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Introduced Version Senate Bill 243 History

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Key: Green = existing Code. Red = new code to be enacted
Senate Bill No. 243

(By Senators McCabe, Caruth, Plymale and Prezioso)

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[Introduced February 12, 2009; referred to the Committee on Finance.]

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A BILL to repeal §13-1-18 of the Code of West Virginia, 1931, as amended; and to amend and reenact §13-1-4, §13-1-14, §13-1-15, §13-1-15a, §13-1-16, §13-1-17, §13-1-19 and §13-1-21 of said code, all relating to updating the code to be consistent with the current practices and procedures required for issuing general obligation bonds through competitive sale; incorporating changes from section ten, article X of the West Virginia Constitution; not requiring the issuer to designate the series of bonds in the election order; not requiring the bond resolution to set forth the date of issuance, the denominations of the bonds, the medium with which the bonds are payable or the terms of redemption; allowing issuers to establish a maximum rate of interest in the bond resolution; allowing issuers to make semiannual payments on principal and interest; lengthening the time an issuer is required to begin making debt service payments by a year from the date of issuance; requiring issuers to register bonds and eliminating reference to coupon bonds; allowing issuers to accept electronic bids; and allowing an issuer to publish an abbreviated sale of notice when advertising the sale of bonds.

Be it enacted by the Legislature of West Virginia:
That §13-1-18 of the Code of West Virginia, 1931, as amended, be repealed; and that §13-1-4, §13-1-14, §13-1-15, §13-1-15a, §13-1-16, §13-1-17, §13-1-19 and §13-1-21 of said code be amended and reenacted, all to read as follows:
ARTICLE 1. BOND ISSUES FOR ORIGINAL INDEBTEDNESS.
§13-1-4. Bond issue proposal to be submitted to voters; election order.

No debt shall be contracted or bonds issued under this article until all questions connected with the same shall have been first submitted to a vote of the qualified electors of the political division for which the bonds are to be issued, and shall have received three fifths of all the votes cast for and against the same: Provided, That a county board of education may contract indebtedness and issue bonds for public school purposes when submitted to a vote of the people of the county if the question of contracting indebtedness and issuing bonds is approved by a majority of all the votes cast for and against the same pursuant to section ten, article X of the Constitution of West Virginia. The governing body of any political division referred to in this article may, and when requested so to do by a petition in writing, praying that bonds be issued and stating the purpose and amount thereof, signed by legal voters of the political division equal to twenty per cent of the votes cast in a county or magisterial district for Governor, or in a municipal corporation or school district for mayor or member of the board of education, as the case may be, shall, by order entered of record, direct that an election be held for the purpose of submitting to the voters of the political division all questions connected with the contracting of debt and the issuing of bonds. Such order shall state:
(a) The necessity for issuing the bonds, or, if a petition has been filed as provided herein, that such petition has been filed;
(b) If for the construction of a county-district road or bridge thereon, a summary of the engineer's report provided for in the following section setting forth the approximate extent and the estimated cost of the proposed improvement, and the kind or class of work to be done thereon;
(c) Purpose or purposes for which the proceeds of bonds are to be expended;
(d) Valuation of the taxable property as shown by the last assessment thereof for state and county purposes;
(e) Indebtedness, bonded or otherwise;
(f) Amount of the proposed bond issue;
(g) Maximum term of bonds; and series
(h) Maximum rate of interest;
(i) Date of election;
(j) If a special election, names of commissioners for holding same;
(k) If registration of voters is necessary, notice of the time, place and manner of making same;
(l) (j) That the levying body is authorized to lay a sufficient levy annually to provide funds for the payment of the interest upon the bonds and the principal at maturity, and the approximate rate of levy necessary for this purpose;
(m) (k) In the case of school bonds, that such bonds, together with all existing bonded indebtedness, will not exceed in the aggregate five per cent of the value of the taxable property in such school district ascertained in accordance with section eight, article X of the Constitution; and that such bonds will be payable from a direct annual tax levied and collected in each year on all taxable property in such school district sufficient to pay the principal and the interest maturing on such bonds in such year, together with any deficiencies for prior years, within, and not exceeding thirty-four years, which tax levies will be laid separate and apart and in addition to the maximum rates provided for tax levies by school districts on the several classes of property in section one, article X of the Constitution, but in the same proportions as such maximum rates are levied on the several classes of property; and said tax may be levied outside the limits fixed by section one, article X of the Constitution.
Any other provision which does not violate any provision of law, or transgress any principle of public policy, may be incorporated in the order.
§13-1-14. Resolution authorizing issuance and fixing terms of bonds.

