13-23-120 - Issuance of bonds and notes Bond finance committee Creation. - Tennessee Statutes

13-23-120. Issuance of bonds and notes Bond finance committee Creation.

(a)  (1)  Subject to the provisions of title 9, chapter 20, and § 13-23-121, the agency has the power and is hereby authorized from time to time to issue its negotiable bonds and notes in conformity with applicable provisions of the Uniform Commercial Code of Tennessee, compiled in title 47, chapters 1-9, in such principal amounts as, in the opinion of the agency, are necessary to provide sufficient funds for achieving the corporate purposes thereof, the payment of interest on bonds and notes of the agency, establishment of reserves to secure such bonds and notes, and all other expenditures of the agency incident to and necessary or convenient to carry out its corporate purposes and powers.

     (2)  With respect to all or any portion of any issue of bonds or notes issued or anticipated to be issued hereunder, the agency may authorize and enter into interest rate swap or exchange agreements, agreements establishing interest rate floors or ceilings or both, and other interest rate hedging agreements and options in respect thereto, from time to time, and under such terms and conditions as the agency may determine, including, without limitation, provisions permitting the agency to pay to or receive from any person or entity for any loss of benefits under such agreement upon early termination thereof or default under such agreement.

     (3)  The agency may enter into an agreement to sell its bonds or notes under this chapter providing for delivery of such debt not more than five (5) years (or such greater period of time if approved by the comptroller of the treasury) from the date of execution of such agreement or in the case of refunding bonds the earlier of the first date on which the bonds being refunded can be optionally redeemed resulting in cost savings or be optionally redeemed at par.

(b)  (1)  Except as may otherwise be expressly provided by the agency, all bonds and notes issued by the agency under this chapter shall be general obligations of the agency, secured by the full faith and credit of the agency and payable out of any moneys, assets, or revenues of the agency, subject only to any agreement with bondholders or noteholders pledging any particular moneys, assets or revenues. The agency may issue such types of bonds or notes as it may determine, including bonds or notes as to which the principal and interest are payable:

          (A)  Exclusively from the revenues of the agency resulting from the purchase of mortgages from lenders from the proceeds of such bonds or notes;

          (B)  Exclusively from the revenues of the agency resulting from the purchase of certain mortgages from lenders whether or not purchased in whole or in part from the proceeds of such bonds or notes;

          (C)  Exclusively from the revenues of the agency resulting from the making of insured construction loans;

          (D)  Exclusively from the revenues of the agency resulting from the making of insured mortgage loans; or

          (E)  From its revenues generally.

     (2)  Any such bonds or notes may be additionally secured by a pledge of any grant, subsidy or contribution from the United States, or any agency or instrumentality thereof, or the state or any agency, instrumentality or political subdivision thereof, or any person, firm or corporation, of a pledge or any income or revenues, funds or moneys of the agency from any source whatsoever.

(c)  Bonds and notes shall be authorized by a resolution or resolutions of the agency adopted as provided by this chapter; provided, that any such resolution authorizing the issuance of bonds or notes may delegate to an officer of the agency the power to issue such bonds or notes from time to time and to fix the details of any such issues of bonds or notes by an appropriate certificate of such authorized officer.

(d)  Such bonds or notes shall bear such date or dates, shall mature at such time or times, shall bear interest at such rate or rates, shall be of such denominations as approved by the agency but not less than five thousand dollars ($5,000), shall be in such form, carry registration privileges, be executed in such manner, be payable in lawful money of the United States at such place or places within or without the state so long as one (1) place is within the state, be subject to such terms of redemption prior to maturity as may be provided by such resolution or resolutions or such certificate with respect to such bonds or notes, as the case may be; provided, that the maximum maturity of bonds does not exceed forty (40) years from the date thereof and the maximum maturity of notes or any renewals thereof does not exceed five (5) years from the date of the original issue of such notes.

