2021 Code of Alabama
Title 11 - Counties and Municipal Corporations.
Title 1 - Provisions Applicable to Counties Only.
Chapter 8A - County Bond Financing Review.
Section 11-8A-3 - County Government Bond Financing Review Form.
County government bond financing review form.
(a) In addition to any and all other documents presented for examination and execution of a bond financing agreement which, for the purposes of this chapter, takes place at the time a county commission makes an official award of the bonds, the county commission shall execute a county government bond financing review form. The standard review form shall be prepared by the Department of Examiners of Public Accounts and shall include statements to the effect that:
(1) The county commission has considered whether it can satisfy its financial obligations for the life of the bonds.
(2) In the case of limited obligation indebtedness, the county commission has identified the source for the debt service payments for the life of the bonds, and in the case of general obligation indebtedness, the county commission has indicated that the full faith and credit of the county has been pledged for the debt service payments for the life of the bonds.
(3) The county commission has considered the period of usefulness of the improvement or property for which the bonds are to be issued in light of the duration of the term of the bonds under the bond financing agreement.
(4) The county commission acknowledges that bond proceeds shall not be used for general operating expenses of the county.
(5) The county commission has received from the bond underwriter, bond counsel, issuer's counsel, trustee, and any others associated with the issuance of bonds an itemized listing of their respective fees and all other costs which shall not be subject to change prior to the sale or issuance of bonds.
(6) The county commission has received from the bond underwriter a clear and understandable written proposal explaining all details of the proposed bond issue, its repayment schedule, and any external factors which could affect the total cost to the county if it issues the bonds.
(7) The county commission has considered the effect, if any, that the bonds will have on the county's constitutional debt limit.
(8) The county commission has received from the bond underwriter information demonstrating that the estimated interest rate on the bonds is reasonable and, that if information regarding similar recent issuances is available, the interest rates are comparable with other similar issuances based on current bond market conditions on the date of execution of the bond financing agreement.
(b) If the proceeds of the proposed bonds are to be used in whole or in part for the purpose of refinancing or refunding outstanding bonds, the county government bond financing review form shall also include statements to the effect that:
(1) The county commission understands how the issuance of refunding bonds may extend the county's initial debt repayment period and the total cost paid by the county by the end of the refunding period.
(2) The county commission has considered whether the refunding bonds will create net present value savings for the county, including the costs of refinancing.
(c) In connection with a swap agreement, the county government bond financing review form shall include statements to the effect that:
(1) The county commission has complied with paragraph a. of subdivision (2) of Section 41-1-42.
(2) The county commission has reviewed or had explained by the adviser selected as provided in Section 11-8A-5 all documentation provided pertaining to the swap agreement as required in subsection (d).
(3) The county commission has designated an employee or official who will have primary responsibility for the consideration, execution, and monitoring of interest rate swaps and financial hedges entered into by the county.
(4) The county commission has determined whether the county's obligations under the swap agreement constitute a general obligation indebtedness of the county and whether the source of payment is sufficient.
(5) The county commission has sought and received specific information disclosing the potential risks inherent in the swap agreement including those risks commonly referred to in the derivatives industry as basis risk, tax risk, interest rate risk, counterparty risk, termination risk, market-access risk, rollover or anticipation risk, and credit risk.
(d) The county government bond financing review form shall also include a statement acknowledging that all enumerated items on the review form have been considered by the county commission, and that the county commission has voted to enter into the bond financing agreement or swap agreement by an affirmative vote of a majority of the members of the county commission. The statement of acknowledgment shall be signed by the chair of the county commission or another commission member designated by the county commission and the adviser or consultant utilized by the county commission pursuant to Section 11-8A-5.
(e) A copy of the county government bond financing review form shall be forwarded to the Department of Examiners of Public Accounts within 10 business days of the issuance of the bonds or swap agreement. All county government bond financing review forms shall be kept on file at the department and shall be available for public inspection for a period of seven years.
(Act 2009-757, p. 2287, §3.)