If three fifths the required amount of all the votes, pursuant to section four of this article, cast for and against the proposition to incur debt and issue negotiable bonds shall be in favor of the same, the governing body of the political division shall, by resolution, authorize the issuance of such bonds in an amount not exceeding the amount stated in the proposition; fix the date thereof; set forth the denominations in which they shall be issued, which denominations shall be one hundred dollars or multiples thereof determine establish the maximum rate or rates of interest which the bonds shall bear, which rate or rates of interest shall be within the maximum rate stated in the proposition submitted to vote; and payable semiannually; prescribe the medium with which the bonds shall be payable require that the bonds shall be made payable at the office of the State Treasurer Municipal Bond Commission and at such other place or places as the body issuing the same may designate; provide for a sufficient levy to pay the annual interest on the bonds and the principal at maturity; fix the times within the maximum period, as contained in the proposition submitted to vote, when the bonds shall become payable, which shall not exceed thirty-four years from the date thereof; determine whether all or a portion of the bonds shall be subject to redemption prior to the maturity thereof; and, if so, the terms of the redemption and prescribe a form for executing the bonds authorized.
§13-1-15. Bonds to be payable in annual or semiannual installments.
Such bonds shall be made payable in annual or semiannual installments beginning not more than two three years after the date thereof, and the amount payable in each year may be so fixed that, when the annual interest is added to the principal amount to be paid, the total amount payable in each year in which part of the principal is payable shall be as nearly equal as practicable. Once principal payments commence, it shall be an immaterial variance if the difference between the largest and smallest amounts of principal and interest payable annually or semiannually during the term of the bonds shall not exceed three five per cent of the total authorized issue. Or, such bonds may be payable in annual or semiannual installments beginning not more than two three years after the date thereof, each installment being as nearly equal in principal amount as may be practicable.
§13-1-15a. Bonds may be subject to redemption.
All or a portion of such bonds may be subject to redemption prior to the maturity thereof, at the option of the body issuing the same as established by resolution of the governing body authorizing the bonds. at such times and prices and on such terms as shall be designated in the resolution required by section fourteen of this article The body issuing the bonds may not levy taxes in connection with the redemption of any bonds in excess of the taxes that would have been levied for the payment of principal of and interest on such bonds in such year.
§13-1-16. Recital of certification that bonds are issued in conformity with Constitution and statutes; effect thereof with Attorney General's indorsement.

The resolution authorizing the bonds provided for in section fourteen of this article may direct that they shall contain the following recital:
"It is certified that this bond is authorized by and is issued in conformity with the requirements of the Constitution and Statutes of the State of West Virginia."
Such recital, when such bonds shall have been indorsed by the Attorney General as provided in section twenty-eight of this article, shall be deemed an authorized declaration by the governing body of the political division and to import that there is Constitutional and statutory authority for incurring the debts and issuing the bonds; that all the proceedings therefor are regular; that all the acts, conditions and things required to exist, happen and be performed precedent to and in the issuance of the bonds, have existed, happened and been performed in due time, form and manner as required by law; that the amount of the bond and the issue of which it forms a part, together with all other indebtedness, does not exceed any limit or limits prescribed by the Constitution or statutes of this state; and that all questions connected with incurring the debt and issuing the bonds have been first submitted to a vote of the people and have received three fifths the required amount
of all the votes, pursuant to section four of this article, cast for and against the same at an election regularly called and held for the purpose after notice published and posted in the manner required by law. If any bond be issued containing the said recital, and also containing the indorsement of the Attorney General as aforesaid, it shall be conclusively presumed that said recital, construed according to the import hereby declared, is true, and neither the political division nor any taxpayer thereof shall be permitted to question the validity or regularity of the obligation in any court or in any action or proceeding.
§13-1-17. Bonds may shall be registered. coupon bonds may be registered as to principal.