(e)  (1)  Prior to the commencement of each fiscal year of the state, the agency shall submit to the state funding board a schedule showing the financings proposed to be undertaken by the agency during such fiscal year. Such schedule shall specify the amount of funds estimated to be required by the agency for the financing of loans for the purchase or rehabilitation of owner-occupied residential housing for occupancy by not more than four (4) families and the amount estimated to be required by the agency for the financing of loans for any other residential housing, indicating particularly the amount estimated to be used to finance facilities for the mentally or physically handicapped. In addition, the schedule shall also specify the agency's estimates of:

          (A)  The amounts required to provide for costs of issuance, capitalized interest and the funding of reserves in connection with the financing of such loans;

          (B)  The total amount of obligations necessary to be issued to provide for such financings and the amounts expected to be provided therefor from unexpended proceeds of any outstanding obligations of the agency or from any other source;

          (C)  The principal amounts and months of sale of each issue of such obligations; and

          (D)  The spread, expressed in basis points, determined to be necessary to finance the agency's operations for such fiscal year.

     (2)  The agency may submit a revised schedule of proposed financings to the state funding board at any time for its consideration. If, but not unless, a schedule (or revised schedule) of proposed financings for such fiscal year has been submitted to and approved by the state funding board, the agency may during such fiscal year make advance commitments to make loans in the types and amounts stated in such schedule or revised schedule. However, no such commitment may be made which is not subject to the availability of the funds to be provided through the issuance of obligations of the agency unless such commitment is either:

          (A)  For a loan to be made from sources other than the proceeds of bonds as shown in such an approved schedule or revised schedule; or

          (B)  For a loan to be made from the proceeds of sale of outstanding obligations of the agency as shown in the resolution of the agency authorizing the application of the proceeds of such obligations.

     (3)  (A)  There is hereby created a bond finance committee of the agency. The bond finance committee shall be composed of the following: the chair of the agency, the commissioner of finance and administration, the state treasurer, the comptroller of the treasury, and the secretary of state. The chair of the agency shall serve as chair of the bond finance committee, and the comptroller of the treasury shall serve as secretary. The chair shall preside at all meetings of the committee; provided, that in the absence of the chair, the secretary shall serve as acting chair. The committee shall appoint an assistant secretary to perform such duties as it directs and as may be delegated by this chapter. In the absence of both the chair and the secretary, the committee shall designate by official action of the committee a member of the committee to serve as acting chair.

          (B)  Three (3) or more members of the bond finance committee constitute a quorum, and the concurring vote of three (3) members is required for the approval of any matters coming before the committee for determination. Written minutes covering all meetings and actions of the committee shall be prepared by the secretary and shall be kept on file, open to public inspection during reasonable business hours. The bond finance committee shall select bond counsel and such managing underwriters as the bond finance committee deems necessary for all obligations issued by the agency.

          (C)  It is the duty and responsibility of the bond finance committee to periodically review and evaluate the performance of the agency's trustee and report its findings and recommendations to the board of directors.

     (4)  Prior to making any other preparation for the authorization, issuance or sale of any issue of obligations, the assistant secretary of the bond finance committee, with the assistance of the executive director, shall prepare and submit a plan of financing for such issue to the bond finance committee which shall specify:

          (A)  The maximum aggregate principal amount of the obligations to be issued;

          (B)  The amount of the proceeds of sale expected to be applied to:

                (i)  The making of loans for owner-occupied residential housing for occupancy by not more than four (4) families;

                (ii)  The making of loans for housing facilities for the mentally or physically handicapped;

                (iii)  The making of loans for any other residential housing;

                (iv)  The payment of costs of issuance and capitalized interest;

                (v)  The funding of reserves; and

                (vi)  Any other purpose;

          (C)  The estimated maturities, interest rates, redemption terms, if any, of such issue of obligations and the spread, expressed in basis points, determined to be necessary to finance the agency's operations as determined to be allocable to the issue; and

          (D)  The proposed method and date of sale and, in general, the proposed terms of such sale.

     (5)  Upon approval of the plan of financing, the assistant secretary of the bond finance committee, with the assistance of the executive director, may proceed with the preparation of the necessary documents pertaining to the authorization, issuance and sale of such obligations. Upon authorization and adoption by the board of the bond resolution authorizing the terms and conditions of such obligations and providing for the application of the proceeds thereof, the bond finance committee shall be authorized to proceed with the sale of such obligations on behalf of the agency.

     (6)  Failure by the agency to comply with the provisions of this subsection (e) shall not affect the validity of any obligations issued by the agency or the sale thereof if the resolution of the agency authorizing the terms of such obligations has been submitted to the bond finance committee, and such obligations have been sold by the bond finance committee on behalf of the agency.

