual signature or a facsimilesignature, as determined by the Local Government Commission. Each bond or notethat is not represented by an instrument shall be evidenced by a writingrelating to the obligation that identifies the obligation or the issue of whichit is a part, contains the signed statement certifying approval of the LocalGovernment Commission that is required on an instrument, and is filed with theLocal Government Commission. A certification of approval by the LocalGovernment Commission is conclusive evidence that a bond or note complies withthis Chapter.

(h)        The proceeds of abond or note shall be used solely for the purposes for which the bond or note wasissued and shall be disbursed in accordance with the resolution authorizing theissuance of the bond or note and with any trust agreement securing the bond ornote.

(i)         Prior to thepreparation of definitive bonds, the Authority may issue interim receipts ortemporary bonds, with or without coupons, exchangeable for definitive bondswhen the bonds have been executed and are available for delivery.

(j)         The Authority maysecure a bond or note issued under this Chapter by a trust agreement betweenthe Authority and a corporate trustee. The corporate trustee may be any trustcompany or bank having the powers of a trust company inside or outside theState. The Authority may secure a bond or note issued under this Chapter by adeed of trust. The trustee of the deed of trust may be an individual who is aresident of the State. A bank or trust company that is incorporated in thisState and is a depository of the proceeds of obligations, revenues, or othermoney of an Authority may furnish indemnifying bonds or pledge securitiesrequired by the Authority.

The pledge of any assets,income, or revenues of the Authority to the payment of the principal of or theinterest on any obligations of the Authority is binding from the time thepledge is made, and any assets, income, or revenues of the Authority areimmediately subject to the lien of the pledge without any physical delivery orother act. The lien created by a pledge is binding against all persons who haveclaims of any kind against the Authority, regardless of whether they havenotice of the lien.

(k)        A resolutionauthorizing the issuance of a bond or note and a trust agreement securing abond or note may provide that any moneys held under the resolution or trustagreement may be temporarily invested pending disbursement. Any officer withwhom, or any bank or trust company with which, the moneys are deposited isconsidered a trustee of the moneys and must hold and apply the moneys for theirstated purpose in accordance with this Chapter and the resolution or trust agreement.The Authority may invest any moneys, other than the proceeds of bonds issued tofinance special user projects, as allowed in G.S. 147‑69.1 forinvestments of the State Treasurer or in this subsection. The proceeds of bondsissued to finance special user projects may be invested as provided in thesecurity document for the bonds.

In connection with orincidental to the acquisition or carrying of any investment relating to bonds,program of investment relating to bonds, or carrying of bonds, the Authoritymay, with the approval of the Local Government Commission, enter into acontract to place the investment or obligation of the Authority, as representedby the bonds, investment, or program of investment and the contract orcontracts, in whole or in part, on an interest rate, currency, cash‑flow,or other basis, including the following:

(1)        Interest rate swapagreements, currency swap agreements, insurance agreements, forward paymentconversion agreements, and futures.

(2)        Contracts providingfor payments based on levels of, or changes in, interest rates, currencyexchange rates, or stock or other indices.

(3)        Contracts toexchange cash flows or a series of payments.

(4)        Contracts to hedgepayment, currency, rate, spread, or similar exposure, including interest ratefloors or caps, options, puts, and calls.

The Authority may enter acontract of this type in connection with, or incidental to, entering into ormaintaining any agreement that secures bonds. A contract shall contain thepayment, security, term, default, remedy, and other terms and conditions theBoard considers appropriate. The Authority may enter a contract of this typewith any person after giving due consideration, where applicable, of theperson's credit‑worthiness as determined by a rating by a nationallyrecognized rating agency or any other criteria the Board considers appropriate.In connection with, or incidental to, the issuance or carrying of bonds, or theentering of any contract described in this subsection, the Authority may enterinto credit enhancement or liquidity agreements, with payment, interest rate,termination date, currency, security, default, remedy, and other terms andconditions as the Authority determines. Proceeds of bonds and any moneys setaside and pledged to secure payment of bonds or any of the contracts enteredinto under this subsection may be pledged to and used to service any of thecontracts entered into under this section.

(l )        Bonds and notesare exempt from all State, county, and municipal taxation or assessment, director indirect, general or special, whether imposed for the purpose of generalrevenue or otherwise, excluding inheritance and gift taxes, income taxes on thegain from the transfer of bonds and notes, and franchise taxes. The interest onbonds and notes is not subject to taxation as income.

(m)       Bonds or notesissued under this Chapter shall not constitute a debt secured by a pledge ofthe faith and credit of the State or a political subdivision of the State andshall be payable solely from the revenues, income, or assets of the Authoritythat are pledged for their payment. The face of each bond or note issued shallcontain a statement that the Authority is obligated to pay the bond or note orthe interest on the bond or note only from the revenues, income, or assetspledged in payment of the bond or note and that neither the faith and creditnor the taxing power of the State or any political subdivision of the State ispledged in payment of the principal of or the interest on the bond or note.

(n)        The State pledgesto the holder of a bond or note issued under this Chapter that, as long as thebond or note is outstanding and unpaid, the State will not limit or alter thepower the Authority had when the bond or note was issued in a way that impairsthe ability of the Authority to produce revenues sufficient with otheravailable funds to do all of the following:

(1)        Maintain and operatethe project for which the bond or note was issued.

(2)        Pay the principalof, interest on, and redemption premium, if any, of the bond or note.

(3)        Fulfill the terms ofan agreement with the holder.

The State further pledges tothe holder of a bond or note issued under this Chapter that the State will notimpair the rights and remedies of the holder concerning the bond or note.

(o)        Obligations issuedunder this Chapter are made securities in which all public officers and publicbodies of the State and its political subdivisions, and all insurancecompanies, trust companies, banking associations, investment companies, executors,administrators, trustees, and other fiduciaries may properly and legally investfunds, including capital in their control or belonging to them. The obligationsare made securities that may properly and legally be deposited with andreceived by any State or municipal officer or any agency or politicalsubdivision of the State for any purpose for which the deposit of bonds, notes,or obligations of the State is now or may be authorized by law. (1991,c. 749, s. 1; 1991 (Reg. Sess., 1992), c. 1030, s. 16; 1995, c. 46, s. 2.)