The bonds issued hereunder may be registered or coupon bonds shall be issued only in fully registered form and shall carry such registration privileges as set forth in the resolution authorizing the bonds. Coupon bonds may be registered as to the principal in the owner's name by the State Treasurer on books which shall be kept at its office for the purpose and the registration shall also be noted on the bonds, after which no transfer shall be valid unless made by the State Treasurer on the books of registration and similarly noted on the bonds. Bonds registered as to principal may be discharged from registration by being transferred to bearer, after which they shall be transferable by delivery; but may again, and from time to time, be registered as to the principal amount as before. The registration of coupon bonds as to the principal sum shall not affect the negotiability of the interest coupons, but title to the same shall pass by delivery
§13-1-19. Signing, sealing and delivery of bonds.
All bonds issued under this article by any county shall be signed by the president of the county court and countersigned by the clerk of such court; bonds issued by any municipality shall be signed by the mayor or other chief executive and countersigned by the clerk, recorder or secretary; bonds issued by a district or independent school district shall be signed by the president of the board of education and countersigned by the secretary thereof. The seal of the political division shall be affixed to such bonds. Interest coupons shall be signed by the facsimile signatures of such officers. The delivery of any bonds or coupons so executed at any time thereafter shall be valid, although before the date of delivery the person signing such bonds or coupons shall have ceased to hold office.
§13-1-21. Advertisement and sale of bonds.
The governing body of the political division issuing such bonds shall sell the same and collect the proceeds, which proceeds shall be deposited with its treasurer. The governing body of the political division shall advertise such bonds for sale, on sealed bids or electronic bids if the governing body elects to utilize an electronic bidding procedure, which advertisement shall be published as a Class II legal advertisement in compliance with the provisions of article three, chapter fifty-nine of this code, and the publication area for such publication shall be the political division. The first publication shall be made at least fourteen days before the date fixed for the reception of bids. Such advertisement shall also be published in a financial paper published either in the city of New York or the city of Chicago, or in a newspaper published in a city of this state having a population of not less than twenty thousand inhabitants, according to the last federal census the Bond Buyer or similar publication and such advertisement may be published electronically: Provided, That all advertisements required by this section may consist of an abbreviated notice of the sale of the bonds. The governing body may reject any and all bids. If the bonds be not sold pursuant to such advertisement, they may within one hundred twenty days after the date advertised for the reception of bids, be sold by the governing body at private sale, but no private sale shall be made at a price less than the highest bid which shall have been received. If not sold, such bonds shall be readvertised in the manner herein provided. In no event shall bonds be sold for less
than their par value.



NOTE: The purpose of this bill is to modernize article one, chapter thirteen of the code to enable it to be consistent with the current practices and procedures required for issuing general obligation bonds through competitive sale. The bill's updates include: incorporating changes from section ten, article X of the West Virginia Constitution; not requiring the issuer to designate the series's of bonds in the election order; not requiring the bond resolution to set forth the date of issuance, the denominations of the bonds, the medium with which the bonds are payable or the terms of redemption; allowing issuers to establish a maximum rate of interest in the bond resolution; allowing issuers to make semiannual payments on principal and interest; increasing the time an issuer is required to begin making debt service payments from two years to three years from the date of issuance; requiring issuers to register bonds and eliminating reference to coupon bonds; allowing issuers to accept electronic bids if the issuer elects to utilize an electronic bidding procedure; and allowing an issuer to publish an abbreviated sale of notice when advertising the sale of bonds.

Strike-throughs indicate language that would be stricken from the present law, and underscoring indicates new language that would be added.
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