(f)  The agency is authorized to provide for the issuance of its bonds or notes for the purpose of refunding any bonds or notes of the agency then outstanding, including the payment of any redemption premiums thereon and any interest accrued or to accrue to the redemption date next succeeding the date of delivery of such refunding bonds or notes. The proceeds of any such bonds or notes issued for the purpose of refunding outstanding bonds or notes shall be applied to the purchase, retirement, or redemption of such outstanding bonds or notes as determined by the agency and may, pending such application, be placed in escrow until applied to such purchase, retirement or redemption. Any such escrowed proceeds, pending such use, may be invested and reinvested in the same manner as permitted by law for the investment of state funds.

(g)  Whether or not the bonds and notes are of such form and character as to be negotiable instruments under the terms of the Uniform Commercial Code, compiled in title 47, chapters 1-9, the bonds and notes are hereby made negotiable instruments within the meaning of, and for all the purposes of, the Uniform Commercial Code of Tennessee, subject only to the provisions of the bonds and notes for registration.

(h)  Subject only to the provisions of title 9, chapter 20 and §§ 13-23-121 and 13-23-122, any resolution or resolutions authorizing any bonds or notes of the agency may contain provisions which may be a part of the contract with the holders of such bonds or notes, as to:

     (1)  Pledging or creating a lien, to the extent provided by such resolution or resolutions, on all or any part of any moneys or property of the agency or of any moneys held in trust or otherwise by others for the payment of such bonds or notes;

     (2)  Otherwise providing for the custody, collection, securing, investment and payment of any moneys of the agency;

     (3)  The setting aside of reserves or sinking funds and the regulation or disposition thereof;

     (4)  Limitations on the purpose to which the proceeds of sale of any issue of such bonds or notes then or thereafter to be issued may be applied;

     (5)  Limitations on the issuance of additional bonds or notes, the terms upon which additional bonds or notes may be issued and secured, and upon the refunding of outstanding or other bonds or notes;

     (6)  The procedure, if any, by which the terms of any contract with the holders of bonds or notes may be amended or abrogated, the amount of bonds or notes the holders of which must consent thereto and the manner in which such consent may be given;

     (7)  The creation of special funds into which any moneys of the agency may be deposited;

     (8)  Vesting in a trustee or trustees such properties, rights, powers and duties in trust as the agency may determine, which may include any or all of the rights, powers and duties of the trustee appointed pursuant to § 13-23-123, and limiting or abrogating the right of the holders of bonds or notes to appoint a trustee under such section or limiting the rights, duties and powers of such trustee;

     (9)  Defining the acts or omissions to act which shall constitute a default in the obligations and duties of the agency and providing for the rights and remedies of the holders of bonds or notes in the event of such default; provided, that such rights and remedies shall not be inconsistent with the general laws of this state and other provisions of this chapter; and

     (10)  Any other matters of life or different character, which in any way affect the security and protection of the bonds or notes and the rights of the holders thereof.

(i)  Any resolution or resolutions or trust indenture or indentures, under which bonds or notes of the agency are authorized to be issued, may contain provisions for vesting in a trustee or trustees such properties, rights, powers and duties in trust as the agency may determine, which may include any or all of the rights, powers and duties of the trustee appointed by the holders of any issue of notes or bonds pursuant to § 13-23-123, in which event the provisions of § 13-23-123 authorizing the appointment of a trustee by such holders of bonds or notes shall not apply.

(j)  It is the intention of the general assembly that any pledge of earnings, revenues or other moneys made by the agency shall be valid and binding from the time when the pledge is made; that the earnings, revenues or other moneys so pledged and thereafter received by the agency shall immediately be subject to the lien of such pledge without any physical delivery thereof or further act, and that the lien of any such pledge shall be valid and binding as against all parties having claims of any kind in tort, contract or otherwise against the agency, irrespective of whether such parties have notice thereof. Neither the resolution nor any other instrument by which a pledge is created need be recorded.

(k)  Neither the members of the agency nor any person executing the bonds or other obligations shall be liable personally for the bonds or other obligations or be subject to any personal liability or accountability by reason of the issuance thereof.

[Acts 1973, ch. 241, § 10; 1974, ch. 702, § 6; 1975, ch. 320, § 4; 1977, ch. 483, § 6; 1979, ch. 442, § 6; T.C.A., § 13-2320; Acts 1988, ch. 900, §§ 15, 16; 1989, ch. 201, §§ 2, 3; 1990, ch. 643, §§ 1, 2; 2001, ch. 253, § 17.]