Maryland Debt - Public Section 12
§ 12.
(a) Any public body and any municipal corporation, including the Mayor and City Council of Baltimore and those municipal corporations subject to the provisions of Article XI-E of the Maryland Constitution, now or hereafter authorized to issue its bonds or other obligations for any proper public purpose, at one time or from time to time may issue and sell its bond anticipation notes, in aggregate amount not greater than the authorized amount of the bonds in anticipation of the sale of which the notes are issued and sold, the principal of and interest on the notes to be made payable to the bearer or registered holder thereof out of the first proceeds of sale of the bonds, or from the tax or other revenue which the public body or municipal corporation shall have previously determined to apply to the payment of the bonds and the interest thereon. The proceeds of sale of the notes, after payment from the proceeds of the expenses of the issuance of the notes, shall be expended only on the public purposes for which the bonds are authorized. Twelve months' interest on the notes, or any renewal thereof, may be paid from the proceeds, or from the proceeds of the sale of the bonds, accounting from the initial date of issue thereof. The notes shall be authorized by ordinance, resolution, or other form of official action customarily used by the public body or municipal corporation, which shall cite the authority for the notes and bonds and the amount authorized, shall fix the maturities, interest rates or the manner of determining the same, and other terms of such bond anticipation notes, the price or prices at which the notes will be sold, which may be at, above or below the face value thereof, or the manner of determining the price or prices at which the notes will be sold and the manner of their sale, which may be by private negotiation by the public body or municipal corporation with a prospective purchaser or purchasers if deemed by the public body or municipal corporation to be for its best interest. The resolution or ordinance may provide for the issuance of the notes, pursuant to the sale, in series as funds are required, and may also provide for the renewal of the notes at maturity with or without resale. All such notes shall be signed, endorsed, or guaranteed in the same manner as shall be provided by law for the bonds in anticipation of which the notes are issued, and no such notes shall be issued under this subsection unless so signed, endorsed, or guaranteed. Bond anticipation notes authorized by this subsection may be issued as notes in the nature of commercial paper and, if so issued, may, in the discretion of the public body or municipality issuing the notes, be secured by a trust indenture with a corporate trustee or trustees, which may be any trust company or bank having the powers of a trust company within or without the State, and by a letter of credit, line of credit, or other credit arrangement from or with a bank or other lending institution. The letter of credit, line of credit, or other credit arrangement may be made payable out of the first proceeds of sale of the bonds, or from the tax or other revenue which the public body or municipal corporation shall have previously determined to apply to the payment of the bonds and the interest thereon.
(b) No such bond anticipation notes shall be issued and sold hereunder unless the public body or municipal corporation shall, by the resolution or ordinance authorizing the notes, covenant to pay the same and any interest thereon not paid from the proceeds of the sale of the notes from the proceeds of the bonds in anticipation of the sale of which the notes are issued and shall further covenant to issue the bonds when, and as soon as, the reason for deferring their issuance no longer exists.
(c) The maximum amount of such bond anticipation notes of any such public body shall not exceed in any case the maximum amount of bonds for the issuance of which said public body has authority at the time said notes are issued.
(d) Bond anticipation notes issued under the provisions of this section shall pass as negotiable instruments and possess all the attributes thereof to the extent set forth in § 8 of this article entitled "Negotiability of public indebtedness".
(e) Bond anticipation notes sold under the provisions of this section shall not be subject to the provisions of § 10 hereof entitled "Method of advertising and offering for sale", nor the provisions of § 11 hereof entitled "Method and time of maturing bonds".
(f) In the event any official whose signature shall appear on any such notes shall cease to be such official prior to the delivery of such notes, or in the event any such official whose signature shall appear on any such notes shall have become such after the date of issue thereof, said notes shall nevertheless be valid and binding obligations of any such public body in accordance with their terms.
(g) Any bond anticipation notes or grant anticipation notes issued under the authority of this section or Title 8, Subtitle 2, Part III of the State Finance and Procurement Article, and any bonds thereafter issued from the proceeds of which the notes are to be paid, together with the interest on the obligations, shall be and remain exempt from taxation of any kind and nature whatsoever by the State of Maryland and by any county, municipal corporation, or other political subdivision of the State.
(h) In the event that (i) bond anticipation notes are issued by any public body pursuant to the authority of this section and (ii) the public body is unable to sell bonds to pay such bond anticipation notes when due because of any interest rate limitation contained in the original bond authorizing legislation for such bonds, the public body may issue bonds in an aggregate principal amount sufficient to pay the principal of such bond anticipation notes and not exceeding twelve (12) months' interest on such notes and may provide for the payment of interest on such bonds at a rate or rates in excess of such interest rate limitation contained in the original bond authorizing legislation. The resolution or ordinance providing for the issuance of such bonds shall refer to the original bond authorizing legislation and to this section as authority for the issuance of such bonds. This section shall be construed as additional and supplemental authority for every public body (so authorized to issue bonds) to issue such bonds free of any interest rate limitation for the purpose of paying outstanding bond anticipation notes. Except for the authority hereby granted to all public bodies to provide for the payment of such interest rate or rates as bond market conditions may then require, every public body shall comply with all other provisions, requirements and limitations contained in the original bond authorizing legislation with regard to the issuance of any such bonds.
(i) Any public body and any municipal corporation, including the Mayor and City Council of Baltimore and those municipal corporations subject to the provisions of Article XI-E of the State Constitution, may from time to time issue and sell notes in anticipation of the receipt of grants either from the federal or State government or from any of their agencies in aggregate amount, including interest, not greater than the grant or grants in anticipation of the receipt of which the notes are issued and sold. The principal of and interest on the notes shall be payable out of the proceeds of the grant or grants, and the issuer shall so covenant. Grant anticipation notes may be sold only after receipt of written commitment of the federal or State government or agency or agencies making the grant or grants. Authorization, issuance, sale, and delivery of grant anticipation notes shall be undertaken on substantially the same procedure, terms, conditions, and covenants provided in this section with respect to bond anticipation notes. Grant anticipation notes may be made payable only from the proceeds of grants and need not pledge the faith and credit or taxing power of the public body or municipal corporation, and in that case the notes may not be deemed to constitute an indebtedness of or a charge against the general credit or taxing power of the public body or municipal corporation within the meaning of any constitutional or charter provision or statutory limitation. Grant anticipation notes authorized by this section may be issued as notes in the nature of commercial paper, and, if so issued, may, in the discretion of the public body or municipality issuing the notes, be secured by a trust indenture with a corporate trustee or trustees, which may be any trust company or bank having the powers of a trust company within or without the State, and by a letter of credit, line of credit or other credit arrangement from or with a bank or other lending institution. The letter of credit, line of credit or other credit arrangement may be made payable out of the proceeds of the grant or grants.
